Internship Report

ZARAI TARAQIATI BANK LIMITED

Head Office Islamabad

SUBMITTED BY

Mumtaz Ali

MBA-IV

SUPERVISED BY

Asif Ali Naqvi

Department of Administrative Sciences

Quaid-i-Azam University Islamabad

ACKNOWLEDGEMENT

All praises are for almighty Allah for guiding me in hardships and all respects for Holy Prophet

(PBUH) for showing me the light of truth and honesty. I am thankful to Asif Ali Naqvi under his

guidelines I was able to complete this Internship Report and she always helped us during the

extensive work of the project. I am also thankful to the respondents who gave me their precious

time for the interviews.

Mumtaz Ali Hulio

Executive Summary

Banking is one of the most sensitive businesses all over the world. Banks play very important

role in the economy of every country all over the world and Pakistan is no exemption. This

report is about one of the leading Agriculture Bank of the Pakistan known as Zarai Taraqiati

Bank Limited. ZTBL is playing its one of the most important role in the development of the

Agriculture Sector of the Pakistan. On 14th December 2002, under the ordinance of the

Agricultural Development of the Pakistan 1961, ZTBL was incorporated as Public Limited

Company. This Bank severs its venerated customers in the form of different customized

products. It is providing both type of severs financial and non-financials mostly to its clients of

the rural areas of the Pakistan, which comprises of 68% of the Pakistan’s total population. The

Bank has country-wide network in the form of 349 branches and is severing round about half of

the million clients annually and over accumulated account holder’s with the average loan size of

around Rs.89, 000 serving 65%, 31% & 4% of subsistence, economic and large growers

respectively.

Chapter no 1

1INTRODUCTION

1.1 History of the Bank

Pakistan is one of the agricultural country, about 75% of its population is directly or indirectly

associated with agriculture. Due to its widespread and extensive canal system, its land is very

fertile. The Agricultural Development Finance Corporation was setuped in 1951, keeping in view

the need of finance to rapid development of agriculture sectored. It also provides financial

facilities for the development and modernization of agriculture, including forestry, fisher, animal

husbandry, poultry and dairy farming.

Under the Agricultural Development Bank Act, the Agriculture Development Bank of Pakistan

came in being in September 1957. Under this Bank, the agriculturists, co-operation societies and

others were provided the facilities of credit in cash, warehousing and storage. Agricultural

Development Finance Corporation and the Agricultural Development Bank were similar in

function and government provides capital to both of them. later On February 18, 1961, due to

their similar functions these both came under the single banner of Agricultural Development

Bank of Pakistan.

Agricultural Development Bank of Pakistan (ADBP)

Under the ADB Ordinance 1961, the Agricultural Development Bank of Pakistan (ADBP) was

established originally. Then, ADBP was reorganized into a public limited company, with the

purpose of ensuring better governance and the provision of high quality financial services to its

rural clientele. Then all assets, business, contracts and liabilities of ADBP were taken by the

Zarai Taraqiati Bank Limited (ZTBL and on December 14, 2002 and started its countrywide

operations as a public limited banking company.

The ADBP had than become the single largest institution in the country catering to be viable

credit need of the agriculturists and in disbursing over Rs. 5000 million per annum for the

development and modernization of agriculture.

Conversion of ADBP into ZTBL

Agriculture Development Bank of Pakistan (ADBP) was converted into Zarai Taraqiati Bank Ltd

(ZTBL) by the Federal Government and it started its operations with profound effect. It was

restructured accompanied with new board of directors and was titled as public limited company.

Its aim under the presidential ordinance was to ensure good governance, autonomy, delivering

high quality, viable and timely financial services to a greater number of clientele in the

agricultural and rural segment of the country with adequate return to the stake holder. In 1984

Zarai Taraqiati Bank (ZTBL) under the company’s ordinance was registered with SECP as a

public limited and by virtue of finance order, all assets, liabilities proceeding undertaking of the

ADBP stands transferred to and vested in Zarai Taraqiati Bank with effect from December 14,

2002.

The conversion of ADBP into ZTBL had a conditionality of the Asian Development Bank

(ADB) loan framework as per which a restructuring exercise was initiated. The restructuring

process entailed ADB’s Rural Finance Sector Development Program (RFSDP) with the objective

to transform ZTBL into a sustainable Rural Finance Institution. It also included the up-gradation

of Information technology (IT) infrastructure for which funds from ADB’s loan were to be

utilized. As part of the overall organizational revamping strategy, the bank has taken several

initiatives to enhance its lending activities while adopting a prudent approach with regards to

credit quality. Kisaan Support Services (Pvt.) Limited (KSSL), a subsidiary of ZTBL, has been

engaged to sell fertilizer to farmers at subsidized rates, while a Memorandum of Understanding

(MoU) is signed between KSSL and Pak Arab Fertilizer to ensure timely availability of

agricultural inputs.

The main aim behind the restructuring of ADBP and its conversion into ZTBLis extend swore

credit to the needy segment of highly productive and yielding agri and non-farm activities. It was

done keeping in the mind that this step shall greatly add to the credit distribution mechanism.

National Operation

The Zarai Taraqiati Bank Limited runs its operation in whole Pakistan and also out side Pakistan

and the persons conducting such business. The bank’s total manpower is 7665 having 4515

officers and 3150 staff. It has 49 regional offices and 342 branches through out the Pakistan

including the Federally Administered Tribal Area (FATA), Federally Administered Northern

Area (FANA) and Azad Jammu and Kashmir. ZTBL while completing its period of 42 years

operational activities tried to serve the forming community through the country for their medium

and long-term development credit needs.

