46758513 bop internship report

8/13/2019 46758513 Bop Internship Report

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HISTORY OF BANKING IN PAKISTAN

Pakistan came into being on 14th August, 1947; sufficient banking services were available in

the areas forming Pakistan. Out of the total branches of the nearly ,!"" in the un#ivi#e#

$n#ia, as many as about 1,!"" branches were e%isting in these areas.

$t was agree# between the two countries that reserve bank of $n#ia shall continue to

function in the Pakistan territory until "th &e'tember 194( an# that $n#ian notes woul#

continue to be legal ten#er at Pakistan until "th &e'tember 194(. )nfortunately, relationshi'

between the two countries became most straine# imme#iately after in#e'en#ence; banking

was mostly in the lan#s of *in#us who imme#iately starte# transferring their offices an#

assets into $n#ia. As a result most of the banks in Pakistan were close# #own an# even those

which were o'en were not #oing any effective business.

+he number of banking office in Pakistan came #own to about "" on "th -une 194(.

ranches of some /uro'ean banks were also functioning in a limite# manner, financing in

e%'ort of cro's, an# their number was limite# to about ".

$t was only the *abib bank, which transferre# its office from ombay to 0arachi

Austral Asia bank was another bank, which was in e%istence in the Pakistan territory at the

time of in#e'en#ence. es'ite of best efforts on the 'art of government of Pakistan, no hea#y

way coul# be ma#e on this behalf an# reserve bank of $n#ia was in no moo# to hel' the new

country. $m'erial bank of $n#ia, agent of the reserve bank of $n#ia also starte# closing #own

its branches in Pakistan.

2eserve bank also refuse# to a#vance money to Pakistan to make essential 'ayments

such as salaries etc, also Pakistan3s share of 2s.7! billion in cash balance was with hel# by

bank, causing har#shi's to the newly born state. $n view of these ho'eless state affairs it was

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agree# between the two countries that reserve bank woul# serve as monetary authority in

Pakistan only u' to "th -une 194(.

NATIONALIZATION OF BANKS

+he 'rinci'le of nationaliation of banks is to stream line the o'eration of commercial banks

in such a way that it may be con#uctive to the #evelo'ment activities in 'rocess in the

country.

&ince the commercial banks were owne# controlle# by big business grou's of the

country it was feare# that these banks woul# not maintain uniformity in their o'erational an#

woul# be instrumental to inflationary 'ressure. *owever, the consi#erations behin#

nationaliation are

+o form uniformity in the 'olicy of the commercial banks so they may serve the best

national interest.

+o make the o'eration of commercial banks highly sensitive an# res'onsive to the 'olicy

of the government relation to financial matters.

+o make the cre#it 'olicy of the commercial banks more 'ur'ose full an# effective

es'ecially in the #evelo'ment of economic sectors of the country. $t acts as an agent of

the &tate ank of Pakistan

+o make the best use of the fun#s available at the #is'osal of these banks for the

economic #evelo'ment of the country.

+o eliminate unhealthy an# uneconomic com'etition among commercial banks.

+o #evelo'ment strong money banks market in the country so that the value of currency

may be maintaine# at stable level both in national facilities to e%'orter an# agriculturists

which have not been satisfactory in the 'ast years.


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Public Sector Commercial Bank

5ational ank 5P

6irst omen ank 8imite# 6

+he ank of 0hyber 0

+he ank of Punab OP

Local Pri!ate Bank

Askari :ommercial ank 8imite#

ank Al6alah 8imite#

ank Al *abib 8imite#


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S#eciali$e% Bank

>ari +ar?iati ank 8t#.

$n#ustrial evelo'ment ank of Pakistan

Punab Provincial :oo'erative ank

8imite#

$t has not so far been #eci#e# as to how the wor# @ank3 originate#. &ome author3s o'inion

is that, this wor# is #erive# from the wor# @ancus3 or @an?ue3, which means a bench.

Others authors hol# the o'inion that the wor# @ank3 is #erive# from the =erman wor#

@ack3, which means oint stock fun#. $t is therefore so much #ifficult to #eci#e as to which

o'inion is correct.

anking in fact is 'rimitive as human society, forever since man came to realie the

im'ortance of money as a me#ium of e%change, the necessity of a controlling or regulating

agency or institution was naturally felt. Perha's it was the abylonians who #evelo'e#

banking system as early as """bc. $t is evi#ent that the tem'les of the abylon were use# as

@anks3 because of the 'revalent res'ect an# confi#ence at the clergy.

At the time of in#e'en#ence there were 1 offices of the sche#ule# banks in Pakistan,

of which 4(7 were locate# in est Pakistan alone. As a new country with resources it was

very #ifficult for Pakistan to run its own banking system imme#iately. +herefore the e%'ert

committee recommen#e# that the 2eserve ank of $n#ia shoul# continue to function in

Pakistan until ", &e'tember 194(, so that 'roblems of time an# #eman# liability, coinage

currencies, e%change etc, coul# be settle# between $n#ia an# Pakistan. +he non


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with the status of small branch offices that were engage# solely in e%'ort cro' from Pakistan,

while there were only two Pakistani institutions, *abib ank, an# Australasia ank, the

customers of the banks are not satisfie# with the uncertain con#ition of banking. &imilarly the

2eserve ank of $n#ia was not in the favor of =ovt. of Pakistan. +he =ovt. of Pakistan

#eci#e# to establish a fullfle#ge central bank. :onse?uently the =overnor =eneral of Pakistan

Buai#eAam inaugurate# the &tate ank of Pakistan on -uly 1,194( +hus a lan#mark was

ma#e in the history of banking when the &tate ank of Pakistan assume# full control of

banking an# currency in Pakistan.

