Bismillah Textile

Asma Kazmi
SESSION: 2003 –2005

Mr. Khalid Aziz

In the name of ALLAH, The Beneficent, The merciful:

“It is not righteous that you turn your faces towards the East And the west but righteousness is this that one should believe in ALLAH and The last day and the Angels and the Book and the Prophet (PBUH) and giveaway wealth out of the love for him to needy and the way-farer and the Beggars and for the way-farer and the beggars and for (the emancipation of) the captives, and keep up prayer and pay the poor rate; and; the performers of their promise, and the patient in distress and affliction and in time of conflicts these are those who are true (to themselves) and these are they who guard (against evil)”

(Peace be upon him)

Praise be to God, the Cherishes and Lord of the world-most Gracious and most Merciful.
We are grateful to almighty Allah for enabling us to complete the work presented in this thesis. It is through his unending mercy that this task moved towards success.
This is my first effort of my carrier. And after the God, We will like to admire the personality who is the best gift by the God for me, is my mother whose prayers are always with me and I feel that I am nothing without her prayers.
I also grateful to my honorable teacher Mr. Khalid Aziz for teaching me to see the silver lining in every dark cloud. I also conclude that, This work not has been fulfilled without the advice and help of Mr. Nasir Abbas and my special thanks to Bhai Jawad and Mrs. Nosheen Jamil.

Asma Kazmi

In Master of business Administration,Internship Program is an important part to give students an opportunity to have experience of practical field.Unless and untill the students experience the novelty of practical work.their knowledge of what they study in theoritical courses remains incomplete. The most important point in an Internship Program is that the student should spend their time in a true manner and with the spirit to learn practical orientation of theoretical study frame work .

This internship report is on my eight weeks practical training at National Bank of Pakistan Gulgasht Baranch ,Multan. In this internship report I have tried to give detail about the National Bank Of Pakistan,working and the functions of different departments of the bank.

Soneri Bank Limited


Presented to: Mr. Shahid Hussain Nadeem

Presented by: Saleem Hussain

Roll no.58 II
Session 2001 to 2002

Govt. College of Commerce
Bahauddin Zakariya University

Internship is the most important part of the M.Com studies. In fact internship provides the opportunity to us to implements our bookish knowledge in practice.

More than the internship is also provides the plate form to us to assess our strength and grip toward the concepts of the post graduate knowledge. This report reflects what I have learned during my internship period.

I have spent my time in different departments of the Soneri Bank and I tried my best to get the maximum knowledge during my training period.

I am very thankful to all members of the Soneri Bank for their sincere efforts and devotion for the preparation of this report.

I am also greatly under obligation to Prof. Shahid Hussain Nadeem (Govt. Post Graduate College of Commerce Multan) whose sincere encouragement enables me to complete the whole task.

It’s my pleasure to dedicate of my this minor effort to my


I am very thankful to the following person who has given me enough assistance and guidance and spare their valuable time for me during my Internship Period.

Mr. Qamar Azeem Chief Manager
Mr. Malik Zafar Iqbal Assistant Manager
Mr. Saleem Akhtiar Incharge Foreign exchange & Credit
Mr. Sajid Riyaz Incharge Accounts Department
Miss Nadia Noor Assistant Incharge Foreign exchange
Mr. Saadat Ali Incharge Credit
Mr. Syed Ali Naqvi Remittance, clearing Department
Mr. Syed Ali Raza Incharge Cash Department

I am again very thankful to all of them because they are very cooperative to me during my internship


History 7
Corporate Date 8
Organization Structure 10
Export Department 11
Import Department 18
Advances Department 22
Accounts Department 26
Deposit Department 28
Cash Department 32
Account Opening Department 39
Soneri Future Schemes 42
Branches 50
Financial Analysis 53
Strengths and Weaknesses 62
Suggestion and Recommendation 64
Pattern of Share-holding 65

History of Soneri Bank

Incorporated on September 28, 1991 the first Branch of Soneri Bank Limited formally opened doors for operations in Lahore on April 16, 1992 followed by Karachi Branch on May 09, 1992. The bank now operates with 30 Branches spread all over Pakistan including the   Northern Areas of the country where no other private bank has ventured so far. Expansion of branches is based on a policy of maintaining a balance between the urban and rural areas with a view to offering services even in the remote areas of Pakistan. Pleasant and sophisticated atmosphere has been provided in the branches, which are all fully air-conditioned and computerized. The essence of Soneri Bank business philosophy is to cater to the banking requirements of small & medium sized entrepreneurs, providing them qualitative & competitive services with emphasis on encouraging exports. Nearly forty percent of credit portfolio is related to export financing and credit decisions are taken within 48 hours that is why the slogan of bank is:
We have more time for you




Mr. Badruddin J. Feerasta


Mr. Safarali K. Lakhani


Mr.Alauddin J. Feerasta

Mr. Nooruddin B. Feerasta (Sr.)

Mr. Amin A. Feerasta

Mr.Abdul Hayee

Mr. Asadullah Khawaja (NIT Nominee)

Mr. Hasan A. Bilgrami (NIT Nominee)


4th floor, IEP building, 97-B/D-1,

Gulberg III, Lahore.


Mr. Abdul Hayee


Taseer Hadi Khalid & Company

Chartered Accountants


Mandviwalla & Zafar, Advocates

Tahir Ali Tayebi & Co., Advocates

Sheikh Atta-ur-Rehman & Association, Advocates


THK Association (private) Limited Ground Floor,

Sheikh Sultan Trust Building No.2,

Beaumont Road, Karachi.

Tel.:(021) 568 6658

(021) 568 9021


Chief Executive

Board of
A president, a secretary, 9 other member

Directors, Senior Executive, vice president

Provincial Headquarters
Senior Executive, vice president, provincial chief

Divisional Chief, Execute vice president

Circle Execute, Senior Vice president

Zonal Chiefs, Vice President

Branch Manager, Officer etc.


Export earning and the volume of exports has now become an important factoring deciding the economic fate of numerous people. Soneri Bank is well aware of this fact and it plays their required role in order to boost exports. Soneri Bank also has an export department working under competent experts.

For the export purpose following procedure is adopted
Registration of Exporter
Under the registration (importer and Exporter) Order, 1993, as amended from time to time, no person can export any goods from Pakistan unless he is duly registered as an exporter with the Export Promotion Bureau.
Forms prescribed for declaring Exports
As required under the Federal Government notification dated 1st July 1948 the exporter are required to declare their export to Customs/Postal authority in form ‘E’.
Certification of Export Form by the Bank
Before the export form is lodged by the exporter with the custom/postal authorities all the copies thereof are required to be certified as under by the Soneri Bank.
a). Certified that the above exporter is known to us that he is bonafide businessman in Pakistan.

And that he has made arrangements with us for the realizations of the export proceeds, of the goods declared on this form on the due date from payments or with in six moths from date of shipment/posting, which ever is earlier.

b). we under take to ensure that export proceeds against shipment on firm contract shall be received by us on the due date for payment or with in six months form the date of shipments/posting, which ever is earlier.

c). We under take that in the event of non-realization of export proceeds against shipment on consignment sale within period of six month, we shall obtain from the exporters and furnished to the state bank of Pakistan a full explanation as to the circumstances resting in non-realization.
B) We further undertake that in the event of short realization, we shall obtain from the exporters and furnished to the state bank of Pakistan a fully documented account sale certified by the consignees/Chamber of Commerce of the country of the import.
Printing and Distribution of Export Forms
Central Office of Soneri Bank is maintaining a complete recorded of all export forms printed by them and of then distribution to branches and customers. For this purpose, they are maintaining a stock register which show branch wise distribution of the export form.

Maintenance of Party-wise Record of Certified Export Forms
All Branches of Soneri Bank LTD. are maintain another register for recording the particulars of export forms issued and certified by them in respect of each exporter. In this register they are also maintain record against each from the date of submission of the export documents in cases where shipments have been made or of the surrender of complete set of export forms in cases where goods have not all been entered for shipment or of submission of complete “shutout notice” in cases where the goods have been entered for shipment but have been shut-out.

Functionality Utility of the Copies of Form ‘E’
Form ‘E’ is consisting of the sets of four copies each. The exporter should submit the full set of Form ‘E’ to the Soneri Bank for certification. It has been completed and signed by the exporter himself or his authorized agent. While certifying Form ‘E’. Banks ensure that exporters give only one address in Form ‘E’. After the form is certified by the Bank, it should be submitted to the Customer/Postal authorities at the time of shipment alongwith the shipping bill. The Customer authorities will detach the original copy and after filling in the portion relating to them and affixing their seal and signature thereon forward it to the State Bank. The Customer authorities will return the duplicate, triplicate and quadruplicate copies to the exporter or his authorized agent who will retain the quadruplicate for his own record and submit the duplicate and

Triplicate copies to the Soneri Bank along with the shipping documents within 14 days from the date of shipment. Now the Bank will forward the triplicate copies of the export forms to the State Bank alongwith the monthly return in which realization of export proceeds is reported, retaining the duplicate for his record.

Submission of Export Document to Soneri Bank
All shipping documents covering goods exported from Pakistan and declared on Form ‘E’ must be passed through the medium of Soneri Bank within 14 days from the date of shipment. The exporter must submit the duplicate (bearing Customer seal and signature of Customer officials with Code number) and triplicate copies of Form ‘E’ alongwith the shipping documents, invoices etc. to the bank who had certified the form ‘E’. an extra copy of shipper’s invoices must be attached to the triplicate copy of the Form ‘E’.

Security of Documents
The Bank compare the bills of Lading and/or documents with the relative export form and satisfy themselves that they confirm in all respects to the declarations made on the relative export forms and the amount of bills and invoices is not less than the value declared on them.

Short Shipment
Where a portion of a consignment is short shipped and the exporter consequently draws a bill or papers an invoice for a quantity less than that

Declared on the relative export form, he should produce a notice of short shipment on the prescribed form duly certified by the Customs alongwith the shipping documents. Now Soneri Bank will forward the short shipment notice to the State Bank alongwith triplicate copy of Form ‘E’ while reporting the realization of full value of the goods shipped.

Shipment lost or damaged in Transit
If shipment from Pakistan is lost in transit for which payment has not already been received, the Bank must see that an insurance claim is made immediately the loss is known. The triplicate copy of the relative export form must be endorsed with the narration “Shipment Lost” under the stamp and signature and sent to the State Bank.

Verification of Export Proceeds Realisation Certificate
Sometimes exporters are requested to produce to the Government Department evidence of exports and realization of then proceeds. In such cases proceed realizations certificates may be issued by the Soneri Bank in the prescribed form after getting then authenticated by the State Bank.

Remittance of Export Commission, Brokerage and Discount
Banks or any Authorized Dealer is permitted to allow payment of commission/brokerage/discount due to foreign importers or agents by exporters in Pakistan at the following rates:

Maximum rate of Commission etc,

Books, journals and magazines Upto 33 1/3%
Engineering goods (Electrical and Upto 10 %
Sports goods, surgical instruments Upto 7 %
Cutlery, leather goods, ready made
Garments and other textile made ups
Carpets and plastic manufactures.
Cotton Upto 2 %
All other goods except cement Upto 6 %

Method and period of payments
Full exports value of goods exported form Pakistan and declared to the Custom authorities, should be received in an approved manner, on the due date for the payments of with in the six months form the date of shipment/posting, with ever is earlier, or within a period as may be prescribe by the State Bank through specific or general instructions though an Authorized Dealer either in convertible foreign currency in with the authorized dealer maintain accounts or in U.S. dollars or in Pakistan rupee from a non-residence bank account. However, where the term of sale/irrevocable letter of credit provide for payments on 180 days, usance/270 days usance in the case of Hand Knotted Carpets, from the date of shipment/ posting shall be permissible for the exporter repatriate

the export proceeds within 195/285 days form the date of shipment/posting.
Exports to Afghanistan are not requested to be declared on form ‘E’.

Trade across the country boundaries when goods come inwards, it is called import. The ministry of commerce, Govt. of Pakistan under export control act 1950, regulates import of goods in Pakistan.
Modes of payments for the Import:

Payment for the import may be made either through letter credit, without letter of credit, documents received for collection on the basis of contracts or as clean remittance without opening of Letter of Credit and with out registration of contract.`

Letter of credit is very important in foreign trade. So the importer request to Bank to open LC in favor of beneficiary. First of all he fills the application for opening of Letter of Credit in triplicate with the following details.

Name and address of importer
Classes of importer
type of industry
Center of import
Sources of import
Value of LC to be establish amount of import fees paid
Description of items with ITC/H.S code number

Freely importable /importable subject to condition
Country of import with name and address of beneficiary
Performa invoice/ indent number
Date, name and address and
Registration number of indenter and in the last
Declaration by the importer.

A letter of credit is just a guarantee given by one bank to a third party i-e., exporter. The guarantee ensures that he will receive payments of his goods provided he performs certain obligations. It also ensures to the importer that payment to the exporter will only by made when goods have been received.

In others words
“Letter of credit is a commitment on the part of buyer’s bank to pay and accept draft drawn upon it provided draft does not exceed a specified amount”.

Types of Letter of Credit
Following are some important kinds of LC.

1- Irrevocable L/C
Such Letter of Credit cannot be modified or cancelled by the opening bank. Here absolute undertaking is given by the opening bank that it will honors the draft presented by negotiating bank.
Revocable L/C
Such Letter of credit can be revoked by the issuing bank at any time. This means that it can be modified and cancelled by the opening bank without giving any notice.
Red Clause L/C
Under such Letter of Credit the opening bank authorizes the negotiating bank to provide finance to the exporter that he can purchased goods for the shipment. Such type of Advances are called pre-shipment advances
Green Clause L/C
Besides containing the provision to issue pre-shipment finance, this letter of credit also provides for storage expenses and where houses charges.
Revolving L/C
Under this type of Letter of Credit the amount of credit is automatically renewed once the credit condition has been fulfilled.
Back-Back L/C
Back to Back Letter of Credit is one where the person in whose favour it has been opened, uses it to established and other credit in favour of an other person. Thus one credit backs another credit. Etc.
Parties involved in Letter of Credit

There are four parties involved in L/C
Issuing Bank
Paying Bank

Bank must insure before opening a letter of credit that in each case a firm commitment exist for this purpose they should insure that an invoice order, or indent has been issued by the indenter.
It is permissible to open a letter of credit on the basis of Performa invoice/order issued/accepted for foreign supplier.
Full description of goods to be imported is given, when the amount of LC is Rs. 1.5 million or over authorized should obtain a confidential report on the exporter from their branches.
Application and agreement for irrevocable documentary credit freely negotiable in beneficiary country (IB8).
IB8 contain the following,
Name and address of opener
name and address of beneficiary
amount of credit
invoice value of shipment
nature of goods
quantity, prices etc.,
name of indenter and reference of invoice/order/indent.
From …….to ………country of destination.


Financing and trade facilitation services have been design keeping in view the needs of business and industry. The aim is to reach out the widest spectrum of business concern there by insuring that the risk effect portfolio of the bank is spread out and serves the country in the best possible manner. For the convenience of the reporting, credit facility granting by the Bank are classified in the heads of accounts appearing in the subsidiary ledger and statement of affairs. However financing broadly classified as follows:
Fund-based facility
Non-fund-based facility
Funds-based facilities largely aim at financing commercial and trade business.
While non-fund-based facilities focus on facilitating and contracting business.
Fund-based facility aim at providing funding support for all possible working capital finance requirement of business and industry including those for:
Accusation of local and imported goods and raw material.
Normal inventory holding period smoothing out their flow to the market.
Direct marketing manufacturing and processing expenses and

Domestic and international trade receiver.

Non-fund-based facilities aim at banking needs of importers and all type of contracting fund by offering a full range of Letter of Credit and Letter of Guarantee.

Types and purposes

Followings are some important type of financing
1. Temporary running finance (TRF)
Customer who maintains satisfactorily conducted accounts at their specific request be accommodated to temporarily overdraw their current balance to met unexpected and urgent financing requirements. The amount to which overdrawing may be permitted, will depend on security coverage, the previous conduct of the account with the Bank as will as the turnover in the account, and average balance maintained in the past..
This facility is extended for a very short period of time or should alternatively be converted in to regular running finance facility.

2.- Running Finance (R.F.)
Most businesses fluctuating financing need arising either from the need to meet temporary funding shortfall in full fling payments commitments to their suppliers or in meting operating expenses pending realization of trade and other receivable. To cater to this working capital needs,

Customers require of fluctuating balance financing facility which could be drawn up to stated limit. It should be granted against the security of tangible assets to a reasonably acceptable extent.
This facility is normally allowed for maximum period of twelve month and is revived once in a year.

3. Demand Finance (DF)
This is a short to medium term finance facility under which the usual maximum term is Upto three years depending on the Bank’s knowledge about the customer, the merits of the proposal and the nature of financing need. This facility may extend beyond the three years period in the Housing Finance facility granted to the permanents staff members of the Bank.

Purpose: This facility is usually finance acquisition of long life assets who pay out period exceed 12 months, or expenditure of capital nature whose benefits will accrue over and extended period.
Re-payment: This facility repayable by customers normally in periodic installments with mark-up being payable normally quarterly intervals.
Security: If the demand finance facility is being recommended for acquisition of fixed assets then it is to be covered by the mortgage charge over the related fixed assets as prime security. If however, it is being extended to finance working capital or investment requirement then the facility will need to be secured by current assets components and by other tangible if and as considered necessary.

4- Term Finance (TF)
This facility should be extended for the purpose is in which re-payment will be extended over a period 18-24 months either is installments or in a lump sum (Balloon payments).

Finance against packing Credit (FAPC)
IN FAPC security lien over L/C or contract this kind of finance facility is favorable for the bank because goods are in the possession of the bank and customer gets goods from bank when they made payment

Finance against imported merchandise (FIM)
In import when importer has no funds to clear the goods then bank will creates FIM account and got the goods under the pledge which may be released to the importer by issuance delivery order by payments.


Function & importance of account department.
To collect voucher passed in different departments.
To arrange the voucher and balancing of GL.
Prepare daily statement of affairs.
Prepare daily position.
Prepare Soneri a/c extract.
Prepare periodic statements.
Maintenance of voucher register.
Types of voucher
Simple Cr. Voucher.
This voucher is used for crediting head of a/c where customer a/c is not involved. It may also be used for recovery of mark-up Loan, installment and consumption of stationary etc.
Simple debit voucher.
It is generally use for assets and expense a/c when assets are purchased (e.g.) purchase of furniture.
Party credit voucher.
It is use where a customer a/c is credited and intimation is sent to party. It is prepared in duplicate, original copy is called credit voucher and

duplicate copy is called credit advice. It is used for credited TT receipt, OBC realized etc.
Party debit voucher.
These are used for debiting the customer a/c where customer is to be informed of debit entry. These are also prepared in duplicate, original copy is called debit voucher and duplicate copy is called debit advice.
Cash debit voucher.
It is used for making internal payments in cash.
When postage stamps are paid
For the payment of convince charges
For the payment of newspaper bill etc.
Contra voucher .
These voucher are used for recording contra assets and contra liabilities. These voucher records the debit and credit effect.
Essential contents
Voucher must be dated.
Head of a/c & subhead of a/c must be written.
GL code must be written.
Narration is also necessary.
Amount in word and figure must be written.
Contra head.


It is the most important department because of its functioning’s. Its function are to issue cheque books after opening their accounts from account opening department and this account opening department issue the account holder a account No. and then it is referred towards the deposit department where this department issue them cheque books and they get a slip of their cheque book serial no. from —–to—– and date and then they handled to them. In this department people deposit their money in current account, saving account, and fixed deposit according to their will. In other words we can say that the fundamental function of any commercial band is the acceptance of deposits. All other function of a bank is based upon this function. Banks accept deposits from those who have surplus money in their hands but they are unable to use it in a profitable way. In order to attract general public and persuade people to deposit money in bank, different way of account are maintained by the Soneri Bank.
These are following
Current account
Current account is such an account in which you can deposit and withdraw money at any time. (Of course during working hours) it is a running account and no interest is paid on its balance. The deposit in this account is called demand deposit.

