Usman Final

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Cphapter 1
INTRODUCTION

OVERVIEW OF BANKING SYSTEM IN PAKISTAN BANKS IN PAKISTAN HISTORY OF THE BANK OF PUNJAB CONSTITUTIONAL BASE SCOPE OF THE BANK OF PUNJAB MANAGEMENT OF THE BANK CORPORATE INFORMATION (BANK OF PUNJAB) MISSION STATEMENT YEAR 2011 & FUTURE OUTLOOK REGIONAL NETWORK
USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES
UNIVERSITY OF LAHORE
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REGIONAL OFFICES WORLD WIDE WEB ORGANIZATIONAL STRUCTURE FUNCTIONS OF DIVISIONS
OVERVIEW OF BANKING SYSTEM IN PAKISTAN (SBP

Report)
The year under review added further strength to the soundness of the banking system. This is in line with trends witnessed over the past couple of years. Indicators of financial soundness have shown significant improvement and the industry structure presents a robust picture. The major developments during the year are summarized as follows: A few more banks with low capital base, which could have posed a systemic risk to the sector, merged and became part of more resilient and consolidated institutions, better placed to withstand any adverse shocks. Profitability and earnings showed a remarkable improvement, thereby contributing significantly towards strengthening the capital base and resilience of the banking system. Credit to the private sector picked up significantly, after showing years of sluggishness. The flow of non-performing loans has been stemmed and their stock came down substantially during the year, as did the NPL indicators. Along with the creation of additional provisions, this led to a considerable reduction in the burden of the infected portfolio on capital base.
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The system continued to have abundant liquidity. The recent upward movement in the interest rates, however, has increased the market risk. The average intermediation cost came down as a result of cost controls and expanding business volumes. This reflected an increased efficiency in financial intermediation. The privatization of Habib Bank Limited, a post-review development, has increased the share of private sector in the banking system to around 80 percent. This will further promote competition and efficiency in the system. While these improvements owe much to financial sector reforms and
improved corporate governance in banks, the regulatory and macro-economic environment have also contributed towards this: The economy preformed well and remained on the projected growth trajectory. The demand for bank credit by the private sector picked up. The key indicators of the corporate sector showed robust earnings and debt servicing capacity. Workers remittances, though decelerated as compared to the last year, remained in the projected growth brackets. Consequently, the flow of funds to the banking sector remained intact and was sufficient to maintain a comfortable liquidity position in the market. Fiscal position of the government as well as inflationary trends was in favorable shape, thus enabling the easy monetary regime during the year.
To support a vibrant financial system, the State Bank took a number of policy initiatives. This included issuing guidelines on corporate governance to strengthen
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the culture of accountability and transparency, change of ownership and consolidation of weak institutions, encouragement of consumer financing, and cleaning up of balance sheets through incentive-based recovery drives. Guidelines were also issued to banks on risk management to provide the banks a broader framework to identify measure, monitor and control/mitigate various risks in their business. The State Bank also took a major leap forward shifting from a one-sizefits-all approach of regulation to more risk-focused supervision by categorizing and instituting separate sets of prudential regulations for corporate/commercial banking, SME financing and consumer financing. Realizing the importance of much needed expansion in the scope of business and the due risk management thereof, the SBP issued guidelines in various areas and liberalized its exchange policy in respect of trade financing. The banking sector is sensitive to developments in the economic and political sphere. The countrys political scene saw the resolution of some key issues, which had a salutary impact on its economic condition. Improvement in relations with India also helped restore investor confidence and as the process continues, prospects of boosting regional trade become bright. Despite these improvements, some irritants continue to haunt the geo-political environment. The western border continues to pose problems and, despite some progress, will remain in the limelight considering its potential impact on the state of law and order in the country. However, the governments resolve to address the issue generates hope for better days ahead. The results for the first half of the fiscal year paint a positive economic outlook and promise achievement of major growth targets. Strong and robust growth in the manufacturing sector and consistent surge in credit demand further support this belief. There are, however, some subtle concerns that may increase stress both on the economy as well as the banking system. Higher level of economic activity is placing
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pressures on the external account, despite satisfactory export performance, in form of higher increase in imports, while there is a slowdown in capital repatriation and official inflows, prepayments are being made on external debt. Its intensity will depend upon the future terms of trade oil prices have witnessed a sharp increase recently. The comfort of substantially large foreign exchange reserves and an underpressure US Dollar (barring sporadic moments of strength) presents the SBP with some significant maneuvering space. Creeping inflation, along with an anticipated global rate hike, is generating sentiments for a similar response in the local market. The magnitude and impact of such a rate hike (as and when it comes) is likely to remain modest as much of the prevalent liquidity is likely to remain in the system. This contributes to the continued strength of the corporate sector over banks, which have already built up significant cushions on the back of robust performance over a couple of years. The debt and liquidity related indicators for corporate have continued their upward trend, giving it the essential robustness for sustaining an upward march even in a changed interest rate environment. This said, the recent string of anti dumping measures taken against Pakistani exports, formation of new trade alliances and a continued influx of cheap foreign imports in the local market have the potential of stalling the recent corporate performance. The household paying capacity could come under strain in the changed rate scenario but given the present leverage margins, it is unlikely to result in growing defaults in the short run. The banking sectors persistent robust operating performance over the last couple of years is a healthy sign. But, the overwhelming portion of trading gains presents a caveat, and this may not be sustainable on long-run basis. The recent upturn in credit demand, if it is to sustain, has the potential of making up much of the lost gains. Another caveat is the continuous drain on depositors wealth; they are at present in a disadvantageous position as they have to settle at a negative real rate of return.
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Other than the depressing yields, the specter of massive liquidity has not had any adverse impact on the system. Banks adventures in the booming stock market has been capped at twenty percent of their equity. Along with upcoming margin rules for stock trading (as against a highly leveraged badla trade, in which the banking system is an important player) is likely to further solidify the banking systems inherent strength. Credit disbursement at an exponential rate has, at last, broken the protracted spell of sluggishness. However, it has also at the same time, increased the level of credit risk for the banking system. Crucially important is the substantial increase in loans to SMEs, agriculture and consumer finance. This may have helped in diversification of loan portfolios of the banking system but at the same time have enhanced the risk profile, as banks are still going through an evolutionary phase in developing risk appraisals and mitigating techniques in these areas. The future expansion of credit to these new sectors will largely depend upon the extent to which the banks are able to develop internal procedures and controls in risk appraisals and mitigation.
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BANKS IN PAKISTAN
There is the list of Banks and Financial Institutions, servicing in Pakistan
Sr#
Name of Bank
Web Site of Bank
NATIONALIZED COMMERCIAL BANKS 1 2 3 4
First Women Bank Ltd Habib Bank Limited National Bank of Pakistan United Bank Limited
http://www.fwbl.com.pk/ www.habibbankltd.com http://www.nbp.com.pk www.ubl.com.pk
DE-NATIONALIZED BANKS 5 6 Allied Bank of Pakistan Ltd Muslim Commercial Bank Ltd www.abl.com.pk www.mcb.com.pk
SPECIALIZED SCHEDULED BANKS 7 8 9 10 Agricultural Development Bank of Pakistan Federal Bank for Co-operatives Industrial Development Bank of Pakistan Punjab Provincial Co-operative Bank Ltd www.adbp.org.pk/adbp Nil www.idbp.com.pk
PRIVATE SCHEDULED BANKS

11 12 13
Askari Commercial Bank Ltd Bank Alfalah Limited Bank Al-Habib Limited
http://www.askaribank.com.pk/ http://www.bankalfalah.com/ http://www.bankalhabib.com/
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14 15 16 17 18 19 20 21 22
Bolan Bank Li Faysal Bank Limit Meezan Bank Limited Metropolitan Bank Limited PICIC Commercial Bank Ltd Platinum Commercial Bank Ltd Prime Commercial Bank Ltd Soneri Bank Limited Union Bank Limited
http://www.bolanbank.com.pk/ http://www.faysalbank.com.pk/ http://www.meezanbank.com/ www.metrobank.com.pk http;//www.picicbank.com.pk http://www.platinumcommercialbank.com/ www.primebank.com.pk http://www.soneri.com/ Nil
PROVINCIAL BANKS The Bank of Khyber

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www.bankofkhyber.com.pk http://www.punjabbank.com/
The Bank of Punjab
MICRO FINANCE BANKS The First Micro Finance Bank Limited

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www.khushhalibank.com.pk
FOREIGN BANKS ABN Amro Bank N.V.

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http://www.abnamro.com/ www.albaraka.com.pk http://www.aexp.com/ Nil www.ca.indosuez.com www.citigroup.net www.db.com Nil
Al-Baraka Islamic Bank B.S.C.(E.C.) American Express Bank Limited Bank of Cylon Credit Agricole Indosuez Citibank N.A. Deutsche Bank AG Doha Bank
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Habib Bank A.G. Zurich International Finance Investment & Commerce
www.habibbank.com
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Nil Bank Limited (IFIC) Mashraq Bank psc Oman International Bank S.O.A.G. Rupali Bank Limited Standard Chartered Bank Standard Chartered Grindlays Bank Limited The Bank of Tokyo-Mitsubishi Limited The Hongkong and Shanghai Banking Corporation Limited
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www.mashreqbank.com www.obioman.com Nil http://www.scb.com/ www.scb.com http://www.btm.co.jp/ (this web site is maintained by their HO, Tokyo Japan) www.hsbc.com.pk
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DEVELOPMENT FINANCIAL INSTITUTIONS
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Investment Corporation of Pakistan National Investment Trust Limited Pak Kuwait Investment Company(Pvt) Limited Pak Libya Holding Company (Pvt) Limited
Nil In development phase www.pkic.com http://www.paklibya.com.pk/ www.pakoman.com http://www.picic.com/
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Pak Oman Investment Company (Pvt) Limited Pakistan Industrial Credit & Investment 48 Corp. Ltd.
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Saudi Pak Industrial & Agricultural 49 Investment Company (Pvt) Limited 50 SME Bank Limited
www.saudipak.com http://www.smebank.org/
INVESTMENT BANKS 51 First Standard Investment Bank Limited Nil Nil In development process www.cresbank.com Nil www.fidelity.com.pk www.interbank.com.p-k www.iibl.com www.jahangirsidiqui.com www.orixbank.com Nil Nil www.trustbank.com.pk
52 Asset Investment Bank Limited 53 Atlas Investment Bank Limited 54 Crescent Investment Bank Limited 55 Escorts Investment Bank Limited 56 Fidelity Investment Bank Limited 57 First International Investment Bank Limited
58 Islamic Investment Bank Limited Jehangir Siddiqui Investment Bank 59 Limited 60 61 62 63 Orix Investment Bank (Pak) Limited Prudential Investment Bank Limited Security Investment Bank Limited Trust Investment Bank Limited
VENTURE CAPITAL 64 Pakistan Venture Capital Limited Nil
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Pak Emerging Venture Limited
Nil
DISCOUNT HOUSES First Credit & Discount Corporation 66 (Pvt) Limited 67 National Discounting Services Limited Nil http://www.ndsl.com.pk/
Prudential Discount & Guarantee 68 House Limited 69 Speedway Fondmetal (Pak) Limited Nil
HOUSING FINANCE COMPANIES 70 71 72 Asian Housing Finance Limited Citibank Housing Finance Co. Limited* House Building Finance Corporation Nil Nil www.hbfc.com.pk www.ihfl.com.pk
73 International Housing Finance Limited
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HISTORY OF THE BANK OF PUNJAB