Organization

First the head office of the ZTBL was located in Karachi and was shifted to Islamabad later

during 1973. Presently there are 9 division and 33 departments in the head office. It has 49

regional offices and 343 branch offices apart from 8 audit directorates in the field, two staff

colleges at Islamabad and Karachi. To cater for loan requirement of the forming community at

their door steps over 1408 Mobile Credit Officers have been deployed in the field, each covering

25 villages in an average.

Board of Directors:

Syed Qamar-Uz-Zaman Shah

Chairman Board

Mr. Muhammad Zaka Ashraf

President/ CEO

Mr. Yawar Zia

Director

Mr. Qamar Zaman Chaudhry

Director

Mr.Muhammad Iftikhar Khan Mohmand

Director

Mr. Tauqir Ahmad Faiq

Director

Dr. Khalid Ahmad Khokhar

Director

Mr. Imam Bux Sheikh

Director

Mr.Muazam Ali

Company Secretary

Vision Statement

Emerge as a Leader in provision of agriculture credit by promoting and sustaining productivity

through a market/agribusiness focus. To bridge yield gaps of all agriculture commodities and to

ensure that the welfare of farming population is radically improved and the environment is

protected from harmful human interventions.

Mission Statement

To become a leader in guiding entrepreneurs & farmers implement an agribusiness and

marketing led approach that brings strong commercial orientation in production catering

domestic and international markets. As a specialized agriculture development bank, deliver

pragmatic technology and optimal solutions to farm communities and rural areas across all agro-

ecological zones with sensitivity to economic growth and equity. Develop close partnership and

linkages with all its clients to dramatically transform, restructure and revamp the agriculture

scene and enhance its outreach by investing wisely and judiciously in new approaches, ideas and

means of mass communication.

Corporate Objectives

The prime objective of ZTBL incorporated under the companies’ ordinance 1984 is to provide

Srural and agriculture sector and mitigates poverty. The credit facilities in rural areas shall be

provided in cash or kind at a market based a mark-up rate that ensures operational and financial

sustainability of the bank.

The ZTBL is to “Develop and operate as a financially and operationally sustainable R.F.I of the

country. To assist rural community, particularly the small farmers, in raising their productivity

and income levels through timely delivery of credit, advisory and ancillary services. Build

ZTBL's image as a proactive, client friendly, financially & operationally sustainable with

indigenous product deployment.

Establish and provide backward and forward linkages to strengthen agri. value added commodity

chains. Engage in public - private and wholesale - retail partnership to deepen outreach and

reduce operating cost. It functions as a rural commercial bank to mobilize rural capital formation

and to commercialize the agri. sector by delivering the true value of credit to the client. Provide a

wide range of risk insurance products to its clients. Open up it venues of operation to Domestic

& International Banking Industry to avail comparative advantages.

Nature of Business

Zarai Tarqiati Bank is to provide credit facilities to the farmers, including hiring and renting of

any thing which it may advance way of loan and the provision for ware hosing facilities of such

terms and subject to such conditions as may be prescribed by its rule to agriculturists for the

purpose of agriculture and to persons engaged in cottage industries in rural areas and provide

sustainable rural financing services, particularly to small farmers.

Types of loans

Banks provides loans through various products/schemes for short, medium and long term

depending on the cash flow of the borrowers.

The bank gives special focus and importance to fulfill the genuine and real needs of the small

farmers in terms of production loans (seed, fertilizers, pesticides, POL, labor charges etc) as well

as for working capital purpose. These loans are provided to the needy farmers in cash and kind

under various schemes like Sada Bahar, Awami Zarai, General Credit and One Window

Operations Zarakhazi Schemes.

The bank also provides Development loans to farming community like tractors, allied agri-

equipments/implements, besides loans for poultry and livestock, fisheries, orchards, plantation,

and irrigation schemes etc.

Maximum Credit limit

Maximum limit of loan is Rs.1.00 million per borrower/party.

Lending Criteria

The bank advances preferably to small farmers and following criteria is observed in overall

distribution.

Subsistence farmers 70%

Economic farmers 20%

Big farmers 10%

Production loans 77.5%

Development loans 22.5%

The management adopts lending – recovering linkage criteria to ensure smooth operations of the

bank and honor its obligations.

Security

The bank provides loans under Agri-Pass Book System as well as other collateral acceptable to

the bank. Simplification of loan documents is in order to facilitate the farmers, the Bank has

simplified the loan documentation to be applicable for three years of the loan period. The main

loan documents which are presently being used in the branches of the bank are as under loan

application form IB-7 Revised loan Agreement-cum-Guarantee Charge Creation

Certificate/Sanction Mutation entered in bank favor sanction latter for loan

Major lending scheme

Sada Bahar Scheme

One Window Operation/Zarkhaiz Scheme

Crop Maximization Project-II

White Resolution Scheme

Red Meat Financing Package Scheme

Green Revolution Scheme

Sairab Pakistan Scheme

Crop loan Insurance Scheme

Banazir Tractor Scheme

Awami Zarai Scheme

Establishment of Model Village

Performance and Progress of Projects

Loan Disbursement

During the year 2009 loans amounting to Rs.77.680 billion were disbursed to 567.415 borrowers

as compared to Rs.70.698 billion availed by 571,946 borrowers during the year 2008. Thus

growth in amount was 10%.

Disbursement Position during the Last 5 Years

Years Disbursement

Growth

No of

Borrowers

Served

Production Development Total

2005 33.42 5.941 39.36 - 441,536

2006 47.77 4.72 52.52 33% 443,874

2007 50.22 5.7 55.91 6% 475,756

2008 58.52 12.17 70.7 26% 571,946

2009 61.72 15.96 77.7 10% 567,415

Bank disbursed total of Rs.77.680 billion in 2009 as against Rs.39.356 billion disbursed during

the years 2005, with borrower network of 567,415 and 441,536 respectively. The cumulative

growth during the period under remained 97% in terms of amount and 29% in terms of

borrowers.

