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Internship programs are designed to make students known to the practical work and to give them proper experience that would help them in their future endeavors. For my MBA course requirement I got an opportunity to work as an internee in any organization. I decided to take up Punjab bank Limited for my internship because I really like to work in banking sector And in HasilPur there is no other opportunity to do internship. I apply in some banks. First of all Punjab bank call me to work as an internee in Bank of Punjab. And I have also a reference in Punjab bank. So in order to learn more this was my choice. This report is about my internship that I have undergone at Punjab Bank Limited Hasilpur Branch. During my internship I am able to learn practical aspect of business, and get good working experience. On the very first day of my internship I reported to Operation Manager Sajjad Haider Khan. He gave me small introduction of the bank and introduced me to some staff of the bank. Every internee is rotated among the banks departments and so was I. This rotation is done in order to have general concept regarding banks functions, operations and policies. In this rotation the stay in department is usually a week or fifteen (15) days. I have learned more about the credit, Foreign Trade and accounts department. Also worked in the operations department that has clearing, account opening and remittances have given below the caption of activities I was involved in during the period of seven weeks. The working environment in Punjab bank is something that can be found only in a challenging and in a reputed multinational corporation. The senior staff is always open for any kind of suggestions and help for the junior staff and the internees. One is provided with plenty of opportunities to groom his career and to learn while working this sort of an environment. Apart of completing a course requirement, I learnt a lot from this internship in terms of how to deal with people while you are on a job.

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The primary purpose of this study is to fulfillment of the requirements for the degree of MBA (Banking & Finance).For this connection each student of this particular course is required to undertake training in a relevant organization selected by them, for a period of 6-8 weeks. The secondary purpose of this internship is to understand how the theoretical knowledge can be applied to the practical situations and examine an organizations financial issues and identify its opportunities/ problems and also suggest corrective measures. This internship is also very necessary to gain confidence and become aware of the mechanism of an organization. As an internee I want to achieve following objectives during my internship and organization study: 1. To familiarize with a business organization. 2. To familiarize with the different departments in the organization and their functioning. 3. To enable myself to understand how the key business process are carried out in organization. 4. To understand how information is used in an organization for decision making at various levels. 5. To relate theory with practice. 6. I was also keen to gain professional experience in an actual testing environment. 7. I want to develop my skills in the application of theory to practical work situations. 8. To develop my attitude conducive to effective interpersonal relationships. 9. To acquire good work habits and sense of responsibility. 10. To enhance my learning experience by application of fundamental concepts previously learned.

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11. To observe, analyze and interpret the relevant data competently and in a useful manner. 12. To develop my interpersonal communication.

3. History


The Bank of Punjab started functioning with the inauguration of its first branch of 7Egerton Road, Lahore on November 15, 1989. The architect of the bank Mr. Nawaz Sharif then, the Chief Minister of Punjab, performed the inauguration. In Pakistan, over long periods of time the gap in saving and investment and balance of trade deficit has posed serious threat to the target levels of growth The ailments related to the budgetary deficit and public debt, both foreign and domestic are in addition. Interestingly even such adverse circumstances growth of real sector during the preceding year registered a favorable change, which speaks of hidden potential and strength of economy Fortunately, the banking sector of the country has the well organized and properly institutionalized system, which is the major vehicle not only for mobilization of resources to finance trade, agriculture, and industry but also for the effective conduct of monetary policy. The emergence of new bank on the national scene in the early 1990s has done two important services to the nation. The saving base of the economy has effectively enlarged and hence the investment opportunities have increased.

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The services of the banks in the fact of severe competition have improved considerably so that now consumer are left with extensive choice to do or undo their business relations with these banks keeping in view quality of their services. The Bank of Punjab has the privilege to discharge its responsibilities towards national progress and prosperity. Within the couple of years of its scheduling, the bank has not only carved out for itself prominent niche in the mainstream banking of the country but in certain areas it has the distinction of taking the lead. In the short span of time the Bank has been able to evolve a distinct corporate culture of its owned-based policies, which are realistic and are on highly professional footings.

Scope of the Bank.