The Bank of Punjab started functioning with the inauguration of its first branch of 7egerton road, Lahore on November 15, 1989. The architect of the bank was Mr. Nawaz Sharif Chief Minister of Punjab at that time performed the inauguration. The emergence of new bank on the national scene in the early 1990s has done two important services to the nation. The savings base of the economy has effectively enlarged and hence the investment opportunities have increased.
The services of the banks in the fact of severe competition have improved considerably so that now consumer are left with extensive choice to do or undo their business relations with these banks keepings in view of the services.
The Bank of Punjab is working as a scheduled commercial bank with its network of 260 branches at all major business centers in the country. The bank provides all types of banking services such as deposits in local currency, client deposits in foreign currency, remittances, and advances to business, trade, industry and agriculture. The Bank of Punjab has indeed entered a new era of science to the nation under experience and professional hands of its management. The Bank of Punjab plays a vital role in the national economy through mobilization of hitherto untapped local resources, promoting savings and providing funds for investments. Attractive rates of profit on all types of deposits, opening of foreign currency accounts and handling of foreign exchange business such as imports, exports and remittance, financing, trade and industry for working capital requirements and money market operations are some facilities being provided by the bank. The lending policy of bank is not only cautious and constructive but also based on principles of prudent lending with maximum emphasis on security. As agriculture in considered as backbone of our economy the Bank of Punjab
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has introduced Kissan Dost Agriculture Finance Scheme to small farmer and cultivators. The Bank of Punjab has the privilege to discharge its responsibilities toward national progress and prosperity. Within the couple of years of its scheduling, the bank has not only carved out for it self prominent niche in the mainstream banking of the country but in certain areas it has the distinction of taking the lead. In the short span of time the bank has been able to evolve a distinct corporate culture of its owned-based policies, which are realistic and are on highly professional footings.
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CONSTITUTIONAL BASE
The Bank of Punjab was established under the provisions of section 28 of Federal list included in the 4the schedule of the constitution of the Islamic Republic of Pakistan 1973. The bank was established under the Act of Punjab Assembly viz. the Bank of Punjab Act 1989. The bill to this effect was passed by the provincial assembly on July 3, 1989 and was passed to, by Governor Punjab in accordance with the provisions of the constitution on July 26 1989. The act provided for the foundation on which the edifice of the bank was erected. It also included and provided for various modalities concerning the structure, the organization and scope of the bank laying down its objective share capital and principle of lending. The act defines rules for the following: Short title, extent, and commencement Establishment and incorporation of the Bank Share capital Register of shareholders Qualification of shareholders Government to be shareholders Head Office of the Bank Board of director Managing director Qualification and disqualification of the directors Removal of directors Terms of office of directors Vacancies General and special meetings
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Votes of the shareholders Business, which the bank is authorized to transact Business, which the bank is not authorized to transact Auditors / Governments auditors Right and duties of the auditors Liquidations of the bank Powers of the board to make bye law
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SCOPE OF THE BANK OF PUNJAB
B
fold.
eing a commercial bank, the Bank of Punjab performs all such functions as are attributed to commercial banking institution both in the area of resources mobilization, loans, and investment. The bank is thus providing all type of
advances to business, trade and commerce on seasonal and annual basis, and is ensuring, through the prudent policy, the safety and protection of its loan portfolios, as the resources base of the bank expands, projects financing will also be brought into its
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MANAGEMENT OF THE BANK

At the level of decision-making and implementation, senior management of the bank is drawn from highly accomplished bankers with rich experience in the banking profession both domestic and international. The entire responsibilities of policy formulation and management have been placed, under the law, the board of director. Furthermore it will be heartening to know that Mr. Nawaz Sharif, during his CM-ship of the province of Punjab issued special instructions to the political and executive echelons not to interfere in The Bank of Punjab, thereby ousting the possibility any pressure which may be put on the management of the bank in respect of recruitment of staff or provision of credit. These instructions have become an essential part of the culture of the bank.
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CORPORATE INFORMATION (BANK OF PUNJAB)

Name Registration # Registration Date CRO BANK OF PUNJAB 00000013054/19891102 15-11-1989 Lahore
AUDITORS A. F. Ferguson $ Co. Chartered Accountants REGISTERED OFFICE 7-Egerton Road, Lahore Pakistan
M O V E D HERE
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Pattern of other share holders Shareholder Category Total No. of Shares Held PHYSICAL Directors/CEO/Spouse Provincial Government Foreign Funds Individuals NBFI/FIN.INST/Insurance Co./Mudaraba NIT ICP Others Total 3611 51781427 274063 CDC 10893 -------169908 TOTAL 14504 51781427 443971 20144461 17883813 147500 3610117 6389533 0.01 51.57 0.44 20.06 17.81 0.15 3.60 6.36 100.00 %
3422622 16721839 22935 17860878 -------4075 5224351 147500 3606042 1165182
60733084 39682242 100415326
Catagories of Shareholders
0.15 3.6 17.81
6.36
0.01
51.57
20.06 0.44
Director/CEO/Spouse Foreign Funds NBFI/FIN. INST./Insurance Co. /Modaraba's ICP
Provincial Government Individuals NIT Others
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MISSION STATEMENT
To exceed the expectations of our stakeholders by leveraging our relationship with the Government of Punjab and delivering a complete range of professional solutions with a focus on programme driven products & services in the Agriculture and Middle Tier Markets through a motivated team.
Vision statement
"To be a customer focused bank with service excellence"
CORE VALUES
Integrit y Dedication Transparency Team work
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YEAR 2011 & FUTURE OUTLOOK

Year 2011 raises expectation of growth in the major sectors of economy with large-scale manufacturing, agricultural and services sector leading from the front. Continuity of the focused economic reforms and policies of the Government together with positive developments on the geo-political front has really placed the Country in a position where the investors and the business community should start gaining comfort to embark upon the much needed investment activity. The prevailing economic scenario indicates that the GDP growth target of 7% plus is very much achievable. Although, the prevailing money market scenario with low spreads and almost stable interest rates suggest that the Banking sector will be facing tough time ahead yet they believe that effective mobilization of resources and efficiently utilizing them shall help the Banks to maintain their performance levels already achieved while focused efforts to increase volumes in retail based consumer finance products and services shall ensure growth and strengthening of the Banks earnings. Keeping the in view the management of the BOP, during the year under review, Development and growth of agricultural sector has always been given priority by the bank owing to its importance and contribution to our economy. In this respect a large number of schemes have been introduced by the bank to provide financial support and assistance to the farmers in all sub sectors of agriculture. Realizing the growth potential and huge exploration opportunity in SME and consumer financing the bank has introduced variety of products and has enhanced its exposure in These modes of financing to ensure market penetration and build market share. Undoubtly, concentration on agricultural, SME and Consumer financing will strengthen the backbone of the economy and maximize banks profits.
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Year 2012 will prove to be another challenging year for the bank with scattered opportunities and tough competition in the offing. Diversification, innovation and mission driven approach are the key to success. The Bank of Punjab has launched electronic banking services like ATMs and online banking for clients. The Bank of Punjab is now equipped with e-banking technology and launched market products like house loan, car loan, small medium enterprise loan and Bank of Punjab ready cash. The Bank of Punjab Managing Director said that as a step forward towards our mission to become an I.T. oriented Bank we have successfully installed 6 ATMs while we plan to add 25 more ATMs at our various branches. This year our focus will be on connectivity to provide real-time online banking services to our customers at all more than 260 branches of our Bank.
REGIONAL NETWORK
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There are 273branches of the BOP in all over Pakistan; the detail of the network is described Below.
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These are some regions along numbers of branches contains
Faisalabad Faisalabad 2020 Bahawalpur Bahawalpur 1515 Gujranwala Gujranwala 1010
H.H. O. O. The Bank ofof The Bank Punjab Punjab Lahore Lahore
Multan Multan 1616 Rawalpindi Rawalpindi 1212
Karachi Karachi 1212
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WORLD WIDE WEB

http://www.bop.com.pk
This is the official website of The Bank of Punjab-established in 1989, in pursuance of The Bank of Punjab Act 1989 and was given the status of scheduled bank in 1994. The Bank of Punjab is working as a scheduled commercial bank with its network of 273 branches at all major business canters in the country. The Bank provides all types of banking services such as deposit in local currency, client deposit in foreign currency, remittances, and advances to business, trade, industry and agriculture. Information regarding the share holder, foreign currency rates, branch networks, balance sheet etc can be accessed through links on this website.
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ORGANIZATIONAL STRUCTURE
MANAGEMENT HIERARCHY
BOARD OF DIRECTORS BOARD OF DIRECTORS CHAIRMAN CHAIRMAN SENIOR EXECUTIVE VICE PRESIDENT SENIOR EXECUTIVE VICE PRESIDENT EXECUTIVE VICE PRESIDENT EXECUTIVE VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT ASSISTANT VICE PRESIDENT ASSISTANT VICE PRESIDENT OFFICER GRADE-I OFFICER GRADE-I OFFICER GRADE-II OFFICER GRADE-II OFFICER GRADE-III OFFICER GRADE-III CASH OFFICER CASH OFFICER
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CATEGORIES OF SERVICES
A A
B B
C C
D D
President Executive Vice President Senior Vice President Vice President Assistant
officer Grade Officer-I Officer Grade-II Officer Grade-III Cash Officer
Clerical Staff
Driver Guard/Gunm an Gate Keepers Tea Boys
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DIVISIONS AND DEPARTMENT
CHAIRMAN CHAIRMAN GENERAL MANAGER GENERAL MANAGER

ADMINISTRATION ADMINISTRATION
CHIEF MANAGER CHIEF MANAGER

ORGANIZATION & METHODS ORGANIZATION & METHODS INFORMATIONAL & INFORMATIONAL & TECHNOLOGY TECHNOLOGY OFFICERS TRAINING OFFICERS TRAINING INSTITUTE INSTITUTE SHARES SHARES
OPERATIONS OPERATIONS
BUSINESS DEVELOPMENT BUSINESS DEVELOPMENT
CREDIT CREDIT
INTERNATIONAL INTERNATIONAL
LAW LAW
FINANCE FINANCE
STATIONERY STATIONERY PLANNING RESEARCH & PLANNING RESEARCH & PUBLICATION PUBLICATION
RECOVERY RECOVERY
AUDIT & INSPECTION AUDIT & INSPECTION
TREASURY TREASURY
Division Headed by General Manager, Departments Headed by Chief Manager
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FUNCTIONS OF DIVISIONS
ADMINISTRATION/HUMAN RESOURCE DIVISION
GENERAL MANAGER GENERAL MANAGER