PLS saving account
These accounts are just like saving deposit. Only difference between is that they are free of interest. The declare profit for such-holder after the close of financial year. Withdrawal from such account can be made only Upto 8 times in a month. In case large amount withdrawal is needed, seven days notice has given to the bank.
PLS Soneri saving account
· Introduced in 1994
· Can be operated like c/d account
· Profit is calculate on daily product basis
· But profit is paid on monthly basis
· Profit rates are given at the end of this dept.
Notes deposit
This will be repaid on receipt of prior notice. Any amount of deposit may be accepted by the Bank for unidentified period. Notice period depends upon the choice of depositor. Profit is paid on daily period basis.
Term deposit
Term deposit is issued for a certain time period. Customer can not withdraw before maturity of period.
Deposit in round figure are accepted for any duration of one month,
3 months, 6 months, one year, 2 years, 3 years.
At least there must be minimum Rs. 1000.
Profit is paid on daily product basis at the rates determined by the
Central office by annually.

In case the depositor wishes to withdraw the deposit before its maturity they will not be entitled to receive the profit.
Term deposits withdrawn after one year, but before maturity will
earn profit for the period deposit remain with the bank.
S.S. card is not required.

Soneri Mahana Amdani Scheme (SMAS)
Soneri Mahana Amdani Scheme is for those who want to get the monthly income for necessities. In this case investment must be in
Minimum amount of Rs. 50,000
Overall it is a part of PLS. In this Soneri Bank provide income to customer monthly.

Profit will paid during the first week of each month.
Minimum period is one year.
Special Notice Term Deposits (SNTD’s)
These deposits are accepted for unidentified period which will be repaid only on receipt of prior notice before the withdrawal.
Date of maturity is not mentioned.
7 days notice and 30 days notice.
At the tome of acceptance notice period will determined.
Profit rate is depends upon the situation.


Effective: 01-01-2003
Period: January-June 2003

Deposit Category (% p.a.)
PLS Saving Account 5.00
PLS Soneri Saving Account
Up to 20,000,000
Over 20,000,000 to 50,000,000 5.00
Over 50,000,000 5.50
Notice Deposit
7 days
30 days 4.00
Term Deposit
1 month
3 month 5.50
6 month 6.00
1 year 6.50
2 years 6.75
3 years and above 7.00

Cash is a liquid assets, and play as part of blood in the body. All the cash is handled and managed by the cash department.
It is the function of the cash department to make the supply of money regular. The head of the cash department is called chief cashier. There are two cashiers in our branch. One is chief cashier and second is cashier.
Paying side
Cashier can pay up to 50,000 after scrutiny and checking.
Above 50,000 there is a supervisory level.
50,000 to 300,000 ———- Sub manager
300,000 and more ———–Manger

Cash Balance book
In this
Opening balance ­­­­­­­­­­­­­­————
+ Total received ———— with demonstration

– Total payment ———–
Total cash — ———

Received from main branch. xxxxx
Sent to other branch xxxxx

Separate register will be operated with initial of manger which is called “Cash in Transit Register”

In case of any deposits from the customers, when cash is received then it is recorded in “Received Cashier’s Book”
In case of any payment when payments are made to payees by cashier then it is recorded in the “Payment cashier’s Book”

Specimen of ‘payment cashier’s Book’

S. no. Account no. Name Cheque no. Token no. Amount
Rs. Signature

At the end of the day cashier prepare the cash position
Specimen of cash position

Cash Position
Payment made within 3 minutes
Receipt issued within 3 minutes
Opening balance xxxx

Drawn from banks xxxx
Received from clients xxxx
Total xxxxx
Paid into banks xxxx
Paid to client xxxx
Balance in hand xxxxx

Receipt vouchers————– payment vouchers
Chief cashier officer

In case when of cash shortage in cashier a/c

Pass the following entry.

Debited suspense a/c-Sundry debtors
Credit Cash

It means that cash has been paid more than receiving cash

Sundry debtors voucher will be signed by the cashier who will be the victim and verified by the Manager.

All shortage and excess will be reported to G.M office in the same day.
Again clearing the voucher next day sundry debtor a/o of must be finished through the monthly installment.
Recovery of each month

Debit cash a/c
Credit suspense a/c-Sundry a/c

In case of excess of cash a/c
All the same procedure for excess of cash is used as in cash shortage.
Report to the G.M office in same day.
Book balance entry.

Debit Cash
Credit Sundry deposits-sundry creditors

Entry will be in same sundry creditor register.
Excess cash is paid to the true owner after the permission of G.M office. They suggest getting the indemnity.

Reversal Entry.
Debit Sundry deposits-sundry creditors
Credit Cash

If there is no claimant for this amount this will become the earning of the bank.
And after one year not claiming from any one then contact to G.M office to reverse it. Cr. Income a/c- misc. earning

While making payment cashier must keep in mind the following points.
Note the date of cheque in following manner.
a. Government cheques are accepted within the three months after the date of issue.
b. Depositor Cheque is accepted with in the six month after the date of issue.

c. Treasury Cheque is accepted with in the fifteen days after the date of issue.

Amount in words and figures must be same.
Customer balance must be sufficient to honor the Cheque.
Signature of the drawer. Etc.

While in case of depositing the cash the paying slip must be same dated.

Computer generated balance must be equal to the cash balance book

Manger will sign over the book
Once in a month a surprise counting must be by manger.
Balance book must be sign daily.
Notes properly denomination and properly excise.
Cashier must hand over these notes to customer.
Customer must greet.
No arguments with customer.
Do not misguide the customer

Cashier work is more technical and speedy. So cashier must be skilled in their work

Denomination of notes – should be mentioned on back of pay –in – slip and on Cheque.
1000 * 9 = 9000
500 * 14 = 7000
Check and counter check and after satisfaction of cashier then do entry in computer. All vouchers must be noted in any register.


Steps involved in Account opening are following.
1- Filling of Account Opening Form (AOF).
AOF should be completely filled in all particulars.
(i) Title –Name-Data of Birth- Address- Occupation- NTN # – Type of account – currency – Type of organization – Zakat Deduction – Signature – Details of other bank account – Introducer etc.
(ii) Letter of kinship
Purpose: To give the address and name of any relative to contact after expiry of 3 years of last operation. If any account is inoperative about more than 3 years then the contact given in the letter of kinship is used to know about the customer (but nominated person may not be entitling to the amount contained in the a/c).
(iii) Signature Specimen Card
In CD account two cards are used. First remains with manger and other with cancellation officer.
(iv) A form
A form is used for the purpose of issuance of cheque book.
2- Interview.

Manger will interview with that a/c opening person to judge that, is he suitable for being a customer?

3- Introducer.
Introducer should a well known customer. Introducer is not a guarantor. He only help in identification of the a/c holder in case of any mishaps / fraud.
4-Deposit of amount
1- A senior & experience officer or Branch Manger / Assistant Manger handle the account opening department
2- AOF to be taken in duplicate.

Following documents are provided by the Bank.
1- Account Opening Form (AOF).
2- Signature Specimen Card.
3- Letter of Kinship.
4- Rules for account.

Customer must provide the following thing.
In case of individual
(i)-Copy of Identity Card.
Sole proprietor
ID card.
Stamp of business.
Letter head.

In case of Partnership
Letter head
Signature of all partner on letter of partnership
Authorized partners sign on S.S. card.
Private Limited company
Letter head
Article of association
Memorandum of association
Stamp of the company
Signature of authorized person
Certificate of incorporation
Public Limited Company
Common seal
Memorandum of Association
Article of Association
Certificate of incorporation with attested copy
Certificate of commencement
Audited Report
Chairman and Directors signature etc.
Resolution passed by the Board of Directors
Letter head



Soneri Bank is launching “Ghar Finance” early 2003 for low & medium income individuals for purchase of pre-constructed house/flat for self-occupancy. Salient features of the scheme are as under:-
(I). Maximum Individual Finance: Rs. 2.5 M.
(II). Repayment Period: up to 10 Years.
(III). Mark-up Rates: –
1 to 5 Years Finance 5.5% above
Prevailing SBP discount rate minimum 13% p.a.
5 to 10 Years 6.5 % above
Prevailing SBP discount rate minimum 14% p.a.
Above mark-up rates are subject to revision on January 01, every year based on the S.B.P. Discount Rate prevailing at the close of preceding year or such mark-up rates as determined by the bank under its sole discretion in case S.B.P. Discount Rate is not prevalent.

Eligible Borrowers:
Employees of reputable legal entities self-employed or business persons
Take Home Salary / Declared Income to be 4 times of monthly repayment installments amount
Borrowers Equity:
A minimum of 30 % of the property price.
Mortgage of the property
Mortgage Insurance.
Designated Branches: Haidery Branch, Karachi Phone (021) 6638617 & 6630409
Shahrah-e-Faisal Branch, Karachi PH: (021) 4535546 & 4535553
Defence Branch, Lahore PH 🙁 042) 5730760-61
Model Town Branch, Lahore PH: (042) 5889311-12

At Soneri Bank Customer convenience comes first. With this in mind Soneri Bank
Now offer Round the Clock Telebanking facilities COMPLETELY FREE.

Soneri Round-the-clock Telebanking (SRCT)
Access to SRCT available 24 hours a day and 365 days a year.
A Time Saver
Telebanking saves your
. The hassle of traffic rush.
. Travel time to the bank.
. Que-ing in at counters.
Now the customers can have access to their accounts information while enjoying
the comfort of their home/office or any other place in the world.
Easy to Operate

Dial 021-2400900 & 2400901 and obtain any or all of the following information
. Balances in your accounts.
. Statements of your accounts.
. Information on our various products.
A unique password known alone to ACCOUNTS HOLDER ensures complete confidentially of information on their account.

Soneri Car Finance 11%p.a.
Soneri Bank is also providing Car financing on the following conditions:
Maximum finance amount Rs. 1 Million for brand new un-registered cars. Repayment within 1 to 5 years in equal monthly installments inclusive of mark-up. Mark-up rate 11 percent p.a. flat.
Down Payment:
Just 15% of Car Price.

Salaried persons up to 55 years of age in continuous permanent employment for past 2 years with financial institutions/multinational companies/public limited companies/corporate customers of Soneri Bank.
Self employment persons like doctors, engineers, architects etc. registered with professional organizations & business persons who are directors, partners & sole proprietors and corporate customers of Soneri Bank up to 60 years of age.

(3) Monthly installments must be more then 33 percent or declared income in case of self employed Persons. Registration of car would be in bank’s name to be transferred in borrower’s name on full payment of the finance. Comprehensive insurance with Soneri Bank as beneficiary through bank’s approved insurance company. To calculate monthly repayment installment multiply finance amount by the applicable factor given here under:

-1Year 2Year 3Year 4Year 5Year
0.090106 0.048180 0.034200 0.027220 0.023020

Soneri Bank ATM Cards provide their customers Self-Service Banking 24-Hours-a-day, 365 days a year and offers following services at touch of a button from ATMS,
Cash withdrawal.
You can withdraw cash from your account(s) up to Rs. 20,000 per day in multiples of RS.100, Rs. 500, and Rs.1, 000 currency notes.

Balance Request.
You can see the available balance in your account displayed on the screen or obtain a printed advice.

The ATM shall provide you with an instant mini-statement of your ATM linked accounts (declared by you on the application) listing 10 last transactions in the account(s).
Detailed Statements.
Request for a detailed statement is processed at the push of a button. Requested statement shall be dispatched by your branch at your Registered Address within 4 working days.
Cheque Book Request.
Request for fresh Cheque book may be made through the ATM. The chequebook may be collected from your branch after 3 working days against surrender of duly signed cheque book Requisition slip.
PIN changing facility.
You may change your Personal Identification Number (PIN) through the own ATMs any number of times.

Soneri Bank ATM Card is available to customers if they maintain a Resident Rupee Savings or Current Account with any of on-line branches.
(For Bank charges on the ATM service please refer to our schedule of charges in force)
Joint Account holders may also have their individual Soneri Bank ATM Card provided either of the two signatories is authorized to operate the account. The second joint account-holder, in this case, shall be provided with supplementary ATM Card.
ATM Switch Shared Network.
Cash withdrawals against a charge of Rs.15/-per withdrawal and Balance
Inquiry services are also available through 80 ATMs of ABN-AMRO Bank,
Askari Commercial Bank and Habib Bank Ltd, located in 10 different cities of Pakistan.


(Main Branch) (Main Branch)
87, Sharae Quaid-e-Azam Adamjee Insurance Building, I.I.
P.O. Box No. 49, Lahore Chundrigar Road, P.O. Box No. 5798
Tel: 6368142-48 Karachi
Fax: 6368138 Tel: 2436990-94,
Telex: 47694 SONRI PK 2425755, 2425877 Fax: 2436980 & 2418350
Telex: 20479 SONRI PK 21736 RUPMK PK
G-14, Commercial Area Lahore Cantt. KARACHI
Defence Housing Authority, Lahore (Aga Khan University)
Tel: 5897181-83,5730760-61 Stadium Road
Fax: 5724325 Karachi Tel: 4852252
Fax: 4852251
90-B-C/II, Liberty Market KARACHI
Gulberg-III, Lahore (Clifton)
Tel: 5713445-48 Shadman Center Block-7, Clifton
Fax: 5713326 Karachi
Telex: 44304 SONRI PK Tel: 5830130 & 5877773/4 Fax: 5860671
Telex: 29790
(Circular Road)
49/2-B, Circular Road Lahore KARACHI (Federal B Area)
Hasan Mansion, Block 7 Federal B Area,
GUJRANWALA Near Aisha Manzil Karachi
Rail Bazar, Gujranwala Tel: 6373782-83
Tel: 224674-76 Fax: 6373781
Fax: 224677
FAISALABAD Silver Jubilee Center
Chiniot Bazar, Faisalabad Britto Road, Garden
Tel: 639877-78 East, Karachi
Fax: 649254 Tel: 7232877-78
Telex: 43320 SONRI PK Fax: 7232876

Saddar Road (Korangi)
Peshawar Cantt. Plot No. 7, ST 3/1 Sector 15, Korangi
Tel: 273424 & 277914-17 Industrial Area
Fax: 273727 Karachi
Telex: 52505 SONRI PKE Tel: 5066722
Email: Fax: 5066731
Telex: 27243
PESHAWAR *new Karachi *new
(Chowk Yadgar) (Haidery)
Shop No. 2400-2401-2402,Chowk Yadgar, Plot No. SF-10, Hussein Square,
Peshawar. Block-E, improvement Scheme No.2 Haidery-North Nazimabad Karachi.
Mujahid Road, P.O. Box No. 2958, Sialkot
Tel:596992-596983-581250 Fax: 596885. Karachi *new
Telex: 46445 SONRI PK (Jodia Bazar)
Email: D.S. No 11-B-313 Market Quarters,
Birjee Street Jodia Bazar Karachi.
Plot No. 7, Sector B/3 ghazi Manzil Allama SUKKUR
Iqbal Rd P. O. Box 5 Mirpur (Azad Kashmir) Glamour Heights
Tel: 44488 Plot No. C-260/4
Fax: 44588 Muhammad Bin Qasim Road, Sukkur Tel: 22382-22925
Fax: 22704
Saddar Bazar
P.O. Box No. 532, Gilgit RAWALPINDI
Tel: 3658 Kitchlew Building
Fax: 3658 41-Bank Road
P.O. Box No. 62 Rawalpindi Cantt.
QUETTA Tel: 5522901-103
Shara-e-Iqbal Fax: 5522906
P.O. Box No. 624, Quetta Telex: 54777 SONRI PK
Tel: 821610 & 821641
Fax: 821524
Email: 68-W, Sama Plaza
Blue Area
Sharif Plaza, Sargodha Islamabad
Road, Sheikhupura Tel: 2277551 & 2272460
Tel: 613570 Fax: 2277550
Fax: 56800 Telex: 4754 SONRI PK

Dr. Ziauddin Road Bagri Plaza, Lahori Gate
Saddar Main Bazar, Wazirabad.
P.O. Box No. 419 Tel:603703,603704. Fax: 603705.
Tel: 781528-29.
Fax: 781530.
(Fatima Jinnah Road) Mall Plaza
Defence Plaza, Fatima Quaid-e-Azam Road,
Jinnah Road, Hyderabad Multan Cantt.
Tel:28131,85997 Fax: 785998. Tel: 44884/511022.
Telex: 22097. Fax: 546808 Email:mainmtn@soneri

Ali Abad Hunza. 14-Mission Chowk,High Street Sahiwal. Email:mainsahiwal@soneri


2001 2000 1999

(000) (000) (000)
Share capital 782,719 626,175 500,940
Share-holders equity 1,543,047 1,272,635 1,101,913
Total assets 20,540,675 20,117,220 17,730,315
Investment 4,494,340 3,165,651 7,116,000
Deposit 16,053,886 14,029,595 12,262,293
Total income (before tax) 551,234 393,922 382,316
Total income (after tax) 270,412 164,386 132,819
Operating expenses 361,912 348,680 285,784
No of accounts 128,598 111,236 95,687


Earning Per Share
The earning per share is a good measure of profitability and when compared with E.P.S. of similar other companies, it gives view of the comparing power of the firm. E.P.S. calculated for a number of years indicates whether or not the earning power of the company has increased.
Earning Per share (EPS) = net profit after tax / number of shares

ITEMS 2001 2000 1999
Profit after tax 270,412 164,386 132,819
Number of shares 78271.9 62617.5 50094
EPS 3.45 p/share 2.10 p/share 2.12 p/share

From the above calculation it is clear that earning power of company has been increased as compared to previous years which are a good sign.
Return on Equity Capital
In real sense ordinary share-holders are the real owner of the company so they are more interested in the profitability of a company and the performance of the company should be judge on the basis on the basis of return on equity capital of the company. Return on equity capital is a relationship between profit of the company and its equity

Return on equity capital = Net profit after tax / paid up equity capital*100

ITEMS 2001 2000 1999
Profit after tax 270,412 164,386 132,819
Equity share capital 1,543,047 1,272,635 1,101,913
Return on equity capital 17.52 % 12.91 % 12.05 %

According to the above calculation it is clear that these ratio are more meaningful to the equity who are interested to know profit earned by the company and these ratio are increasing every year it means that company profitability is increasing.