Being a commercial Bank, The Bank of Punjab performs all such functions as are attributed to commercial banking institution both in the area of resource mobilization, loans, and investment. The Bank is thus providing all type of advances to business, trade, and industry on seasonal and annual basis, and is ensuring, through the prudent policy, the safety and protection of its loan portfolios, as the resources base of the bank expands, project financing will also be brought into its fold.


The Bank of Punjab is working as a scheduled commercial bank with a network of almost 280 branches at all over major locations in the Punjab. The Bank provides all types of banking services such as Deposits in Local Currency and client foreign currency, remittances, and advances to business, trade, industry and agriculture. The Bank of Punjab has indeed entered a new era of science to the nation under experience and professional hands of its management. The Bank of Punjab plays a vital role in the national economy through mobilization of hitherto untapped local resources, promoting savings and providing funds for investments. The bank

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offers attractive rates of profit on all deposits, opening of foreign currency accounts and handling of foreign exchange business for example imports, exports and remittances, financing, trade and industry for working capital requirements and money market operations. The lending policy of bank is not only cautious and constructive but also based on principles of prudent lending with maximum emphasis on security. The Bank of Punjab is working as a scheduled commercial bank with its network of 282 branches at all major business centers in the country and strength of employees Branches of this bank are increasing all over the country at a gradual speed which shows that customers are placing confidence and satisfaction in the services of BOP. In fact, it has made wonderful advancement in a very short time as compared to other banks in Pakistan.


Punjab Government wishes to state that being the major stake holder in the Bank of Punjab it has full faith in the new management and operations of the Bank. The government further pledges its unequivocal support to the Bank and firmly believes that the affairs of the Bank are sound and its financial health robust


These are the quick facts of the business in October 2010. At that instant BOPs business volume is as under. Assets(Current + Fixed) Loans Deposits US$ 2.7 Billion US$ 1.7 Billion US$ 2.3 Billion PKR 164.7 Billion PKR 103.7 Billion PKR 140.3 Billion

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Business Volume in terms of Investment, Current & Fixed Assets, Share Capital, Revenues, Deposits, Advances, Income, and EPS for the last 5 years is as under:

2007 Total assets Revenue Shareholder's Equity Investment Deposits Advances (net) Income EPS (Rs/share) ROI RS (M) RS (M) RS (M) RS (M) RS (M) Rs % 3052 11,458 34,938 18,344 831 6.86 7 RS (M) RS (M) 43,621 3,675

2008 66,320 5,488

2009 111,154 10,912

2010 164,855 18,603

2011 234,974 26562

4,420 16,198 54,724 39,439 1,368 9.08 8

6,777 18,026 88,465 63,624 2,353 10.01 13

10,659 28,233 137,728 101,320 3,804 13.14 13

15,110 73,462 191,968 133,894 4,446 10.51 6

Head Office and the main branch of BOP is in Gulberg 3, Lahore & Egerton, Lahore Respectively. The Bank has been divided into seven regions Each consisting a number of branches.

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Lahore Region Faisialabad Region Gujranwala Region Rawalpindi Region Karachi/Quetta Region Multan Region Peshawar Region

Rest are the branches working under these regions. Which are almost 270 in all over Pakistan.


The total number of employees in the organization is 3859. Which is increasing. Regular hirings are taking place. Categories of Services The services in The Bank of Punjab are classified in different categories.

Category A:
President Executive Vice President (EVP)

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Senior Vice President (SVP) Vice President (VP) Assistant Vice President (AVP)

Category B:
Officer Grade I Officer Grade II Officer Grade III Cash Officer

Category c:
Clerical Staff

Category D:
Non-Clerical Staff Driver Guards Gate Keepers

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Tea Boy


1. Saving Accounts 2. Current or demand accounts 3. Fixed accounts

SAVING ACCOUNTS(PLS) These types of accounts are designed to encourage the saving habit of the

customer and lead to long term or invest relationship. Bank saving account are in the nature of deposit accounts and are not normally available for drawings. Rates of interest are typically ahead, by a small margin. Savings accounts with the banking sector represent a very small proportion of total deposits. Customer can make withdrawals from this type of account. The cash reserve ratio is typically low then the current account because the withdrawals against this account are very low.