ADMINISTRATION & ADMINISTRATION & ESTABLISHMENT ESTABLISHMENT This division deals with the problems related to the staff administration. The main function of this department is to arrange a comprehensive training program for recruited staff. Others function
OFFICERS TRAINING INSTITUTE OFFICERS TRAINING INSTITUTE
Placing the staff Providing and defining the opportunities for career development and growth Devising and implementing services rules. Promotion and demotion Suspension and termination Transportation Security, health and benefits
includes:

Recruitment Staff remuneration
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OPERATIONS DIVISIONS
This division is
COMPUTER DEPARTMENT COMPUTER DEPARTMENT
ENGINEERING & MAINTENANCE ENGINEERING & MAINTENANCE
O & M DEPARTMENT O & M DEPARTMENT
concerned with the operational working in general banking, which is concerned with the routing working of the bank. Any problem or ambiguity arise in any branch working are rectified and suggested for
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correction by this division. usually and takes technical
This Division procedures
Maintenance of the existing building owned by the bank Opening new branches and their
involved the decisions like commissions
maintenance
Stationery of the bank
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BUSINESS DEVELOPMENT DIVISION
MARKETING CELL MARKETING CELL
PRP DEPARTMENT PRP DEPARTMENT
It is the other name of marketing division. It promotes the bank cause i.e. deposits and work for the over all development of the bank. any. Deposits are the lifeblood of This Without deposits bank cannot
schemes like cash prizes and special increments. It publishes an bulletin in which those branches are encouraged who achieves their monthly targets. The main function is to develop and attract the customers and depositors. It also manage Advertising policy Sales promotion Schemes offered by the ban
perform any function of banking.
division fixes the deposits target of every branch by keeping and eye over the potential customers in the area. It gives motivation to branches to achieve their targets through different campaign and

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CREDIT DIVISION
AGRICULTURE CREDIT WING AGRICULTURE CREDIT WING
This
division
control
over
all
credit
the credit proposal to head office credit division. Credit committee approves it after making a through analysis. It also perform
operations like sanction of loans, inland bill purchased (IBP) and also keeps check over securities mortgage, hypothecating or pledge. It also fix the rate of mark-up and other decisions concerning with the credit.
Prepare the policies regarding the sanctioning loan Monitor loans and credit Look after the portfolio of the bank Define credit limits against specified securities
There
is
credit
committee,
which
consists of senior officers; branches send
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INTERNATIONAL DIVISION
INTERNATIONAL WING INTERNATIONAL WING
FOREX MONEY MARKET FOREX MONEY MARKET INVESTMENT INVESTMENT
ENGINEERING & ENGINEERING & MAINTENANCE MAINTENANCE
This
division
is
providing
important
services tot the bank regarding the matters of international trade, import export, letter of credit etc., it develops correspondent
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relationship with other commission basis and this helps to deal with the clients having import export business. It handles treasury operations.
The marketing and spot inspection cell, which were introduced by the bank, are showing positive results in terms of achieving foreign currency deposit targets and other foreign related businesses.
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FINANCE DIVISION
BALANCE SHEET RESULTS BALANCE SHEET RESULTS MONITORING SBP AFFAIRS, AND MONITORING SBP AFFAIRS, AND COMPLIANCE COMPLIANCE
SHARES DEPARTMENT SHARES DEPARTMENT
It
COMPANY AFFAIRS COMPANY AFFAIRS
controls the routing financial matters. The permission of special expenditure Incurred in the branches, and other such cases. The daily position and HO extracts are daily sent to this division by all the branches.
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This division not only estimates the profit and loss of every branch but also prepare over all income statement and balance of the complete bank. It also keeps record of total deposits of the bank and then their classification in the form of loans into different sectors of economy.
The basic functions are Monitoring the fiscal and financial policies of the bank
Deals in exploring means for investing banks surplus funds Maintenance employees. and investment of
gratuity and pension funds of the
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RECOVERY DIVISION
The recovery
division, which was established in 1994 to assist in regularizing the difficult loan accounts, has rendered valuable services this To an policy been in affect in a has framed efficient respect.
LAW DEPARTMENT LAW DEPARTMENT
recoveries manner,
in accordance with the guidelines issue by the SBP; moreover recovery cells at regional levels have been setup to assist the head office. This division looks after the matters of recovery of loans with the assistance of legal advisors.
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AUDIT AND INSPECTION
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GENERAL GENERAL MANAGER MANAGER
AUDIT OF AUDIT OF BRANCHES BRANCHES
RECTIFICATION AND RECTIFICATION AND PERSUASION PERSUASION
This department ensures appropriate system of check and balance. It checks all the irregularities, errors, and forgeries if any, under the rules and regulations formed by the Government of Punjab. For this purpose it doesnt only keep and eye on the branches in their vicinity but also conduct surprise audits of and the comprehensive branches.
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This strategy has improves working at the branch level. It not only points out the discrepancies but also tries to solve it. Surprise audit maintain a
good check on the over all working of the branch especially of the side of finance.
Chapter 2
AREA OFFICE
TEAM BRANCHES UNDER AREA INTRODUCTION
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FUNCTIONS OF AREA OFFICE
INTRODUCTION
There is regional office in MULTAN. There is 11 branch in Multan. To cover all these problems the area office/the regional chief of Multan covers all the threats faced by the branches
TEAM
The team of regional office in the supervision of an experienced and highly qualified person Mr. RANA ZUBAIR is an excellent and very nice combination of young, intelligent and energetic and TUHEED AHMED serving as a R.O.H, are hardworking, motivated, and professional and committed with their duties. They are working strictly with the core values of the Bank of Punjab
Mr. RANA ZUBAIR Mr.TUHEED AHMED
REGIONAL Chief R.O.H
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FUNCTIONS OF REGIONAL OFFICE

Monitoring of branches business and helped them to expand the same. Collection of daily, weekly and monthly reports from branches. Coach and trained the staff. Sanction salary loan, Meet with present and prospective clients. Transfer and posting of staff in the area.
Chapter 3
BRANCH
INTRODUCTION BRANCH TEAM BRANCH HIERARCHY
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INTRODUCTION
Ahmed Pur East(APE) is historical city of south Punjab/NAWAB Sir Sadiq Muhammd Khan, and branch of BOP is situated at the Kathery road APE.The team of branch in the supervision of an energetic, highly qualified person Mr. Muhammad ARSHAD BHATTI is an excellent and very nice combination of an
experienced
persons
(Muhammad
Arshad
Bhatti(BR
MGR),
Muhammad
Imran(Operational Manager) and young and energetic, all are hardworking, motivated, professional and committed with their duties. They are working strictly with the core values of the Bank of Punjab and have been appreciated by the Head Office and Regional Office. APE is famous about its cotton growing sunflower and the back bone of the south Punjab and having the largest grain market. There is lots of factories in the surrounding areas of APE city. BOP branch is dealing in cash financing, demand financing, running financing and also newly introduced consumer financing schemes for salaried and non salaried persons; that are BOP Car Loan, BOP SME Loan, BOP Aasaish Loan, BOP House Loan and Quick Cash.
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Punjab Development Fund (PDF tickets) collecting funds for the development of Punjab through various banks including Bank of Punjab and BOP main branch at Bahawalpur has best selling record for the sale of those tickets in Bahawalpur.
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BRANCH TEAM OF SHAH RUKN-E-ALAM

The branch manager of APE having a dayinamic personialty and he gave he is devoting his experience to the branch whole heartedly truly a proud banker for the bop.and the operational manager Muhammad Imran is young energetic and create magic in working. he is leading his team from the front and he is the truly a motivating factor for his team mates it is not wrong to say that he is deserving what he got And the officer grade-i Malik Shoaib is a man of principal and working hard for the bank and for the team always backing up his juniors he is a true example for the new comer banker and the cash officer Mr. Irfan doing a great work with cash he is young and energetic and know his work quite exceptionally well and the last but not the least Mr. Arshad Bhatti is the most experienced person of the branch giving a rich experience to Bop

Mr. Muhammad Arshad Bhatti Mr. Imran Mr. Ahmed Mr. Shahid Raza Mr.Shoaib Mr. Tahir Ali Mr. Irfan Mr. Muhammad Asif
Officer grade-i Manager Manager(op) Manager Agri Manager Advances Officer grade-ii Officer grade-i Cash officer Messenger
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BRANCH HIERARCHY
BRANCH BRANCH MANAGER MANAGER
Manager Manager Operations Operations
Manager Manager Advances Advances
Manager Manager Agri-loans Agri-loans
Officer Officer GradeIIII Grade
Officer Officer GradeIII Grade III
Cash Cash Officer Officer
Messenger Messenger Messenger Messenger
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Chapter 4
BANKING SERVICES
BOP CONSUMER FINANCING AGRICULTURE AND ECONOMY AGRICULTURE FINANCE SCHEME BANKING SERVICES ACCOUNTS OF SPECIAL CUSTOMERS
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BOP CONSUMER FINANCING

For specified consumer goods of LG, PEL, Haier, Philips, Samsung, Super Asia, Daikin and Daikool, Raffles. Aasaish Loan 19% mark-up for 12 months Free Home Delivery Tenure 6, 9, 12, 18 and 24 Months Minimum PRs 20,000 Max PRs.500,000
Salaried person of 5 years experience and min Rs. 20,000/- per month salary Age limit 25-60 year at the end of loan term For purchase of house / flat or construct house or renovate existing house. Limit for purchase / construction Rs. 0.3M to Rs. 25M, for renovation Rs. 0.2M to Rs. 10M Banking financing for purchase / construction up to 70% of assessed value for renovation up to 20% of assessed value Markup- 1/2/3 Years ask side KIBOR+ 375 bps with floor of 17%p.a. (KIBOR of respective tenure of 1,2 &3 years shall be used) Non-refundable fee Rs. 450 Processing Fee Rs. 2,950 Tenure for purchase / construction 3 to 25 years, for renovation 3 to 25 years Valuation charges / stamp duties and legal charges as per actual
House Loan
Car Lease
Salaried person of 3 years experience and min Rs. 20,000/- per month salary Age limit 25-59 years at the end of loan term For purchase of Suzuki and other motor cars Limit of Rs. 0.2M to Rs. 50M Down payment 10% to 20%
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Markup- 1/2/3 Years ask side KIBOR+ 400 bps with floor of 17%p.a. (KIBOR of respective tenure of 1,2 &3 years shall be used) Tenure of 1 to 5 years Non-refundable fee Rs. 450/Processing fee Rs. 3,750/Registration charges actual, payable directly to the dealer by customer
For small and medium enterprise 3 years of self business experience Age between 25-55 years Monthly income of min Rs. 36,000/Member of trade body, chamber of commerce or anjuman-e-trajiran for at least 3 years Taxpayer Limit Rs. 1.0 m to Rs. 7.5 m Non-refundable fee Rs. 450 Processing fee for loans up to Rs. 3.0 m is Rs. 4,950/- for loans over Rs. 3.0 m Rs. 8,950/Valuation charges, all stamp duties, legal and documentation charges will be charged at actual and will be borne by the applicant
SME Loan
Quick Cash
All kind of personal needs Salaried person of 3 years experience and min Rs. 15,000/- per month salary Age between 25 and 55 Limit Rs. 50 thousand to Rs. 0.2 m Min repayment per month 5% of utilized amount
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AGRICULTURE FINANCE SCHEMES

Kissan dost Agricultural finance scheme
Purpose:
Eligibility :
1. Resident Self Cultivator having Agriculture maximum 50 acres 2. Owner-cum tenant having minimum land 5 acres under cultivation
3. Tenant
having valid lease agreement for reasonable tenure (minimum area of subsistence land holding)
Amount:
Maximum Rs.500, 000/- according to per acre limit of the crop.
Security:
Charge on Agriculture Land through Agri. Pass Book.
OR
Registered / Equitable mortgage of Urban property assessed by PBAs approved surveyor and cleared by Banks legal counsel.
OR
Liquid security in the shape Banks Fixed Deposited Receipts/DSC/NSC or Regular Income Certificates. One personal guarantee of reputable person. ACO along with Regional Chief can waive this condition if they deem the borrower to be very credit worthy. Two written satisfactory market checking reports must be obtained before disbursement.
Margin on Security:
50% Margin on Agri land or Urban property. 25% margin on liquid security.
Insurance:
The borrower will have to arrange life assurance under the Banks charge .
Mark-up:
9% per annum .
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Repayment:
Once in a year along with mark up.