Ho Account Department

Day first: 19-7-2010, Zulfkar ali Satti – In charge Payroll unit

Pay Roll Unit

Payroll unit of ZTBL consists of 700 employees. Its role is to manage Advances given to the

employee, allowances, benefits and tax deduction over the salaries of the employees etc. there

are five types of the advances as mentioned bellow:

House building allowances

Computer allowances

Personal loans

Car loan

Motor cycle

There is 4% markup charged over the employees on the house building allowances while no

markup is charged over the personal loans, which is in the benefit of the employees. Non clerical

staff is given 18% allowance, while clerical staff is given 15% allowance on the basic pay.

Allowances and benefits are given on the basis of the scales of the employees. There are

different scales of the employees as mentioned bellow:

1 to 3 Scale for non clerical employees

4 to 7 scale for clerical employees

7 onwards for officers

The amount of allowances and advances are transferred through a transfer voucher. Different

types of the vouchers are used in ZTBL such as debit voucher, credit voucher and transfer

voucher. The credit and debit voucher are in the branches of the ZTBL, while transfer voucher is

used in the ZTBL Head Office.

Day 2: 20-7-2010, Munir hussain – OG 2

ZTBL consists of staff training school, which facilitates the refresher courses in training program

to the existing employees of the ZTBL. Training school preplan the training schedule for the

upcoming year, which is approved by the higher authorities and send letter to different training

zonal offices for training purpose.

Employees coming form the different branches are entertained through lecture on banking sector

and are given techniques to improve skills required in this current world of competitive

environment. ZTBL hire the trainer of the program both internally as well as internally.

Lecture Fee

These trainers charge the lecture fee, which is disbursed by the HO Account Department. The

entry is passed in the GL Head (General Leger Head) as debit the speaker fee and credit the

ZTBL. Above transaction is done, while using the excel format as mentioned bellow:

S. No. – PP No. – Account – No Speaker – Amount

Amount of the lecture is given to the speakers with respect to the grade vice. Minimum amount

is Rs400 for grade 16 to 18, and maximum amount is Rs600 for 19 grade officer.

It is required for the external speaker to open account into the ZTBL for error free transaction.

This transaction usually takes two days to take place.

Leave In Cashment

When leave of the employee is not approved by the bank then that leave is changed into cash.

The criteria for this mentioned by the SBP, which stats that it is only possible when there is 180

days balance of the employee, below this it would not work. This transaction takes place as

follow

Employee – Credit

Bank – credit

Education Stipend/ Allowance

Education stipend is special relief for all staff including non clerical, clericals and officers, where

as education allowance is only opportunity available to non clerical and clerical staff. The

employees apply through the application forms, while submitting that to the Staff Welfare

Department Three children are allowed for the stipend allowance and 300 are added in the salary

of the employee. For the education stipend minimum 65% marks criteria is set by the bank.

Students of the 6th to 8th are given Rs224 per month, 9th and 10th are given Rs376 per month,

where as students of the XI and XII are given Rs388 per month and bachelors to master are given

Rs400 per month. Top 10 students in their studies are awarded Rs1200 per child.

President Club Charge

President club charges are Rs1300 per month.

Payment of Special Duty Allowance

It is the criteria of the bank that if the employee will perform special duty after the bank timings

then he will be given special duty allowance. Employees who perform special duty from 5 PM to

8 PM or 10 PM then they are given Rs200 per day.

Arrear of Salaries

Arrears are the result of increment, promotion of the employees or other differences of the actual

salary and paid salary. These arrears are handled by the payroll unit

Day 3

Sher allumgeer AVP IBR UNIT

IBR Unit

HO Account Department consists of IBR unit, in which reconciliation of the transaction takes

place. These transactions are of two types, one is transaction in between branches and other is in

between and head office. Central Accounting system Head Office Islamabad is used for

reconciliation purpose. It consists of central accounting file/ entry quarry. Again it consists of

two files, one is originating file and other is respondent file. From originate file funds are

transferred, while from respondent file funds are received. In these accounts transfer voucher is

used as base.

When errors occurred in the transaction then the balances does not tally. Errors in these accounts

mostly occur due to wrong code of branch or mixing of both debit and credit accounts or through

other wrong entry. To solve this problem of errors reconciliation method is used. Inter

reconciliation unit in HO Account Department collects whole data from country wide branches

and if there is problem of reconciliation, IBR Unit inform the branches to reconciliation the

transaction. If there is error in the data collected in IBR Unit then software shows the status of

99. After reconciliation when balances tally then the software show the status of 00. The head

office sends advices to branches through mail and list form. According to the prudential

regulations issued by the State Bank of Pakistan reconciliation should take place with in 30 days,

but for certain times it takes place after due date.

Employees Funds Unit

HO Accounts Department of ZTBL consists of Employee fund unit. Major responsibilities of

this unit consists of activities related to the managing funds, investment of surplus funds,

payments of retirement benefits of gratuity, pension, GPF, GTI, BF grants etc. to out going

employees. It is also the responsibility of this unit to prepare the accounts of the funds annually

and these are later audited by external auditors. Further more it records the contribution towards

employee’s funds and maintains individual accounts in visionary funds where ever applicable. It

maintains the book of accounts of trust funds and invests the surplus funds and manages the audit

with the help of Chartered Accountants Firms. It facilitates the payment if benefits of

Benvolevent Funds, Pensions, Provident, Gratuity and Group Term Insurance (GIT). It also

facilitates the payments of various benefits just as death compensation/donation to deceased

employee’s family and marriage grant to clerical staff etc. It manages outstanding staff advances

of employees who die during bank services. It recovers funds provident funds advances. It

facilitates the arrangement of actuarial valuation study as required under International accounting

standarad-19

This unit consists of trustees, who manage these funds through operational staff of this unit. The

regulations, standards and instructions of the banks are kept at first priority while managing these

funds. According to the regulations of the bank, Head of the Accounts and in charge of employee

funds are chief trustee and trustee according to their functional position. To select the chief

trustee, according to the Banks fund regulation two third rules is applied.