Price Earning Ratio
Price earning ratio is the ratio between market price per share and earning per share. This ratio is calculating to make decision by investor whether or not to buy share of the company. This ratio is also useful in financial forecasting.
Price earning ratio = market price per equity share / earning per share

ITEMS 2001 2000 1999
Market price per share Rs 19.90 Rs 19.94 Rs 22.02
Earning per Share 3.45 2.10 2.12
Price Earning Ratio 5.77 times 9.49 times 10.39 times

Proprietary Ratio
This ratio is also known as equity ratio or net worth to total assets ratio this ratio indicate the long-term or future solvency position of the business.
Proprietary Ratio = Share-holder funds / total assets*100

ITEMS 2001 2000 1999
Share-holder fund 1,555,654 1,248,578 1,102,913
Total assets 20,540,675 20,117,220 17,730,315
Proprietary ratio 7.57 % 6.21% 6.22%


2001 2000
(Rupees in ‘000)
BALANCES WITH OTHER BANKS 7   1,065,536   713,729
INVESTMENTS 9   4,942,340   3,165,651
ADVANCES 10   10,198,907   10,931,001
OTHER ASSETS 11   642,887   528,450
OPERATING FIXED ASSETS 12   327,734   323,947
DEFFERRED TAX ASSETS 13   151,030   125,122
  20,540,675   20,117,220


BILL PAYABLE 14   240,782   335,993
DEPOSITS AND OTHER ACCOUNTS 16   16,053,886   14,029,595
OTHER LIABALITIES 18   467,810   326,168
  18,985,021   18,868,642
NET ASSESTS   1,555,654   1,248,578

SHARE CAPITAL 19   782,719   626,175
RESERVES   757,818   648,464
  12,607   (24,057)
  1,555,654   1,248,578


2001 2000
(Rupees in ‘000)
MARK-UP / RETURN / INTEREST EARNED 22   1,893,168   1,845,658
MARK-UP / RETURN / INTEREST EXPENSED   (1,454,885)   (1,391,963)
NET MARK-UP / RETURN / INTEREST INCOME   438,283   424,695

  (58,767)   (47,614)
DIVIDEND   –   593
OTHERS INCOMES   76,906   65,769
  915,499   743,010
ADMINISTRATIVE EXPENSES 25   (361,912)   (348,680)
OTHERS CHARGES 26   (616)   (408)
TOTAL NON-MARKUP / INTEREST EXPENSES   (364,265)   (349,088)
  551,234   393,922
PROFIT BRFORE TAXATION   551,234   393,922

TAXATION-CURRENT   (315,000)   (268,000)
-PRIOR YEAR   8,270   (958)
-DEFFERRED   25,908   39,422
27   (280,822)   (229,536)

PROFIT AFTER TAXATION   270,412   164,386




STATUTORY RESERVE   (54,082)   (32,877)
PROPOSED ISSUE OF BONUS SHARES @ 30% (2000; @25%)   (234,816)   156,544
GENERAL RESERVE   20,000   12,000
  (268,898)   177,421
BASIC / DUTIES EARNINGS PER SHARE (Rupees) 28   3.45   2.1

Cash Flow Statement For the Year Ended 31 December 2001

2001 2000
Cash Flow From Operating Activities (Rupees in ‘000)
Profit Before Taxation 551,234 393,922
Dividend Income – (593)
551,234 393,329
Adjustment for Non-Cash Charges
Depreciation and Write Off 59,326 56,200
Provision Against Non-Performing Advances and Others Assets 60,504 47,614
Gain on sale of Operating Fixed Assets (1,678) (3,432)
Finance Charges on Leased Assets 3,069 4,844
121,221 105,226
672,455 498,555
(Increase) / Decrease In Operating Assets
Lending to/ Placement with Financial Institutions 1,409,108 (393,883)
Advances 673,327 (3,181,908)
Other Assets (Excluding Advance Payment) (160,634) (158,931)
1,921,801 (3,734,722)

Increase / (Decrease) in operating Liabilities
Bill Payable (95,211) 32,556
Borrowings From Financial Institution (1,959,257) 410,204
Deposit and Other Account 2,024,291 1,767,302
Other Liabilities (Excluding Current Taxation 88,739 45,328
58,562 2,255,390
2,652,818 (980,777)
Income Tax Paid (209,367) (93,407)
Net Cash Flow From Operating Activities 2,443,451 (1,074,184)

Cash Flow From Operating Activities
Net Investment in Available For Sale Securities (1,740,025) 1,241,129
Dividend Income – 593
Investment in Operating Fixed Assets (63,376) (59,470)
Sale Proceed of Property and Equipment Disposed-off 1,941 3,642
Net Cash Flow From Investing Activities (1,801,460) 1,185,894

Cash Flow From Financial Activities
Receipt / (Payment) of Leased Obligation 1,845 (18,994)
Increase in Cash And Equivalents 643,836 92,716
Cash and Cash Equivalents at Beginning of the Year 1,959,166 1,866,450
Cash and Cash Equivalents at End of the Year 29 2,603,002 1,959,166

Like any other sphere of modern life, banking too has now gone very profound and vast. As the past era witnessed revolution, changes and innovation in every field of life, banking also went through different shares. Through the basic facts remain same but the practice application and operations have taken different shape.
During my internship I noticed some deficiencies of the Soneri Bank which are following
Rate of interest on different financial schemes like Car Financing are higher as compared to Faysal Bank.

Another deficiency is the non availability of on-line banking in Multan branch. Because many of Private Banks are on-line in Multan. If Soneri Bank wants to compete with them, then on-line banking must be immediately introduced in Multan Branch, because it facilitate the customer and helpful to provide the quality services.
Credit card facility is another key deficiency in the Soneri Bank. Now a day’s credit card is very common in our day life. Every well reputed customer want credit card so this facility must be introduced as soon as possible. Through credit card you can enjoy the facility of home shopping by online.

The strengths of the SBL include the rigid hierarchy level but it is a very pleasant sign that the employees of all levels are so loving, friendly and cooperative with each other. They enjoy working with keen interest.

The most important thing that I observe during my internship period is that all the employees are shows and serves the customers with best ethical values that are so important to win the faith and confidence of the valuable customers.

There is another thing goes towards the favor of the SBL is the good working environment for the employees. In the break time the employees have the opportunity to gather for lunch and during the lunch they did the informal talk with each other.

All the complaints from the employees and customers are handled by the operations manager and take the immediate corrective action to address the problem.


1- Building of the office is compress. It should be wide and opened

2- Bank staff is not Upto the required number. So staff should be immediately increased.

3- We should run with the pace of time, so ATM machine is the requirement of the changing environment of the world.

4- Tele-Banking facility should be immediately introduced in Multan Branch.

5- One branch in Multan city if not sufficient, even now the population of Multan is increased more than 1.4 million. More branches should be opened in the different territory of the city.

6- Out dated token system should be eliminated. A new system in this regard should be introduced to facilitate the respectable Customer.


841 1 100 32180 0.0411
2274 101 500 457128 0.5840
472 501 1000 321173 0.4103
3710 1001 5000 5327744 6.8067
143 5001 10000 964503 1.2322
40 10001 15000 486410 0.6214
16 15001 20000 274309 0.3505
11 20001 25000 248807 0.3179
8 25001 30000 218195 0.2788
5 30001 35000 158759 0.2028
8 35001 40000 300235 0.3836
7 40001 45000 295479 0.3775
2 45001 50000 94875 0.1212
2 50001 55000 104113 0.1330
1 55001 60000 59193 0.0756
1 60001 65000 60482 0.0773
2 65001 70000 131430 0.1679
1 70001 75000 75000 0.0958
1 75001 85000 78971 0.1009
2 85001 90000 173878 0.2221
1 90001 100000 90098 0.1151
1 100001 115000 102500 0.1310
1 115001 120000 116531 0.1489
1 120001 155000 121177 0.1548
1 155001 180000 155157 0.1982
1 180001 205000 184593 0.2358
1 205001 210000 206250 0.2635
1 210001 235000 213468 0.2727
2 235001 325000 474374 0.6061
1 325001 330000 329262 0.4207
1 330001 345000 333656 0.4263
1 345001 415000 350000 0.4472
1 415001 495000 415593 0.5310
2 495001 600000 995097 1.2713
1 600001 930000 603451 0.7710
1 930001 975000 934439 1.1938
1 975001 1375000 977375 1.2487
1 1375001 1730000 1378825 1.7616
1 1730001 2140000 1733720 2.2150
1 2140001 3105000 2142870 2.7377
1 3105001 3910000 3106250 3.9685
9 3910001 18220000 35222642 45.0004
1 18220001 18225000 18221683 23.2800
7580 78271875 100

Bank Of Punjab


In Masters of Business Administration, Internship Program is an important part to give students an opportunity to have experience of practical field. Unless and until the students experience the novelty of practical work, their knowledge of what they study in theoretical courses remains incomplete. The most important point in an Internship Program is that the student should spend their time in a true manner and with the spirit to learn practical orientation of theoretical study framework. This internship report is on my six weeks practical training at Bank of Punjab Civil Secretariat Lahore. In this internship report I have tried to give details about the Bank of Punjab, working and the functions of different departments of the bank.


First and foremost all praise be to Almighty Allah to gave me the courage and patience to carry out this responsibility successful.
I also wish to tender grateful acknowledgements with profound respect and gratitude to respected Dr.Muhammad Zaffarullah director of Institute of management Science B.Z.University, Multan& Internship coordinator Mr. Reza Ali for providing me an excellent opportunity to explore ourselves by practical experience of internship.
I am highly indebted to Mr.Shahzad Siddique ( Senior Chief Manager) & Mr.Sohail Tanveer (Operations Manager) of Bank of Punjab Civil Secrtetariat Lahore.
I also feel indebted to all the respected staff of Bank of Punjab Civil Secrtetariat Lahore who gave me very effective guidance to make this work successful.

Executive Summary
Bank Of Punjab has started its work as a non scheduled bank in 1989 and was given the status of scheduled bank in1994.It is performing specialized services to the government of Punjab. It has not able to show a remarkable performance. Further, the privatization of other banks has also created a competitive environment in banking industry.
Bank Of Punjab currently has a wide network of branches in side the province and other province of the country as well. Through this huge network of branches the bank is providing all sort of services that have become part of the modern banking. Bank Of Punjab successfully adopts innovation and new products which are rapidly adding up in the product mix of banking industry, all.
The bank is providing deposits facilities to more than 200000 customers in the country and which is increasing by the time. The bank has been providing a service to the Government of making salary payments to government employees on behalf of the government. These payments are sent to the bank of distribution from the provincial division of concerning departments.
In the deposits area the bank is providing special account such as PLS term deposits, which provides a monthly withdraw able return on the account. And there is a national income daily account carrying hybrid characteristic of saving and current account distributes all profit on daily product basis to the account holders. The bank is trying revolutionizing the services that are provided over the counter and is working for an early change in all branches of the bank.
In the advances side the bank has been successful in deploying its resources in the best way in all commercial, industrial and agricultural sector of the country. The advances have been increasing with the increasing trade and commerce and bank has been able to meet the requirements up to the maximum extent. The introduction of a new setup of services in shape of foreign currency account has further given a sharp rise in the banking field. This has made easy for the formers residing in Pakistan to be encouraged.
The financing process of all international trades, which modern banking made less complicated and more secur have increased with the global villege in the world. For banks it is an oppourtunity to grasp the maximum share as possible through being more
efficient to reach the customer. BANK OF PUNJAB has been providing these financing services with great esteem and devotion to public and private enterprises. Further due to being under the influence the bank has been forced to make unprofitable commitments too.
The management is considering the facts and doing planning for the sake of getting it through the unjustified pressures but still not be able to implement them in good manner. This is a further disturbed by the demotivated an unqualified staff that is workling with the bank.
To be able to regain the level of performance and profitability the bank has to take serious measures to escape from the political influence, build a competent and qualified cool pf employees, make all possible efforts to introduce the modern technology that is serving in the world and to enhance the confidence of the customer, all necessary steps be taken by the bank.

“Bank is a pipeline through which currency moves into and out of circulation.”
Bank accepts deposits and repays cash to its customers on their demand. The Bank borrows money at a lesser rate of interest and lends it to the borrowers at a higher rate. It is thus a profit-lending concern. Bank cannot lend all the money that has been deposited with it. It has to keep a certain portion of the total deposits in cash with them in order to meet the cash requirements of the individuals and business concern.
Banking History
Word Bank is said to be derived from the words Banc us or Banque or Bank.The history of banking is traced to as early as 2000 BC. The priests in Greece used to keep money and valuables of the people in temples. These priests thus acted as financial agents. The origin of banking is also traced to early goldsmiths. They used to keep strong safes for storing the money and valuables of the people. The persons who had surplus money found it safe and convenient to deposit their valuables with them. The FIRST STAGE in the development of modern banking, thus, was the accepting of deposits of cash from those persons who had surplus money with them.
The goldsmiths used to issue receipts for the money deposited with them. These receipts began to pass from hand to hand in settlement of transactions because people had confidence in the integrity and solvency of goldsmiths. When it was found that these receipts were drawn in such a way that it entitles any holder to claim the specified amount of money from goldsmiths. A depositor who is to make the payments may now get the money in cash from goldsmiths or pay over the receipt to the creditor. These receipts were the earlier bank notes. The SECOND STAGE in development of banking thus was the issue of bank notes.
The goldsmiths soon discovered that all the people who had deposited money with them did not come to withdraw their funds in cash. They found that only a few persons presented the receipt for encashment during a given period of time. They also found that most of the money deposited with was lying idle. At the same time, they found that they were being constantly requested for loan on good security. They thought it profitable to lend at least some of the money deposited with them too the needy persons. This proved quite a profitable business for the goldsmiths. They instead of charging interest from the depositors began to give them interest on the money deposited with them. This was the THIRD STAGE, in the development of banking.
By experience the banks came to know that they could keep a small proportion of the total deposits for meeting the demands of customers for cash and the rest they could easily lend. They allowed the depositors to draw over and above the money actually standing to their credit. In Economics terminology we can say that they allowed the overdraft facilities to their depositors. This was the FOURTH STAGE, in development of banking.
When every bank issues receipts and most of them allowed the overdraft facilities, there was then too much confusion in the banking system. The banks in order to earn profits could not keep adequate reserves for meeting the demands of the customers for cash. The failures on the part of the bankers to return money caused widespread distress among the peoples.
In order to create confidence among the people, steps were taken to regulate the banking organization. A conference was held in Nuremberg in 1548. It was decided that a bank should be set up by the state, which should streamline the banking organization and technique. The first central bank was formed in Geneva in 1578. Bank of England was established in 1694. The responsibility of issuing of notes is now entrusted to a central bank of each country.

At the time of partition total number of banks were 38 only. Out of these Banks the Pakistani Banks were only 2, Indian Banks 29 & Exchange Banks were 7. The total of deposits of Pakistani Banks was Rs.880 Million. & advances were Rs: 198 Million. According to banking companies ordinance Banks are the companies, which transacts the business of Banking in Pakistan.
Commercial Banks have constituted the most important [part of the intuitional credit in the economy of Pakistan. Being the largest source of credits, Banking Industry is a pivot of whole the economic activities in Pakistan. Section 37(2A) of State Bank of Pakistan Act 1965 lays down that the Banks must have paid-up capital & reserve of not less then Rs: 5 Lac & fulfilling certain other requirements for declaring as “Scheduled Bank”.
At the time of independence Bank services was badly affected. But with the passage of time these are improving. The government of Pakistan nationalized all Banks in early 1974. This act was done to minimize control of few hands over banking. But this step was proved e futile for the Banking in Pakistan. So the Govt. had to revise its decision in1990. Two Banks (Allied Bank of Pakistan Limited & Muslim commercial Bank of Pakistan Limited have been denationalized. Since then Banks were working well. Now slogan of the Banks is to serve their customers in the best possible manner.
Professor Berton:
“Banks are the guardian & distributor of money “.
Similarly we can say that it is a pipeline thorough which currency moves into & outside the circle. Banks accept deposited of money and repay it on demand. Bank borrows money at lesser rate of interest & lends it at higher rate of interest. In this way Banks earn money. Bank do not lend all money they collect, they keep certain portion of it as reserve to meet the uncertain demand of the customer.

In general terms the functions of a commercial bank can be classified under the following main heads.
Some people have an excess money and they want to deposits it to some honest man or an institution which can give them some profit. So the first function of commercial bank is to receive deposit there are three types of deposits.
1.1 Demand Deposits or Current Deposits
Some people deposit their excess money in the current accounts and they can withdraw their money deposited in this account at any time during the banking hours, so bank is not ready to give interest on it.
1.2 Fixed Deposits
These deposits are fixed for a particular period. Commercial banks also pay an interest on these accounts. An important thing related to it is the varying interest rates for the different period deposits. Interest rate increases with the increase in the fixed deposit period.
1.3 Saving Deposits
To create the habit of savings, bank accepts the saving deposits and pays an interest on these deposits. And this rate of interest is greater than the demand deposits.
Bank also advances the loans to the merchants and charges the interest. It is the major source of its income. It also issues the loan for short term, medium term and for long term. And bank receives the higher interest from the borrower for the long term loans offered.
Commercial banks also discount the bills and facilitate the business; for example one businessman purchases anything from another person and promises to pay after one month. The seller will write a bill to the buyer and there will be an order that after one month the buyer will pay the amount to the seller. Buyer will sign on the bill. In other words buyer will accept the responsibility of that amount. If seller is in need of money, he will take it to the bank and will receive the money by discounting the bills. The commercial bank also may rediscount it from the central bank.
By issuing cheques and drafts bank provides cheap, medium of exchange.
The commercial bank is very helpful in transferring the money from one place to another by issuing the drafts. This is very popular concept in the modern world and widely used in the business community.
Banks also provide lockers for the safety of precious articles. So now everyone can secure his precious metals like gold, silver, etc., and bank charges a very nominal charge for this facility.
Commercial Banks also perform the duty of an agent. It collects and pays on the behalf of the customers.
On behalf of the customers all the banks also make an investment in different companies and industries. And banks receive nominal charge from the customers.
It also creates and extends the volume of credit.
It also provides the finance to the foreign trade. Letter of credits are issued by the commercial banks for the foreign payments.
The commercial bank purchases and sells the securities, for itself and sometimes on the behalf of the costumes.
If a client directs his bank to act as a trustee in the administration of a business, the bank performs this responsibility.
Banks play an important role in the economic development of country. If our Banking system is not in accordance to the economic requirement then how it can play a vital role in our developments. The State Bank of Pakistan is at the apex and all the commercial Banks have to follow the rules of State Bank of Pakistan. Role of the banking sector can be judged by the following facts:
The commercial Banks namely United Bank Limited Pakistan, Habib Bank Ltd, Allied Bank of Pakistan Ltd. National Bank of Pakistan & Bank of Punjab has opened Branches in urban areas & rural areas to mobilize savings of people.
Banks & other financial institutions like ADBP, IDBP, and PICIC etc. Advances short & medium terms loans for financing of the development projects both in the private & public sectors .So they helping to accelerate the rate of progress (Economic) in the country.
The credit institutions collect the savings of people & make them available for facilitating the trade activities both inside & outside the country.
A developed baking system stimulates the growth of economy by creating favorable climate for capital formation in the Country.
Commercial Banks under the supervision & guidance of the S.B.P help in implementing & achieving the objective of monetary policy, which vary from time to time.
Commercial Banks are profit-seeking enterprises. In order to maximize profit they have the incentive from S.B.P to maximize the limit of finance. An organized Banking system keeps BOPance between the liquidity * profitability, thus assists in the planed development of the Country.
Commercial Banks receive surplus BOPance of the households and business & pay interest on the deposit of client. The depositors instead of having a fixed return on the deposit will share in the profit & loss of the Bank. The profit & loss scheme arrangement is the alternative to interest, under an Islamic economic system, which is since on the experimental basis in Pakistan.