Renewal:
Automatic renewal upon adjustment of entire principal with full markup within one year. Fresh documents will be obtained after three years.
Kissan dost Tractor Finance Scheme
Purpose: Provision of financial facility to the farmers and non farmers (those who provide tractors to farmers on rental basis for various tractor related operations), for purchase of Tractor on Lease Finance Basis. Eligibility: Resident Self Cultivator having Agriculture Land minimum 5 acres and maximum 50 acres OR Persons providing their tractors to farmers on rental basis for their various Agriculture and Farming activities. The persons who are related with the business of providing services for tractor related farming practices to the farmers on rental Basis. Amount: Maximum Rs.500, 000/-. Equity: The borrower on case-to-case basis will pay 10% to 20% of the cost of Tractor. Security: Farmers: 1. Lease Tractor (to be registered in the name of Bank) 2. Charge on Agriculture Land through Agri. Pass Book
3. One personal guarantee of reputable person. ACO along

with Regional Chief can waive this condition if they deem the borrower to be very credit worthy. Two written satisfactory market checking reports must be obtained before disbursement Non Farmers:
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1. Lease Tractor (to be registered in the name of Bank) 2. Charge on urban immovable property through equitable/registered mortgage 3. One personal guarantee of reputable person. ACO along with Regional Chief can waive this condition if they deem the borrower to be very credit worthy. Two written satisfactory market checking reports must be obtained before disbursement Insurance: The Lessee will arrange comprehensive insurance of tractor life assurance of lessee under the Banks charge. Mark-up: 11% per annum. Repayment: 10 equal half yearly installments (within five years).
KISSAN DOST AABIARI SCHEME
Purpose Provision of financial facility to farmers for purchase of Tube well.
the
Eligibility Resident Self Cultivator having Agriculture Land minimum 5 acres and maximum 50 acres. Amount Maximum Rs.500,000/-. Equity The borrower will pay 20% of the cost of project.
Security: Farmers
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1. Lease Assets i.e. Engine, Tube well and other related implements (The vendor will issue receipt in the name of Bank) 2. Charge on Agriculture Land through Agri. Pass Book 3. One personal guarantee of reputable person. ACO along with Regional Chief can waive this condition if they deem the borrower to be very credit worthy. Two written satisfactory market checking reports must be obtained before disbursement Insurance The Lessee will arrange comprehensive insurance of implements/assets life assurance of lessee under the Banks charge. Mark-up 11% per annum. Repayment 8-10 equal half yearly (within four to five years).
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Purpose: Provision of financial facility to the farmers for purchase of Agricultural Implements e.g. Trolley, thresher, plough, richer etc. Eligibility: Resident Self Cultivator having Agriculture Land measuring 5 acres to maximum 50 acres. Amount: Maximum Rs.500, 000/-. Equity: 20% of the cost of machinery tool and implements. Security: Farmers: 1. Lease Assets/implements (The vendor will issue receipt in the name of Bank) 2. Charge on Agriculture Land through Agri. Pass Book 3. One personal guarantee of reputable person. ACO along with Regional Chief can waive this condition if they deem the borrower to be very credit worthy. Two written satisfactory market checking reports must be obtained before disbursement Insurance: The Lessee will arrange comprehensive insurance of assets life assurance of lessee under the Banks charge. Mark-up: 11% per annum. Repayment: 8 equal half yearly installments (within four years).
Kissan Dost Mechanizati on Support Scheme
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Purpose: Provision of financial facility to the farmers for purchase of Farm Transport Vehicles e.g. Small Pickups, VP/Vans and small chillers. Eligibility: Resident Self Cultivator having Agriculture Land minimum 5 acres and maximum 50 acres. Amount: Maximum Rs.500, 000/-. Equity: The borrower will pay 20% of the cost of Vehicle. Security: Farmers: 1. Leased Vehicle (to be registered in the name of Bank) 2. Charge on Agriculture Land through Agri. Pass Book 3. One personal guarantee of reputable person. ACO along with Regional Chief can waive this condition if they deem the borrower to be very credit worthy. Two written satisfactory market checking reports must be obtained before disbursement Insurance: The Lessee will arrange comprehensive insurance of Vehicle life assurance of lessee under the Banks charge. Mark-up: 11% per annum. Repayment: 10 equal half yearly installments (within five years).
Kissan Dost Farm Transport SCHEME
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KISSAN DOST ISLAH-EARAZI SCHEME Kissan Dost Live Stock Developme nt Scheme
Purpose:
Provision of financial facility for purchase of animals (Milk & meat production, cattle farming, Poultry Farming and Fish farming) to the farmers and non farmers (those who have their own live stock farm/fish farm for commercial purposes).
Eligibility:
Sufficient experience to handle Dairy Farm, Cattle Farm, Goat Farm, Poultry and Fish Farming. The persons who have their self owned Dairy Farms for production of milk on commercial basis).The applicant should be having adequate arrangements to sell out the products properly e.g. supply contract with milk processing company.
Amount:
80% of cost of animals (Maximum facility can be granted upto 50% of forced sale value of property).
Security:
1. Leased Animals (receipt will be issued in the name of Bank)
2. Charge on Agriculture Land through Agri. Pass Book

OR
Charge on urban immovable property through equitable/registered mortgage. The property will be cleared by Banks approved legal counsel and will be assessed by Banks and PBAs approved surveyor. Liquid security in the shape Banks Fixed Deposited Receipts/DSC/NSC or Regular Income Certificates.
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Margin on Security:
1. 2. 50% margin on landed property ( Agri /Urban) . 25% margin in ca se of liqu id secur ity
Insurance:
The Lessee will arrange comprehensive insurance of Animals. In case of Poultry and Fish farming Borrower will have to arrange comprehensive insurance of poultry and fish stock himself form Banks approved A rated company life assurance of lessee under the Banks charge.
Mark-up:
Average 6 months KIBOR + 600bps with floor of 11% per annum. In case of written assurance for recovery from DCO/Nazim markup will be KIBOR + 6% with floor of 8%.
Period:
5 years (including one year dry period).

Repayment:
16 equal quarterly installments within four years excluding one year dry period.
Kissan Dost Live Stock Scheme
Finance for live Stock breed improvement through village veterinary workers
Purpose:
Provision of financial facility to the Village Veterinary Workers (trained by Live Stock and Dairy Development Department) for purchase of Artificial Insemination kits on lease finance basis.
Eligibility:
Village Veterinary Workers having diploma certificate and recommendations from Live Stock and Dairy Development Department Govt. of Punjab)
Amount:
Maximum Rs.45, 000/- or 90% of purchase price of kit and bicycle .
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Security:
1. Lease Assets (Receipt will be issued in the name of Bank).
2. Two personal guarantees of reputable persons having

fixed assets equivalent or more to value of advance.
Insurance:
Comprehensive Insurance of Leased Assets life assurance of lessee under the Banks charge.
Mark-up:
11% per annum.

Repayment:
Equal monthly or quarterly installments (within five years).
Purpose:
Kissan Dost Eligibility: Commercia Commercially viable entities with immaculate track record with the Bank/Other financial institutions. l Agro Amount: Services To be decided on case-to-case basis keeping in view the Scheme financial/commercial viability of the transaction. Not to exceed 80%
of the value of equipments/implements.
Mode of Finance
I
Provision of financial facility to the commercially viable entities with immaculate track record for acquisition of Agri implements and equipments i.e. tractor trolleys, harvesters e.t.c. for providing Agri services to farmers.
Shall be demand finance/lease finance.
Security:
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1. Lease Assets (Vehicles/Tractors will be registered in the name of Bank or Receipt of equipments will be issued in the name of Bank) 2. Bank charge on Agri Land through Agri Pass Book Or Banks Charge on urban property through registered and equitable mortgage
3. One personal guarantee of reputable person. ACO along with

Regional Chief can waive this condition if they deem the borrower to be very credit worthy. Two written satisfactory market checking reports must be obtained before disbursement
Insurance:
Comprehensive Insurance of Leased Assets life assurance of lessee under the Banks charge.
Mark-up:
9% per annum .
Repayment :
Equal quarterly installments (within five years).

.
Kissan dost Agri mall Purpose of Finance: Scheme
Four renowned companies of the country such as M/S Ali Akbar Group, Millat Tractors, PSO and Angro Services have established a joint venture company in the name of the Agrimall (Pvt) Ltd to provide agro services under one roof through its Franchisees. The Agrimall (Pvt) Ltd has approached our Bank to provide financial help to their franchisees to establish and run these Agrimalls under their specialized management through out the country. We have launched a Kissan Dost Agrimall Finance Scheme. All facilities required by the Franchisees of the Agrimall (Pvt) Ltd will be provided through this scheme. The farmers who will be the clients of Franchisees, will also be provided production loans through Banks Kissan Dost Agriculture Finance Scheme (For purchase of inputs).
Amount of Finance:
The amount of Finance will be 9.5 (M) maximum for all package of facilities mainly as under:
Demand Finance:
Maximum Rs.2.5 (M) for construction of site.