This unit manages different types of the funds for different purposes as shown in figure in the

Sr. No. Name of Fund Purpose

1 ZTBL Employee Benefit Fund To write-off/adjust house building and

conveyance advances of all officer/staff who

die during Bank service and payment of death

compensation.

2 ZTBL Benevolent Fund

(Officers)

Payment of BF grant as admissible under rules

3 ZTBL Benevolent Fund (Staff) Payment of BF grant as admissible under rules;

Funeral charges & Marriage Grant

4 ZTBL Pension Fund Payment of pension as admissible to

employees on superannuation or voluntarily

exit from service after completion of 25 year of

service.

5 ZTBL Gratuity Fund (under

SSR-1961)

Gratuity is paid to employees having less then

10 year of service. After 10 years of service the

gratuity is transferred to pension fund.

6 ZTBL Gratuity Fund (under

SR-2005)

Payment of gratuity as severance benefit to

employees regulated under SR-2005

7 ZTBL Employees Provident

Fund

Payment of account balances during service

or/and accumulated Provident Fund to member

at exit from service.

8 ZTBL General Provident Fund

(Officers)

Payment of account balances during service

or/and accumulated Provident Fund to member

at exit from service.

9 ZTBL General Provident Fund

(Staff)

Payment of account balances during service

or/and accumulated Provident Fund to member

at exit from service.

10 ZTBL Contributory Provident Payment of account balances during service

or/and accumulated Provident Fund to member

Fund at exit from service.

Central Accounts Department of ZTBL

Aims & Objectives

The central accounts department of ZTBL formulate and maintain accounting polices and

procedures manuals accounting standards to ensure dissemination and implementation across the

bank. It formulates and prepares financial statements keeping in the view of the requirement of

Bank. It also makes sure the proper accounting of Assets, liabilities, and Income and

Expenditure.

Functions

Central accounting department issues instructions related to accounting polices and procedures.

Central Accounts Department of ZTBL consists of five units like Policy Unit, Accounts Unit,

Corporate Tax Unit, Fixed Asset unit, Prepayment Unit.

Policy Unit

Policy Unit plans accounting procedures of accounting in both head office and branches and

coordinate with other departments with in the head office on the different policy meters. It deals

coordination of external auditors and arrange payment to them. It formulates bank charges

schedules and circulates among the branches and submits to SBP on half yearly basis. It deals

with management letter and executive summary and suggests guidelines for adjustment of

suspense account. It performs administrative functions for the department such as sanction of

leaves and budget preparation. This unit also provides guidelines to the branches regarding

rectification of accounting errors and audit observation.

Accounts unit

The Account unit of the Central Accounts Department coordinates with concerned departments

for the timely production of statement of affairs. It prepares financial statements whiling

compiling balances under relevant group of heads from trial balances. It makes the list of

abnormal entries for rectification. It prepares quarterly, half yearly and yearly financial

statements for the audit committee. It prepares annual capital adequacy ratio statement for

certification by external auditors.

Tax unit

The Tax unit of the Central Accounts Department of the ZTBL provides guidelines of deduction

of the tax under the ordinance of income tax 2001 and collects tax payment documentary

evidences for tax deducted. It communicates and coordinates with tax consultant, SBP and

income tax authorities and collects related to the tax refund case form consultant. It pays advance

tax and prepares the statement along with tax related audit.

Fixed assets unit

It sends out timely formats and procedures for the fixed assets to the Zones, Branches, and Head

Office Department. It deals with collection of fixed assts schedules as well as other required

documents from branches and head office department. It compiles and summarizes the fixed

assets schedules on country level along with data maintenance. This unit on quarterly basis

compiles the addition and deletion of fixed assets. It works to monitor and verify the disposal of

fixed assets and depreciation charged by the departments and head office on quarterly basis. It

calculates and accounts for the deferred tax assets and coordinates and cooperates with external

and internal auditors on the different issues of the fixed assets of the bank.

Pre-payment verification unit

Pre-payment unit of the ZTBL Bank is designed to verify all payment structures related to the

Head Office. It checks availability and competence of sanction of the competent authority. It

works to check procedural compliance and completeness of documents.

Budget and Fund Management Department

Aim and Objective

The main aim of Budget and Fund Management Department of ZTBL Bank is prepare the

financial plane for the credit limits, fund review and to arrange additional resources for

maintenance of additional liquidity for efficient distribution, timely discharge of liabilities and

operations of Bank.

Functions

Budget and fund management department of ZTBL mainly develops the policies, procedures and

standards for the budget planning and analysis. It coordinate and cooperate with administrative

and government in order to resolve budget issues. It automates budget process and preserves the

data and obtains approval from Board of Directors for annual budget. It gather the data of

various departments and analysis that for their performance. Further it consists of four units as

described bellow.

Budget Planning Unit

Budget Analysis Unit

Treasury Unit

Fund Reconciliation Unit

Budget Planning Unit

The Budget planning unit of the Budget and fund management department of the ZTBL develops

departmental polices procedures and standards for the financial management and budget

planning processes and parameters. It communicates with administrative and governance groups

in order to resolve the budget issues. It compiles and process necessary information for the

preparation of annual reports. It generally evaluates and review expenditures and submits to the

audit committee. Its further role is to provide information and analysis for the purpose of the

annual planning and effective efficient decision making.

Budget Analysis Unit

It generally analyzes and monitors financial activities of departments which show their

performance. On the basis its analyzed results performs the highly effective steps. It develops

assumptions and strategies for future budget cycle.