CURRENT OR DEMAND ACCOUNT These are those deposits, which can be drawn by the depositor at any time by

representing a cheque to the bank. People deposits their money in this account they gave a ready command on their account in developed countries of 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 at sight. The cash reserve ratio for his account is very high. The operating cost for the handling of this type of account is very regular.

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FIXED OR TERMS ACCOUNT Fixed accounts are those which are deposited for a fixed period of time and repayable

after the expiry of stipulated time to the customer. Those people who have surplus funds and want to have save investment 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 lower for shorter period. The rate of this type of deposits is higher the saving bank accounts. The cash reserve against this deposit are vary low because there no fear of with draw of a month before the stipulated of time.

1. Agriculture Schemes 2. Business Promotion Finance Schemes

1. Agriculture Schemes There are many agriculture promotion schemes provided by BOP. Kissan Dost Agricultural Finance Scheme Kissan Dost Tractor Finance scheme Kissan Dost Aabiari Scheme Kissan Dost Mechanization Support Scheme

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Kissan Dost Farm Transport Scheme Kissan Dost Eslah-E-Arazi Scheme Kissan Dost Live Stock Development Scheme Kissan Dost Live Stock Scheme

Such type of schemes provides farmers a real plate form to accelerate. Some facilities given by Kissan Dost Agricultural finance scheme are: - Purpose Provision of financial facility to farmers for purchase of inputs (Seed, fertilizer, pesticides, fungicides etc). - Amount Maximum of Rs.500000 according to per acre limit of the crop. - Security Charge on Agriculture Land through Agriculture Pass Book. - Insurance The borrower will have to arrange life assurance under the Banks charge. - Mark-up 9% mark-up per Annum.

2. Business Promotion Finance Schemes

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BOP Quick Cash BOP Car Loan BOP House Loan BOP SME Loan BOP Assaish Loan BOP House Loan For Federal Govt


BOP car loan is a demand financing facility to purchase brand new locally manufactured/Assembled cars for personal use. This facility can be availed by salaried person of different nature and by the business persons. All must have the holdings of NIC.

2.2. BOP Aasaish Loan BOP Aasaish loan is demand finance facility for purchase of consumer durable goods like TV, Refrigerators, Mobiles, Microwave Oven, Fans, Audio/Video system etc with no down payment, in addition with the free home delivery. The financing tenure of this product is max 36 months. The nature of employment should be salaried or the business man.


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These are the services provided by the BOP. ATM Facility Letter of Credit Pay Order On-Line Banking E-Banking Debit Card Consumer Financing Agriculture Financing Corporate Financing Commission free Remittance Demand Drafts Collection of Utility Lockers Facility

3.1. Automated Teller Machine (ATM) Through the ATMs Customers have access to the various services such as withdrawal, balance enquiry and mini statement? Complete security is ensured because access to the account is only possible by entering a four digit personal identification number (PIN) known only to the

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account holder. Cash withdrawal limit is up to Rs.20, 000 per day. Annual charges of ATM is Rs.250/- per card. 3.2. Online Banking BOP is currently offering window-based online banking to its customers, which gives access to information on their accounts and the liability to act on the latest information received over the net. 3.3. Lockers It is one of the utility services that BOP provides to their customers for keeping jewellery, important documents and other valuables. 3.4. Demand Drafts BOP provides safe, speedy and reliable way to transfer money at vary reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch. 3.5. Letters of Credit BOP is offering its business customers the widest range of option in the area of money transfer. BOPs letter of credit service is with competitive rates, security, and ease of transaction, BOP Letter of credit is the best way to do the business transactions. 3.6. Pay Order BOP provides transfer of money using different facilities. Its pay orders are a secure and easy way to move the money from one place to another. The charges for this service are extremely competitive. 3.7. Mail Transfer Moves money safely and quickly from BOP Mail Transfer service. The rates for

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this service is quiet impressive as compare to the market. 3.8. Short Term Investment BOP offers excellent rates of profit on all its short term investment accounts. The packages are starting from 3 months. BOPs rates of profit are extremely attractive, along with the security and service only BOP can provide. 3.9. Agricultural Finance It help farmers utilize funds efficiently to further develop and achieve better production. Provides farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and supervision of farming.