TH& BANK OF P'N(AB

)ISION STAT&*&NT

C+o be a customer focuse# bank with service e%cellence.D

*ISSION STAT&*&NT

+o e%cee# the e%'ectations of our stakehol#ers by leveraging our relationshi' with the

=overnment of Punab an# #elivering a com'lete range of 'rofessional solutions with a focus

on 'rogramme# #riven 'ro#ucts E services in the Agriculture an#


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COR& )AL'&S

Our CutomerAs our first 'riority.

Pro+itabilit,6or the 'ros'erity of our stakehol#ers that allows us to constantly invest,

im'rove an# succee#.

Cor#orate Social Re#onibilit,+o /nrich the 8ives of community where we o'erate

Reco"nition an% Re-ar%6or the talente# an# high 'erforming em'loyees

&.cellence$n every thing we #o.

Inte"rit, $n all our #ealings.

Re#ect6or our customers an# each other.

HISTORY OF BOP

+he ank of Punab was establishe# in 19(9 an# was given the status of sche#ule# bank in

1994. +he ank of Punab is working as a sche#ule# commercial bank with a network of

almost 7 branches at all over maor locations in the Punab. +he ank 'rovi#es all ty'es of

banking services such as e'osits in 8ocal :urrency an# client foreign currency, remittances,

an# a#vances to business, tra#e, in#ustry an# agriculture. +he ank of Punab has in#ee#

entere# a new era of science to the nation un#er e%'erience an# 'rofessional han#s of its

management. +he ank of Punab 'lays a vital role in the national economy through

mobiliation of hitherto unta''e# local resources, 'romoting savings an# 'rovi#ing fun#s for

investments. +he bank offers attractive rates of 'rofit on all #e'osits, o'ening of foreign

currency accounts an# han#ling of foreign e%change business for e%am'le im'orts, e%'orts

an# remittances, financing, tra#e an# in#ustry for working ca'ital re?uirements an# money


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market o'erations. +he len#ing 'olicy of bank is not only cautious an# constructive but also

base# on 'rinci'les of 'ru#ent len#ing with ma%imum em'hasis on security.

+he ank 'rovi#es al lty'es of banking services such as e'osit in 8ocal :urrency,

:lient e'osit in 6oreign :urrency, 2emittances, A#vances to usiness, +ra#e, $n#ustry an#

Agriculture A wholly owne# subsi#iary of OP 6irst Punab


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Annual 2e'ort of the ank for the year ""! won !th 'osition for H+he est :or'orate

2e'ort Awar#H for the 6inancial sector, a#u#icate# ointly by the $nstitute of :hartere#

Accountants of Pakistan an# the $nstitute of :ost an#


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P'N(AB GO)&RN*&NT SHO/S FAITH IN BOP

Punab =overnment wishes to state that being the maor stake hol#er in the ank of

Punab it has full faith in the new management an# o'erations of the ank. +he government

further 'le#ges its une?uivocal su''ort to the ank an# firmly believes that the affairs of the

ank are soun# an# its financial health robust.

6inance e'artment

=overnment of the Punab.

BRANCH N&T/ORK

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8ahore 2egion

6aisialaba# 2egion

=uranwala 2egion

2awal'in#i 2egion

0arachiKBueta 2egion


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G&N&RAL BANKING OF TH& BANK OF P'N(AB

0&POSIT 0&PART*&NT

$n mo#ern times very few business enter'rises are carrie# out solely with the ca'ital of the

owners. orrowing fun#s from #ifferent sources has becomes an essential feature of to#ay

business enter'rise. ut in the case of a entire banking system is base# on it. +he borrowe#

ca'ital of the bank is much greater then their own ca'ital. anks borrowing is mostly in the

form of #e'osits.

+hese #e'osits are lent out to #ifferent 'arties. +he larger the #ifference between the

rate at which the #e'osits are borrowe# an# the rate at which they is lent out the greater of the

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'rofit margin of the bank. 6urthermore, the larger the #e'osit the larger will be the fun#s

available for em'loyment; larger the fun#s lent out the greater will be the 'rofit of the bank.

+o receive the #e'osit is the basic function of all commercial banks. +he bank #oes

not receive these #e'osits for save kee'ing 'ur'ose only, but they acce't #e'osits as #ebts.

hen banks receive #e'osit from a customer, the relationshi' of a #ebtor an# cre#itor is

establishe# where by the customer become the cre#itor an# the bank a #ebtor. hen the bank

receives amount of #e'osit as a #ebtor, it becomes the owner of it. $t may, therefore use it as

#eems a''ro'riate. ut there is an im'licit agreement that the amount owne# woul# be 'ai#

back by the bank to the #e'ositor after a s'ecifie# 'erio#.

NAT'R& OF 0&POSIT

:urrent or #eman# e'osits

&aving e'osit

&hort 5otice +erm e'osit

:all e'osits

6i%e# or +erm e'osits

C'RR&NT 0&POSIT

:urrent #e'osit are those which are 'ayable to bank whenever #eman# by the customer. ank

#oesn3t 'ay any 'rofit on current #e'osits. +here are of #ifferent scheme of saving #e'osits,

which are classifie# un#er #ifferent #uration 'ur'ose an# rate of interest. 6i%e# #e'osits are

those which are by the bank un#er the con#itions that will not be 'ayable on #eman# but will

be 'ayable un#er fi%e# or #eterminate future time #ate.