Treasury Unit

Treasury Unit is engaged in the arrangement of the fund for the different purposes to the

branches and maintains their records. It manages Banks accounts with SBP and commercial

banks such as MCB, HBL, and UBL and so on. It checks out the appropriate balances in the

branches if there are excess balances then its calls for and if there is less balances then it transfer

the funds and also declare the deposit rates for the depositors. It performs the role of coordinator

while performing the role of coordination with SBP, commercial, Internal and External auditors

on the matters of treasury. It deals the matters of investment of surplus funds provided by the

branches.

Funds Reconciliation Unit

It mainly plays the role of reconciliation of Bank accounts with other commercial banks at Head

Office, due maintenance of check and balance of funds received or remitted from other branches.

Advices issued by branches are responded by Funds Reconciliation Department. It also monitors

the reconciliation of bank accounts with other commercial banks.

Regulatory Reporting Deportment

The regulator gives instructions What to do, when to do and hoe to do as Government agencies

and SBP etc, while reporting means perpetrations of the reports and submission of the reports to

the regulators. That’s why this department reports certain information to the regulators and

ensures it that bank has compiled all instructions.

Aims and objectives

It aims to fulfill the statuary reporting requirements and provides financial reporting to the

management for the specific purposes. Its objective is to provide and ensure the effectiveness in

meeting statutory reporting obligations. It makes prompt and accurate analysis to aid effective

decision making. In last it ensures the implementation of the Basal-II.

Functions

It reformulates and redesigns system of data capturing, its consolidation and subsequent

reporting keeping in mind regulatory requirements. It ensures the implementation of updated

reporting requirements, which are update time by time. It analysis the financial results and repots

it to concerned authority and arrange compliance with external and internal auditors. Further

more it performs the job suggested by the regulatory authority.

Reporting process

There are mainly five steps in reporting process, which are defined bellow:

Data Capturing

This is the step in which data is gathered from various sources such as field offices, deportments

such as CAD and ISD and from financial reports such as Accounts, D/R Series etc.

Consolidation

In this step the gathered data is consolidated in to single hole, because this data is collected from

various sources.

Data verification

In this step collected data is verified weather the collected data is valid and true or not, because

the collected data is not all ways reliable. It needs very careful examination due to possible errors

and mistakes, which are later rectified for report generation purpose.

Report generation

On the basis of analyzed and verified data is injected in the form of reports which is provided by

SBP.

Submission

In this last step the complete formed reports are submitted to the regulatory authorities such as

SBP. The main sources of submission are courier and online.

Personal Experience

Personal Experience

My internship was started on 6th of July at Operation Division of the ZTBL Islamabad. Firstly we

met with Sir Mahmood Karim Qureshi Sahib, he is the Senior Vice President of BD & MD

department. We were the under supervision of SVP BD & MD department. He warmly

welcomed in the ZTBL Head Office and gave us the Brief introduction of the ZTBL and purpose

of the organization. After meeting with SVP of BD & MD department I moved to the ZTBL

Islamabad Branch, to the operation branch as Schedule given in the internship letter issued by

ZTBL Head Office. I spend my first two weeks of Internship at ZTBL Islamabad Branch at

operational Branch. As I wanted to the get information and knowledge about work which is

going on grass root level, where the basic work is performing.

During internship period (8 weeks) in ZTBL (Internal Audit Department), I learned a lot of

knowledge from the experts and highly qualified persons. It was necessary to fulfill the practical

requirements of the degree of master of business administration.

Chapter no 2

Team Members

Learning and personal Internship experience

Practical world is different from that we studied in books. When students getting their degrees

from their institutions, every one have its mind set goal, either he wanted to start his personal

business or wanted to get a good job. Internship is the compulsory academic requirement where

you are studying in the institute. As I’m student of MBA and I selected the ZTBL Bank for my

learning experience because ZTBL is the developmental organization of the Pakistan. Its

technology is used for the high production development, so that it was our nicer chance to get

into this to enhance the learning approach and get good experience from the organization.

Head Office Accounts Department

Mr. Haider Ali Jan Arbab (Senior Vice President)

Mr. Ghulam Muhammad (Vice President)

Mr. Muhammad Ali (Assistant Vice President)

Mr. Tariq Ejaz (Assistant Vice President)

Mr. Muhammad Naseer (Assistant Vice President)

Mr. Zulfiqar Ahmed Satti (Grade - 1)

Mr. Shaheen Iqbal (Assistant Vice President)

Mr. Sher Alam Khan (Assistant Vice President)

\

1 st & 2 nd Week July 12, 2010 – July 23, 2010

I started my internship in ZTBL form Monday 19th of July2010. On the first day of Internship I

was introduced by the office members and the head office accounts Department in which we are

doing the internship. Next day I was briefed with details about the employee fund unit.

Recording of contributions towards employee’s funds and maintenance of individuals accounts

in provident funds where applicable. Next day I was told about different funds. There are of

basically the following funds.

ZTBL Employee Benefit Fund

ZTBL Benevolent Fund (Officers)

ZTBL Benevolent Fund (Staff)

ZTBL Pension Fund

ZTBL Gratuity Fund (under SSR-1961)

ZTBL Gratuity Fund (under SR-2005)

ZTBL Employees Provident Fund

ZTBL General Provident Fund (Officers)

ZTBL Contributory Provident Fund

ZTBL General Provident Fund (Staff)

Next day I was briefed with details about the employee fund. The funds are managed by the

trustees through operational staff of the unit. Each activity of funds is managed in accordance

with the funds regulations and Bank’s instructions in this regard. Fourth day I was sent in

payment unit and introduced the unit & office staff. Next day I was briefed with details about the

function of payment unit. The main function of payment unit is to make the payments of head

office expenses. Make all payments at Head Office and application of Income Tax as applicable.

Provide tax chalans to Suppliers/Contractors.