On behalf of the Board of Directors, I am pleased to present accounts of the Bank of Punjab for the 1st quarter of the year ended March 31, 2006. Pakistan’s economy is on a high growth trajectory with GDP expanding by 8.4% during FY 2005. While growth has tapered during the first half of FY 2006, most macroeconomic indicators suggest that the economy is in good shape and real GDP growth of 6.0% during FY 2006 is forecasted. Policy makers are faced with the unenviable task of boosting economic growth potential while keeping inflationary pressures under check. The overall balance of payments situation remains manageable as growing remittances and an encouraging jump in both FDI and portfolio investment have helped eased the burden of a large trade deficit. Inflation has picked up after hitting an all time low in FY 2003 and is presently uncomfortably close to double digit levels, driving the SBP to maintain its tightened monetary stance.
The performance of your Bank remained satisfactory during the 1st quarter of the year. The Bank earned a pre-tax profit of Rs.822 million during the quarter as compared to Rs.565 million for the similar period last year indicating 46% growth. Profit after tax of Rs.585 million is 61% higher than the figure of last year’s corresponding period. Despite accounting for the dilution impact of about 58% bonus issue made by the bank for the year 2005, earning per share for the 1st quarter comes to Rs.2.04. Bank’s deposits rose to a level of Rs. 90,089 million at the end of the quarter. Advances portfolio of the bank has increased to Rs.71,385 million showing 12% increase over December 31, 2005. The capital and reserves of your bank have now grown up to Rs.7,362 million with a rise of 9% over the level as of December 31, 2005.
The staff of the Bank also deserve for an appreciation for their untiring efforts to achieve the targeted results.                                           For and on behalf of the Board
The Bank of Punjab was established in 16 November, 1989 under The Bank of Punjab Act 1989. Main Branch Lahore was the first Branch that was opened. In 1989 BOP was mended as a non – scheduled bank on in the province of Punjab. In beginning the main deposits were the government. Because it was opened to support the government of Punjab. In 19th Sept 1994 the Bank of Punjab was converted into a scheduled bank, The permission was being given by the Government of Punjab. After being converted into scheduled bank it opened its first branch in the city of Islamabad (Blue Area ) on the date 19th Sept 1994. The total numbers of staff of BOP is approx. 4000 most of the employees are master degree holder and are highly qualified and are working efficiently. It quickly expanded its operations in the Punjab province by opening its branches. Approximately one branch was opened in a day. The strength of branches in the province of Punjab is 255. .Now the total number of branches is 266. Today they established 266 Branches allover the country as:

Names of the cities No. of Branches
Rawalpindi 37
Lahore 67
Gujranwala 45
Multan 63
Faisalabad 43
Karachi/Quetta 05
Peshawar 06
Total Branches: – 266

Bank earned a pre – Tax profit of Rs. 3165million for the year 2005 with aremarkable growth of 82% over the previous year.
The Bank paid-up capital in 2005 Rs. 851.880 million.
Macro economic management is the major concern of an economy. In Pakistan over a long period of time, the gaps in saving and investment and BOPance of trade deficit have become the serious problem to achieve the desire level of growth.
The Bank of Punjab by the grace of ALLAH has the privilege to discharge its responsibilities to words national progress and prosperity with in the little period if its scheduling.
Awards and Achievements
Best Corporate Awards
The Joint Committee of the ICAP and ICMAP selected the BOP for winning 3rd position for The Best Corporate Report Award 2004 for the financial sector
Merit Award by South Asian Federation of Accounts (SAFA)
On the basis of evaluation of the Annual Report 2004, SAFA adjudged the bank of Punjab as the recipient of “Merit Award” under the “Banking Sector subject to Prudential Supervision” category.
2nd Kissan Time Awards
The Bank was adjudged as “Best Agri Loan Bank” and has been awarded 2nd Kissan Time award.
15th Bolan Excellence Award
The Bank was awarded Best bank Award under 15th Bolan Excellence Award distributed in 2005.
Achievement Award
The Lahore Chamber of Commerce & Industry rated the Bank as “Best Performance Bank” In year 2005.

To be a customer focused bank with service excellence
To exceed the expectation of our stakeholders by leveraging our relationship with the Government of Punjab and delivering a complete range of professional solutions with a focus on programme driven products and services in the agriculture and middle tier markets through a motivated team.
To achieve this objective the bank aims to:
Ensure that its performance in all facts of its operations more than matches that of its competitors.
Maintains a comprehensive range of domestic and international activities.
Maximize contributions from its key sources of personal machines brands representation and capital.
Be innovative progressive and the need of its customers with in the frame work of operational and prudent risk taker.
Act as a reputable efficient and responsible organization.
Pursue personal policies which recognize the aspirations and performance of individual and which are suited to the devise levels of skills.

Board of Director
The Board of Directors oversees the Bank’s strategic direction, policy formulation, its organizational structure its activity and succession planning of senior executives. The board meeting held in every quarter to review performance of the bank. Additional meeting may be called by the chairman to discuss specific issues of critical importance based on bank’s exigencies. Board committees have been estabilished for more in-depth analysis and review of varius issues. The committees then report to the board aftr each meeting. The Managing Director, who is also the chief executive officer of the bank, is powered for operational issues and day to day running of the bank. In carrying out of these duties the Managing Director is assisted by ateam of professional management through various committees as follows:
Management Committee
Asset liability Committee
Central Credit Committee
Operations Committee
I.T. Steering Committee
Special Management Committee
Corporate Information
Mr. Shahzad Hassan Pervez Chairman
Mr. Hamesh Khan President
Mr. Salman Siddique Director
Mr. Qaiser Zulfiqar Khan Director
Mr. Sikandar Musatafa Khan Director
Mian Muhammad Latif Director
Syed Salman Ali Shah Director
Mr. Shahzad Ali Malik Director
Mr. Gohar Ejaz Director
Mr. Jahangir Siddiqui Director
Mr. Azizul Hameed Secretary to board

Audit Committee
Mr. Qaiser Zulfiqar Khan Chairman
Syed Salman Ali Shah Member
Mr. Shahzad Ali Malik Member .
Salman Siddique Member
A.F.Ferguson & Co. Chartered Accountants
Registered Office
7-Egerton Road, Lahore- Pakistan
Organizational Structure
BOP Setup

Management Hierarchy

Senior Executive Vice President (SEVP)

Executive Vice President (EVP)

Senior Vice President (SVP)

Vice President (VP)

Assistant Vice President (AVP)

Officer Grade 1 (OG 1)

Officer Grade 2 (OG 2)

Officer Grade 3 (OG 3)

Operational Staff

Branch Level Hierarchy

General banking area is also call the operations group. It consist on following section


Accounts section
Accounts Department of the bank can be considered the most important department. This department is basically concerned with processes and activities of recovering, sorting, summarizing and reporting data resulting from the whole day transactions of all the departments. Actually the process of this activity starts from the preparation of all the required vouchers by
different related departments. When these vouchers are prepared, these are posted into respective computer terminals by the relevant departments. Before merging, a batch list is printed out by Computer Department and duly checked by the respective departments. After this, merging stage comes, after which a proof list is printed out. This is the stage, where Accounts Department starts performing its function. Proof list is checked by the Accounts Department.
This section performs the following functions:
Opening of Accounts
Issuance of checque books
Closing of accounts
Payment of Cheques
Types of accounts
Following types of accounts are open in BOP
Saving account
Current or demand account
Fixed account
Saving account (PLS)  
This type of account is designed to encourage the saving habit of the customer and lead to a long-term banking or investment relationship .Bank saving accounts are in the nature of deposits accounts and are not normally available for drawings. Rates of interest are typically ahead, by a small margin. Saving accounts with the banking sector represent a very small proportion of total deposits. Customer can make any withdrawals from type of account. The cash reserve ratio is typically low them the current account because the withdrawals against this account is very low. The minimum BOPance for this account is Rs.100 and interest rate is  
Current or demand account  
These are those deposits, which can be drawn by the depositor at any time by presenting a cheque to the bank. People deposit their money in this account they gave a ready command on their account in developed and under developed countries of the world, a very significant part of money is kept under current or demand account. On this type of account of interest transfer of cash or by cheque takes place at sight. The cash reserve ratio for this account is very high. The operating cost for the handling of this type of account is very high because withdrawals are very regular.  
Fixed account
Fixed accounts are those, which are deposited for a fixed period of time and are repayable after the expiry of stipulated time to the customers. Those people who have surplus funds and want to have save investments deposit the amount in the fixed account. The rate of interest given to depositor varies with the length of deposit, i.e. it is higher for longer period and lowers for shorter period. The rates on this type of deposits are higher than the saving bank accounts. The cash reserves against this deposit are very low because there is no fear of withdrawal of a month before the stipulated of time. No paying books or passes book or cheque book is issued to the customers against this deposit to the depositors  
 The authorities of bank of Punjab have the right to revise all these rates of interest with out any notice to customers generally rates of interest are revised after six months. The amount deposited for 7 and 30 days short term notice and accumulated for the period exceeding the limit and the customers can get the interest of the extra days of deposit but in the case of months and years the customer did not get any additional interest for the exceeding period of deposit.  
Procedure for Opening an Account
First of all, the customer gets an application from the bank, which requires all information necessary for opening account and also the documents required. An account can be opened as:
An individual account
Joint account
Proprietorship account
Limited company account
Club, society, association and trust
Information Required by the Bank
Telephone No.
Currency of Account
Nature of Business
Country of Residency
Special instructions regarding the account
Documentation In case of limited company accounts
Photocopy of National Identity Card of each director
Application form
Copy of company’s memorandum and articles of association
List of directors
Copy of board resolution
Certificate of incorporation
Their signature cards
Certificate to commence business
Documentation In case of Partnership Account
Application form
A copy of partnership deed
Signature cards of partners
Registration certificate copy
A copy of National Identity Card of each partner
Documentation In case of Club, Society, Association or Trust
Application form
Copy of rules
Certified copy of resolution
Signature cards
When the concerned officer is satisfied then he opens the account and gives an account number that will be used in all communications with the bank in regard to the account and when making deposits and withdrawals.
Bank has the right not to open an account without assigning any reason or to close the account if it is not operated in a satisfactory manner by the instructions of the head office
Issuance of Cheque Book
After opening the account, a cheque book is given to the customer to sign upon which the number of cheque book issued and the name of the customer is written. Bank issues a cheque book against requisition. A cheque book may be of 25(PLS), 50 or 100 leaves (current A/C). Rs. 3 per leaf as excise duty is charged to the customer.
A cheque book register is maintained by the office. In this register, the cheque book inventory, cheque books issuance is recorded.
Loose Cheques
If any customer forgets or leaves his cheque book at his home, which is far away from the bank or whatever the case may be, the customer applies with the bank for the issuance of loose cheque by the bank as he does not has his cheque book with him and the money is urgently required, the this cheque is called the loose cheque.
Bank issues a loose cheque for Rs. 50 as charges for the issuance of the loose cheque plus Rs. 3 as excise duty.
Payment of Cheques
It is bank’s primary function to repay the money required for its customer’s account usually by honoring his cheques. It is a contractual obligation of a banker to honor its customer’s cheque if the following essential are fulfilled
Cheque should be in a proper form
Cheque should not be mutilated
Cheque should be drawn in this particular branch
Cheque should not be damaged
No unauthorized material alterations
Funds must be sufficiently available
Cheque should not be post date or stale
Cheque should be presenting during the banking hours
Procedure for Closing an Account
The customer can close the account. Customer is required to submit an application for closing the account. Then the account is closed out and his BOPance is paid to him after deducting the closing charges, i.e., Rs. 200 and the application is filed in Account Closing File. Remaining leaves of cheques will also be collected from the customer.
The activities of Accounts Department can further be divided as:
Routing of expenses vouchers
Preparation of daily activity reports
Preparation of weekly and monthly statements
Preparation of statements for tax purpose.
Routing of Expenses
Vouchers of all expenses and material purchases are routed out through this department. As far as the expenses are concerned, they include the heads of salaries paid to confirmed employees of bank, wages paid to employees that are on contractual basis, rent of the building, lease installment and insurance premium paid to insurance company for the insurance of vehicles and cash in safe and counter. Expenses also include the utility bill, which consists of courier, electricity, water and gas bills, medical expenses, which are reimbursed.
Preparation of Daily Activity Reports
As far as the daily activity reports of this department are concerned, these include the following heads:
Voucher collecting of
Loan transactions
General ledger transactions
Foreign currency related transactions
Fixed deposit related transactions
The checking is on daily basis.
Preparation of Daily, Weekly Monthly and Annual Statements
Daily Statements
These statements are sent daily to Main Office Lahore. These are:
Daily Affair Statement, which is same as BOPance Sheet
Statement of Income and Expenditure, which includes the details of income generated and expenses incurred by the bank.
Weekly Statements
These statements are generated on weekly basis for the purpose of sending it to Head Office. These also include:
Statement of affair
Deposit and advances position of the bank
Monthly Statements
These statements are prepared on monthly basis and also sent to Head Office. These include:
Provisional statement of income and expenses. This statement adjusted for accruals and pre-payments.
Monthly BOPance Sheet and Income Statement
Comparative Statement
Statements for Tax Purpose
The department also prepares two statements for the purpose of paying tax on monthly and annual basis. These statements are generated for the purpose of submitting to Central Board of Revenue. These are:
Statement of deduction of income chargeable under the head salary under Section 53 (Tax deducted at source)
Withholding Tax from the payments made to vendors, suppliers and other parties providing various services. The rate of withholding tax is as follows:
Suppliers 2.5%
For other parties 5%
Remittances Section
Transfer of money or equivalent to money from one branch to another branch of the same bank is called remittance. Now it has become an easier and safer method both for the client and banker to transfer their money from one branch to another within the city or Outside City.
In case of remittances normally two banks are involved, are as under:
Originating Bank Branch
It is the branch, which issued the instrument for remittance.
Responding Bank Branch
The branch that receives the instruments for remittances, also known as drawee’s branch:
Remittances are classified into the following two types:
Inland Remittance
Foreign Remittance
Inland remittances
It is a transfer of money from one branch to another branch of the same bank within the same country. In this case both the parties will be of the same country and same bank.
Remittances can be made through:
Instrumental transfer
Electronic transfer
Instrumental Transfer
Instrumental transfers are following
Demand Draft
It is an instrument, which is payable on demand and it is only presentable in the city/country. When any draft, i.e., an order to pay money, drawn by an office of bank upon another office of the same bank for a sum of money payable to order on demand, purports to be issued by or on behalf of the payee, the bank is discharged by the payment in due course.
When a person requires a draft, he should be asked to complete the prescribed application form in which he should state the amount of the draft, the name of the payee, and the place of payment. The person to those persons, who have been duly authorized to act on his behalf, should sign this application form. An advice is prepared and two copies of this advice are sent to the Head Office. The bank charges 3% withholding tax and commission according to the rate list (minimum is Rs. 200).
Pay Order
It is an instrument, which is payable in demand and only presentable in city.
Pay order is also called the banker’s cheque drawn upon the issuing bank itself. It is not negotiable and therefore, bankers tend to cross the instrument “Payee’s account only” to avoid the possibility of dealing with instruments with forged endorsement. The pay order is issued favoring individuals, commercial concerns, government departments. On the presentation of pay order, the bank is liable to pay the amount to the customer. Bank charges excise duty of Rs. 4 and service charges of Rs. 100.
Pay Slip
It is an instrument, which is issued by bank and used for expenditure purposes, i.e., electricity bills, maintenance bills, security bills, fixture and fitting, etc.

Call Deposit
Call deposit are not actual deposits of bank. It is in fact the liability of the bank. Call deposit are oftenly prepaid by the bank for contractors
Following steps are involved
1) Depositor fill the credit vouchers for call deposit. He writes the following information
Name of company
2) He deposits the cash along with filled voucher in the cash department
Encashment of CD
For the encashment of call deposit needed
5 rupee stamp
two signature of customer on the back side of CD
token issued
accountant make entry in the CD register show that it has returned
Electronic Transfer
Electronic transfer is of following types
Telegraphic Transfer
It is the message, which is sent from one branch to another on the order of payer to payee through wire. It is one of the quickest means to transfer fund through the use of telex/fax/internet or cable. Payment to the beneficiary is affected directly by the drawee office upon identification or through credit into beneficiary’s bank account. As such remitting office is not required to issue any instrument payment to the remitter for delivery to the beneficiary.
Issuance and Payment of Telegraphic Transfer Outgoing
Application form is filled by the client in which the name and account number of the beneficiary, which is to be credited and name of customer is required. For telegraphic transfer, the payment can be made in case or by cheque or by debiting the customer’s account if he is the account holder. The amount of Telegraphic Transfer should be written on the form. The amount is transferred to beneficiary’s account in the other bank. An advice is given to the customer but application is filled in the record of the bank.
If the beneficiary is not the account holder of DBL, bank credits a Telegraphic Transfer payable account and when payment is made to the beneficiary, TT payable account is debited.
Issuance and Payment of Telegraphic Transfer Incoming
When a TT is received then an entry is passed in TT incoming register after verifying the test. When a person comes and wants to encash his TT, bank checks the statements of that person. If the bank finds any account credited to the person’s account against TT, bank prepares a voucher for this payment against that TT. The customer then presents that certificate to the cash counter and collects money.
Mail Transfer
It is the same like TT, but in this type, the message is sent through mail rather than telex. The procedure is same as TT, but the advice is sent through mail rather than wired.
Lockers service
Bank of Punjab also provides lockers facility in the country. The lockers issued only to the depositors. No lockers are issued to any unknown person.
The dual control system is used for lockers. The officer has master key to apply on the locker but he cannot open the locker of any person. The locker holder provides the bank has specimen signature. Whenever the locker holders come to open the locker, his signatures are verified by the officer and then will be able to open his locker. If the key of the locker is lost company providing these lockers breaks the locker and new lock is fitted in its locker and lock is destroyed in the presence of the locker holder and bank charges RS 1200 for that. In case the locker holder dies, the court opens his locker in the presence of his heir as mentioned in his will or and his belongings are given to them and the locker is closed.  
Billing And Government Receipt/Payment
This department is performing following functions
Ø Collection of utility bills
Ø Payment of salaries
Ø Payment of zakat
Clearing Department
The major function of Clearing Department is to receive the cheques, which are drawn on some other bank. The customer can get the money in his account at BOP, from the cheques drawn on another bank. The bank accepts these cheques and collects the amount from that bank on which cheque is drawn through the Clearing House. Bank charges some commission for this function.
Procedure for Clearing the Cheques
Pay-in Slip
The customer fills pay-in slip. This slip is just like deposit slip. The cheque number, date, amount and account number must be written on this slip.
Stamping and Scrutinizing
The officer on receipt of cheques and pay-in slip will stamp the pay-in slip with “cheque received” and give a portion of slip to customer and the remaining portion is attached with the original cheque.
The original cheque will be marked with two stamps.
Bank of Punjab
Clearing Stamp
At the end of day, all cheques are counted and then scrutinized in bank-wise and sent to the Clearing House
This department basically deals in bills, which come in bank for collection. The bills are cheques, call deposit, drafts and pay order. These bills are from outstation branches of BOP or of other banks. This department provides services to customers at low charges to get their amounts from the nearest branch.
There are two main heads of the bills i.e.
Outward Bills For Collection (OBC)
Inward Bill For Collection (IBC)
Outward Bills for Collection
Bills department receives cheques or other kinds of bills from its clients. The condition under Outward Bills for Collection is that the customer must have his account in the branch. This branch forwards the cheque with schedule or covering letter to that branch on which bill is drawn. The checking officer of bills department will cross the cheque with special bank stamp before forwarding the cheque to the other branch.
Outward bills for collection register
Outward bills for collection register is maintained in order to deep the records of all bills for outward collections. This register is updated two times, first at time of receiving the OBCs and secondly at the time when confirmation advice is received from the other branch, either the cheque will be paid or not by the other bank branch. After confirmation of the amount, confirmation advice is transferred to the sender branch. After confirmation of the amount and bills, the account of the customer is credited against reasonable charges, which is income for the bank.
Inwards Bill for Collection
These bills come to branch for payments so branch has to verify these cheques, pay orders, drafts and call deposits etc. The party account must be opened in that branch which sends it to paying branch .The responsibility under IBCs of the branch is to verify all the bills within three days, and should send the bank advice to the originating branch.
Inward bills for collection register
Inward bills for collection register are maintained for future record purposes. Care is made while posting the amount of bills in the register. Each bill is assigned a number according to the register series. Every year the number starts from one and continues for the whole year and next year again from one and so on.
Credit is defined as the sale of goods, services and money claims in the present in return for a promise to pay in the future. While in banking sector advance is the promise that carries the repayment of the original amount plus an interest on the principal amount, extended as advance. The credit/advance is given on the base of the confidence/trust and on the belief that the customer will be able and willing to pay on the demand or at some future time.
The term credit may not be confused with term Debt. Credit and debt are merely the same things looked at from two different points of view. When a lender extends credit, the borrower acquires it. The lender or the creditor has the right to get back payment and the borrower has the obligation to pay back. Credit can be defined in these words: “credit is the right to receive payment or the obligation to make payment on demand or at some future time on account of immediate transfer of goods”. The first phrase right to receive payment is used from the point of view of the creditor, as he is to exchange present goods for the right to receive payment in future. The second phrase, an obligation to make payment on demand, which is from the debtor point of view. The debtor has an obligation to pay in the future for the goods required. Credit and debt are two sides of the same shield.
The credit officer will have to see the following information from the company:
Name of the Company
Legal Structure
Names of Principal Shareholders/Directors.
Line of Business.
Financial Standing & Respectability.
Repayment capacity/Behaviour.
Your Credit experience including the use of credit facilities.
For this purpose the credit officer takes following steps before advancing credit:
Step 1: Applicant is required to serve some documents to the credit officer whenever required by him. These documents may include certified Financial Statements, legal documents regarding property occupied by the borrower. And some other certificates required by law and prudential regulations of State Bank of Pakistan like property deed, mortgage of property etc.
Step 2: Now the credit officer will have to analyze the provided financial statements critically. He will have to see the summary of financial health of the company, or partnership or the sole trader ship. Then he will have to fill the form containing information
In ratio anlaysis, credit officer has to see the Liquidity, Marketability, Profitability, and Activity ratios. After this he has to see the comparative Operating/Non-operating Cash generation statement.
Step 3: While doing this job the credit officer will have to see that the financial statements are reflecting the true picture according to the GAAP or not, and must fulfill the requirement of Checklist—-Prudential Regulations. This form consists of three pages regarding the subject matter. For this purpose he has to see the competitors, suppliers, customers and bankers with whom he is dealing.
Step 4: If the credit officer is satisfied with the financial performance of the company and other documents, he will write a credit approval containing the relevant information about the business. He attaches these documents with the proposals he made and forwards to the Zonal Office. The Zonal Office advance department ensures that the requisite documents are in order. Further they applied various financial tests, client business reliability and competitiveness. If the Zonal Chief has the power to sanction the loan, then he will prepare the sanction advice and sent it back to the relevant branch. If beyond his limits/powers then send it to regional office.
Five C’s are the main elements used for credit selection:
1- Character
The loan officer checks the character of the applicant, his family background, mode of living, & business.
2- Capacity
The loan officer checks the paying ability of the applicant by his previous experience.
3- Capital
Loan officer checks the business capital and liquid assets worth.
4- Collateral
The loan officer checks collateral like stocks, bonds, B/Es,
5- Condition
The loan officer also checks the economic condition inside the country and outside the country. If economic condition is favorable than loan is sanctioned otherwise not.
There are two main sectors for which BOP is advancing loans. These sectors are:
Consumer Sector
Commercial Sector
These loans are given specially to employees, traders, businessmen, small industrial units, including cottage and small-scale industries, agriculturists. Thus BOP is ensuring an equitable distribution of credit among various sectors of the country’s economy. Different industry codes are used for different kind of industries.
Consumer loans
These loans are given to employees including lower scale employees and higherl-scale employees and other people up to or less than Rs. 50 thousand. Loans amount shall not exceed amount specified by marginal restriction on the type of securities offered. Consumer loans are granted by analyzing the requirements .
Loan period, loans are allowed for a maximum period of 3 years including a maximum grace period of one year. In special cases up to 5 years loan period can be extended, depending on the merit of the case.
Commercial loans
Total principal amount of loans to a single borrower shall not exceed to Rs.0.3 million, including loans to dependent members of the family. Maximum maturity period is 3 years, also depending upon the nature and types of the loans, extended.