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SA)ING 0&POSIT

+his ty'e of accounts is one ste' towar#s the $slamiation of banking system in Pakistan.

+here are two ty'es of P8& Accounts.

P8& &aving Account

P8&+2 FProfit E 8oss &haring +erm e'osit 2ecei'tsG.

P8& saving accounts can be o'ene# with the minimum sum of 2s. 1"" an# P8&+2

account can be o'ene# for a sum of 2s. 1""" or above. Profit is 'ai# on both ty'es of the P8&

account on half yearly basis.

)n#er P8& saving account the #e'ositor un#ertakes to share 'rofit or loss on the #e'osits

earne# or sustaine# by the bank. &econ#ly the bank is at the liberty to invest the fun#s of the

#e'osits in any avenue, it #eems fit. +he P8& #e'osits are investe# in nonintereste#

channels.

SHORT NOTIC& T&R* 0&POSITS

+his kin# of #e'osit is for a short 'erio#. +he #e'ositor may with#raw his #e'osit at any time

by giving seven #ays notice to the bank. +his ty'e of #e'osit facilitates the #e'ositor to

with#rawn his amount with interest of the #e'osite# 'erio#.

CALL 0&POSIT

:all #e'osits are the sorts of #e'osits, which are #e'osite# with the banker against any

ten#er. +his is without interest #e'osit. +his may be with interest 'rovi#e# the #e'ositor has

agree# to kee' this amount with the bank for some fi%e# 'erio#.

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T&R* 0&POSIT R&C&IPTS

This type of deposit is same as the SNTD. The difference is that SNTD is for short period (7- 30 days)

while TDR is for long period ( month !p to " years).

ACCO'NT OP&NING

Account o'ening is the first ste' towar#s establishing a relationshi' between the customer

an# the bank. +he ank of Punab is offering basically two ty'es of accountJ

:urrent e'osit Account

Profit an# 8oss &haring Account

+he necessary con#ition for a customer, who wants to o'en an account with the bank, is

intro#uction, which is 'referably by the bank officers or any account hol#er of the bank. +he

#ifferent categories of accounts that are available are as un#er.

$n#ivi#ual Account

-oint Account

Partnershi' Account

8imite# :om'any Account

:lubs, &ociety, Association, or +rust Account

&5+

+2

6oreign :urrency e'osit

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ACCO'NT OP&NING PROC&0'R&

+he general banking #e'artment 'erforms various functions among them the first an# most

im'ortant function is Account O'ening. +he bank reserves the right to o'en any account,

which in its o'inion is suitable as a customer. +he 'rocess of

o'ening an account is very sim'le an# any bo#y that woul# like to o'en his account coul# #o

it easily without any #ifficulty.

+he 'erson woul# like to o'en his account is re?uire# to meet with the manager or

secon# officer, who will give him an A''lication form s'ecifically use# for account o'ening.

Along with the form a car# for s'ecimen signature is also su''lie# to the customer.


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receives the che?ue, he com'ares signature on the che?ue with the &'ecimen car#, for

avoi#ing the frau#s.

CL&ARING 0&PART*&NT

+his #e'artment receives the che?ue an# other negotiable instruments #rawn on local

branches of other banks. &tate bank of Pakistan has clearing house, in which che?ue, an#

other negotiable instruments are brought by each local bank re'resentatives an# the mutual

claims of each bank on other an# offset an# a settlement is ma#e by the 'ayment of

#ifference. :learing system is hel' full for both the customer an# saving currency, time an#

labor.

$nvestments which are collecte#

:he?ues

eman# rafts

+elegra'hic transfers


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$nwar# clearing means the che?ue #rawn on OP an# outwar# clearing means the :he?ues

#rawn on others

O'T/AR0 CL&ARING

+he instrument collecte# or store# bank wise an# a sche#ules is 're'are# se'arately for each

bank mentioning the total number of instruments an# the amount of the instruments. +hen

these are recor#e# in a register calle# CO)+A2 :8/A2$5= 2/=$&+/2D then a main

sche#ule is 're'are# showing the total number of che?ue an# their aggregate amount being

'resente# in the clearing.

+he che?ueKinstruments are han#e# over the clearing branch. :entral clearing branch issue

:2/$+ AM$:/ to the branch for 'assing cre#it to its customer imme#iately. +he branch

on receiving cre#it a#vice #ebits the clearing account an# cre#it the res'ective customer

accounts.

IN/AR0 CL&ARING

On receiving che?ueKinstruments from central clearing branch, the in charge checks the

number an# amount of che?ue receive# in clearing must tally with the main sche#ule

receive# from central clearing branch.

+hese che?ueKinstrument are entere# in C$5A2 :8/A2$5= 2/=$&+/2D for the

che?ueKinstrument 'asse# in clearing is a cre#it a#vice for the aggregate amount of che?ue

'asse# in clearing is 're'are#, #rawn on central clearing branch.

R&S&R)&S AT STAT& BANK

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e'osit hel# by bank at &P serves as check clearing an# collection balances. 2ather than

'hysically transferring fun#s between banks, check clearing an# collection can be #one by

sim'ly #ebiting or cre#iting a bank3s account at &P.

R&*ITTANC& 0&PART*&NT

2emittance is a maor function of the bank. $t is the transfer of money from one 'lace to

another 'lace. +he nee# for remittance is commonly felt in commercial life 'articularly an#

in every#ay life generally.

y 'roving this service to the customers the ank of Punab earns a lot of income in the form

of service charges.