In the first day of 2nd week I was in payroll unit where introduced by the office members and

payroll unit. Next day I was briefed with details about the function of payroll unit, such as

preparation of Payroll of Employees posted at Head Office and disbursement thereof, calculation

of income tax, deduction and deposit with State Bank of Pakistan In the third day I was in inter

Team Members

branch reconciliation unit and was introduced by the office members and inter branch

reconciliation unit. Next day I was briefed with details about the function of inter branch

reconciliation unit. Last day of 2nd week I discussed these main points such as timely

reconciliation of inter branch transactions and communication in this regard with Branches and

Zonal Offices and generating reports of Inter Branch Transactions - Originating & Responding-

wise outstanding entries.

Fund Management Department

Mr. A.D Abid (Senior Vice President)

Mr. Iftikhar Hussain (Vice President)

Mr. Shahid Tuafel (Grade - 1)

Mr. Aftab Udin (Grade - 1)

Mr. Khalid Qamar (Grade - 1)

Mr. Hammid (LATE) (Junior Manager)

3 rd Week July 05, 2010 – July 09, 2010

In the first day of second week I was introduced by the office members and introduced by the

fund management Department in which I was doing the internship. On the second day I was

introduced by the various documents like, Advices and Vouchers. Next day I was briefed with

details about this important document of ZTBL. In ZTBL advices are used for the purpose of

financial transaction there are two types of advices such as Debit advices and Credit advices.

Next day we were briefed with details about the vouchers. There are there types of vouchers such

as Debit vouchers, Credit vouchers and Transfer vouchers. Debit vouchers have white colour,

credit vouchers have blue colour and transfer vouchers have yellow colour.

In ZTBL Head Office there is no cash transaction that’s why used only transfer voucher. Debit

and credit vouchers are used in ZTBL branches but not in head office. Next day of this were

Team Members

given the assignment on Microsoft excel in which we maintain the record of funds that head

office issue to the branches for tractors.

In the last day of this were given the another assignment .in this assignment we were checks the

total amount of the branches and those branches that have above three million we write letter of

those branches that they remit the extra amount to head office.

BUDGET DEPARTMENT

Mr. A.D Abid (Senior Vice President)

Mr. Waqar Hussain (Vice President)

Mr. Zafar Iqbal (Assistant Vice President)

Mr. Ahmad Aleem (Grade - 2)

Mr. Ashraf Siddique (Grade - 2)

Mr. Khalid Khatak (Grade -3)

Mr. Amjad (Senior Assistant)

4 st Week June 28, 2010-July 02, 2010

On the first day of 4th week I was introduced by the office members. Next day I was introduced

by the Budget Department in which I was doing the internship. Budget Department is basically

to develop a budget process which clearly identifies issues, incorporates planning, establishes

accountability factors and provides follow-up reporting. In the second day of I was told by the

allocation of budget. Allocation of budget is done on two bases such as Demand based budget

and Expenditure trend based budget (with some % increase like 10%). Next day I was briefed

with details about this allocation of budget. In demand based budget allocate on the demand for

Team Members

this purpose budget department check the demand of branches and head office and allocate the

budget. Expenditure trend based budget is one in which department allocate the budget of

branches and head office same as last year or some percentage increase in the last year budget

allocation. Next day I was introduced with other important term such as Contingency /

unforeseen reserves.

Budget department also appropriation of capital and revenue expenditure for additional funds

from contingency/unforeseen reserves for new schemes introduced during the year.

Central Accounts Department

Mr. Rana Mujahid Ali (Senior Vice President)

Mr. Ali Abbas (Vice President)

Mr. Farooq Aftab (Vice President)

Mr. Ali Hassa (Assistant Vice President)

Mr. Muhammad Saleem (Grade - 1)

Mr. Muhammad Iqbal (Grade - 1)

5th Week August 02, 2010 – August 06, 2010

In the first day of 5th week I was introduced by the office members and introduced by the central

accounts department. Next day I was briefed with details about the pre payment verification unit

fund unit. I briefly discussed about the function of these units such as verify all payments

relating to head office and check budget/ceiling. Next day I was in policy unit and discussed

about the policy unit. I briefly discussed about the function of these units:

Team Members

Coordinate with other departments in the head office on policy matters, issue specimen signature

numbers and up-date specimen signatures booklet for use by authorized signatories in

branches/head office and Allocate new G.L. Heads for accounting purposes.

In the forth day of this week I was in tax unit. Where, I briefly discussed about the function of

these units such as Issue guidelines regarding deduction of tax at source under the income tax

ordinance, 2001, coordinate with tax consultant, SBP & income tax authorities on tax issues and

Prepare statement & payment of advance tax u/s 147 of the income tax ordinance, 2001.

In the last day of this week I was in accounts unit. We are briefly discussed about the function of

these units such as prepare quarterly, half yearly and yearly financial statements and its agenda

for presentation to audit committee & board of directors, compile balances under relevant group

of heads from trial balances for preparation of financial statements and produce list of abnormal

entries/balances for rectification.

Regulatory Reporting Department

Mr. Khalid Mehmood (Senior Vice President)

Mr. Mubashir Umar (Vice President)

Mr. Muhammad Ali (Assistant Vice President)

Mr. Jameel Ahmad (Assistant Vice President)

Mr. Kashif ur Rehman (Grade - 1)

6th Week July 26, 2010 – July 30, 2010

First day of 6th week I was introduced by the office members and introduced by the regulatory

reporting department. Next day I was given brief details about the functions and objectives of

this department such as improve effectiveness in meeting statutory reporting obligations, prompt

and accurate analysis to aid decision-making and periodic financial reporting to the management.

In the third and fourth day of this they gave me the trial balance and said to make a balance

sheet. During balance sheet formation I faced some problems so as I discussed these with office

members and I finalized the balance sheet. In the last day of this week I made financial analysis

of balance sheets such as Horizontal analysis and Vertical analysis.