Mark-up, will be charged as per existing rate, which is subject to change from time to time. Presently it is 0.51 paisas per day on per thousand/1000. Mode of paying back, the borrowed amount can repay back in the form of quarterly, equal monthly or semi-annually with interest, or as the case decided.
Securities against Commercial Loans
Loan can be made against any or more of the following securities:
Mortgage of immovable property (land and Building).
Pledge of stocks, raw materials and finished goods.
Hypothecation of stocks, raw materials and finished goods

Financial Analysis of The Bank of Punjab
Balance Sheet

Assets Year 2005(Rs.’000′) Year 2004(Rs.’000′)
Cash and Balance wirh treausery banks 8787387 5579566
Balances with other banks 9367595 2118242
Lending to financial instittons 7593681 1019488
Current Asset 25748663 8717296
Investments 18026181 16197505
Advances 63623705 39438923
other Asset 2040568 1277201
Operating Fixed Asset 1715061 689486
Defferd tax Asset – –
Total Asset 111154178 66320411
Bills payable 478001 267113
Borrowings from Financial Institutions 6791007 2831605
Current account balance 15499755 12964045
Current LIABILITIES 22768763 16062763
Deposits and other accounts 72965296 41760266
Subordinates loan – –
Liabilities against Asset subject to lease 55403 81795
Other Liabilities 1474425 567540
Deferd Tax Liabilities 220177 8964
Total Liabilities 97484064 58481328
Net Asset 13670114 7839083
Represented By
Share Capital 2349719 1506230
Reserves 4257337 2770645
Unappropriate profit 169817 143590
Total Profit before taxation 6776873 4420465
Surplus revaluation of asset 6893241 3418618
Total Representation 13670114 7839083
Liabilities + Representation 111154178 66320411

Ratio Analysis

Liquidity Ratio
Current Ratio 1.1309 0.5427
Cash to current liabilities Ratio 0.7974 0.4792
Cash to total asset 0.1633 0.1161
networking Capital 2979900 -7345467
Leverage Ratio
Debt Ratio 87.70166426 88.17998429
Equity Ratio 7.131181496 7.460225641
Equity Multiplier 8.131181496 8.460225641
Profitability ratio
Gross profit 56.42941258 71.85663311
Operating Profit ratio 51.67198278 67.94193748
Net profit ratio 40.81567415 57.52839781
Return on Investment 2.249126434 2.216320704
Return On Equity 18.28805524 31.89145975
Marketability ratio
Price Earning ratio 2.197802198 1.780068729

Horizontal Analysis of Balance Sheet

2005(Rs’000′) 2004(Rs ‘000)
Cash and Balance wirh treausery banks 8787387 57.4923 5579566
Balances with other banks 9367595 342.2344 2118242
Lending to financial instittons 7593681 644.8524 1019488
Current Asset 25748663 195.3744 8717296
Investments 18026181 11.2899 16197505
Advances 63623705 61.3221 39438923
Other Asset 2040568 59.7687 1277201
Operating Fixed Asset 1715061 148.7449 689486
Defferd tax Asset – –
Total Asset 111154178 67.6018 66320411
Bills payable 478001 78.9509 267113
Borrowings from Financial Institutions 6791007 139.8289 2831605
Current account balance 15499755 19.5596 12964045
Current LIABILITIES 22768763 41.7487 16062763
Deposits and other accounts 72965296 74.7242 41760266
Subordinates loan – –
Liabilities against Asset subject to lease 55403 -32.266 81795
Other Liabilities 1474425 159.7923 567540
Deferd Tax Liabilities 220177 2356.2361 8964
Total Liabilities 97484064 66.6926 58481328
Net Asset 13670114 74.3841 7839083
Represented By
Share Capital 2349719 56 1506230
Reserves 4257337 53.6587 2770645
Unappropriate profit 169817 18.2652 143590
Total Profit before taxation 6776873 53.3068 4420465
Surplus revaluation of asset 6893241 101.6382 3418618
Total Representation 13670114 74.3841 7839083
Liabilities + Representation 111154178 67.6018 66320411

Vertical Analysis of Balance Sheet
Bank of Punjab

2005(Rs’000’) 2004(Rs ‘000)
Cash and Balance wirh treausery banks 8787387 7.91 5579566 5.02
Balances with other banks 9367595 8.43 2118242 1.91
Lending to financial instittons 7593681 6.83 1019488 0.92
Current Asset 25748663 23.16 8717296 7.84
Investments 18026181 16.22 16197505 14.57
Advances 63623705 57.24 39438923 35.48
other Asset 2040568 1.84 1277201 1.15
Operating Fixed Asset 1715061 1.54 689486 0.62
Defferd tax Asset – –
Total Asset 111154178 ) 66320411 )
Bills payable 478001 0.4903 267113 0.274
Borrowings from Financial Institutions 6791007 6.9663 2831605 2.9047
Current account balance 15499755 15.8998 12964045 13.2986
Current LIABILITIES 22768763 23.3564 16062763 16.4773
Deposits and other accounts 72965296 74.8484 41760266 42.838
Subordinates loan – –
Liabilities against Asset subject to lease 55403 0.0568 81795 0.0839
Other Liabilities 1474425 1.5125 567540 0.5822
Deferd Tax Liabilities 220177 0.2259 8964 0.0092
Total Liabilities 97484064 100 58481328 59.9907
Net Asset 13670114 7839083
Represented By
Share Capital 2349719 17.1887 1506230 11.0184
Reserves 4257337 31.1434 2770645 20.2679
Unappropriate profit 169817 1.2423 143590 1.0504
Total Profit before taxation 6776873 49.5744 4420465 32.3367
Surplus revaluation of asset 6893241 50.4256 3418618 25.008
Total Representation 13670114 100 7839083 57.3447
Liabilities + Representation 111154178 66320411

Vertical Analysis of Profit and loss Statement
Bank of Punjab

Financial Analysis
Analyzing a company’s financial statements includes the methods of calculating and interpreting financial ratios to compare the company’s performance of the present year with the past and the analysis is also done to predict the future performance. The company whose annual performance you are going to evaluate, its annual report should be fulfilling the criteria:

Financial statement should be audited and prepared by a certified chartered accountant.
Financial statement should be prepared according to the Generally Accepted Principle of Accounting.
The Performance of at least three years is required. These years include the data of past one year and the year of which performance is going to be analyzed.

To assess the firm’s present performance as well as the future, three basic tools are used as:
1. Ratio Analysis
2. Common Size Statement Analysis
3. Performa Analysis

The firms whose performance is going to be evaluated (Bank of Punjab) fulfill these requirements that are why it is chosen to be analyzed. Here in this report, we are using the first two instruments to analyze that either company is best in terms of short term solvency, long term debt paying ability, and the profitability.

Ratio Analysis
Ratio analysis is used to compare the figures of the company’s past year’s performance with the present or to compare one company’s liquidity.

Basically, ratio analysis consist a complex set of ratios which are further divided into categories. These ratios include:

Short Term Debt Paying Ability Ratios
Activity Ratios
Long Term Debt Paying Ability Ratios
Profitability Ratios

These ratios measure the efficiency of the firms to pay back the short term contractual obligations on the due date.
The liquidity ratios of Bank of Punjab for the last two years are given below

No Ratios 2005(‘000’) 2004(000)
1. Net Working Capital 297900 -7345467
2. Current Ratio (%) 1.1309 .5427
3. Cash to total asset Ratio (%) 0.1633 0.1161
4. Cash to current Ratio (%) 0.7974 0.4792

Working capital

Net Working Capital = Current Assets-Current Liabilities
By seeing at the working capital, it is obvious that company is in a very good position to pay its short-term contractual obligations. Because it is shown from the table that the trend is consistently increasing.
But it is important to note that net working capital is not a very good estimate to assess the short term solvency of the firm that’s why we go for other liquidity ratios.
To analyze the short term solvency ratios of Bank of Punjab we see the current asset structure of this firm which is as follows

No Items 2005 2004
1. Cash and Balance with treasury banks
34.12% 64%
2. Balances with other banks
36.38% 24.30%
3. Lending to financial institutions
29.5% 11.70%
4. Total current assets 100% 100%

Analysis of short-term solvency ratios
When we see the over all picture of the firm’s short term solvency ratios we conclude that firm is in a very good position with prospective of short term debt.
The reason is that it’s current, quick and cash ratio is continuously increasing. Now we find out the causes behind them

The current assets are the major part of the total assets. In 2005 the current assets were the near about the 23.15% of the total assets and they were 7.84% in 2004.

Cash ratio has also the increasing trend and the reason is that the contribution of cash is increasing in the total current assets.

The overall all these ratios are showing the very good positive trend and this is mainly due to the reason that shows that management of the company is increasing their efficiency.


In the long run, a relationship exists between the reported income resulting from the use of accrual accounting and the ability of the firm to meet its long term obligations. Although the reported income does not agree with the cash available in the short run, the revenue and expenses items eventually do result in cash movements. Because of the close relationship between the reported income and the ability of the firm to meet its long run obligations, the entity’s profitability is an important factor when determining long-term debt paying ability.
The long-term debt paying ability ratios of Bank of Punjab are given below.

No Ratios 2005 2004
4. Debt ratio 87 % 88 %
5. Debt equity ratio 71% 75%
6. Debt to tangible net worth 8.13 8.46


The debt ratio is showing the decreasing trend. This trend is due to liabilities against subject to lease fix asset is decreasing by 32% it is a good sign for the short term & long term investor because firm is going to discharge its leased asst payment but risk is also going to decrease in long run..

It is clear from the table that like debt ratio the debt to equity ratio is also decreasing. The trend is declining and showing that equity proportion is gradually becoming higher as compared to total liabilities. In 2005, the equity was approximately 71 % of the total liabilities and equity but in 2004 it was 75%. This is clear that every year the part of equity in total liability is increasing. This indicates that firm is financed from capital money to finance the assets.


Profitability is the ability of the firm to generate earning. Analysis of profit is of vital concern to stockholders since they derive revenue in the form of dividends. Further, increased profits can cause a rise in market price, leading to capital gains. Profits are also important to creditors because profits are one source of funds for debt coverage. Management uses profit as a performance measure.
So, the profitability ratios measure firm’s efficiency in terms of earning profit by utilizing resources.
The profitability ratios of Bank of Punjab. are given below

No Ratios 2005 2004
1. Net profit margin 40% 57%
2. Gross Profit Margin 56.% 72%
3. Operating Profit Margin 52% 68%
4. Return On Asset 2.24% 2.21%
5. Return On Equity 18.28% 31.89%

Analysis of Profitability Ratios

Almost all the profitability ratios have the not favorable trend it means that this company is not highly profitable in 2005.

The net profit margin is decreasing in 2005 and the reason is that each year the markup earning of the company is increasing but they have a not considerable control on the cost of funds. The reason for this inefficient funds management may be that now the company is not utilizing its human resource in more sophisticated for the management of funds.

Form the table it is clear that return on total assets is also decreasing in year 2005. This shows that the company is not utilizing their assets in more efficient manner in year 2005.


Sr# Ratios 2005 2004
1. Price earning ratio 2.198 3.78

Ø As earning per share has reduced which because price-earning ratio to increase market price of their stock is also reduced significantly which is not good sign for the company.

Now based on the ratio analysis we will see that whether this firm is attractive for the short-term investor and long-term investor.
Here we will also see whether this firm is attractive for the investing purpose or not.

Short-term creditors point of view

This firm has very good short-term solvency ratios. Even its cash amounts in 2005 and 2004 are higher than its total liabilities. This shows that BOP has a very less chances of technical insolvency. The other important thing is that the firm has considerable facilities of short-term finances under mark up arrangements available from various banks . Therefore, we can say that over all position of the firm is very secure for the short-term creditors and this is a very attractive firm for the short-term investors.

Long-term investor’s point of view

The firm’s profitability ratios are very attractive and almost all ratios have the favorable trend.
So, we can say that it is very good for the long term investors to invest in this firm. The reason is that this is a highly profitable firm.

Horizontal Analysis of Balance Sheet
Bank Of Punjab

Cash and balance with treasury bank increase by 57.49% from previous year due regulatory authority regulations and circulars.
Balance with other banks is increased by 36.38%.
Due to excess of liquidity in the market, bank has reduced its lending to other financial institution as they have liquidity .it is decrease by 44.85% as compare to last year.
Current Asset has increase to 11.29%.
Bank has increased its advances to the people of country by 61.32% in this year 2005
Operating fixed asset has been increased by 48.75% from previous year.
Total asset has been increased by 59.76%.
In this year bank bills payable has been increased by 78.95%.
As cash balance with other bank and treasury has shown that bank has enough liquidation there for bank has decrease its borrowing from other financial institution by 39.83%
Bank has reduced its liability against asset subject to lease finance by 32.26%.
Bank has also reduced its other liabilities by 59.79% which is a healthy sign for the Bank of Punjab.
Total liabilities have been increased by 14.82% but this increase is less than increase in total assets .the increase in total asset is 17.22%.
Share capital is increased by 56% overall there is an increasing trend in profit .

The whole balance sheet also shows that bank assets has been increased as compare to bank liabilities the profit before taxation is also showing an increasing trend which is a good sign. The whole horizontal analysis of the bank is showing the healthy position of the bank .after analyzing the balance sheet horizontally we can assume that bank is doing a very good job in increasing their share holders wealth.

Horizontal analysis of Profit and Loss Account
Bank of Punjab
Bank markup earned from lending is increased by 39.72% which is a good sign for the health of a bank.
Markup Expense has been decrease to 71.135% which is a good sign and showing the management efficiency in the field of deposit collection.
Net Markup Income is also increase by 56.43%.
Bank has controlled its loans to going into bas debts which is showing from decrease of provision against non performing advances that are reduced by 28.94% as compare to previous year.
It is the amazing sign that bank has increase its net markup after provision by 74.71% as compare to last year. That shows that bank is running on profitable path.
Fee commissioned earned brokerage income is also increased by 4.16% as compare to last year.
Profit before tax is also increased by 51.67% as compare to last year it is totally due to bank has reduce its expense in this year and increase its income also.
Profit after tax is also increase by 38.42% as compare top last year .it is higher than last year. That shows the management efficiency and stake holder trust.
Profit available for appropriations increased by 59.27% as compare to last year. This is due to decrease in cost and increase in income of the bank as compare to last year. in this year bank has also decrease its administrative expense which is a good sign.
As bank profit for appropriation is increase due to healthy status in the economy and trust worthiness of the bank the earning per share is also increased by 48.65% as compare to last year its shows that bank is in a good position.
All the horizontal analysis of income statement showing the strong financial position of the bank .bank has cut their cost as well as increases its profit as compare to last year. both short term investor and long term investor can trust on the bank and can invest into the bank .bank is adding value to the stake holder equity. It is increasing the net worth of the investor which is a goal of financial manager. it also shows that bank human resource is doing very well as compare to last yare.
Vertical Analysis of Balance Sheet
Bank of Punjab
Year 2005-2004
Cash and balance with treasury bank is the 7.91% of the total asset in year 2005 and in year 2004 it was just 5.02% of total asset this shows clearly the bank has increase its cash balance with treasury bank. it is due to high liquidation in the market and bank has more deposits bank has to increase its time & demand liability and increase its deposit with treasury.
Balance with other banks in year 2005 is 8.43% and in year 2004 was only 1.91% it is also due to high liquidation and foreign remittances increase .it is a very good sign.
Lending to financial institution was 6.83% in year 2005 of total asset and 0.92% in 2004.this decreasing trend is due to more money come to country in 2004 banks has enough surplus of money to start their projects so bank do not in need of finance from the bank of Punjab there for the lending to financial institution is decreased.
Investment are 16.22% of total asset in year 2005 and 14.5% in year 2004 which shows a decreasing trend in investment it is due to excessive liquidity trend in the economy of Pakistan in year 2005.
Advances are 57.24% of total asset in year 2005 and 35.4% in 2004 this is a big difference between the year 2005 and 2004. Bank has more lend so its profit will also increase in this regard .bank is going in a good direction and it will increase overall worth of the bank in banking industry.
Bills payable are 0 .4903% of total Liability in year 2005 and 0.27% in 2004 very small increase in bill payable liability in 2004.this is due to bank total liability in more increase to its bills payable liability.
Deposits and other accounts all are 74.85% of total liabilities in 2005 and 42.82% of total liabilities in 2004 as you know that deposits are blood of bank therefore increase in term deposit and saving deposits is the good sign for the bank and showing the trust of customer on the bank.
Total profit before tax is 49.57% in total representation in year 2005 while in 2004 it was just 32.34% it is due to more lending and increase in non markup income of the bank. it is a very good sign and showing that bank is in a good financial position and its profitability is increased.
Vertical Analysis of Profit and loss account
Bank of Punjab
Year 2005-2004
The markup expense is 43.57% of total markup earned in 2005 which is less than the previous year it shows that bank management has controlled their expenses very efficiently on its deposits and it is reduced to 17% as compare to previous year although the markup earned is increased.
The decrease in markup expense is cause of increase in net markup income which is 56.43% of total markup earned in 2005 which is 5% more than previous year.
Provision against non performing loan ahs also decreased 5.35% as compare to previous year .the management efficiency is clearly shown by this head.
Fee commission brokerage income in 2005 is 4.16% of total commission earned and 1.84% of total markup earned in 2004 it clearly shown the 3% more income in 2005.
Bank has also decrease its administrative expenses just because of cutting the administrative and deposit expense cost. Other charges are also decrease by .0475%.
Profit after tax is also increase by 38.42% of markup earned which is due to more income and cutting cost of expense. this showing that bank of Punjab management is very efficient in decreasing of cost it can be a competitive edge for the bank

BOP is one of the fastest growing banks in Pakistan. In the light of these situations we can make an analysis.
Bank is supported by Punjab Government
Bank is in its growing stages so there is good financial position.
Professional and Committed workforce
Low cost than other major banks
Increasing the number of branches in the country
Successfully launching new Product Lines
Well experienced and quality staff
Efficient internal communication system
Each department in the bank is fully allowed to take adequate decisions of its own, saving the time and help in achieving the objectives

Although the bank is growing fastly but it has some weaknesses which it should remove to make itself further strong.
Less Advertisement
Slow in introducing new products
The staff is not satisfied with the salary structure
Gives its staff less benefits
Extension of national network of the branches
Introduction of innovative products
Growing market
ATM facility for all customers
Uncertain economic conditions
Action taken by competitors

Future Planning
The bank of Punjab’s equity base is good and it plans to expand its expand its business by introducing Islamic banking , deposit and investment new products as well as focusing towards developing business in the consumer finance segment.
They have planned to open more branches in the different cities of Punjab as well as in other Provinces.