TYP&S OF R&*ITTANC&

+he ank of Punab #eals with the following ty'e of remittances

eman# raft FG


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36 A #raft voucher is fille# which contains the following information

5ame of the 'arties involve#

ate

Amount to be sent

Account number Fif is crosse#G

86 A cre#it voucher is fille# in or#er to get the e%cise #uty an# e%change commission.

26 +he sen#er #e'osits the total amount of the two vouchers i.e. the #ebit an# cre#it

vouchers.

96 +hen the cashier sen#s the cash recei't voucher to the accounts #e'artment an# the

account recor#s the amount 'ai# in his cash scroll.

:6 Accountant gives the leaf along with the voucher to his assistant who recor#s

the sen#er3s name, amount an# receiver3s name. After writing all the information in the

register he gives it to the officer along with the for authentication.

46 After authentication the is han#e# over to the sen#er an# bank sen#s the a#vice to

the concerne# branch. &o when the 'arty 'resents the in the concerne# branch its

'ayment coul# be ma#e.

PARTI&S IN)OL)&0

+he following 'arties are involve# in #eman# #raft;

36 Purchaser or &en#er

+he 'urchaser is the 'erson who sen#s the money to a 'articular 'erson 'ayable at a

certain branch.

86 $ssuing or rawing ranch

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+he branch from where the #eman# #raft is issue# to another branch of the same

bank.

26 rawer ranch

ranch in which the #raft has #rawn an# calle# u'on to 'ay the amount.

96 Payee

+he 'erson who is entitle# to receive the amount after 'resenting the #eman# #raft in the

#rawer branch.

*AIL TRANSF&R

$t is the transfer of money from one branch to another branch of the same bank through mail

service. $n mail transfer there is no nee# of a#vice as the amount is #irectly cre#ite# to the

receiver3s account.

PROC&0'R&

36 6irst a voucher is fille# in whish the sen#er writes the amount to be sent, name, account

number of the receiving 'erson with the branch name an# #ate.

86 A cre#it voucher is fille# in or#er to #e#uct e%change, 'ostage charges accor#ing to the

amount of the mail transfer.

26 +he sen#er #e'osits the total amount in the cash #e'artment.

96 +he cash officer gives the vouchers to the officer after affi%ing receive# cash stam' an#

writing the amount in re# ink.

:6 +hen the officer writes the amount 'ai# in the cash scroll an# gives the


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is use# for #ifferent 'ur'oses. +he 'ur'ose may be the re'airs of the branch or renovation of

the branch.

PROC&0'R&

+he 'roce#ure of a 'ay or#er varies with the nature of the 'ur'ose. $f the work is of huge

amount then first the manager writes a letter to the >onal :hief in or#er to get sanction of the

work. +hen the a#vertisement of the work is given in the news'a'er in or#er to invite the

contractors. ut if the work is small then the branch manager has #iscretionary 'ower to

select the 'arty whose rate is lowest. After finishing the work the contractor submits the bill

of work on his stam' 'a#. +hen the bank issues a 'ay or#er, against the 'ay or#er the

contactor gets the amount from the issuing branch.

.ACCO'NT 0&PART*&NT

Account #e'artment is the backbone of a bank. $t 'lays a vital in 'erforming #ifferent

functions of a bank. +he account #e'artment of is com'uterie# as well as manual.

Accounting books of #ifferent #e'artments are maintaine# un#er this #e'artment an# with the

hel' of these, accountant 're'are the monthly ?uarterly, semiannually an# yearly financial

statement an# or#er statement of the whole bank. All the transaction taking 'lace is recor#e#

#aily in the books of accounts an# in com'uterie# le#gers.

6or every transaction there is Moucher 're'are# an# through these vouchers contra

entries are 'asse# un#er #ifferent hea#. =oo# working of accounts mainly #e'en#s on the

voucher system. Accounts #e'artment is res'onsible for 'ro'er han#ling an# maintenance of

vouchers of #ifferent #e'artment


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.

*AN'AL F'NCTIONS OF ACCO'NTS 0&PART*&NT

Accountant 're'ares vouchers for all #aily activities of #ifferent #e'artments. :hecking

officer checks an# tallies these vouchers with their #aily transactions an# 'osts their entries

un#er 'ro'er hea#s.

TYP&S OF )O'CH&RS

ebit Moucher

:re#it Moucher

+hese two ty'es of vouchers are again classifie# un#er following ty'esJ

:ash voucher

+ransfer voucher

:learing voucher

All the #aily transaction in cash, transfer an# clearing is #one through these vouchers. A

sheet is 're'are# on which all the vouchers 'asse# #uring one #ay are consoli#ate# an#

summarie#. +his sheet is calle# su''lementary sheet. +here are two ty'es of su''lementary

sheet.

aily 'ai# voucher sheet

aily recei't voucher sheet

Pai# sheet is use# for all #ebit vouchers an# recei't sheet is use# for all cre#it vouchers.

CASH BOOK


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:ash book is 're'are# #aily to kee' the recor# of #aily 'ai# vouchers. :ash book contains the

o'ening balance an# the closing balance of a working #ay. efore writing an# balance the

cash book firstly there is nee#e# to 'ro'erly arrange all the vouchers of that #ay.