Chapter 3

Performance Analysis of the company

SWOT ANALYSIS

Strengths

It provides the loan at cheaper interest rate as compare to the other Banks.

In Pakistan, majority of the farmers is poor that’s why farmers are required to get loan

from the bank so ZTBL has a very vast market to operate in.

ZTBL gets most of the funds from different developmental institutions including

Government, ADP, and SBP etc. so in case of bad debts the bank won’t have to suffer a

lot.

It is affiliated with different research institutions and it has all sort of agricultural

machines and technology so it can easily achieve its aim which is the development of

agriculture in Pakistan.

ZTBL has a staff college for the training of its employees in Islamabad, through proper

training more efficient team of employees can be made which shall be beneficial in tough

banking competition.

One of the core competency of the bank is its MCOs because ZTBL is the only bank

which has a team of highly experienced and properly trained MCOs who can easily

disburse loan and can achieve recovery target quickly hence risk of bad debts is reduced.

Through different computer softwares data is kept and maintained. Some of these

softwares are CFOCS, DMS, MIS, and HRIS etc.

ZTBL has no competitors in the market, some banks started lending facility for agri

business but due to lack of efficient team of MCOs those banks had to suffer heavy loss.

The farmers have a trust on ZTBL because of its operations and the behavior of mobile

credit officers.

Audit zone performing its job in a better way to rectify the errors and fraud cases.

Weaknesses

Sometimes the lending is done on political basis. Due to the influence of political leaders

the recovery system is affected which leads to bad debts.

The bank has no treasury department due to which funds are not being properly utilized

and the bank is missing a great opportunity to earn profit.

There is exuberance of old, non technical and uneducated employees in ZTBL. These

employees are promoted to senior level management on the basis of seniority due to

which performance is affected.

Some cases of nepotism are often seen in the bank when loans are given by the branch

managers to their relatives and fake data is maintained.

Most of the employees even seniors managers are computer illiterate. They can even

check their emails properly. So IT implementation seems to be failed in the bank due to

rigid attitude of employees because they are not adaptable to change.

They are lacking of banking online system.

Opportunities

By utilizing the efficient team of MCOs the bank can have heavy amount of deposits.

The bank can set up its treasury department in Karachi for proper utilization of the funds

and for maximum profit earning.

The bank can reduce its expenses by laying-off non performing employees.

The bank has a good reputation in the market and its employees are highly trained for

agri business development planning so it can also operate in Middle East because the

Arabs are now focusing on agriculture.

ZTBL can become a leading commercial bank by slightly changing its culture. It is

already equipped with highly experienced bank officers.

Threats

As the economy situation is very bad and the country is facing liquidity crunch that’s

why ZTBL may have to face difficulty in getting funds.

In order to overcome the liquidity problem the bank has started operating in commercial

banking market but due to inefficient commercial banking practices ZTBL may have to

face a severe situation.

The climate of the earth is rapidly changing due to which heavy rains and floods are often

anticipated. This is an alarming situation for ZTBL to operate in the market being an agri

lender.

The bank has a very small profit margin because it gets funds from SBP at 6% and

provides funds to the farmers at 8% only.

Agricultural crop rate decreasing each year

Ratio Analysis

Current Ratio

Formula: Total current assets/Total current liabilities

(Values are in %)

Ratio 2006 2007 2008

Current Ratio 0.86 0.99 0.96

Current ratio has improved last year as the traditional value of the current ratio is 2. In 2008 the

current ratio of ZTBL was 0.99 last year in 2007 it decreased to 0.96 but the difference is very

low as compare to last year. The analysis of current assets showed that almost 50% of current

assets comprise cash. This is a healthy sign for the ZTBL.

Debt to Equity Ratio

Formula: Total Debt/Total Equity

Ratio 2006 2007 2008 2009

Debt to Equity Ratio 0.34 0.29 0.20 0.18

The debt to equity ratio of the ZTBL is decreasing since last years as in 2006 D/E ratio is was

0.34 and in 2009 it is 0.18. The reason is that the company is mainly financed by equity, which is

evident from low Debt/Equity ratio. The debt is being paid over the period of time. Hence the

company apparently not properly utilizes this source of finance.

Total Debt to Total Asset Ratio

Formula: Total Debt/Total Asset

Ratio 2006 2007 2008 2009

Total Debt to Total

Asset Ratio

0.17 0.17 0.13 0.10

The trend in above given table shows that the Total Debt to Total Asset Ratio decreases

continuously, as in 2006 it was 0.17 and in 2009 it is 0.10. The reason is that the company is

equity based and low financial leverage, accordingly there is very low Debt/Total assets ratio.

This trend is continuing over the past five years.

Interest Coverage Ratio

Formula: EBIT/Interest Charges

Ratio 2006 2007 2008 2009

Interest Coverage

Ratio

10.16 13.69 36.7 65.42

The interest coverage ratio of ZTBL increases as we move from 2006 to 2009. The company has

very high interest coverage ratio. This is mainly due to low debts and increase in the profits over

the years. It is evident from the previous five years data.

Total Assets Turnover

Formula: Sale/Total Assets

Ratio 2006 2007 2008 2009

Total Assets Turnover 0.41 0.51 0.51 0.52

The Total Assets Turnover Ratio of ZTBL in 2007 is 0.51 and in 2009 is 0.52. There is slit

difference it suggests that the assets turns over ratio over the period remain static especially

during last two years.

Net Profit Margin

Formula: Net Income/Sale

Ratio 2006 2007 2008 2009

Net Profit Margin 0.29 0.29 0.34 0.39

The Net Profit Margin of the ZTBL increases as we move from 2006 to 2009 which suggests that

there is decrease in expenses and expansions.