The political influence should be minimized on all type of the operations of BOP.
The customer satisfaction should be guaranteed through rapid delivery of financial products and services.
Implementation on the rules, regulation and policies should be done at all cost.
Advances of the non-productive investment should be stopped.
The influence of the employees union should be minimized.
The bank should develop a comprehensive recruitment policy in order recruit the competent people.
The professional people should be recruited at least executive level.
The employees should be promoted according to their turn.
In order to improve the productivity the pays of employees should be compatible to banking industry.

For checking the implementation of policies task force should be formed.
All the branches of BOP should be computerized.
The bank should spend more on the promotional activities.
For the development of the Human Capital the bank should conduct a series of training program to achieve the mission.

Habib Bank Limited


The term “BANK” is derived from an Italian word “BANKO” which means “Bench” that is where people were meet and solve their financial matters.

The term bank is being used for a long time yet it has no precise definition. The basic reason is that the banks perform not just one but many types of functions originally the banks were supposed to make short term loans to the traders only. The banks now not only make short term loans to the formers, traders , industrialist etc. But also invest in a wide variety of long term earning assets.

The commercial banks also undertake and execute trust, deal in stock, shares and debentures, issue guaranties and indemnities underwrite and sell new securities, and deal in foreign exchange etc.

However some of the definitions of bank from different authors are as follows.

According to Dr. Hart

“Banker or bank is a person or company carrying on business of receiving money and collecting drafts for the customers subject to the obligation of honouring cheques drawn upon them from time to time by customers to the extends of the amounts available on their currents accounts”

In the words of G W Gilbert

“A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the borrower and lender. He borrows one party and lends to the another”


Central bank or state bank.

Commercial bank.

Exchange bank.

Industrial bank.

Agriculture bank.

Investment bank.

Saving bank.


Every country has its central bank or state bank. Its major function is to carry out a country’s monetary policy with an aim to safeguard its financial and economic stability. It has the monopoly of note issue. It is also the custodian of money market. State bank is the Banks bank and lender to the government.


Commercial banks are profit earning concerns. They receive deposits and advance loans to the borrows. They greatly help in financing for internal and external trade of the country.


The main function of the exchange bank is to finance the foreign trade by the purchase and sale of foreign currencies in the form of drafts, bills of exchange, telegraphic transfers. They also perform the function of commercial bank. Receiving deposits and advancing loans.


Commercial bank cannot afford to block their funds in long term investments. The industrial banks receive long term deposits and finance the industries by providing them long term credits. In Pakistan the Industrial bank named as Industrial Development Bank of Pakistan (I.D.B.P) was established in 1961 for this purpose.


Agricultural bank provides short and long period loans for financing agriculture. The agriculturists need short and long term loans for meeting their day to day and long term requirements for making permanent improvement in the land. In Pakistan Agricultural Bank is named as Agricultural Development bank of Pakistan (A.D.B.P) and it was established in 1961


The main function of investment bank the merchandising of shares and other securities, managing and distributing the issue of shares and other securities.


These are the institutions which are sponsored by the government for having facilities to the people and small means. These bank collect small saving of people and allow them to withdraw in small amounts. Also another institution i.e. National Savings is working in the same capacity.


The working of the Habib Bank Limited was commenced on 25th August 1941 in Bombay and in 1948 it was established in Pakistan. It was the first Muslim Bank in the Subcontinent,

Now there are 1773 branches inside the Pakistan and about 66 Branches overseas providing financial services to its worthy customers.

Habib Bank is working for the last 50 years and become the largest commercial bank in the country. It has the Authorized capital of RS 5000 Million with a paid up capital and reserves of RS 858 Million and its deposits are more than RS 213 billion in approximately 10.7 Million accounts. It has the advances of 131 Million. Habib Bank has innovated a numbers of financial schemes like term deposits, Special notice term deposits, A.T.M. etc. As governments are hoping to be liberal and their policies are innovative and liberal the scope of banking is increasing and Habib Bank is on step ahead if the growth and participating very much in the economic growth of Pakistan.

Habib bank HEAD QUARTER is situated in KARACHI that building has highest number of stories in Pakistan.

Habib bank has basically 9 Regions all over the country those control the entire activity of Habib bank operation is countrywide.



1 Lahore Region 13 313

2 Faisalabad Region 10 263

3 Islamabad Region 10 274

4 Multan Region 13 261

5 Karachi Region 15 204

6 Hyderabad Region 06 163

7 N.W.F.P. Region 10 261

8 Balochistan Region 02 46

9 Azad Kashmir Region 03 98


To inherence the corporate culture in business society through quality oriented banking services.

To increase the profitability of our shareholders through investing in financially sound and profit earning projects.

To maintain and increase the reliability and quality services to our accounts holders.

To strengthen the status economy through financing the export under control of state bank of pakistan.

To provide funds for increasing environmentalism, cultural and sociological thinking in society .

Lahore Region

Lahore Zone

Sheikhupura zone

3. Gujranwala zone

Gujrat zone

5. Hafiz Abad zone


1. Agriculture and small loan division .

2. Audit and inspection division

3. Cash and investment division

4. Computer service division

5. Customer service division

6. Corporate credit division

7. Engineering and Maintenance.

8. Finance division

9. General administration division

10. International division

11. Law division

12. Marketing and development division

13. O and M division

14. Planning development division.

15. Printing and stationary division.

16. Syndicated loans divisions.

17. Trade information division.

18. Training division.


Divisional Head

Small loans department


Divisional Head Management Audit

Circle Audit circle audit implementation

A & B Karachi (Karachi B & c) Wing

Circle Chiefs Circle Chiefs inspection team


Divisional Head (SVP)

Vice President.


Divisional Head (AVP)

Lahore Hyderabad Quetta Peshawar Islamabad Faisalabad Multan


Divisional Head


Branch Opening Cell Haij Cell Deptt for T.J Cell

Overseas Pakistan


Divisional Head (SVP) (EVP) (AVP)


Divisional Head (EVP)


Divisional Head (SVP) (EVP) �


Divisional Head


Purchase and Insurance security war Housing Deptt.

Expenditure cell cell

Control deptt.


Division Head (SVP) (A.P)


Executive Incharge (AVP)


Divisional Head (SVP) (VP)


Litigation Non interest Recovery Zakat

Cell Banking deptt. Cell Cell


Public relation Protocol/Travel Sports & Credit card



Divisional Head (SVP &VP)



Department finance committee Cell


Divisional Head (SVP &VP)


Divisional Head (SVP & VP)




Centeral Main Deptt School Banking


Divisional Head

Trg. Institute Trg. Institute Trg. Institute Trg. Instute

Lahore Islamabad Karachi Multan





Account Audit Finance M.I.S Dept. R&D



Zonal Chief


Staff Manager Staff officer




Sub. Manager


Cashier Guard Assistant


To implement the polices chalked out and decision made by the board of directors

To look after the affairs of the whole origination

To maintain good relation with the big Clint of bank in the interest of the origination

To promote the business activities of the bank

To find new areas for investment

To make liaison with the government and state bank


1. To make the policies in order to promote the business of bank.

2. To declare the profits on deposits.

3. To announce the rate of interest on advances and loans.

4. To make the policies for the welfare of bank employees.


To make visit at the branches in order to promote the business activities and make the discussion at the spot under his discriminatory powers.

To promote the business activities.

To make the relation with the industrialist business man Agriculturist etc. for the promotion of banking activities.

To solve the union problems.

To approve loans for heavy industries i.e. big amount of loans.


To look after the affairs of the branch.

To meet the depositor and borrowers and solve their banking problems.

To make try for increasing the profitability of the branch by capturing low cost/cost free deposits and giving the secured advance to the valued clients.

To reduce the expenses of the branch.

To make relation with the industrial business man agriculturist, industrialist of the branch.

To sanction small amount of loans and judge whether the client is genuine.

To solve the problem of the bankers working under him.


H.B.L branch is situated at NOSHERA VIRKAN which is the center of cotton and grain business. According to its location majority of its accounts holders are Cotton Broker , Traders and other business concerns. This branch is working under the experience hand of Mr. Mubashir Iqbal he is very hardworking and friendly to subordinates. He is used to go to his subordinate himself quires and other matters however a complete system of intercom is also installed in the branch in order to make the coordination .As the working of the branch is organized so different are made in order to make the working easier and error free.

The bank also issues creation form for the television license, account opening , deposit slip etc are also available at this place. Cheque books are also made by the persons at the counter.


Account opening department

This department is under the supervision of Mr. Mubashir Iqbal an ambitions young officer. Applications are received here and after the scrutiny of all the requisites the account is opened. There are mainly two types of accounts.




Now profit and loss (PL) is divided into four types:

1-Profit and Loss Saving Account (PLS).

2-Short Notice Term Deposits Account (SNTD)

3-Term Deposit Account.

4-Golden Investment Scheme.

Now Short Notice Term Deposit (SNTD) is further divided into two:

1-Ordinery Term Deposit Receipt (TDR).

2-Khas Term Deposit Receipt (Khas TDR).



There accounts are opened by Rs. 500. No profit or interest is given on these accounts. These types of accounts are mostly maintained by the businessmen who may draw money at any time. Zakat is also not deducted on these accounts and no any notice is required for the withdrawal of money.

2-Profit and loss account:


This account may be opened by RS. 500. After every six months profit/interest is given on this account and the rate of profit is declared by the Head Office Habib Bank Limited. This year the management of the Habib Bank has decided to give the profit of 8.10% on their saving depositors . A 7days notice is required to draw the money exceeding RS. 15000, However bankers are used to give the relaxation of two, three thousands to their customers. A cheque book containing 10 leaves is given to the account holder which costs to him for RS 10 Mostly persons on jobs maintain these types of accounts. Zakat is also deducted on these accounts on the first of the Ramzan. A new tax i.e. with holding is also levied on the profit of the saving account. The rate of the with holding tax is 10%.


Short notice term deposit accounts are categorized into three categories That are as under:

7-Days notice.

15-Days notice.

30-Days notice.

These accounts are opened for 7, 15,or 30days. But these can be encashed at any time. The rate of interest on these accounts is lesser ordinary PLS. Saving account. If it is encashed before its maturity the rate of profit is further reduced. With holding tax is also deducted on the profit .

This year the rate of interest on SNTD offered by the Habib bank is

From 7 to 29 days 6.00%

For 30 days and above 6.60%


These accounts are opened for 1 month, 3 months, 6 months, 1year and so on. The rate of interest/profit goes on increasing as the time /period of the deposit is increased. These accounts can also be encashed at any time and ordinary PLS rate is given if these are encashed before its maturity. With holding tax of 10% is also deducted on the profit of TD RS. The of

Profit/interest announced this years are as under:


01 month 8.60%

02 month 9.00%

03 month 9.40%

06 month 10.50%

01 year 11.00%

02 year 11.60%


A Golden investment scheme is offered by the Habib Bank which offers you a rate of 14.50% per annum and the time limit for the said scheme is five years or seven and a half years or so . This scheme doubles the amount after 5 years and in years the amount is three times. But if the amount is drawn before its maturity no such profit is given on this behalf.


These are another type of accounts opened by the Government or companies. Construction companies/organizations require some percentage of total amount of the total contract to be deposited by the contractors as a security. Like when applications for shares are called or when some plots in a housing colony is to be allotted certain amount is called as a security that the applicant is genuine, these accounts are called call deposits. These accounts are refundable and no profit or deduction is made on this account.


As the Pakistani currency accounts are opened the requirements are same for the foreign currency accounts. All the transactions are made in the foreign currency in which the account is opened.


As it is the function of the bank to remit the money to any place where there is a bank. It is the most easiest and safest way to send money to any place. Bank charges menial amount as a commission for the remittance. Here in the Habib bank Branch there is also remittance department. There are mostly four methods to remit the money. They are:

Demand Draft (DD).

Mail transfer (MT).

Telegraphic Transfer.(TT)

Pay Order (PO)

Now these all are discussed here separately in detail:


It is the most commonly method used for the remittance of money. It is very simple, firstly a form is to be filled in , in which all details are specified that where and in which branch the draft is to be sent then the money is deposited which is called draft and money can by drawn after showing to the bank of the specified branch of the bank. Only specified person can draw the money on that draft. Another method to secure the payment of the draft could be the crossing of the draft which means that it will only be deposited in the payee’s account.

To make it more secured and safe the bank has coded the amount exceeding Rs.15000. Only the banker or the person knows the actual amount of the draft. In return bank gets a commission which is its mode of earning.

The bank’s commission rate is as under:

Rupees Min. amount %age

Up to 10,000 15 20%

10,001-100,000 20 15%

100,001 of above 150 07%

Now with holding tax is also levied, so bank also gets 20% with holding tax on the sum an excise duty of RS. 1 per leaf.

Now if the draft is to be canceled or duplicate of the draft is to be needed in case of misplacement Rs.20 is to be paid.


The money is transferred through mail. One branch of the bank sends advice to the branch of the same bank to credit the account of payee. In this type of transfer the payee must have the bank account . For example, now a days PTV’s licensees are made all over the Pakistan. The cash is deposited in the banks and after a week the bank mail transfers the amount to the PTV’s Islamabad account. Bank also gets commission on the mail transfers, the commission rate is:

Rupees Min amount %age

Up to 10,000 15 20%

10,001- 100,000 20 15%

100,000 or above 150 .075%

The bank also charges the postage expenses of Rs.12 on it.


It is a good safe and fast method of transferring money from one place to another. The advice is sent through the telegram and the bank to which the advice is made reconfirms that whether the advice is made or not. After the confirmation the money is paid to the payee. Telegraphic Transfer could be made by giving the name and the telephone number of the payee but account number is considered good and sage . The amount exceeding Rs.15000 is coded in order to keep security.

Bank charge commission on TT’s and the rate is as under.

Rupees Min. amount %age

Up to 10,000 15 20%

10,001-100,000 20 15%

100,001 or above 150 .075%

The bank also charge the telegram expenses of Rs.20 TT


Pay order is less expensive method of transfer money. Normally this method is used to transfer money inside the city. If it is used city wide, it takes a long time.

The bank charge Rs.10 which is flat foe the pay order and an excise duty of Rs.1 per leaf. With holding tax of 20% on the sum is also taken from the party.

Now if the pay order is to be canceled or duplicate of the pay order is to be needed is case of misplacement Rs.20 is to be paid.


Lockers are also available at Habib bank limited NOSHERA VIRKAN. The procedure to get a locker is same as of account opening and RS 600 is to be deposited as a security fee which is refundable. There are three types of lockers available i.e. small, medium, and large. The bank charges Rs.300 per annum for the small locker, RS 500 the medium and Rs.800 per annum for the large size locker.

People get the lockers for the security of precious items which include jewelry, bonds, documents etc. To ensure safety and security two key system is used. Firstly the lock holder is verified and then in the presence of banker the locker is opened with the help of the key which is in the custody of lock holder and is closed with the banker’s key. Without these two keys it couldn’t be opened or closed.

Bills here doesn’t mean the utility bills like electricity bills or gas bills, but in the bills section those cheque are presented that are for the outstation or in station of any branch of any bank.

Now the procedure of collection is different for in both the cases, the outstation cheques are called the OBC cheque. Which stands for outward bills for collection or these are the collections inside the country or city wide and the in station cheque are those which belongs to the Lahore, may be from the Habib bank or any other bank.

Of the cheque is of Habib Bank, the cheque is sent to the HBL main branch GUJRANWALA the HBL GUJRANWALA branch sent those cheque to the branch where the cheque belongs. And after confirmation, in return, sent the IBCO inter Branch Credit Order. After the reception of the IBCO the HBL NOSHERA VIRKAN branch credit the account of the customer.

Now if the cheque belongs to the GUJRANWALA but the bank is other than

the Habib Bank i.e. UBL, MCB, NBP, etc, those cheque are sent to the

HBL main branch GUJRANWALA and from GUJRANWALA the banker will go to

the collection cell which is located at main branch GUJRANWALA.

Here all the representative from all the banks met and settled their inter

bank transaction after the confirmation from the respective bank. The

amount will be credited in the account of the Habib Bank at State Bank

and from their IBCO will be issued in the name of GUJRANWALA main

branch and further main branch will issue the IBCO to the NOSHERA VIRKAN branch.

Now for the outstation cheque the procedure is different. These cheque are sent to the Habib Bank main branch of that city where the cheque belongs. That main branch collects the money and sends a document which is name as IBCO which stands for inter branch credit order to the Habib bank NOSHERA VIRKAN Branch. Bank after the reception of the IBCO credits the account of the person who presented these cheques for collection. Now there are two types of outstation bills for collection,s . These are as under.


Clean OBC includes those instrument,s which do not need any documentation to be attached with it for the purpose of collection. This includes cheque draft etc. The bank charge commission on the clean OBC as .20% of the amount of the cheque or a minimum of Rs, 10. An additional amount of Rs, 30 for the Courier or Rs, 12 for the postage as instructed by the customer credit order to the Habib Bank Chowk Azam Branch and bank after the reception of the IBCO credits the account of the person who presented those cheques for collection. Now there are two types of Outstation Bills for Collection. These are as under.


Clean OBC includes those instruments which do not any documentation.To be attached with it for the purpose of collections. This includes cheque Drafts etc.


Documentary includes those instruments which includes an additional

documentation attached with that instruments for the collection. The

bank charge commission on documentary OBC as 35% of the amount of

that instrument or a minimum amount of Rs 25 an additional Amount of

Rs 30 for the courier or Rs 12 for the postage as instructed by the

customer .

If the instrument is dishonored or returned handling charges of Rs. 25/= per cheque or any instrument will be charged by the bank.


This department deals in those cheque and draft,s which are drawn upon the Habib Bank Branch.

The transit delivery section received those cheque and drafts which are through any branch of Habib Bank after proper verification of the genuine of the draft or cheques , this branch transfers the inter branch credit order IBCO to the main branch which further transfers the IBCO where the cheque or draft was presented the clearing section deals in those cheque and drafts which are drawn on Habib Bank. From other banks like UBL, MCB, NBP, etc.

The procedure is same that after proper verification the IBCO is transfer to the main branch which sends the credit note to the State bank,

And State bank credits the account of that bank with the specified amount the bank charge noting on those cheque which belongs to Habib Bank but if the other bank is involved the bank will charge the commission and courier charges.


Current deposit and profit and losses department at Habib Bank branch is working for the maintenance of the account holder’s record. This department maintains all the record regarding the account of the account holders, specimen signature card is with them and the verify the signature of the account holders.

All cheque drawn of Habib Bank branch are sent to this department and

they properly judge and verify the validity of the cheque and after

verification they sent it to the cash department. Firstly that verify for the

signature then they see whether the cheque is within the due date, is

there a balance in the account of the account holder. After the

verification of all these pre-requisites the cheque is cleared. It is also the

function of this department to maintain the record of all transactions of

the day certain calculation of interest of profit is also made by them.