Lease Finance:
Maximum Rs.1.50 (M) for purchase of tractors and machinery.
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Running Finance:
Maximum Rs.3.0 (M) for stocks of seed, fertilizers, pesticides and oil etc .
L/C Limit:
Maximum Rs.2.5 (M) for import of pre-engineered construction material for construction of site one time transaction.
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BANKING SERVICES
There are the following services being provided to the claims:

Acceptance of deposits Granting of loans Transaction Foreign Exchange Services RemittanceCollection SPEDFAXinstant Fund Transfer Service Lockers facility Utility Services
The Bank of Punjab attaches special importance to the fee earning business and business base remuneration. As part of diversification of the banks utility services, it established collection arrangements for WAPDA, SUIGAS, WASA, PTCL, and PAKTEL. By using banks extensive branch network, effort have been to made to maximize the exploitation of this source in view of its rich potential of yielding business and deposit direct earning of commission. DEPOSIT SECTION In modern times very few business enterprises are carried out solely with the capital of the owners. Borrowing funds from different sources has becomes an essential feature of today business enterprise. But in the case of an entire banking system is based on it. The borrowed capital of the bank is much greater then their own capital. Banks borrowing is mostly in the form of deposits. These deposits are lent out to different parties. The larger the difference between the rate at which the depositors are borrowed and the rate at which they lent out the greater of the profit margin of the bank. Furthermore, the larger the deposit the larger will be the
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funds available for employment; larger the funds lent out the greater will be the profit of the bank. To receive the deposit is the basic function of all commercial banks. The bank does not receive these deposits for save keeping purpose only, but they accept deposits as debts. When banks receive deposit from a customer, the relationship of a debtor and creditor is established where by the customer become the creditor and the bank a debtor. When the bank receives amount of deposit as a debtor, it becomes the owner of it. It may, therefore use it as deems appropriate. But there is an implicit agreement that the amount owned would be paid back by the bank to the depositor after a specified period. NATURE OF DEPOSITS Current deposits Profit and loss sharing account Short notice term deposits (SNTDR) Call deposit Term deposit receipts (TDR)
Current Deposits In this type of account the customers allowed to deposit or withdraw cash as and when one likes. Because of their nature, these deposits are treated as the current liabilities of the bank. There is no profit on such deposits. Usually this type of account is opened by the business community. Profit and Loss Sharing Account This type of account is one step toward the Islamic Banking in Pakistan, but the actual theme of this account has been dead, this is being treated as markup/interest base account now. There are two types of PLS accounts:
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PLS saving account PLS -TDR (Profit and Loss Sharing Term Deposit Receipts)
PLS saving accounts can be opened with the minimum sum of Rs. 500/- and PLS-TDR account can be opened for a sum of Rs. 5000/- or above. Profit is paid on both types of accounts on half yearly basis. Under PLS saving account the depositor undertakes to share profit or loss on the deposits earned or sustained by the bank. Secondly the bank is at the liberty to invest the funds of the deposits in any industry, it deems fit. The PLS deposits are invested in non-interested channels. Short Notice Term Deposits (SNTD) This kind of deposit is for a short period. The depositor may withdraw his deposit at any time by giving seven days notice to the bank. This type of deposit facilities the depositor to withdrawn his amount with interest of the deposited period. Call Deposit Call deposits are the also the kind of deposits, which are deposited with banker against any tender. This is without interest deposit. This may be with interest provided the depositor has agreed to keep this amount with the bank for some fixed period. Term Deposit Receipts (TDR) This type of deposit is same as the SNTD. The difference is that SNTD is for the short period (7-30 days) while TDR is for long period (1 month up to 5 years).
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ACCOUNT OPENING SECTION Account opening is the first step towards establishing a relationship between the customer and the bank. The Bank of Punjab is offering basically FIVE type of account in this section: Current Deposit Account Profit and Loss Sharing Account BTA(business tijarat account) BBA(basic business account) YLS(young lions savings account)
The necessary condition for a customer, who wants to open an account with the bank, is introduction, which is preferably by the bank officers or any account holder of the bank. The different categories of the accounts that are available are as under: Individual Account Joint Account Partnership Account Limited Company Account Clubs, Society, Association, or Trust Account SNTD (short notice term deposits) TDR (term deposit receipts) Foreign Currency Deposits
CLEARING SECTION Clearing is the most important department of the bank performing various functions. Clearing House
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A clearing house is an organization of the member banks, working under SBP and which is for the purpose of setting inter banks claim resulting from transmission of funds from one bank to another. The branch cheque/instruments are credited in the account of the customer. The clearing can be: Outward Inward
Outward clearing The instrument collected or stored bank wise and a schedules is prepared separately for each bank mentioning the total number of instruments and the amount of the instruments. Then these are recorded in a register called OUTWARD CLEARING REGISTER then a main schedule is prepared showing the total number of cheque and their aggregate amount being presented in the clearing. The cheque/instruments are handed over the clearing branch. Central clearing branch issue CREDIT ADVICE to the branch for passing credit to its customer immediately the branch on receiving credit advice debits the clearing account and credit the respective customer account. Inward Clearing On receiving cheque/instruments from central clearing branch, the Incharge checks the number and amount of cheque received in clearing must tally with the main schedule received from central clearing branch. These cheque/instrument are enter in INWARD CLEARING REGISTER for the cheque/instrument passed in clearing is a credit advice for the aggregate amount of cheque passed in clearing is prepared, drawn on central clearing branch.
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RESERVE AT STATE BANK OF PAKISTAN Deposit held by the bank at SBP serves as cheque clearing and collection balances. Rather than physically transferring funds between banks, cheque clearing and collection can be done by simply debiting or crediting a banks account at SBP. REMITTANCE SECTION Remittance is a major function of the bank. It is the transfer of money from one place to another place. The need for remittance is commonly felt in commercial life particularly and in everyday life generally. By providing this service to the customers the Bank of Punjab earns a lot of income in the form of service charges. The Bank of Punjab deals with the following type of remittance: Demand Draft (DD) Mail Transfer (MT) Telegraphic Transfer (TT) Pay Order
Demand Draft (DD) Demand draft is a written order given by the one branch of a bank on behalf of customer to another branch of the same to a certain amount to the certain person. Procedure to prepare demand draft 1. A draft voucher is filled which contains the following information Name of the parties involved Date Amount to be sent
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Account number (if DD is crossed)
2. A credit voucher is filled in order to get the excise duty and exchange commission.
3. The sender deposits the total amount of the two vouchers i.e. the debit and credit
voucher. 4. Then the cashier sends the cash receipt voucher to the accounts section where the officer records the amount paid in his cash scroll. 5. Accountant gives the DD leaf along with the DD voucher to his assistant who records the senders name, amount the receivers name. After writing all the information in the DD register he gives it to the officer along with the DD for authentication.
6. After authentication the DD is handed over to the sender and bank sends the advice
to the concerned branch. So when the part presents the DD in the concerned branch it payment could be made. Parties involved in the Demand Draft There are the following parties involved in demand draft: 1. Purchaser or Sender The purchaser is the person who sends the money to a particular person payable at a certain branch. 2. Issuing or Drawing Branch The branch from where the demand draft is issued to another branch of the same bank. 3. Drawer Branch Branch in which the draft has drawn and called upon to pay the amount. 4. Payee The person who is entitled to receive the amount after presenting the
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demand draft in the drawer branch Mail Transfer (MT) It is the transfer of money from branch to another branch of the same bank through mail service. In mail transfer there is no need of advice as the amount is directly credited to the receivers account. Procedure to prepare mail transfer 1. First a voucher is filled in which the sender writes the amount to be sent, name, account number of the receiving person with the branch name and date. 2. A credit voucher is filled in order to deduct exchange, postage charges according to the amount of the mail transfer. 3. Then sender deposits the total amount in the cash section. 4. The cash officer gives the voucher to the officer after affixing received cash stamp and writing the amount in red ink. 5. Then the officer writes the amount paid in the cash scroll and gives the MT to his assistant. 6. MT leaf is filled according to the information provided in credit voucher. He also writes the same information in the MT register. Then he gives the MT leaf and MT register to the officer for authentication.
Telegraphic Transfer (TT)
This is the most urgent method of remitting the money from one place to another place. This method is used when the sender desires to send urgently, in this case the sender request the manager of the branch to issue TT. Procedure to prepare telegraphic transfer
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1. For sending the TT, the manager and officer apply a test. In this test the manager and officer uses a coding technique. They write their own code numbers, which is allotted to them as the bank branch code. 2. After making all the confirmation, the concerned branch makes the payment to the receiver. 3. If sender wants to convey the same message through telephone then he has to pay the charges of telephone along with the TT charges. 4. First the person deposit the TT amount along with the charges through the credit voucher then this TT sent to the relevant branch. Pay order (PO) A pay order is written order issued by the bank on its own branch, drawn upon and payable by itself to pay a specified sum of money to the person. The purpose of a pay order is to transfer the fund from one place to another. It is usually not issued in favor of the parties of other cities. Usually the pay order is issued for the local transfer of money from one person to another or from the person to any other department. It is used fro different purposes. The purpose may be the repairs by the repairs of the branch or renovation of the branch.
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ADVANCES/CREDIT SECTION It is the loan function, which produces the major portion of banks income, and as such it is the major areas of professional bankers concern and attention. Principles while advancing Basically there are five principles that must be duly observed while advancing money to borrowers. Safety Liquidity Disposal Remuneration Suitability
Forms of Lending Mainly there are two types of advances:
Short-term Lending (maturity with in one year) Long-term Lending (maturity with the period of more than one year) Running Finance Demand Finance Cash Finance Letter of Guarantee
How ever they are further classified as
Running Finance This form of finance was previously known as overdraft. When a customer requires the temporary accommodation, his bank allows withdrawal his account in excess of credit balance, which the customer has in its account, a running finance occurs. The
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accommodation is thus allowed collateral security.
When it is against collateral
securities, it is called a Secured Running Finance and when the customer cannot offer any collateral security except his personal security, accommodation is called a Clean Running Finance. product basis. Demand Finance This is common form of financing to commercial and industrial concerns and is mad available either against pledge or hypothecation of goods produce or merchandise. In demand finance the party is financed up to a certain limit either at once or as and when required. They party due to facility of paying mark-up only on the amount it actually utilizes prefers this form of financing. The customer is in advantageous position in running finance because he has to pay the mark-up on the balance outstanding against him on daily
Securities of Advances There are the following securities for advances: Pledge Hypothecation Guarantee Indemnity Charge Advances against Stock Exchange Securities Advances against immovable property
Pledge Pledge is defined as The bailment of goods as security for the payment of the debt and the performance of a promise is called pledge. Pledge is the characteristics mode of taking goods as the security and the pledge occurs when the goods or document of the
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title thereto or the securities are delivered by the customer to his banker to be held as security for the repayment of the advance. In a pledge, the ownership remains with the pledger but the pledge has the exclusive possession of the property until the advances in repaid in full, while in case of default the pledge has the power of sale after giving due notice. People with the safe custody of goods, when entrusted with the goods for the specific purpose may not make the valid pledge. Hypothecation Hypothecation is defined as A legal transaction where by goods may be made available as the security for a debt without transferring either the property or the possession to the ledger. When the property in goods is in charged as the security for a loan from the bank but the ownership and the possession is left with the borrower, the goods are said to be hypothecated. The essence of the hypothecation is that neither the property in the goods nor the possession of them passes to the lender, but the security is guaranteed by means of letter of hypothecation, which usually provides for a bankers charge of the hypothecated goods. Guarantees Guarantee is defined as A contract to perform the promise, or discharge the liability of the third person in case of his default. This is so when an application for the advances cannot offer any tangible security, the banker may rely on the personal guarantees to protect himself against loss and advances or overdraft to the applicant. There fore a guarantee may be either written or oral. The guarantee is a promise by one person called the guarantor or security to another for answering the present or future debt if a second person called the Principal Debtor.
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Indemnity Indemnity is defined as A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor him self or by any other person is called the contract of indemnity. Thus in an indemnity, the promisor is the only person who becomes liable to the promise if the latter suffers a loss on account of his doing something at the express desire of the former. Charge
When immovable property of one person is by act of parties, or operation of law, made security for payment of money to another, and the transaction does not amount to mortgage, the latter person is said to have the charge on the property, and all the provisions herein before contained which apply to a simple mortgage shall, so far as may be apply to such charge. This means that a charge is a right of payment out of certain property. The charge can be created by the act of parties or by the operation of the law and although the property is made a security the payment of loan, is still not the mortgage.
Advances against stock exchange securities A stock exchange security is the vast term which covers all gilt-edged securities such as: Federal and provincial government bonds Post trust or municipal bonds Shares and debentures
Banker, as security for advances to the customer, frequently accepts these securities.
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Advances can be against Preference shares Ordinary shares Preferred shares
It can be Quoted or unquoted Registered Bearer Inscribed
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Advances against immovable property (Mortgage) A mortgage is the transfer of interest in specific immovable property of r the purpose of securing the payment of the money, advanced or to be advanced. By way of loan, and existing debts or the performance of the engagement this may raises the pecuniary liability. The transferor is called the mortgager and the transferee the mortgagee the principal money and interest of which payment is secured for the time being and instrument, by which the transfer is affected, is called the letter of the mortgage deed.
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ACCOUNTS OF SPECIAL CUSTOMERS