*AINTAINING ; 'P0ATING L&0G&RS

One of the functions of accounts #e'artment is to maintain an# u'#ate the term #e'osit

le#gers an# books manually. +erm #e'osit recei't or +2 le#ger is u'#ate# after every

month for estimating 'rofit on customer3s accounts. Accountant 're'ares #ifferent le#ger for

all schemes of term #e'osit. ith the hel' of +2 le#ger accountant 're'ares C'rovisional

le#gerD. 6rom this le#ger accountant calculate the monthly 'ro#uct of each account an#

estimate the 'rofit for a halfyear. +he semiannual 'rofit on each account will be the e%'enses

of branch.

CO*P'T&RIZ&0 F'NCTIONS OF ACCO'NTS 0&PART*&NT


25/70

+he formats of all these le#gers are same. +hey contain the following hea# account no.

#escri'tion, 'revious balance. :o#es are assigne# to all these items.

$ncome will be cre#ite# in the branch account an# e%'enses will be #ebite# $ the branch at the

month en#.

All the e%'enses of circle, regional, au#it, ins'ection office is #ebite# in the hea#

office account, because it is the res'onsibility of the hea# office to bear the e%'enses of its

offices. 6or all the hea#s of general le#ger there is closing balance an# o'ening balance.

+hese le#gers are hel'ful in 're'aring the #aily, monthly, semiannually an# yearly

statements. &ome of these statements are 're'are for the

'ur'ose of recor# kee'ing of branches an# some are 're'are# to sen# to the circle office,

hea# office an# state bank of Pakistan.

&ome of these statements are

&tatement of 'rovisional income

&tatement of 'rovisional e%'ense

&tatement of hea# office account

&ummary of income an# e%'ense

&tatement of 'rofit an# loss on P8& account

&tatement of 'rofit an# loss P8& ! account

alance confirmation re'ort

&tatement of affairs

!


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BILLS 0&PART*&NT

+his #e'artment #eals in bills for collection for all kinks such as che?ue, #raft, an# 'ay

or#ers, call #e'osits etc. with outstation branches of OP or with other banks. $t 'rovi#es

service to their customer to get 'ayment from the nearer bank at nominal charges. +he four

main hea#s of bill #e'artment is.

Outwar# ill for :ollection FO:G

$nwar# ills 6or :ollection F$:G

Outwar# ocumentary ills 6or :ollection FO6:G

$nwar# ocumentary ills 6or :ollection F$6:G

O'T/AR0 BILLS FOR COLL&CTION

ills #e'artment receive che?ue or other of bills from its kinks client whose account must be

o'ene# in that branch. +he branch forwar#s the check with sche#ule or covering letter to that

branch on which bills is #rawn. +he checking officer of bills #e'artment will cross the che?ue

with s'ecial bank stam' before forwar#ing the che?ue.

O: register is also maintaine# for 'ro'er recor# kee'ing of outwar# bills. +his register is

u'#ate# two times once at the time of receiving bill from clients an# the other when the

confirmation a#vice of this che?ue is receive# from the 'ayable branch. ank gets a

commission 2s. !K an# courier charges 2s. 4"K on the service.


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IN/AR0 BILLS FOR COLL&CTION

+he branches which receive bill have to verify these bills for 'ayment. +he 'arty account

must be o'ene# in that branch. +he res'onsibility of this branch is to verify the bills for

collection with in three #ays an# sen# the a#vice to the originating branch.

$n case of verification of bills is a''rove#, banks #ebit the account of the res'ective account

hol#er an# sen# a #ebit a#vice to the originating branch an# at the same time cre#it the hea#

office account for inwar# bills $: register is maintaining for kee'ing the 'ro'er recor# of

the bills.

O'T/AR0 0OC'*&NTARY BILLS FOR COLL&CTION

Originating branch receives the #ocumentary bills from their clients an# sent them to out

station branches of the same bank or other bank. :ustomer account must be o'ene# in that

branch. +he #ocumentary bills are i.e. trust recei't, railway recei't, sales invoice, recei'ts of

courier service etc. bank gets as commission ".!N 'lus 'ostage charges 'lus courier service

charges of this service. &eller an# 'ro#ucer both can avail the facility of bank in case of

selling an# 'urchasing their 'ro#uct or goo#s.

IN/AR0 0OC'*&NTARY BILLS FOR COLL&CTION

ank receives the #ocumentary bills from the other outstation branches of the same banks or

other banks for collection the amount from 'urchaser.

$n this case back acts as a buyer3s bank, when bank receives the #ocumentary bills they sen#

intimation to buyer about his arrival of goo#s. $f the buyer is the account hol#er then bank

will #ebit his account otherwise 'urchaser #e'osits the amount of the bills. ank han# over

7


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8etter of =uarantee

R'NNING FINANC&

+his form of finance was 'reviously known as Cover#raftD. hen a customer re?uires the

tem'orary accommo#ation, his bank allows with#rawal his account in e%cess of cre#it

balance, which the customer has in its account, a running finance occurs. +he accommo#ation

is thus allowe# collateral security. hen it is against collateral securities, it is calle# a

C&ecure# 2unning 6inanceD an# when the customer cannot offer any collateral security

e%ce't his 'ersonal security, accommo#ation is calle# a C:lean 2unning 6inance.D +he

customer is in a#vantageous 'osition in running finance because he has to 'ay the marku'

only the balance outstan#ing against him on #aily 'ro#uct basis.