They also prepare the statement of account holders. All the records of

the account holders their transactions, their profit on PLS accounts

interest on SNIDS, TDRs etc. is maintain by this department.


Like all the banks there is cash counter is the Habib bank branch working two or three bankers. They pay the cash to the cheque, which are properly verified from the CD & PLS, Department. People cashier returns a counterfoil of the deposit slip by stamping it with cash receipt stamp.

Cashier also maintained a register in which all the transactions at the cash counter is maintained. At the end of the day cash in hand must tally with the balance in the register.


All the cheque holders go to this department. They present the cheque to the person at the department. He checks that whether the cheque belongs to the same branch, the amount in words and figures is same, cheques is not outdated, there signatures are there etc. Then he allots a number to the cheques and a token is given to the cheque holder and the cheque is sent to the CD & PLS Department. After the proper verification the cash is paid to the cheque holder from the cash counter after taking token from him.

Transfer book is a book in which all the transactions of the day is written and the balance is tally with the cash book. The translator book is also maintained by the said department.


This dept. has been working under the supervision of knowledgeable experienced & well qualified banker Mr. Saleem Mirza who has been serving this bank for last 20 years.

This Dept. has boon playing one of the primary functions of the bank because a bank is the organization that accept deposits & give advances.

There are basically two types of loans:

Fund base

Non fund base

in fund base the cash is involved.

While is non fund base cash is not involved.

These are following types of advances those are given by the BANK.

Cash Finance (CF)

Running Finance (RF)

Machinery Loan.

International Development Agency Loan(IDA)

Transport Loan.

Staff Loan.


Cash Finance is the biggest loan given to the businessmen, industrialists, its limit is in crores and bank do require security for this purpose. After the proper investigation and documentation these finances are given and genuine property is pledged as a matter of security.

These loans are taken for the purchase of stocks etc. The bank appoints its staff of two or three persons at the place where that stock is lying. Bank also keeps the record of the stock and current position too. A notice is also written at the place that the stocks are pledged with the bank. To get these types of loans prior permission from the zonal office of the Habib bank is also required. The bank gets back its principal amount and also markup for the loan. The rate of markup is Rs.0.52/1000 per day and to calculate the markup for finance period as per formula is:

Amount of Amount of

Finance + One installment

MARK UP=———————————— Rate of Mark-up


Mo. of Period of

Installment one installment

Documents Require for the Loan.

1.Demand Promissory Note(DP Note)

This document is filled in by the party that they promise to pay the amount whenever it is demanded.

2. Facility Letter:

This is the requisition of the finance facilities to the bank By the party.

3. Balance Confirmation:

After the approval of the loan this letter is written by the Party that such amount is in the account of the party.

4. Letter of pledge (IB26)

For the getting of the cash finance a letter of Pledge is to be given to the bank that such property is to be pledged with the bank as a security.

5. Letter of Guarantee(IB29)

A letter for the personal guarantee is also required in which the guarantee from a sound person to the party is attached with the application

6. Agreement for Financing(IB6)

This agreement for the short term medium term/long term on the mark up basis. At most these are the documents required in attaining of the loan.


Running Finances are also given for the purchase of stock etc. But its limit is not too much. Normally upto RS 15,00,000 is given as a Running Finance and no staff is appointed. This is termed as Hypothecation, which means that party is wholly liable for the stock and payment of the principal amount and markup. The procedure is almost same as for the cash finance and the loan is given to those parties which are able to prove its genuineness and satisfies the bank. The bank also pledges the genuine security of the party which normally more valuable then the amount of loan. To get this type of loan prior permission of the zonal office is necessary.

The rate of mark up is RS 0.52/1000 per day and to calculate the mark up for the finance period as per formula is:

Amount of Amount of

Finance + one installment

Mark Up—————————– Rate of Mark up


No. of Period of

Installments One Installment.

�Document Required for the Loan:

1. Demand Promissory Note(DP Note)

The party that they promise to pay the amount whenever it is demanded fills this document.

2. Facility Letter.

This is the requisition of the finances to the bank by the third party.

3. Balance Confirmation

After the approval of the loan the party writes this letter that such amount is in the account of the party.

4. Letter Of Equitable Mortgage (IB24)

For the getting of the running finance a letter of equitable mortgage is to be given to the bank that such property is to be mortgaged with the bank as a security.

5. Letter Of Guarantee (IB29)

A letter for the personal guarantees is also required is which the guarantees from a sound person to the party is attached with the application.

6. Agreement for Finances (IB6)

This agreement for the snort term /medium term/long term on the mark up basis. At most these are the documents required in attaining of the loan.

Letter of Hypothecation (IB25)

This letter that for all types of stock the party is liable and bank not needs to appoint any person.


Certain loans are given for the purchase of machinery. These loans are called Local Machinery Manufacturing Loan (LMM LOAN). The bank finances for the machinery, which is manufactured in Pakistan. Like other loans after the proper verification and proper documentation and

With the prior approval from the zonal office, these loans are given. The bank pledges some genuine property as a security. Personal security is also required in the getting of this loan. The loan is to repay in certain installments which includes the mark-up also. Normally these loans are for the period of five years and first six or three months are exempted from the installments as the ease or as the terms and conditions may be. The rate of the interest to be paid by the party is 8% per annum.


1.Demand Promissory Note(DP Note)

These documents filled in by the party that they promise to pay the amount whenever it is demanded.

2.Facility Letter.

This is the requisition of the finance facilities to the bank by the party.

3.Balance Confirmation.

After the approval of the loan the party writes this letter that such amount is in the account of the party.

4.Letter Of Pledge.(IB26)

For the getting of the machinery loan a letter of Pledge is to be given to the bank that such property is to be pledged with the bank as a security.

5.Letter of Guarantee (IB29)

A letter for the personal guarantee is also required, in which the guarantee from a sound person to the party is attached with the


6. Agreement For Financing(IB6)

This agreement for the short term medium term/long term on the

Mark up basis. at most these are the documents required in attaining of the loan.


These loans are given for the purchase of foreign machinery , stocks, etc.

Though these loans are not in practice but there is a provision for this loan. The cause of in practicing of the loan may be the unawareness of the people about the provision.

The rate of interest on these loans is 11% per annum.

These finances are provided by the World Bank.


1.In respect of the applicant.

Sole Proprietorship

Partnership Concern Copy of registered partnership deed.

Limited Company.

– Copy of the Memorandum and Article of Association.

– Copy of the certificate of Incorporation

– Copy of the certificate of Commencement of Business.

– Resolution of the Board of Directors authorizing the management to obtain the loan from the Bank specifying the

purpose of the loan required for.


1- A.T.M.



Now a days banks are going to inter in the world of Computer & technology, Each & every mark which was done by the men is being done through computer

H.B.L. is innovators to introduce A.T.M. facility to its customer first time in Pakistan A.T.M machine basically provide 24 hours cash service

To its customer you just have to enter your code & amount requirement you could get it when ever you want in throughout 24 hours. A.T.M. card facility can be given to all those who are the customer of the bank But having certain average balance.

For getting A.T.M. card simple procedure is adopted.

-Filling of Application for A.T.M. card

-Attestified from two bankers.

-All kind of necessary related documents are also required.


a- On daily bases RS 2000/-

On weekly bases Rs.9000/- can be drawn.

Normally on deposit of 25000/- the limit of with drawl on deposit and RS 3000/- per 30 days

It is limited on the city only card of some city can’t be used in other city.

There are total 20 A.T.M machines working in Pakistan,

Karachi 8

Lahore 4

Islamabad 3

Multan 1

Faisalabad 1

Peshawar 1

Quetta 1

A.j.k. 1


Individuals personal current and PLS saving account holder can get A.T.M Card.

The HBAC shall allow the card holder access to the bank auto cash terminal to

Obtain cash up to previously arranged limit

Request a new cheque book

The HBAC is not transferable and shall be used exclusively by the card holder.

The cerd holder further undertakes to maintain sufficient funds to meet with drawls and he/ she undertakes not to overdraw the account unless over draft arrangements have previously been agreed to by the bank.

In the event of the card holder at any time drawing amount in excess of the credit balance the bank a will be entitled to create an overdraft in his account and card holder agrees to repay.

The card holder irrevocably authorized the bank to debit his/her A/C with the amount of withdraw.

The HBAC issued to the card holder shall remain at all times the property of the bank and shall surrounded to the bank on demand.


Master Card is another modern facility, which is given by H.B.L. Master Card is having following benefits & privileges

1) H.B.L. master card is accepted at over 123 Million establishment’s word wide.

2) Free air travel accident insurance is provided.

3) This is the card having a photograph & signature of the cardholder, which gives the security against misused.

4) On this card cash withdrawal are available over 29000 outlets all over the world.

5) H.B.L. give an essay to manage monthly statement to keep track of your transaction.


The card can be used to individuals on their request having current /PLS saving Accounts.

The card must be signed by the card holder immediately upon receipt

The card is not transferable & shall be used exclusively by the card holder name.

All possible steps shall be taken to safe guard the card.

The cardholder irrevocably and unconditionally authorizes the bank to debt his/her account with the amount of withdraw/ purchase effected through the use of his/her card.

While using the caed, the cardholder should sign the establishment bills and charges slips with the same signature as that on the card.

The cardholder should promptly notify the bankin knitting of any changes in detail of employment/ bussiness or any change in address office/ Residence.

The joining fee, annual and other payments made by the card holder to the bank shall be non refundable

The card remains the property of the bank at all times and has to be returned by the cardholder on the bank’s demand.


World trend has been changing very rapidly and competition is becoming more & more stiff. Our country is the tendency towards the privatization now a days.

As we know H.B.L. is an Govt. organization and one of those organization those one suffering loses due to heavy operational & management expenses H.B.L. is bearing of its extra employee those are real cause of heavy management expenses. These expenses are making H.B.L weaker & weaker day by day. Now the Govt. has decided to privatize this org also along with other big organization.

If we technically examine the reason behind the down sizing then we

could see that H.B.L. is increasing 5% operational & management

expenses against the deposit while it 2% all over the world. In down

sizing employees of H.B.L regardless grade designation are offered a

golden shake hand scheme in which people are inviting to great benefits

against taking retirement from the job.

This Golden handshake scheme has following

main features.


The employees may excise their option during the period from

25th August 1997 to 10th Sep 1997.

This scheme is a one time offer . when that much expenses will be incurred these will also add up in loan those are given an normally 18% to 20% when

They will become of 20% to 25% those will be more expensive then that of any other bank which has expenses less than the Habib Bank does.

So now-a-days H.B.L. has been passing through the downsizing process president H.B.L. Mr.. Shasta Tarn has made several refers and it is one of more significant reform.


Three months basic pay for each completed years of service.

An account equivalent to 10 years normal post retirement medical facility will be paid in lump sum to retiring employees.

Benevolent fund grant equipment to 10 years will also be paid in lm sum in advance at the time of settlement dues as a final payment.

The residential facilities for six (6) months after retirement and sale of can if already provided, furniture shall be allowed as a special case to all those executives, who accepts this scheme.

�BALANCE SHEET as At 31st December, 1998

1998 1998

(U.S $000) (Rs.000)


Cash 328,672 14,478,010

Balance with other Banks 372,820 16,422,727

Money at call and short notice 75,566 3,328,669

Investment net of provision 1,262,669 55,620,567

Loans and advances

(Less loan loss provision) 2,712,554 119,488,013

Operating fixed assets 122,282 5,386,508

Capital work in progress

civil works 8,022 353,373

Other assets 920,935 40,567,215

———— —————-

5,803,520 255,645,082


Deposits and other accounts 4,800,264 211,451,635

Borrowing from other Banks 431,816 19,021,509

Bills payable 100,334 4,419,732

Other liabilities 284,393 12,527,502

————– —————

5,616,807 247,420,378

————— —————

Net Assets 186,713 8,224,704

————— —————

�Cash Flow Statement For The Year Ended December 31, 1998

1998 1998

(U.S $000) (Rs.000)


Loss before taxation (71,150) (3,134,140)

Add: Dividend income ( 2,273) ( 100,134)

Profit on sale of fixed assets

Profit on sale of shares of Habib Credit

and Exchange

Bank Limited (currently Bank Alfalah Ltd) (27,650) (1,218,000)

———– ————–

(101,462) (4,469,416)

Adjust for non-cash items

Depreciation 4,191 184,627

Provision for diminution in value of

investments 306 13,480

Provision against non-performing loans

and advances 8,289 365,131

Exchange gain on translation of assets

and liabilities of foreign branches 23,168 1,020,549

Provision for gratuity 9,848 433,800

Amortisation of deferred cost 6,581 289,909

———— ————–

52,383 2,307,496

———— ————–

(49,079) (2,161,920)

(Increase)/decrease in operating assets

Government securities 22,517 991,897

Loans and advances (43,067) (1,897,090)

Other assets (excluding taxation, voluntary

golden handshake scheme cost and amount

paid on behalf of Funds) (77,930) (3,432,816)

———— ————–

(98,480) (4,338,009)

�Increase /(decrease) in operating liabilities

Deposits and other accounts 134,350 5,918,076

Bills payable 11,991 528,244

Other liabilities 51,715 2,278,036

———- ————

198,056 8,724,356

———- ————

50,497 2,224,427

Cash inflow/(outflow) before tax and other adjustments

Payment to employees on account of

voluntary golden handshake scheme cost (164,534) (7,247,705)

Payment of retirement benefits on behalf of

funds (63,308) (2,788,743)

Taxes paid (40,192) (1,770,415)

———— ————–

Net cash outflow from operating activities (217,537) (9,582,4360)

———— ————–


Investments (excluding Government

Securities ) 21,443 944,575

Sale proceeds on disposal of subsidiary 9,535 420,000

Dividend income 2,273 100,134

Fixed capital expenditure (11,084) (488,250)

Sale proceeds of fixed assets 804 35,385

———– ————-

Net cash inflow from investing activities 22,971 1,011,844

———– ————-


Borrowing from other banks, agents etc. 77,512 3,414,391

———– ————-

(Decrease)/increase in cash and cash

equivalents for the year (117,054) (5,156,201)

Cash and cash equivalents at the beginning

of the year 894,112 39,385,607

———— ————

Cash and cash equivalents at the end of the

year 777,058 34,229,406

———— ————-

Cash and cash equivalents at the end of the year

Cash 328,672 14,478,010

Balance with other banks 372,820 16,422,727

Money at call and short notice 75,566 3,328,699

———— ————-

777,058 34,229,406

———— ————-


1994 1995 1996 1997 1998

Paid-up-capital 2,478 2,478 2,478 2,478 2,478

Reserve funds 4,308 4,508 4,844 4,862 5,835

Total Assets 288,919 306,851 336,573 328,830 320,634

Total Deposits 166,834 178,647 194,661 213,595 211,383

Advances 102,811 105,502 119,256 121,909 119,758

Investment 57,024 64,874 63,148 60,929 55,445

Total Income 18,752 19,582 22,873 27,714 25,156

Total Expenses 17,986 18,916 22,164 31,121 28,282


Paid –up- capital remained same during the last four year no minor change has been observes.

Reserves has remained same in 1996 & 1997 but these are increased as compared to 1995 & 1996 the purpose may be was to retain more funds in hand for the planning & development of the bank.

In total assets smooth change can be observed the reason may be the increase of clients of banks because in only 1997 3 million clients bank with H.B.L. within the country & overseas branches.

Total Deposit of the bank has increased in each previous year the main reason of this increase is Bank’s foreign currency deposits in Pakistan have increased.

Advances increased through all four years because banl has continued its policy of supporting the priorities established by Govt. and rendering services to all sectors of the economy with specific emphasis.

THE investment slightly declaimed due to increased diversion of bank’s resources for financing the requirement of priority sectors of the economy.

Total Income & Total expenditure remained slightly unfavorable due to increasingly competitive environment and structural problems of public sector Financial institution continued to put sever strain on the bank’s operation.



Total Bank H.B.L.

Acquiring Acquiring

Total Schedule 8718 1773

=Domestic Branches

Total Assets 1540.69 362.33

(Billion) (Billion)

Advances 583.68 131.805

(Billion) (Billion)

Deposits 963.73 213.491

(Billion) (Billion)


On the bases of this Analysis H.B.L. is rated among the top 7 banks in

Financial set up of Pakistan.



H.B.L. has very effective Network of branches all over the country. Every 10th Pakistani is A/C holder of H.B.L. has made huge investment in almost all the important economic sectors of Pakistan. H.B.L. not only has made investment in industry but also in small scale industry as well. H.B.L. has efficient & less bureaucratic set up H.B.L. has introduced monthly income scheme that provides almost highest interest rate .A.T.M. Was introduced in Pak. By H. B. L. master card facilities is also available to the clients.


No consumer banking has offered by the H.B.L. to its clients like phone banking evening banking etc.

Bed Debt rate is very high no special effort has been made to recover the bed amounts.

No marketing set up or structure is there. Most of people do not know how they have to promote their activities.


H.B.L. is oldest bank in the country people do rely on this bank with some additional efforts bank can attract high deposit from Pakistan and overseas.

Instead of emphasizing on big & long term projects bank should concentrate on small scale investments heaving small maturity period.

Now-a-days H.B.L. has been investing almost 18% of its total investment on cotton business, along with investment in cotton it should invest in other cash crops, i.e. Rice, Sugar Cane, Tobacco, Wheat etc and there related agro based industry.


First threat that bank has to face is the Privatization, down sizing & restructuring these changes could make drastic effects as well.

New incoming local & specialy foreign banks those are main cause of stiff competition in the market

DFI’s are going very well in financial set up of Pakistan. So, these are also effecting on the operations of bank. Along with other threats the threat of corruption has vital importance.


Habib Bank limited was rated among first 500 banks of the world but now it is in among 1000 banks in the world, H.B.L. is not progressing due to political influence, in efficient management & corruption. If these draw backs have removed then bank will not only join its previous position rather we hope it will be rated among world top ten banks.

Khokhar Texile



My beloved parents whose encouragement, guidance and presence are assets of my life.

&My teachers who illumined the dark corners of my mind and heart.


This report describes the effort made by me for the learning by first hand practical experience about a business organization. Today is the era of experience as is said by quotation “Experience makes a man perfect.” No body can deny the importance of practical training and experience.

Through internship students get the first touch of professional exposure of the roles; they have to play during their professional careers. The students not only acclimatize themselves to the corporate environment but also learn to assume responsibility, co-operation and teamwork the hallmarks of modern management.

Having experience of textile industry is really a good experience for me. I am submitting all my experiences. No doubt, omissions and errors are expected but it is requested to ignore the nominal errors.

I was lucky enough to have a chance of doing internship in Fatima Sugar Mills Limited. I learnt a lot about the practical business and above all, the mental discipline and awareness, which are the most useful tools for an executive to raise the organizational structure.


First of all, I want to express all and thanks to ALMIGHTY ALLAH whose blessings are above each and every thing which make me able to present my tiny effort. All prays to Hazrat Muhammad (pbuh) who is the reason for creation of the universe and whose kindness came to my part.

Secondly on the successful completion of my internship program, I whish to express my gratitude and heart worthy acknowledgement to my teachers for full co-operation and helped me in completing this report. I feel utmost pride in acknowledging with sincere gratitude for the valuable guidance I have received from my respected teacher Mr. Muhammad Aamir, He has been a constant source of enthusiastic encouragement through out the internship program. Due to his guidance I have become able to complete internship as well as this report. His advice, criticism and remarks were of the most value to me.

�I am also thankful to following persons:

Dr khalid ahmad khokhar Chief Executive

Zubair ahmad khokhar Executive Director

Shahbaz idrees Engineer

Hussain Sajid kazmi Chief Financial officer

M.tahir Raza Sales manager

Furthermore all the other executives and staff members of Khokhar textile Mills Limited, Head Office and Site deserve my thankfulness for their co-operation and guidance during the course my internship at Khokhar Textile Mills Limited. Finally I would like acknowledging the contributions by many other sources of information used in preparation of this report.


Sr. No. Description Page No.