Some of the major customers of Bank of Punjab are: MDA Educational Institutes Agriculturists Pakistan Telecommunication Private Limited WAPDA Pharmaceutical Companies WASA

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Organizational Structure of Bank of Punjab













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Mr. Naveed Hafeez Shaikh Mr. Nadeem Amir Mr. Sharjeal Masud Mr. Muhammad Salim Mirza Mr. Shaheen N. Qureshi Dr. Shahid A. Zia Mr. Feisal Azmat Khan Mr. Muhammad Hanif Mr. Salman Saeed Mr. Moazzam M Maneka

Acting General Manager HR General Manager Finance General Manager Operations General Manager Treasury General Manager Special Assets General Manager T.R.C. & P Division General Manager IT Head Audit & Inspection Head Credit Policy Head Agriculture Credit Department


Successful and profitable banking management deepens upon two principal factors:

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a) The manner in which the function of banking, that is, the acquiring of deposits, the investing or converting such deposits into earning assets, and the servicing of each deposits, are performed. b) The degree to which officers and employees contribute their talents to the progress and welfare of the bank in discharging duties and responsibilities. Management is a distinct process consisting of activities of planning, organizing, actuating and controlling performed to determine and accomplish stated objectives with the use of human being and other resources. The management has two types i.e.., a) Centralized (Centralized Management tends to concentrate decision making at the top of the organization) b) Decentralized (Decentralized disperses decision making and authority throughout and further down the organizational hierarchy) BOP has a centralized type of management because all the decisions are taken by the top management. The BOP has four types of management levels which are as fallows:

Top managers are responsible for making organization-wide decisions and establishing the plans and goals that affect the entire organization. These individuals typically have titles such as executive vice president, president, managing director, chief operating officer, chief executive officer or chairman of the board. The BOP have its top management in their head office at Karachi. They are responsible for making the plans and establishing goals the run their business smoothly all over Pakistan & around the globe. Among seven member of group Chief Executive is called the president. The bank has directors for superintendence and direction of its business. The Government appoints six directors as members and one president. These members are also responsible for making the policy of the bank.

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Middle managers include all levels of management between the first line level and the top level of the organization. These managers manage the work of first line managers and may have titles such as department head, project leader, plant manager or division manager. 1 BOP divided his management into various regions such as Rawalpindi region, Gujranwala region etc. In BOP, regional management falls under this category. They are responsible for the planning, organizing, leading and controlling of the resources and staff of the whole region.


First level managers are the lowest level of management and manage the work of non-managerial individuals who are involved with the production or creation of the organizations products. The branch managers of BOP fall under this category. These managers are responsible for planning, organizing, leading and controlling the staff and all affairs of the branch.


Non managerial employees are not concerned with any decision making. They are normally specialized in their work. The nature of their job is repetitive & clerical as they do same work again & again. The non managerial employees of BOP consist of OG-II, OG III and clerical staff.


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The Hierarchy (An arrangement of objects, people, elements, values, grades, orders, classes etc., any system of persons or things ranked one above another) of BOP is shown as Annexed at the end of this report. The hierarchy may include: Categorization of a group of people according to ability or status. A body of clergy organized into successive ranks or grades with each level subordinate to the one above. A series in which each element is graded or ranked A body of officials disposed organically in ranks and orders each subordinate to the one above it; a body of ecclesiastical rulers. An organization with few things, or one thing, at the top and with several things below each other thing. The President of BOP is ranked Top at the hierarchy. The other six directors of BOP are ranked second in the hierarchy. The Provisional, Regional & Zonal chiefs are ranked 3 rd, 4th& 5th respectively. The vice President & assistant vice Presidents of BOP are ranked 6th& 7th respectively. The Officers Grade I, II & III are ranked 8 th at the hierarchy of BOP. The lower level of BOP is consist of Clerical & non- clerical staff.