Though every person, legally capable of becoming a party to a contract, can open an account with BOP, yet the capacity of certain classes of persons to make valid
PARTNERSHIP ACCOUNT Account opening form is Account opening form is duly signed by all the duly signed by all the partners partners Specimen signature cards Specimen signature cards containing the specimen containing the specimen signatures of the persons signatures of the persons authorized to operate the authorized to operate the account. account. A partnership letter duly A partnership letter duly signed by all the partners signed by all the partners in their personal capacity is in their personal capacity is also obtained.. also obtained All the partners assume All the partners assume the liability of the firm to the liability of the firm to the bank as joint and the bank as joint and several. several. This letter is obtain from This letter is obtain from both registered and nonboth registered and nonregistered firms registered firms accordance with the accordance with the section 25 of Partnership section 25 of Partnership Act1932 Act1932
agreements are subject to well recognized restrictions, as in case of agents, trustees, executors, administrators, firms and joint stock companies.
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JOINT STOCK COMPANY ACCOUNT

Account of the company is Account of the company is opened on the resolution of the opened on the resolution of the Board Board of of Directors, Directors, which which nominates the persons authorized nominates the persons authorized to operate upon the account. to operate upon the account.
Must take the specimen Must take the specimen signatures of the authorized signatures of the authorized persons and allow the operations persons and allow the operations on the account under those on the account under those signatures as long as the signatures as long as the authority is not terminated. authority is not terminated.
When bankers receive a notice When bankers receive a notice of death, retirement of dismissal of death, retirement of dismissal of the authorized person, he of the authorized person, he should stop the operation on the should stop the operation on the account and wait for the fresh account and wait for the fresh resolution authorizing another resolution authorizing another person before his death, person before his death, retirement of dismissal, should be retirement of dismissal, should be honored by the banker because honored by the banker because they were valid instruments they were valid instruments before the termination of his before the termination of his authority. authority.
The banker may open the The banker may open the account of a newly floated public account of a newly floated public ltd company without the certificate ltd company without the certificate of commencement of business in of commencement of business in order to receive the amount of order to receive the amount of issued capital from the issued capital from the prospective shareholders; but he prospective shareholders; but he should not allowed any should not allowed any withdrawal from the account till withdrawal from the account till the certified copy of Certificate of the certified copy of Certificate of Commencement of Business is Commencement of Business is submitted to him. submitted to him.
Failure to obtain this certificate Failure to obtain this certificate necessitates the refund the necessitates the refund the amount to the prospective amount to the prospective shareholder by the promoters. shareholder by the promoters.
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ACCOUNTS OF CLUBS, SOCIETIES AND ASSOCIATIONS

The resolution of the The resolution of the Governing Body/Managing Governing Body/Managing Committee authorizing the Committee authorizing the opening of the account with opening of the account with the Bank of Punjab. the Bank of Punjab.
The resolution should name the The resolution should name the persons authorized to operate persons authorized to operate upon the account, clearly upon the account, clearly specifying the powers of the specifying the powers of the authorized persons. The authorized persons. The resolution should be signed by resolution should be signed by the Chairman of the meeting at the Chairman of the meeting at which the resolution was passed which the resolution was passed and countersigned by the and countersigned by the Secretary of the Governing Secretary of the Governing Body/ Executive Committee.. Body/ Executive Committee
..
Certified copy of the bye-laws Certified copy of the bye-laws or rules and regulations, or rules and regulations, clearly showing the limitations clearly showing the limitations of the Managing Committee of the Managing Committee or the Governing Body. or the Governing Body. The account-opening form The account-opening form duly signed by the authorized duly signed by the authorized person(s) who would operate person(s) who would operate on the account on the account An undertaking signed by all An undertaking signed by all the authorized persons on the authorized persons on behalf of the institution, behalf of the institution, expressly mentioning that as expressly mentioning that as and when any change takes and when any change takes place in the persons place in the persons authorized to operate on the authorized to operate on the account, the banker will be account, the banker will be informed immediately. informed immediately.
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Chapter 5
FINANCIAL ANALYSIS

OPERATING HIGHLIGHTS BALANCE SHEET PROFIT AND LOSS ACCOUNT STATEMENT OF CASH FLOW RATIO ANALYSIS PROJECTED ANALYSIS
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RATED BY PACRA
Short term Long term A1+ AA-
BALANCE SHEET
AS ON DECEMBER 31, 2005
(Rs. in million)
2005 ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets 8788 9368 7594 1803 6362 2041 1715 111,155 LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Subordinated loans Liabilities against assets Subject to finance lease Other liabilities Deferred tax liabilities 478 6791 88465 55 1474 220 97484
2004 5,580 2,118 1019 16,198 39,439 1,27 7 689 66,320
2003 3,625 3,192 5,662 11,45 8 18,34 4 864 407 6 8 43,620
2002 2,814 3,17 0 7,480 8,295 6,621 751 394 29,525
2001 4,448 433 6,776 5,970 5,772 943 276 185 24,803
267 2,832 54,724 81 568 9 58,481
345 2,684 34,938 53 393 38,413
250 1,290 23,767 64 732 117 26,220
163 2,509 19,035 1 9 686 22,412
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NET ASSETS REPRESENTED BY Share Capital Reserves Un-appropriated profit Surplus on revaluation of assets Contingencies and commitments
13671 2349 4257 169 6776 6893 13670
7,839 1,506 2,770 144 4,420 3,418 7,839
5,207 1,004 1,946 1 02 3,052 2,1 55 5,207
3,305 1,00 4 1,368 1 2,363 942 3,305
2,391 980 1,275 2,255 136 2,391
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PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31 2005
(Rs. in Million)
2005 Markup/return/interest earned Markup/return/interest expensed Net Markup/return/interest income Provision against non-performing advances Provision for diminution in the value of investment Bad debts written off directly Net Markup/return/interest income after provisions Non markup/interest income
Fee, commission and brokerage income
2004 2,555 719 1,835 46 1
2003 1,664 484 1,180 7 1 8 1,1 72 97 279 13 442 831 2,003 999 1 2 1,002 1,001 285 27 312 689
2002 2,070 998 1,072 7 6 (23) 1 54 1, 018 60 189 20 105 374 1,392 900 39 1 6 5 960 432 123 25 148 284
2001 2,173 1,113 1,060 3 9 39 1,0 21 52 110 19 59 240 1,261 837 1 838 423 161 3 21 185 238
6125 2668 3456 32737 362 330,99 3125 255 753 93 228 1329 4455 1275 4 11 1290 3165 668 143 811 2351
1,778 173 554 41 328 1,096 2,885 1,116 32 1 1 1,150 1,736 225 141 367 1,368
Dividend income
Income from dealing in foreign currencies
Other income Total non markup/interest income Non markup/interest expenses Administrative expenses Provision against claim for recovery of shares Provision against excise duty recoverable
Provision against off balance sheet items
Other charges Total non markup/interest expenses Profit before taxation Taxation Current Prior years Deferred Profit after taxation
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STATEMENT OF CASH FLOW

FOR THE YEAR ENDED 31ST DECEMBER, 2005
(Rs. in Million)
2005 Cash flow from operating activities Profit before taxation Less: Dividend income (Gain)/loss on sale of fixed assets Compensation for delayed assessed income tax refund (Gain) on sale of investment Adjustment for non-cash charges Depreciation and amortization Provision for employee benefits Reversal for provision for diminution in value of investment Provision for excise duty recoverable Provision for claim for recovery of shares Provision against non-performing advances Provision against off balance sheet items 3165 (754) (5) (3) 2401 78 12 (12) 327 405 2806 1
2004
2003
2002
2001
1,735 (554) (1) (29) (102) 1,049 71 9 32 (7) 46
1,00 1 (279 ) (1) (95) (294) 332 55 (8) 8 1 56 388
432 (189) (13) (57) 185 34 25 (23) 16 38 76 166 351
423 (110) (3) (15) 285 21 8 3 9 68 353
152 1,201
(Increase)/decrease in operating assets Landings to financial institution / Govt. Securities Advances Other assets (excluding advance taxation)
(6174) (24516) (1053) (31743)
3,593 (21,142 ) (375) (17,924 )
(28 3) (11,73 1) 5 (12,009 )
(6 04) (926) 108 (1,422)
1,5 12 333 4 1,849
Increase/(decrease) in operating liabilities Bills payable Borrowings from financial institutions
211 3959
(77) 147
95 1,395
88 (1,218)
32 1,108
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Deposits Liabilities against assets subject to finance lease Other liabilities (excluding current taxation)
33740 (26) 620 38503 9566 (68) 9498
19,786 (25) 165 19,996 3,273 (254) 3,019
11,171 (15 ) (331) 12,315 694 (301) 393
4,732 (9) (155) 3,438 2,367 (235) 2,132
2,006 (32) 3,114 5,316 (224) 5,092
Income tax paid

Net cash flow from operating activities
Cash flow from investing activities Net investment in held to maturity securities Net investment in available for sale securities Dividend income Investment in operating fixed assets Sale proceeds of property and equipment disposed-off
Net cash flow from investing activities
1099 (328) (44) (2) 725 1450
(2,035) (1,373) 549 (338) 40 (3,87)
(87 6) (99 4) 272 (74 ) 11 (1,661 )
(1,0 20) 189 (99) 3 (927)
(2,0 03) 109 (34) 14 (1,914)
Cash flow from financing activities Borrowing from other banks