1. Preface 1

2. Acknowledgment 2

3. Structure of Management 3

4. Growth of Sugar Industry in Pakistan 4

5. Group Profile 5

6. Board of Directors 6

7. Mission of FSML 7

8. Objectives 8

9. Introduction 9

9. Working Force 11

10. Products of the Company 12

11. Production 13

12. Main Departments 15

13. Departments at Site 16

14. Departments at Head Office 33

15. Banking Section 47

16. Data Administration 51

17. Organizational Incentives 55

18. Quality Management 57

19. Problems of Sugar Industry 59

20. Comments & Suggestions 60

Introduction to Textile sector

Textile includes all the business related with yarn and cloths, so all the business from cotton ginning to cloth and apparel manufacturing comes under the textiles. There are different functions of Textile, which are as under:


This is the first stage where cotton is separated from the seeds. Raw material of this stage is cotton seed. Khokhar textile mills does not deal in this function.


Raw material of this stage is Ginned cotton. This cotton is spun to make yarn. Yarn produced in various qualities, this is the main Raw material of Reliance Weaving mills, which is purchase from local market. Khokhar Textile mainly deal this function.


In weaving unit yarn is converted into cloth through power looms or through hand driven machines. Khokhar textile mills does not deal in this function.

Processing and Dying

Cloth is further processed and it could be used for a lot of purposes, like Bed sheets and Garments.

Cutting and Stitching

This is a final use of cloth in which cloth is cut and stitching is made according to local market or importer requirements.

History of the Textile industry

While farmers were developing new and better methods of agriculture, life in other areas of work had changed little for hundreds of years. Early in the 18th century, most of the population still lived in small rural settlements. Few people lived in towns, as we now know them.

Many people worked as producers of woolen and cotton cloth. They cleaned, combed, spun, dyed and wove the raw material into cloth. They did this work in their own houses.

This type of production has become known by the general term of the Domestic (or cottage) Industry.

Work within the Cottage Industry was usually divided up between the members of one family. The women and girls were responsible for cleaning the sheep fleeces, carding the wool and spinning it. The process of weaving was physically hard work and, traditionally, it was the man who was responsible for it.

Generally, at regular intervals, a cloth merchant visited each handloom weaver’s cottage.

He would bring the raw material and take away the finished cloth to sell at the cloth hall.

As soon as the new wool arrived, it was washed to clean out all the dirt and natural oil.

After this, it was dyed with color and carded. This was the process of combing the wool between two parallel pads of nails, until all the fibers were laying the same way.

Next, the carded wool was taken by the spinner and, using a spinning wheel, the thread was wound onto a bobbin. The unmarried daughters of the household who were called spinsters often performed this part of the process. The term spinster still exists in English to man an unmarried lady. The spun yarn was then taken to the loom to be woven. In a weaver’s cottage, the loom was often to be found on an upper floor. There were large windows in the room to let in plenty of daylight. The loom was worked by both hand and foot movements. Working the loom was quite strenuous work, which is why it was traditionally the work of the men of the household.

Textile Industry in Pakistan

Textile is the important sector of Pakistan’s economy. It playing the important role in economy of Pakistan and fulfilling the 65% export target.


The textile industry which is endowed with a strong base of weaving had started its journey from almost non existence in 1947 with a meager size of 3000 shuttle looms that is too in the unorganized sector with only 10 textile units. The industry has gone through a long way and now possesses the 220 units, 45000 looms in which include more or less 30000 shuttles looms. The textile industry is not only catering to the entire local requirement but sharing out 65% of the total foreign exchange earning.

Pakistan being the fifth largest cotton producing country provides a strong base for development sustenance of the textile industry. In spite of tremendous growth in all the peripheral areas of the textile industry includes cotton, ginning , spinning, processing and made up sector. This industry which is the main pillar of the economy has not attained its optimum potential so far.

Let have a look on the istalled units and looms and production.

Capacity Installed Operative





1994-95 55 6600 5500

1995-96 59 7080 6100

1996-97 91 10920 9128

1997-98 105 13125 11125

1998-99 115 14375 12950

1999-2000 153 19125 19556

2001-01 166 20750 19840

2001-02 157 19480 17850


period grey cloth

in meters(000)

1994-95 602250

1995-96 667950

1996-97 999516

1997-98 1218187

1998-99 1428025

1999-00 2141382

2000-01 2172400

Current position of textile industry

With the exception of the period from 1958-59 to 1974-75; the textile industry could not maintain, a sustainable growth, and registered its growing rate at the nominal level in the country. In the organized sector there are 452 textile companies of which 212 are not listed and 240 textile units are listed on KSE/LSE comprising of 157 spinning units,29 and unlisted is however is around 452 approximately.

The weaving capacity of the textile industry in our country is static at 9000 shutlle looms for past many years. The capacity of conventional looms is also around 19840, which have no match with quantum jump the industry as taken in this spinning sector. Instead of going for value added products the frenzy for setting up spinning projects dictated the mind of the textile industry over the years which took the 4.1 million spindles in 1996-97 instead of going to more value added textile products like dying bleaching units in the country.



1995-96 79.50

1996-97 81.00

1997-98 82.90

1998-99 85.10

1999-00 86.20

2000-01 88.00

2001-02 90.00


The textile exports projection in the trade policy 1999-00 worth 6.5 billions $, of major textile products include cotton yarn with the target of 1800 million $, grey cloths 1680 million $ , ready made garments 1050 million $, tent and canvas 55 million $, knit wear 950 million $ and made ups 965 million $.

The industry has to achieve its newly settled targets in the face of difficult trading conditions especially the disturb economies of Asian countries, threat of imposition of anti dumping duties on our gray cloths by the European union countries,(E.U. has withdraw an anti dumping duty i.e. 1.01.2002)cotton yarn of 20/s in Japan and constant decrease in imports from South Korea, all together posting an uphill task of achieving the export targets for the textile industry during the financial year. Duty drawback (rebate)is reducing from time to time and changing in sales tax refund to export oriented units, which is very poor sign for the exporter of the value added items.


The textile industry has been crisis ridden for some time because of shortage of raw material due to three successive cotton crop failures. The main problems it is facing are as under:

1) The production of lint cotton remained below the target.

2) The shortage and non-availability of the lint cotton in the domestic market has led to the price-hike in domestic market.

3) Competitor’s installation of over capacity in some production lines or closure of spinning capacity due to higher prices and short supply.

4) Docile labor-intensive technology, needed to be changed to cost efficient capital intensive.

5) Lack of institutional finance for modernization efforts.




CHAIRMAN Zubair Ahmad Khokhar

MANGING DIRECTOR Dr. Khalid Ahmad Khokhar

DIRECTORS Dr. Khalid Ahmad Khokhar

Zubair Ahmad Khokhar

Mrs. Fatima Leghari

Mrs. Shahnaz Kameel

Mrs. Maheer Perwar


AUDITORS Mahboob Sheikh & Co.

Chartered Accountants

BANKERS National Bank of Pakistan

The Bank of Punjab

Union Bank Ltd.

Metropolitian Bank Limited

LEGAL ADVISOR Syed Mushtaq Ali Kazmi



Multan Cantt.

MILLS Chak 565 TDA, DD Panah Road,

Chowk Serwar Shaheed


Brief Profile of the Companies

The company consists of following concerns:

M/s Khokhar Textile Mills Ltd.

M/s Khokhar Cotton G/P Factory

M/s Khokhar Agri Farms

Khokhar Investments

Tallal Petroleum Services

KK Gases

The following are the main sponsors of group:

Dr. Khalid Ahmad Khokhar

Mr. Zubair Ahmad Khokhar

i) M/s Khokhar Textile Mills Ltd.

The sponsors have well reputed and experienced people of the business of textile, TPS and investment. They engaged in textile business since 1991. The textile spinning having worth of Rs. 650.0 M situated at Distt. Muzaffar Garh.

ii) M/s Khokhar Cotton G/P Factory

The ginning unit situated at Industrial Estate, Multan having net worth of Rs. 50.0 M producing 30% requirement of our spinning unit.

iii) M/s Khokhar Agri Farms

Khokhar Agri Farm consists of 850 acres having net worth of Rs. 430.0 M in which cotton, wheat and vegetables are growing and this farm also consisting of orchard of Mango and citrus etc.

iv) Khokhar Investments

The group is also engaged in the business of property and land development in Lahore and Multan. Recently they set up a residential colony namely Canal Cantt. View, which consists on 20 acres of land.

v) Tallal Petroleum Services

The petrol pump is situated on main Khanawal Multan Lahore going to Lahore. It engaged in the business of sale of petroleum product.

vi) KK Gases

The company has entered in the LPG re-filling business and in addition to this EOI for LPG extraction plant has also been submitted. We are already in process of establishing LPG re-filling station at 19A-Industrial Estate, Multan and 2 acres of land has already been purchased. This plant will fulfill the requirements of South Punjab mainly the area of Multan, D.G. Khan and Bahawalpur.




The company is interested to install complete textile finishing plant including bleaching, dyeing, mercerizing, calendaring, folding, printing plant in the existing yarn units at Multan to make it a complete composite unit, which can explore local and international market of high value products. The company would keep its emphasis on product and market diversification, values addition and cost effectiveness. We want to fully equip the company to play a meaningful role on the sustainable basis in the economic development of the country.


The mission of the company is to operate state of the textile plants capable of producing yarn and fabrics.

The company will conduct its operations prudently assuring customer satisfaction and will provide profits and growth to its shareholders through:

Manufacturing of yarn and fabrics as per the customer’s requirements and market demand.

Exploring the global market with special emphasis on Europe and USA.

Keeping pace with the rapidly changing technology by continuously balancing, modernization and replacement of plant and machinery.

Enhancing the profitability by improved efficiency and cost controls.

Recruiting, developing, motivating and retaining the personnel having exceptional ability and dedication by providing them good working conditions, performance based compensation, attractive benefit program and opportunity for growth.

Protecting the environment and contributing towards the economic strength of the country and function as a good corporate citizen.





M/s Khokhar Textile mills Limited was incorporated on May 30, 1990 as a public

limited company (limited by shares) under the Companies Ordinance, 1984. The

principal activity of the company is to manufacture and sale of yarn of all types.


The principal accounting policies which have been adopted in the preparation of

these accounts are summarised below:


These accounts have been prepared under the historical cost convention.


No provision is made for gratuity payable to the company’s staff on retirement

or leaving the empolyment of company. The payments, as and when, made are

charged to profit & loss account.


Assets & Liabilities in foreign currencies are converted into Pak rupee at the rate

of exchange ruling on the Balance Sheet date except those covered under the State

Bank of Pakistans. Exchange risk cover scheme which are translated at the covered

rate. Exchange gains/losses and exchange risk coverage fee on foreign currency loans

are capitalised as a part of cost of plant & machinery acquired out of the proceeds of

such loans


Tangible fixed assets are stated at cost or valuation less accumulated depreciation.

Freehold land is stated at valuation. Plant and machinery is stated at valuation and

includes exchange risk coverage fee on foreign currency loans. It also includes the

amount of surplus on revluation on fixed assets.

Depreciation is charged applying the reducing balance method at the rates

specified in the operating assets note.

Depreciation on addition is charged on the basis of whole year, while no

depreciation is charged on deletion during the year.

Maintenance and normal repairs are charged to current year income as and

when incurred. Major renewals and improvements are capitalised.

Gain or loss on disposal of operating fixed assets are included in current year



Charge for current taxation, if any, is based on taxable income at current tax

rates after considering the tax credits and rebates. Deferred tax liability, if any,

is accounted for by using the liablity method on all major timing differences to

the extent that liabliyt can be estimated for the foreseeable future.


Deferred costs ae being charged to profit & loss account over a period of five



There are valued at moving average cost.


Basis of Valuation

RAW MATERIAL: -At Annual Average Cost

WORK IN PROCESS: -At Raw material and proportionate

conversion cost depending upon the

stage of completion.

FINISHED GOODS: -Lower of the Cost / Net Relisables


WASTE -At Net Realisable Value (NRV)

Cost signifies in relation to finished goods the annual average cost consisting prime

cost and appropriate manufacturing overheads. Net realisable value signifies the

estimated selling price in ordinary course of business less expenses necessary to

be incurred in order to make the sale.


-Local sales are recorded on despatch of goods.

-Export sales will be booked on shipment basis, if any.

MARCH 07 2006

Rupees Rupees


8,490,330 Ordinary shares of Rs. 10/- each issued

for cash. 84,903,300 84,903,300


Evaluation done by Asif Associated vide their report

dated 19.07.2004. 199,822,736 199,822,736

5. SHARE DEPOSIT MONEY (DIRETORS EQUITY) 108,070,370 100,070,370


Bank guarantee (NBP) (Notes 6.1.5) – 70,000,000

DF (NBP) DF I (Notes 6.1.9) 70,000,000 –

DF (NBP) DF II (Notes 6.1.8) 60,933,333 66,400,000

DF (NBP) DF III (Notes 6.1.10) 3,774,000 –

DF (BOP) (Notes 6.1.7) 30,110,000 38,000,000

164,817,333 174,400,000

LESS: Current portion shown under

current liabilities

DF (BOP & NBP) 33,580,002 11,000,000

33,580,002 11,000,000

131,237,331 163,400,000 10,999,628

6.1 F.A.F.

6.1.1 This finance was rescheduled by Habib Bank Limited by transferring the total

outstanding principal of DF-16A AND FAF-19 as at 30-06-1999. 304,846


6.1.2 Down payment of Rs. 52.933950 (M) has been made on 31-12-1999 by equal #REF!

monthly installments commenced from 31-08-1999.

6.1.3 The debt was repayable in 146 monthly installments commencing from

31st January 2000.

6.1.4 No mark-up was charged on the debt.


6.1.5 The outstanding liability as on 31.12.03 has been resheduled by the HBL on following

terms and condition:

– Settlement amount Rs. 220.0 million

– Down payment Rs. 20.0 million (paid by the company)

– The said DF shall carry nil markup and will be repaid in six installments starting from 1st

November, 2004.

– Principal Rs. 33.800 million, un-debited markup Rs. 99.084 & Rs. 0.706 million being

rescheduling charges will be kept frozen and will be reversed/waived, subject to

regular debt servicing to the satisfaction of HBL.

– Repayments shall be guaranteed by NBP through irrevocable L/g to the satifaction

of HBL.

– All charges will be released on the submission of L/g. (All charges of HBL on fixed

assets has been vacated.

6.1.6 NBP has issued bank guarantee of Rs. 200.0 million against following securities: (14,626)

– 1st exclusive charge on the project:

– Personal guarantees of all directors

– Collateral valuing Rs. 50.00 M

– Cash margin 25%

6.1.7 BOP has sanctioned DF for Rs.38.0 M for the expansion of 4128 spindles with back process :

against following terms and conditions:

– Urban security in the name of directors

– Personal guarantees of all directors

– Repayment by 10 half yearly equal installments.

6.1.8 NBP has sanctioned DF for Rs. 66.40.0 M for the expansion of 4128 spindles with back process :

against following terms and conditions:

– 1st Charge on the Project

– Personal guarantees of all directors

– Repayment by 24 quarterly equal installments.

6.1.9 NBP has sanctioned DF I for Rs. 70.00.0 M for the debt swap of HBL which has now been fully utilized

and HBL long term loan has been cleared. Repayment will be in 6 half yearly installments.

6.1.9 NBP has sanctioned DF III for Rs. 12.00.0 M for the construction of 15 cotton godowns.

Repayment will be in 16 quarterly installments.


Long Term Loans 33,580,002 11,000,000

33,580,002 11,000,000



Cash Finance (NBP & BOP) (Note-8.1) 216,594,617 146,040,482 (61,719,822)


8.1.1 This represents the principal amounts of cash finance. 3,499,417


8.1.2 This finance is secured by way of pledge of stocks. Raw material,

work-in-process, finished goods. This amount forms part of aggregate borrowing

limit of Rs.500.0 (M).


Creditors 1,989,938

-Trade 4,116,215 4,472,988

-Others 1,050,000 1,688,712 180,342

Mark-up and Others:

Accrued Expenses 21,672,800 1,787,393

Commission on Sale & Purchase 250,400 1,042,652 14,626

Income Tax 2,990,000 3,768,781

30,079,415 12,760,526


Security Deposits 1,285,065 1,285,065

1,285,065 1,285,065


-Stores 8,099,000 6,090,800

-Spares 1,896,520 1,680,900

-Loose Tools 50,600 25,500

10,046,120 7,797,200


Raw Material 310,094,900 183,702,698

Work in Process 3,187,249 3,155,054

Finished Goods 4,417,600 3,900,000

317,699,749 190,757,752


Local considered good (unsecured) 3,679,700 5,699,811



Employees 1,285,650 1,186,987


-Cotton 1,050,000 2,570,600

-Goods Supply 750,400 856,900

-Commission Agents 56,500 –

3,142,550 4,614,487


L.C. Deposits 164,500 –

Income Tax/others – 4,156,182

164,500 4,156,182

Sales Tax Refundable 1,052,013 1,052,013

4,359,063 9,822,682


In Hand 2,830 305,060

At Banks 404,580 6,000,400

407,410 6,305,460


Local 677,685,500 682,954,682

Waste 12,632,347 14,596,955

690,317,847 697,551,637

Less: Commission (1,694,770) (1,455,305)

688,623,077 696,096,332


Raw Material Consumed (Note 18.1) 476,611,345 457,588,749

Packing Material Consumed 8,439,755 6,913,859

Stores, spares Consumed 12,862,334 9,574,308

Wages, Salaries & Other Benefits 24,805,530 33,338,583

Power And Fuel 63,351,083 67,099,253

Repair And Maitenance 515,045 746,249

Insurance Expenses 2,350,360 2,145,355

Depreciation 22,543,519 29,558,026

Misc. Expenses 23,650 47,347

611,502,622 607,011,729


Opening 3,155,054 1,696,362

Closing (3,187,249) (3,155,054)

(32,194) (1,458,692)

Cost Of Goods Manufactured 611,470,427 605,553,037


Opening Stock 3,900,000 5,200,000

Closing Stock (4,417,600) (3,900,000)

(517,600) 1,300,000

Cost Of Goods Sold 610,952,827 606,853,037


Opening Stock 183,702,698 133,203,200

Purchases 603,003,547 508,088,247

786,706,245 641,291,447

Less : Closing Stock (310,094,900) (183,702,698)

Raw Material Consumed 476,611,345 457,588,749


Director’s Remuneration 225,000 300,000

Salaries, Wages & Other Benefits 4,023,874 4,283,934

Postage & Telephone 778,399 1,193,421

Electricity Expenses 479,810 611,430

Printing & Stationery 104,379 13,690

Travelling & Conveyance 1,038,774 673,415

Rent, Rates & Taxes 45,000 100,000

Vehicles Running & Maint. 823,730 1,174,071

Legal & Professional Charges 50,000 1,500

Auditor’s Remuneration 75,000 80,000

Repair & Maintenance 274,911 53,509

Paper & Periodicals 31,998 47,205

Fee & Subscription 1,248,386 –

Entertainment 230,440 331,209

Charity & Donation 197,784 218,336

Depreciation 75,859 101,145

Miscellaneous 17,815 6,155

9,721,158 9,189,020


Local freight, Ortri and Loading 217,050 471,047

Salaries 189,000 243,000

Advertising 30,000 33,420

436,050 747,467


Interest and Mark-up on:

-Long term Laon 16,888,104 5,607,098

-Short term running finance 27,928,274 23,372,054

-Commission on L/G 2,400,000 72,069

-Bank Charges 210,546 441,572

47,426,924 29,492,793


Profit on profit & loss sharing account 256,400 2,617,489


-Figures have been rounded off to the nearest rupee.

-Figures of the previous year have been re-arranged wherever necessary

to facilitate comparision


Number of spindles installed 31,296 31,296

Average No. of spindles worked 31,296 31,296

Number of shifts worked per day 3 3

Capacity of yarn 20/s count Kgs. 10,061,320 10,061,320

Actual production converted into 20/s count Kgs. 9,582,209 9,582,209


– have been rounded off to the nearest rupee.

– of prior year have been rearranged wherever necessary for the purpose of