0&*AN0 FINANC&

+his is common form of financing to commercial an# in#ustrial concerns an# is ma#

available either against 'le#ge or hy'othecation of goo#s 'ro#uce or merchan#ise. $n

eman# 6inance the 'arty is finance# u' to a certain limit either at once or as an# when

re?uire#. +he 'arty #ue to facility of 'aying marku' only on the amount it actually utilies

'refers this form of financing

Or#inary &hares

Preferre# &hares

Buote# or )n?uote#

2egistere#

earer

$nscribe#

9


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A0)ANC&S AGAINST I**O)ABL& PROP&RTY

A mortgage is the transfer of an# interest in s'ecific immovable 'ro'erty for the 'ur'ose of

securing the 'ayment of the money, a#vance# or to be a#vance#. y way of loan, an#

e%isting #ebts or the 'erformances of the engagement this may rise the 'ecuniary liability.

+he transfer is calle# the @mortgager3 an# the transferee the @mortgagee3 the 'rinci'al money

an# interest of which 'ayment is secure# for the time being an# instrument by which the

transfer is effecte#, is calle# the letter of the mortgage #ee#.

Availability of a#e?uate flows of cre#it for in#ustry an# agriculture are a sine ?ua non for the

growth an# #evelo'ment of an economy. +his ac?uires a##e# im'ortance when agriculture is

the mainstay of the economy as also the sector where the bulk of the 'oor are concentrate#.

=rowth an# 'ro#uctivity in PakistanIs agriculture has slowe# #own in recent years an# is,

therefore, of serious concern given its im'ortance for the economic 'ros'erity of the country.

A'art from various other weaknesses in

the infrastructural su''ort of the agricultural sector, ina#e?uacy an# lack of efficacy of cre#it,

flows to su''ort agriculture relate# activities has been a maor constraining factor.

Agriculture is the largest sector of the economy. $t contributes ! 'ercent to =P, 'rovi#es

raw materials to (" 'ercent of in#ustry an# em'loyment to over !" 'ercent of the 'o'ulation.

+his is a sector that has the shortest gestation 'erio# for

investments an#, therefore, a remarkable ca'acity to bring about a turn aroun# in the

economy. +his im'ortant sector in Pakistan is suffering from a number of mala#ies an# is

conse?uently witnessing stagnation in 'ro#uctivity.

0ue to 'olicy an# a#ministrative e%igencies, the savings in the agriculture sector remain low

an#, therefore, the sector has 'er'etually remaine# ca'ital starve#. +he 'ricing of in'ut an#

out'ut in agriculture over the years has force# the maority of farmers in Pakistan to 'lough

"


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back their incomes into agriculture an# noninstitutional cre#it, an# has more often than not

serve# to sa' their 'otential earnings. 5ee#less to say, that shortage of savings an# lack of

availability of ca'ital is one of the maor reasons for 'overty in the country. +he agricultural

an# rural sectors in Pakistan in general an# in Punab in 'articular are, therefore, suffering

from severe un#er#evelo'ment. )n#er a #esirable #evelo'ment mo#el, Punab canJ

$ncrease agricultural 'ro#uction to meet the countryIs re?uirement of essential foo#s items

an# in#ustrial raw materials.

evelo' agrobase# in#ustry in the rural sector for economic value a##ition;

=enerate a##itional em'loyment o''ortunities in rural as well as a#acent small

townsKcities

:ontrol massive migration to the urban centers that in turn is causing a number of social,

a#ministrative Fi.e. law an# or#erG an# economic 'roblems for the urban areas

/levate 'overty an# im'rove the income generating ca'acity of the agribase# 'o'ulation.

AGRIC'LT'R& SCH&*&

+here are many agriculture 'romotion schemes 'rovi#e# by OP.

=reen +ractor 8ease 6inance &cheme

Agri 6inance ranches

Agricultural 6inance &cheme

0issan ost +ractor &cheme

&econ# *an# +ractor 8ease 6inance &cheme

0issan ost Aabiari &cheme

0issan ost


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0issan ost /slah/Arai &cheme

0issan ost 8ive &tock evelo'ment &cheme

8ivestock ree# $m'rovement +rough MM

0issan ost :ommercial Agro &ervices

0issan ost Agri arkaashat ri' $rrigation &ystem


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OP &


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CORPORAT& ; IN)&ST*&NT BANKING

Cor#orate Bankin"

+he OP :or'orate anking en#eavors to market new clients an# retain the e%isting

relationshi's an# buil# market share by offering su'erior services, com'etitive 'ricing an#

wi#e 'ro#uct range to value# cor'orate clients inclu#ing Public &ector /ntities an#


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Buasi/?uity Pro#ucts, $n#e'en#ent A#vice, /?uity Placements, $POs, /?uity )n#erwriting,


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Locker Si$e Annual Fee

&mall 2s.1,""


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only to the account hol#er. :ash with#rawal limit is u' to 2s.", """ 'er #ay. Annual charges

of A+< is 2s.!"K 'er car#.

ONLIN& BANKING

OP is currently offering win#owbase# online banking to its customers, which gives access

to information on their accounts an# the liability to act on the latest information receive# over

the net.

LOCK&RS

$t is one of the utility services that OP 'rovi#es to their customers for kee'ing ewellery,

im'ortant #ocuments an# other valuables.

0&*AN0 0RAFT

OP 'rovi#es safe, s'ee#y an# reliable way to transfer money at vary reasonable rates. Any

'erson whether an account hol#er of the bank or not, can 'urchase a eman# raft from a

bank branch.

L&TT&R OF CR&0IT

OP is offering its business customers the wi#est range of o'tion in the area of money

transfer. OP3s letter of cre#it service is with com'etitive rates, security, an# ease of

transaction, OP 8etter of cre#it is the best way to #o the business transactions.

PAY OR0&R

7


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OP 'rovi#es transfer of money using #ifferent facilities. $ts 'ay or#ers are a secure an# easy

way to move the money from one 'lace to another. +he charges for this service are e%tremely

com'etitive.