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Banking procedures are divided between various departments. Different departments do their jobs in occurrence with the bank policies. In BOP each branch is divided into various departments depending on their size and volume of business. Head of department manages each department & officials of the branch follow procedures. The departments working within BOP Bahawalpur Central branch are as under: 1. Clearing House Department 2. Remittance Department 3. Computer Department 4. Deposits Department 5. Advances Department 6. Account Opening Department 7. Accounts Department 8. Cash Department


As part of their daily business activity, banks receive cheques and other financial instruments from their customers drawn on other banks, to be collected and credited to their accounts. Similarly, banks receive cheques/instruments from other banks, deposited by customers of the banks drawn on the customers of the drawee banks. Therefore, the banks act as Collecting Banks when they send cheques/instruments for collection and as paying Banks, when they receive cheques/instruments for collection from other banks. Since each bank receive and sends cheques/instruments for collection to and from an number of banks, the process of settlement

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would clearly be very cumbersome and time consuming if every cheques/instrument had to be sent by the collection bank to each of the drawee banks or branch upon which different collection items are drawn and to individually pay the proceeds to each of the bank sending cheques/instrument in for collection. Therefore, the banks have evolved what is called the Bankers Clearing arrangement. The Clearing System enables cheques to be paid or cleared centrally and settlement made for receivables and payables between the banks. The SBP co-ordinates clearing activity through its offices, called the Clearing Houses, set up in big cities and towns. Where SBP does not maintain its own office, some other bank, usually BOP (BOP) performs this function. But the clearing house facility is available only for cheques/instruments drawn on banks situated within the same city/clearing house area.




Under the clearing arrangements, the State Bank of Pakistan (SBP) offers a Clearing House or a centralized exchange facility, which works on the following general lines: All the banks operating in a city who are members of the Clearing House maintain an account with the SBPs Clearing House. Every day representatives of all the banks in every city meet the Clearing House, first meeting in the morning, at an appointed time, for the purpose of depositing their own customers , cheques/instruments to be collected from other banks and receiving cheques/instrument drawn on their account holders from the others banks. At the Clearing House accounts of all the banks are debited by the total amount of cheques/instruments drawn on their customers accounts and credited with the amount of their customers cheques/instruments drawn on other banks, as per the list of cheques submitted by each bank.

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The cheques/instruments received, also called Inward Clearing, and are taking back by each bank to its bank/branch. The amounts of each cheques/instrument is debited or recovered from each drawee customers account and credited to the Clearing House account. Similarly, against the amount credited by the Clearing House as Outward Clearing, the appropriate customers accounts are credited and clearing House account is debited.

Any cheques/instruments received by a bank that cannot be paid, due to insufficient balance in its customers account or for any other reason, are returned back to the Clearing House and a credit is claimed and obtained there against.




Timing:(Monday to Saturday) i. ii. 1st Clearing at 10:00 a.m. 2nd Clearing at 2.30 p.m.

Each bank will send competent representative to exchange the cheques. Each bank is required to insure that all cheques and other negotiable instruments are properly stamped and suitably discharged

An objection memo must accompany each and every cheque when return unpaid duly initialed.

Each bank is required to maintain sufficient funds in the principal account with SBP to meet the payment obligations.

The State Bank of Pakistan debit the account of each member of the clearinghouse with the proportionate working expenses incurred on the operation of clearing house. These expenses are very nominal.

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The following points are to be taken into consideration while an instrument is accepted at the counter to be presented in outward clearing: The name of the branch appears on its face where it is drawn o. It should not stale or post dated or without date. Amount in words and figures does not differ. Signature of the drawer appears on the face of the instrument. Instrument is not mutilated. There should be no material alteration, if so, it should be properly authenticated. If order instrument suitably indorsed and the last endorsees account being credited. Endorsement is in accordance with the crossing if any. The amount of the instrument is same as mentioned on the paying-in-slip and counterfoil. The title of the account on the paying-in-slip is that of payee or endorsee (with the exception of bearer cheque). If an instrument received other than BOP then special crossing stamp is affixed across the face of the instrument. Clearing stamp is affixed on the face of the instruments, paying-in-slip and counterfoil (The stamp is affixed in such a manner that half appears on counterfoil and paying-in-slip). The instrument is suitably discharged, where a bearer cheque does not require any discharge and also an instrument in favor a bank not need be discharged.