Net cash flow from financing activities
10948 7797 18745
(168) 7,966 7,798
(1,268 ) 9,23 6 7,96 8
1,205 8,0 31 9,2 36
3,178 4,8 53 8,0 31
Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year
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RATIO ANALYSIS
The relationship of one item to another expressed in simple mathematical form is known as a ratio. A single ratio in itself is meaningless because it does not furnish a complete picture. A ratio becomes meaningful when compared with some standard. So we have taken ratios and percentage of the BOP based in its record of the past financial and operating performance. On the following pages, I make the analysis of the financial statements of BOP by using related items for the last five years.
Liquidity Ratios: Current Ratio

Year Ratio (Times) 2005 1.14 2004 1.13 2003 1.14 2002 1.13 2001 1.11
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CURRENT RATIO 1.15 1.14 RATIO 1.13 1.12 1.11 1.1 1.09 2005 2004 2003 YEARS 2002 2001 1.11 1.14 1.13 1.14 1.13
This ratio measures the firms ability to meet its short-term obligations. In 2001 this ratio was 1.11 and in 2005 it was 1.14. In 2002 there is an increase in this ratio and here ratio is reached to 1.13 and it is due to increase in Lending to financial institutions and decrease in current liabilities such as borrowing from financial institutions and a minimal decrease in bills payable. After that this increase in 2003 and then decrease in 2004. In 2005 with some increase in present year of 2005 it is 1.14. So overall the firms position is strong because the standard ratio of current ratio is 2.
Quick Ratio:
Year Ratio 2005 1.16 2004 1.19 2003 1.06 2002 0.68 2001 0.7
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QUICK RATIO 1.4 1.2 1 0.8 0.6 0.4 0.2 0 1.16 1.19 1.06 0.68 0.7
RATIO
2005
2004
2003 Y EARS
2002
2001
A quick ratio of 1.0 or greater is occasionally recommended, but as with current ratio, an acceptable value depends largely on the industry. There is an increasing trend in the quick ratio of the bank. In the starting 2 years this ratio was below from the standard ratio of 1.0 but in the next 3 years it is increases and reaches above of standard 1.0. This increasing trend is due to increase in cash balance with other banks and increase in lending to financial institutions A/R.
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Networking Capital:
Year Rs. 2005 13670114 2004 7839083 2003 14051008 2002 10057601 2001 10625831
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NET WORKING CAPITAL 16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0
13670114 14051008 10057601 7839083 10625831
Rs
2005
2004
2003 YEARS
2002
2001
Net Working capital, although not actually a ratio, is a common measure of a firms overall liquidity. This ratio is very useful for lender because when they lend or deposits in the bank they check its flows of net working capital. There is a increasing trend in the net working capital of the bank which is very beneficial for the bank
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because it can raise more loans or attracts more deposits from the customers.
Analyzing Debt:
Debt Ratio:
Year Ratio 2005 88 2004 89 2003 90 2002 89 2001 90
DEBT RATIO 90.5 90 89.5 89 88.5 88 87.5 87 90 89 88 89 90
RATIO
2005
2004
2003 YEARS
2002
2001
The Debt ratio measures the proportion of total assets financed by the firms creditors. The higher this ratio, the greater the amount of other peoples money being used in an attempt to generate profit. In the Bank of Punjab the outsiders contribution is nearly about 90% of the total assets. There is nominal increase and decrease in this ratio of the Bank of Punjab.
Debt Equity Ratio:
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Year Ratio (%)
2005 14.38
2004 13.2
2003 12.6
2002 11.1
2001 9.9
DEBT EQUITY RATIO 16 14 12 10 8 6 4 2 0 14.38 13.2 12.6
11.1
RATIO
9.9
2005
2004
2003 YEARS
2002
2001
The debt equity ratio is another computation that determines him entitys long-term debtpaying ability. From the perspective of long-term debt-paying ability, the lower this ratio is, the better the companys debt position. In 2005 there is a increase in this ratio and it is due to increase in the banks total liabilities as compare to increase in the total equities of the bank.
Efficiency Ratios:
Total Assets Turnover:
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Year Ratio (Times)
2005 0.45
2004 0.33
2003 0.31
2002 0.62
2001 0.91
TOTAL ASSETS TURNOVER 1 RATIO(TIMES) 0.8 0.6 0.4 0.2 0 2005 2004 2003 YEARS 2002 0.45 0.33 0.31 0.62
0.91
2001
The total assets turnover indicates the efficiency with which the firm uses its assets to generate sales. Generally, the higher a firms total assets turnover, the more efficient its assets have been used. In the bank of Punjab this ratio shows a decreasing trend, which shows that the bank cannot utilize its assets more efficiently.
Fixed Asset Turnover:

Year Ratio (Times) 2005 0.173 2004 0.267 2003 0.378 2002 0.272 2001 0.462
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FIXED ASSET TURNOVER 0.5 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 0.462 0.378 0.267 0.173 0.272
RATIO(TIMES)
2005
2004
2003 YEARS
2002
2001
The fixed assets turnover indicates the efficiency with which the firm uses its fixed assets to generate sales. Generally, the higher a firms fixed asset turnover, the more efficiently its fixed assets have used. This ratio is continuously decreasing which means the fixed assets are not used at optimum level of generating sales revenue.
Profitability Ratios:
Gross Profit Margin:
Year Ratio (%) 2005 56.43% 2004 71.85% 2003 71% 2002 52% 2001 48.78%
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GROSS PROFIT MARGIN 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%
71.85% 56.43% 71.00% 52.00% 48.78%
RATIO
2005
2004
2003 Y EARS
2002
2001
The gross profit margin measures the percentage of each sales /service revenue rupee remaining after the firm has paid for its services cost. The higher the gross profit margin, the better the firm and vice versa. When we analyze the previous five years data of the bank of Punjab it shows a very strong increasing trend. This is due to decrease in the services cost.
Operating Profit Margin:

Year Ratio (%) 2005 27.38% 2004 14.34% 2003 15.11% 2002 13.48% 2001 4.60%
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OPERATIN PROFIT MARGIN

30.00% 25.00% 20.00% RATIO 15.00% 10.00% 5.00% 0.00% 2005 2004 2003 YEARS 2002 2001 4.60% 14.34% 15.11% 13.48% 27.38%
The operating profit margin measures the percentage of each sales/service revenue rupee remaining after all costs of services and expenses other than interest and taxes are deducted. It represents the pure profit earned on each service revenue rupee. This ratio also has an increasing trend, which is due to decrease in cost of sales as well as in operating expenses.
Net Profit Margin:

Year Ratio (%) 2005 38.41% 2004 53.54% 2003 41.41% 2002 13.71% 2001 10.95%
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NET PROFIT MARGIN

53.54% 38.41% 41.41%
RATIO
13.71%
10.95%
2005
2004
2003 YEAR
2002
2001
The net profit margin measures the percentage of each sales revenue rupee remaining after all services costs and expenses, including interest and taxes, have been deducted. The higher the firms net profit margins, the better. The net profit margin is a commonly
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cited measure of the firms success with respect to earnings on service revenue. So when we analyze the previous 5 years data of the bank of Punjab it shows a strong increasing trend. But in 2005 the percentage of net profit margin decreases at very point as compared to previous years, it means the firms is going to very positively side in respect to increasing trend.
Return on Total Assets:

Year Ratio (%) 2005 1.58 2004 0.96 2003 0.95 2002 0.7 2001 0.15
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RETURN ON TOTAL ASSETS 1.58 1.6 1.4 1.2 RATIO(%) 1 0.8 0.6 0.4 0.2 0 2005 2004 2003 YEARS 2002 2001 0.15 0.96 0.95 0.70
The return of total assets also called the return on investment. Measures the firms overall effectiveness in generating profits with its available assets. The higher the firms return on total assets the better. There is a increasing trend of the bank of Punjab return on total asset which shows a effectiveness in generating profits with its available assets
Return on Shareholders Equity:

Year Ratio(%) 2005 22.58 2004 12.01 2003 9.88 2002 7.2 2001 1.54
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Retu nonsh e h er eq ity r ar old u 22.58
Ratio(%)
12.01
9.88 7.20
1.54
2005
2004
2003 Y s ear
2002
2001
The return on equity measure the return earned on the owners investments in the firm. Generally, the higher this return, the better off is the owners. There is a increasing trend in the return in equity of the bank of Punjab.
Price Earning Ratio:

Year Ratio (Times) 2005 3.12 3.95 2004 2003 3.18 2002 8.58 2001 99.57
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PRICE EARNING RATIO 120 100 80 60 40 20 0 RATIO(TIMES) 99.57
3.12 2005
3.95 2004
3.18 2003 YEARS
8.58 2002 2001
The price-earning ratio is commonly used to assess the owners appraisal of share value. The P/E ratio measures the amount investors are willing to pay for each rupee of the firms earning. There is a decreasing trend in the P/E ratio of the bank of Punjab, and it is due to more proportionate increase in EPS as compare to market price per share.
Earning Per Share:

Year Rs. 2005 6.87 2004 2.85 2003 2.36 2002 1.84 2001 0.35
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EARNING PER SHARE

8 6 YEARS 4 2 0 2.85 2.36 1.84 0.35 6.87
2005 2004 2003 2002 2001 RATIO(%)
The firms earning per share is generally of interest to percent or prospective stockholders and to management. The earning per share represents the number of rupees earned on behalf of each outstanding share of common stock. There is a increasing trend in earning per share of the bank of Punjab which is very attracting for the prospective stockholders and for management.
Dividend Payout Ratio:

Year Ratio (%) 2005 0 2004 0.61 2003 0.63 2002 0 2001 0
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DIVIDEND PAYOUT RATIO

0.8 0.6 RATIO(%) 0.4 0.2 0 0 0 0 0.61 0.63
2005 2004 2003 2002 2001 YEARS
The dividend payout ratio measures the portion 0f current earning per common share being paid out in dividends. The bank of Punjab declared dividend only in 2003 and 2004. In 2003 the dividend payout ratio is .63 and in 2004 this ratio is .61.
Dividend Yield Ratio:

Year Ratio (%) 2005 0 2004 0.11 2003 0.095 2002 0 2001 0
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DIVIDEND YIELD RA TIO

0.15 RATIO 0.1 0.05 0 0 2005 2004 2003 Y EARS 0 2002 0 2001 0.11
0.095
The dividend yield indicates the relationship between the dividends per common share and the market price per common share. If the firm successfully invests the money not distributed as dividends, the price should rise; this situation is with the bank of Punjab. That is why the bank of Punjab declared dividend only in 2003 and 2004.
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Chapter 6
CONCLUSION & SUGGESTIONS