ROA

Formula: Net Income/Total Asset

Ratio 2006 2007 2008 2009

ROA 0.13 0.15 0.18 0.20

The ROA of ZTBL in 2006 is 0.13 and in 2009 is 0.20, which increases as we move from 2006

to 2009. The return on Assets ratio has increased over the period of time, which indicates that

assets are effectively managed and utilized. We saw a trend of 2 to 4 percent increase in each

year.

ROE

Formula: Net Income/Equity

Ratio 2006 2007 2008 2009

ROE 0.26 0.26 0.28 0.34

ROE of ZTBL in 2006 is 0.26 and in 2009 it is 0.34. It is due to increase in net profit. We have

observed an increase of 5 to 8 percent in return on equity in previous year from 2006 to 2009.

Earning per Share

Formula: Net Income/Share O/S

Ratio 2006 2007 2008 2009

Earning per Share 2.61 3.56 4.53 5.72

The Earning per Share of ZTBL increased in 2006, which is 2.61 and in 2009 it is 5.72. As a

result of proper utilization of resources and decrease in costs, the net profit of the company has

been increased over the years. The second reason is that the company enhances its infrastructure

at a low cost. All these arrangements results in increase of earning per share.

Payout Ratio:

Formula: Dividend per share/Earning per share

Ratio 2006 2007 2008 2009

Payout Ratio 0.86 0.67 0.77 0.87

The Pay out Ratio of ZTBL in 2006 is 0.86 and in 2009 it is 0.87. The dividend payout ratio has

increased tremendously. This shows that less percentage of funds is re-invested during the year.

The company is being operated in highly technological area should make comprehensive

planning for sustainability in post deregulation era of interest sector in Pakistan. If we observe

the recent year trend, all the described items on top have a positive sign showing future growth

and compact current position. If we look at profit after tax we see that it improves significantly

over the years due to reduction in cost and increase in assets. This is a good sign for the

organization to expand the business. The organization also expanded its Assets significantly

showing the worth of the organization. Interest coverage ratio of the organization is increased

due to reduction in debt to equity ratio. Debt to equity ratio depict that company is more equity

financed and financial charges are reduced. However in my opinion company should utilize

optimal financial structure and enhance debt side of financing to reduce more fixed cost of the

company profit.

Liquidity ratios:

Liquidity reflects the ability of company to meet its short term obligations using assets that are

most readily converted into the cash. Assets that may be converted into cash in a short period of

time are referred as liquid assets that are listed in financial assets as current assets. Current assets

are often referred as a working capital because these assets represent resources needed for the

day to day operations of the company’s long term, capital investments. Current assets are used to

satisfy short term obligations. The amount by which current assets exceed current liabilities is

referred as the net working capital.

Chapter no 4

Conclusion and Recommendations

Recommendations

ZTBL should improve the Management system.

They should be employee and customer oriented.

They have to introduce the dress coat into the organization.

Loaning procedure should be easier and convenient to the customers and easy processing system.

They should adopt the new agriculture technology for the high level production to increase the

GDP level of the country.

ZTBL has to play vital role for introducing new energies to overcome the problems of the fuel

and bio gas.

Political involvement should be eliminated so that they can take good decision and actions for

the better disbursement.

Marketing department should play vital rol for introducing new products.

They should also play role for advertise their products and features and functions of the products.

ZTBL Head Office has to update the annual reports and manuals annually.

They should hire the employee on the merit basis.

Their employees have to knowledge about their organization and about its department where

they are working.

Employees should be qualified and productive.

ZTBl has to introduce again for Project Financing scheme. Because the scheme was successful

before but due to the some hurdles it was closed. But it really highly benefited the whole

country.

The bank’s logo and its color should be changed.

Fresh and energetic graduates should be select for the recruitment on the merit base.

Bank should also be male and female oriented for the better performance of the organization.

ZTBL has to started Online banking system so that their customer will get benefit from their

services and number customer will increase to their organization.

ZTBL has to introduce ATM card service to facilitate their customers

ZTBL has to focus on commercial banking also

Introduction of New Branches to expand their business.

Introduction of DMS to overall branches.

CONSLUSION:

During my internship here in ZTBL, I found that ZTBL has high level of professionalism and

challenging environment and its culture is friendly. ZTBL seems Top Agriculture Financing in

the future as indicated by the financial indicators. It keeps energy and potential to serve the

deserving clients in all over the world. The bank has set itself a vision to be a world-class bank.

This can only be achieved with dedication and a passion to excel in every activity. I really

admire ZTBL’s policy makers for designing investor friendly and customer oriented products.

The bank is really working well and contributing a valuable part in the economy of Pakistan

through tax, giving loan to government, giving loans to the businesses for their survival and

expansion, generating a well skilled human resource and employment etc. During this internship,

I really learned Professionalism, leadership skills, communication skills, problem solving skills,

situation analysis skills and how to become a good mentor etc.

Head Office Account Department

SVP Office

PA/(OG-I)

Inter Branch1 (VP) - VAC ANT

(AVP)

(AVP)

(AVP)

(OG-I)

(AVP)

(OG-I)

(OG-II)

Payment Unit1 (VP) - VAC ANT

Employee Fund Unit

Payroll Unit1 (VP) - VAC ANT

Fixed Assets Unit1 (VP) - VAC ANT

(OG-I)

(OG-I)

(OG-I)

(AVP)

(AVP)

(OG-I)

(AVP)

(AVP)

(OG-I)

(OG-I)

Regulatory and reporting deportment

Non-clerical staff

Clerical Staff

Grades of Bank

SEVP

EVP

SVP

VP

AVP

Grade-1

Grade-2

Grade-3

Assistants

ZONES & BRANCHES LOCATIONS

With an integrated network of over 27 zonal offices and 342 branches in

Pakistan