*AIL TRANSF&R


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5$6 Accounts. F5on $nterest eman# 6inance AccountsG

Accounts re?uiring thumb K 'hoto for o'eration Filliterate accountsG R A+


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BALANC& SH&&T

4"

2008 007

(R!pees in 000)

Aet

:ash an# balances with treasury banks 10,685,057 /&0&30alances with other banks 2,178,455 &7&118en#in s to financial institutions 633,333 &/"0&000$nvestments 22,711,980 73&/1&1"A#vances 131,731,158 33&23&"2"O eratin fi%e# assets 3,471,838 3&"&7"eferre# ta% assets 8,388,162 -

Other assets 6,109,137 "&20"&07

185,909,120 3"&00&00

Liabilitie

ills 'ayable 1,219,801 37&1/7orrowin s 12,278,773 7&2/&"e osits an# other accounts 164,072,532 &12&0&ubor#inate# loans - - -8iabilities a ainst assets sub ect to finance lease 30,632 /0&3eferre# ta% liabilities - &0"&"30Other liabilities 4,564,257 3&00&2/

182,165,995 1&00"&301

Net Aet 3,743,125 2&"&7/

Re#reente% B,

5,287,974 /&30&37

2eserves 7,427,232 7&/7&3

FAccumulate# lossG K )na''ro'riate# 'rofit 3&/"&2/

5,056,520 "&0&/"3

FeficitG K &ur'lus on revaluation of assets net (1,313,395) 3&22"&3/

3,743,125 2&"&7/

Contin"encie an% Commitment


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INCO*& STAT&*&NT

2008 8==>

(R!pees in 000)

17,752,969 7 "3 0/


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FINANCIAL B'SIN&SS S'**ARY

8==9 8==: 8==4 8==> 8==@O'erating 2esults


43/70

RATIO ANALYSIS

2atio analysis is use# to calculate the 'rofitability, li?ui#ityKleverage etc. of the firm. 6rom

ratio analysis it is 'ossible to 're#ict future variances.

6ollowing ratios of OP has been calculate#J

Ratio 8==9 8==: 8==4 8==> 8==@

Gro #rea% ratio N 7 ! ! 1 .4

Pro+it be+ore ta. to total income N !9.19 .11 7.(9 !.71 F1.9G

*arku#< Interet co!er ratio times !."( .79 1.94 1.! 1.

Pro+it a+ter ta. to total income N 4.! 49.1 !4.1 49.7 F1(9."G

Total aet turno!er times "." "."7 "."9 ".1 ".1

Return on a!" total aet 5a+ter ta.6 N .49 .! .7 . F"."!G

Price earnin" ratio times 7.! 1". 7.71 9.1 F"."G

&PS 5Non %iluti!e6 2s.Kshare 9."( 1"."1 1.14 1".!1 F19."G

0i!i%en% #er 1are 2s.Kshare 4 !. .! .! *arket !alue #er 1are 2s.Kshare !.9 1".4! 1"1.! 97.( 11.!"

Ca#ital a%euac, Ratio N 1.( 1.7( 1"."9 9.9 1.9

GROSS SPR&A0 RATIO

=ross s'rea# ratio #efines the total s'rea# of interest between borrowing an# len#ing.&'rea#J

ifference between fun#e# revenue as a 'ercentage of average earning assets an# the cost of

fun#s as a 'ercentage of average 'aying fun#s.

+he higher the s'rea# the higher will be the 'rofit margin.

=&2S 2evK:=&

=&2S F


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45/70

INT&R&ST CO)&RAG& RATIO


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/1.1" /.1 "/.1 /.7

-2.03

-"0

-00

-"0

-00

-"0

0

"0

00

00/ 00" 001 007 002

TOTAL ASS&T T'RNO)&R

Asset turnoverS 5et $ncomeK +otal assets

+his ratio tells the turnover of the asset to generate income.

+his ratio is increase# #uring last few years which re'resent increase in the turnover by

assets.

times

0.01

0.07

0.0

0.

0.-

0

0.0-

0.0/

0.01

0.02

0.

0.-

0./

-00/ -00" -001 -007 -002

times

R&T'RN ON TOTAL ASS&T

+his ratio gives an i#ea of returning net 'rofit generate# by the bank in com'arison with

assets.

2eturn on assetsS Profit after ta% K +otal Assets

4


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+his ratio is #ecreasing in the last year because of #ecrease in Profit as e%'enses raise#

u'.+he #ecrease was mainly #ue to increase# e?uity as a result of increase in minimum

ca'ital re?uirements an# a##itional 'rovision #ue to with#rawal of benefit of 6&M for most

ty'es of a#vances.

./.1"

.71

.

-0.0"

-0."

0

0."

."

."

3

00/ 00" 001 007 002

PRIC& &ARNING RATIO

Price /arning 2atioS


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&ARNING P&R SHAR&

/P& S 5et $ncomeK total shares

+hrough this ratio it can be analye# what 'ercent of 12& share is earne#.

.02 0.03./ 0."

-.0

/ ". 3." 3."0

1".

0./" 0."7.2

."

-/0

-0

0

0

/0

10

20

00

0

00/ 00" 001 007 002

4% S

D+5+D4N

5'64

CAPITAL A0&'ACY RATIO

:a'ital a#e?uacy ratio informs len#ing u' to a certain ratio of e?uity.

+his ratio is set by the &tate ank of Pakistan.

(.'

.23 .72

0.0.1

.