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS CORPORATE PORTFOLIO ANALYSIS (THE BCG MATRIX) AREAS OF IMPROVEMENTS FOR BOP CORPORATE OBJECTIVES FOR BOP SUGGESTIONS TO IMPROVE SUGGESTION TO CHANGE OBSERVATIONS ON BEST PRACTICES
NOTE: These are my own studies and suggestions for the improvement and upgrading of the Bank of Punjab, may be the management of the bank not agreed upon on these.
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STRENGTHS
The major shares of BOP are owned by the Government of the Punjab, so it can develop a good image & trust among its customers. Stability of Bank is strength of any bank. The Bank of Punjab has growth since its establishment. The Bank of Punjab provides the loan facility on sound basis that is very crucial for any bank to recover the loan. The Bank of Punjab has conservative policy for advances. So there are very few bad debts. Personal selling has key role in banking services. The officers of the Bank of Punjab go to the potential customers to develop the business. customers, they achieve the deposit targets. The promotion criteria of the bank are on the basis of the efficiency and passing the diploma examination of Institute of Bankers, Pakistan. It is the policy of the management that requirements are made according to the principles of merit. There is no union in the Bank of Punjab. Working environment is good. Managers and Officers work together as a team. They are very cooperative with each other. By the relationship with
The officers are really cooperative, supportive and helpful, in my experience during internship in shah rukn-e-aIam branch noted their involvement to prepare each case of loan.
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The bank has very spanned network of branches in Punjab as well as in other provinces also.
Profit rate is high as compare to other banks.
It provides courteous services to its customers.
WEAKNESSES
The Bank of Punjab is centralized organization. The authority is not given to the branch level. Branch Managers have to take permission from the Regional office or Head office for credit except Quick Cash. Managers had to get permission if they have to given more rate of profit to the customers. So the customers have to wait for days, which may cause the change of customers. Managers cannot negotiate with customers without the permission of Head office. The Bank of Punjab has less modern technology. Most of branches are
computerized but not online. Due to lack of online facility, the banks services are low and foreign banks and other online banks have large market share. In this era modern technology like Online and ATM are very necessary for competition.
Salaries of the officers and staff members are less as compared to other private banks.
The Bank of Punjab has very less promotional activities. Their advertising campaign is very weak. They only use personal selling and some newspapers advertisements.
The Bank of Punjab has less staff members in the branches of Southern Punjab as compared to Upper Punjab. This deviation creates problem for the employees, they spent most of their time in the bank to complete even their daily routine work. They
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have to sit till 7:00 or 8:00 pm before going back to their homes. For this reason their normal life is disturbing which create the irritation in the behavior of employees. The banks expenses are increasing at very high rate. The Bank of Punjab has less interest in foreign exchanges, and very few branches are involved in the business of foreign exchange business. Mostly small branches are running in loss. The bank of Punjab has only six regional offices in whole Pakistan. It is very difficult to control all branches. The Bank of Punjab is deviating from the basic banking principles, because the basic function of bank is to accept the deposit and advance loans. But analysis of financial statement of Bank of Punjab showing the advances are less as compared to investment. BOP is not taking keen interest in the marketing of travelers cheque than other banks. So, BOP is loosing its share due to the less interest. Duty Hours Are not Properly followed the working hours are from 9:00 A.M to 5:00 P.M. this is because of extra burden of work on them and desire to fulfill the goal of the branch It has been observed that most of the staff member knowledge is limited. They only know their routine duties. If any thing other than normal routine occurs, they are confused. It has a non-professional management. There is Lack of modern banking techniques like ATMs, online banking, credit cards, and traveler cheques. Employees are unsatisfied due to unfair promotion system. There is not a right criterion for promotion; many of vacancies are filled at approach basis.
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Employees have Lethargic attitude especially in main branches.
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OPPORTUNITIES
Although commercial banks have launched may products but a gap existing between the customers want and what the banks are providing. This is an opportunity for the Bank of Punjab to move in and fill the gap between the ideal bank and the current service offerings by aggressive advertising, consumers friendly attitude products and service for attracting customers.
The bank has opportunity to expand the branch network all over the county, and it would be able to develop business and can start many other schemes for investment.
The Bank of Punjab has opportunity to use latest technology for providing good services to customers.
There is an opportunity for more businesses if the BOP opens its branches in foreign countries.
There is an opportunity for more businesses if the BOP offered credit cards. Different multinational are establishing their business in Pakistan. So there is a lot of potential for future businesses.
Providing advance technologies through out the country in its branch network should do modernization of bank. It will attract customers attention. Deposits and advances rates will increase hence profit rate increases.
Steps should be taken to increase banks deposits and advances, as these are less than other competing banks. Such policies should be adopted by bank that can attract customers and rate of deposits and advances can increase.
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The presence of more technical and professional staff can help out the bank in making progress especially in marketing department which should have effect on Banks policy making, making schemes of bank successful and can stabilize down its position.
BOP should concentrate more industrial sector and agriculture sector. They should provide finances to the farmers both on short term and long term basis. New schemes for deposits and finances should be introduced regularly. Proper advertising of the products of the bank.
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THREATS
The salaries of the officers and staff members are less as compared to other banks. It may cause experts drain from the Bank of Punjab to other banks. Expansion of newly establishing banks like Faysal Bank, PICIC Commercial Bank, Union Bank, Bank Alfalah, Askari Commercial Bank etc., and their better performance may cause loss of the market share of the BOP. According to the World Bank report, the Pakistan has become an over banked economy. With the cutthroat competition for deposits in the industry, the battle is on for the market share. The concept of 24 hrs banking, telephone and online banking, ATM and credit card are a direct result of the intense competition. But BOP is far behind the above mentioned services and will not provide better services as compared to other banks; it will lose its market share. The Bank of Punjab is also forced to give loans on potential basis. Due to this the recovery of such loans may become very difficult. Promotional activities of the BOP are not sufficient. Due to this it may lose market share.
Due to low entry barriers, there are more competitors; also the global competition has increased. Because of unfair promotion system and absence of proper recruitment
techniques competent persons may move to o Financial environment is changing day to day, new technologies are introduced by foreign banks that provide customer efficient and quick services. There is a need of proper marketing because certain schemes face failure due ignoring marketing of the product. Failure of the schemes or products is a threat because it becomes a cause of decrease in profits.
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Financial environment is changing day by day, new technologies are introduced by foreign banks that provide customers by efficient and quick services. Employees are involving so much in internal politics & lobbies among them, which disturb working conditions & goodwill of the bank. Lack of customization.
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CORPORATE PORTFOLIO ANALYSIS
(The BCG Matrix)
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MARKET SHARE
HIGH
ANTICIPATED GROWTH RATE
Star
CASH COW S
HIGH
QUESTION MARKS
LOW
do gs
LOW
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AREAS OF IMPROVEMENTS FOR BOP
STRUCTURE TECHNOLOGY
> Work processes > Methods > Equipments > Work specialization > Departmentalization > Chain of command > Span of control > Centralization > Formalization > Job redesign
PEOPLE
> Attitudes > Expectations > Perceptions > Behavior
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SUGGESTIONS TO IMPROVE

The banks overall objectives and strategies should be formulated. Major objectives should be allocated among divisional and departmental units. Regional chiefs collaboratively set specific objectives for their units with their branch managers. Specific objective must be collaboratively set with all department members. Defining how objectives are to be achieved, are specified and agreed upon by branch managers and employees. The action plans should be implemented. Progress toward objectives must be periodically reviewed, and feedback is provided. Successful achievement of objectives must be reinforced by performance based rewards.
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CORPORATE OBJECTIVES FOR BOP

Strategic Objective

A bigger market share A higher, more secure industry rank Higher service quality Lower cost relative to key competitors Broader or more attractive product line A stronger reputation with customer Superior customer services Recognition as a leader in technology and/or product innovation Increased ability to compete n international markets Expanded growth opportunities
Financial objective

Faster revenue growth Faster Earnings growth Higher dividends Wider profit margin Higher returns on invested capital Stronger bond and credit ratings Bigger cash flow A rising stock price A more diversified revenue base Stable earnings during recessionary periods
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SUGGESTIONS TO CHANGE
Education and Communication

Communicate with the employees to help them see the logic of change. Educate employees through one-on-one discussion, memos, group meetings, or reports. Appropriate if source of resistance is either poor communication or
misinformation.
Must be mutual trust and credibility between branch managers and employees.
Participation

Allow those who oppose a change to participate in the decision. Assume that they have expertise to make meaningful contribution. Involvement can reduce resistance, obtain commitment to seeing change succeed and increase quality of decision.
Facilitation and support
Provide supportive efforts such as employee counseling or therapy, new skills training, or short paid leave of absence.
Negotiation

Exchange something of value to reduce resistance. May be necessary when resistance comes from a powerful source. Potentially high costs and likelihood of having to negotiate with other resisters.
Coercion

Using direct threats or force. Inexpensive and easy way to get support. May be illegal, even legal coercion can be perceived as bullying.
119
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INTERNSHIP
REPORT
Chapter 7
APPENDIXES
120
120

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INTERNSHIP

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

REGIONAL OFFICES WORLD WIDE WEB ORGANIZATIONAL STRUCTURE FUNCTIONS OF DIVISIONS

OVERVIEW OF BANKING SYSTEM IN PAKISTAN (SBP

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

Web Site of Bank

NATIONALIZED COMMERCIAL BANKS 1 2 3 4

http://www.fwbl.com.pk/ www.habibbankltd.com http://www.nbp.com.pk www.ubl.com.pk

PRIVATE SCHEDULED BANKS

http://www.askaribank.com.pk/ http://www.bankalfalah.com/ http://www.bankalhabib.com/

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

http://www.bolanbank.com.pk/ http://www.faysalbank.com.pk/ http://www.meezanbank.com/ www.metrobank.com.pk http;//www.picicbank.com.pk http://www.platinumcommercialbank.com/ www.primebank.com.pk http://www.soneri.com/ Nil

PROVINCIAL BANKS The Bank of Khyber

The Bank of Punjab

MICRO FINANCE BANKS The First Micro Finance Bank Limited

FOREIGN BANKS ABN Amro Bank N.V.

http://www.abnamro.com/ www.albaraka.com.pk http://www.aexp.com/ Nil www.ca.indosuez.com www.citigroup.net www.db.com Nil

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

Habib Bank A.G. Zurich International Finance Investment & Commerce

DEVELOPMENT FINANCIAL INSTITUTIONS

Nil In development phase www.pkic.com http://www.paklibya.com.pk/ www.pakoman.com http://www.picic.com/

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

VENTURE CAPITAL 64 Pakistan Venture Capital Limited Nil

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

Pak Emerging Venture Limited

73 International Housing Finance Limited

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

HISTORY OF THE BANK OF PUNJAB

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

SCOPE OF THE BANK OF PUNJAB

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

MANAGEMENT OF THE BANK

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

CORPORATE INFORMATION (BANK OF PUNJAB)

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

3422622 16721839 22935 17860878 -------4075 5224351 147500 3606042 1165182

60733084 39682242 100415326

0.15 3.6 17.81

Director/CEO/Spouse Foreign Funds NBFI/FIN. INST./Insurance Co. /Modaraba's ICP

Provincial Government Individuals NIT Others

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

Integrit y Dedication Transparency Team work

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

YEAR 2011 & FUTURE OUTLOOK

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

These are some regions along numbers of branches contains

Faisalabad Faisalabad 2020 Bahawalpur Bahawalpur 1515 Gujranwala Gujranwala 1010

Multan Multan 1616 Rawalpindi Rawalpindi 1212

Karachi Karachi 1212

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

WORLD WIDE WEB

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES

officer Grade Officer-I Officer Grade-II Officer Grade-III Cash Officer