0

/

1

2

0

/

00/ 00" 001 007 002

(.'

A0)ANC&S ; 0&POSITS

4(


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S/OT ANALYSIS

&O+ analysis is an acronym that stan#s for strengths, weakness, o''ortunities, an# threats

&O+ analysis is careful evaluation of an organiation3s internal strengths an# weakness as

well as its environment o''ortunities an# threats.

C&O+ analysis is a situational which inclu#es strengths, weaknesses, o''ortunities an#

threats that affect organiational 'erformance.D

C+he overall evaluation of a com'any strengths, weaknesses, o''ortunities an# threats is

calle# &O+ analysis

$n &O+ analysis the best strategies accom'lish an organiation3s mission by

J

/%'loiting an organiations o''ortunities an# strength.

5eutraliing it threats.

Avoi#ing or correcting its weakness.

49


50/70

&O+ analysis is one of the most im'ortant ste's in formulating strategy using the

organiation mission as a conte%t; managers assess internal strengths #istinctive

com'etencies an# weakness an# e%ternal o''ortunities an# threats. +he goal is to then

#evelo' goo# strategies an# e%'loit o''ortunities an# strengths neutralie threats an# avoi#

weaknesses.

STR&NGTH

+he ank officers of OP are consi#ere# as one of the most able 'rofessionals in the

banking worl#. *owever, they have a##e# some local flavour in accor#ance with their

targete# segmente#. $n my observation that they interact with their clients as if they are

their 'ersonal frien#s an# #iscuss about their 'roblems as their own.

As a result of the com'assionate an# 'ersonalie# services of the officers, the clients3

'erce'tion for OP is very high. +hey have trust an# feel themselves to be secure while

#ealing with OP.

OP has o'ene# all its branches at commercial areas so that the customers or clients face

no 'roblems in reaching to the bank.

OP has got a reliable an# easy to use internal com'uter system./very information

regar#ing the transactions in customers3 #e'osits has been com'uterie#. ata are

'ro'erly maintaine#.

=oo# security system

5ot e%cellent but goo# facilities are given to em'loyees

/&AKN&SS&S

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8ack of 'ro'er internal controls is one of the maor weakness of OP. $t is also 'ointe#

by the au#itor in his review.

OP has formulie# a lot of 'ro#ucts an# services for its customers, even more than other

commercial banks, but any a#vertisement on electronic me#ia has not been seen.

$ observe# #uring my internshi' that some of the em'loyees were bur#ene# with over

work. &o $ think that the work shoul# be #istribute# accor#ing to their 'ost an#

ca'abilities.

iase# selection of em'loyees.

OPPORT'NITI&S

&atisfy #ynamic consumer nee#s, OP has ma#e significant in roa#s in its entire service

s'ectrum. A lot of 'ro#ucts have been intro#uce# es'ecially in 2etail anking

FAgriculture si#eG an# 'eo'le are increasingly becoming loyal to the bank an# because of

feasible transactions. O'timum 'ricing an# bran#ing strategies of the bank are hel'ing to

make customer feel secure an# convenient.

All the o''ortunities of the 1st century are to be availe# in the information technology.

$nformation technology is the future of this #ynamic worl#. +herefore OP shoul#

em'hasie much on $+, es'ecially on /anking. ank can #esign a universal account

like other foreign banks, to enhance online facilities.

OP has intro#uce# a number of financial schemes inclu#ing s'ecial @e'osit Accounts3.

+hese accounts have their uni?ue features. uring the last three years,

OP #e'osits have been increasing U 4"N, which is a very healthy sign. +herefore, with the

commencement of new schemes there can even be a greater increase in its #e'osits

!1


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THR&ATS

es'ite the #ifficult circumstances that confronte# the banking sector in 'articular an# the

country in general, OP has been still highly 'rofitable. ut, the facts can3t be #enie# an#

there might be an a#verse im'act of such situation.

OP is facing a strong com'etition by its com'etitors, usiness of all these anks are

growing at very high 'ace.

P&ST ANALYSIS

P/&+ analysis of any in#ustry investigates the im'ortant factors that affect the in#ustry

an# influence the com'anies o'erating in the sector. P/&+ stan#s for Political, /conomic,

&ocial an# +echnological analysis. +he P/&+ Analysis is a tool to analye the forces that

#rive the in#ustry an# how those factors can influence the in#ustry.

PO8$+$:A8

/:O5O


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!

SOCIOC'LT'RAL

:*A5=/& $5

8$6/ &+8/

8$+/2A:

2A+/

/


54/70

POLITICAL FACTORS

=overnment 'olicies affect the banking sector. &ometimes looking into the 'olitical

a#vantage of a 'articular 'arty, the =overnment #eclares some measures to their benefits like

waiver of shortterm agricultural loans, to attract the farmer3s votes. y #oing so the 'rofits

of the bank get affecte#. Marious banks in the coo'erative sector are o'en an# run by the

'oliticians. +hey e%'loit these banks for their benefits. &ometimes the government a''oints

various chairmen of the banks. Marious 'olicies are frame# by the &P looking at the 'resent

situation of the country for better control over the banks

FOC'S ON R&G'LATIONS OF GO)&RN*&NT

=overnment affects the 'erformance of banking sector most by legislature an# framing 'olicy

.government through its bu#get affects the banking activities securitiation act has given

more 'ower to banking sector against #efaulting borrowers.

!4

T&CHNICAL

+/:*5O8O= $5A50&

:O2/ A50$5=

&O8)+$O5&

A+

46758513 bop internship report

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