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The instrument along with pay-in-slip is retained while the counterfoil is given to the customer duly signed. Then the following steps are to be taken: 1. The particulars of the instrument and the pay-in-slip or credit voucher are entered in the outward clearing register. 2. Serial no is given to each voucher. 3. The register is balanced; the credit vouchers are balanced from the instruments and are released to the respective departments against acknowledgement in the register. 4. The instruments are arranged bank wise. 5. The schedules are prepared in triplicate, two copies which are attached with the relevant instrument and the third is kept as office copy. 6. The house page is prepared from schedules in triplicate. 7. The schedules and house pages are signed by the house in charge with branch stamp. 8. The grand total of the house page is taken and agreed with that of the outward clearing register. 9. The instrument along with duplicate schedule and house page are sent to the main office. 10. The entry of the instrument returned unpaid is made in Cheques returned Register. If the instrument is not to be presented again in clearing then a covering memo is prepared. The covering memo along with returned instrument and objection memo is sent to the customer who sent the same to his account.




1. The particulars of the instruments are compared with the list. 2. The instruments are detached and sort out department wise.

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3. The entry is made in the inward clearing register (serial no. Instrument no. Account No) 4. The instruments are sent top the respective departments 5. The instruments are scrutinized in each respect before honoring the same.

In addition to the normal clearing function at Clearing house it is mutually agreed to hold an extra clearing at the clearing house on the particular day and time which is known as special clearing it is arranged due to the rush of work arising out of say, more Holidays declared by the Central Govt. at a time, but normally special clearing is held on last working day of half yearly and yearly closing i.e. 30th June and 31st Dec. every year.

The Remittance department deals with the transfer of money from one place to another. Funds transfer facility or remittance of funds is on of the key functions of the banks all over the world. Remittances through banking channels save time, costs less and eliminate the risks involved in physical transportation of money from one place to another. BOP transfers money in the following ways. Pay Order Demand Draft Mail Transfer Telegraphic Transfer Pay Slip Call Deposit Receipt

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Letter of Credit Travelers Cheque

The Job responsibilities & requirements of remittance department include: Responsible for money transfers, issuance of pay-orders & drafts, collection items, maintenance of cheque books & ATM cards and all other counter specific products and services Ensure highest level of customer service in a professional and competent manner Must ensure that the activities are carried out strictly in accordance with the laid down procedures/processes, and SBP/Compliance guidelines Responsible for Cash, Clearing, Inland remittances including Demand Drafts and Pay Orders Ensure high standards of customer services within the assigned turn around time Ensure compliance with SBP's regulations and internal controls handling cash, clearing, local remittances, and other related activities at branch level


There are four parties involved in Remittance, which are Remitter Remittee Issuing Bank

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paying Bank

One who initiates, or requests for a remittance. The remitter comes to the issuing or originating branch, asks for a remittance to be made, and deposits the money to be remitted. The bank charges him a commission for this service. He may or may not be the branchs customer.

The bank that sends or affects the remittance through demand drafts, telegraphic transfers, Mail Transfers, Pay order etc

Paying Bank also knows as the drawee branch, the branch on which the instrument is drawn. It has to make the payment (usually located in a different city or country).




Transfer within the branch Transfer from one branch to another Transfer from one bank to another bank in the same city Transfers from one bank to another bank in two cities.


The opening of an account is the establishment of banker-customer relationship. This department performs the duty of opening accounts for customers. It also issues checkbooks to customers. A person who wishes to open an account with the bank has to fill an account opening form obtained from any branch of BOP. The bank officer tactfully obtains information about

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character, integrity, responsibility, occupation and the nature of business of the perspective customer. Any individual, who has attained the age of majority and is of sound mind can open and maintain his/her account. Two or more individuals may open an account jointly. Similarly, business organizations such as sole proprietary concerns, partnership firms, and limited liability companies as well as non-profit organizations like clubs, trusts, societies, associations and NGOs etc, may open their accounts. The documents required for BOPs Account opening are showed as Annexed at the end of this report. The following requirements are necessary for opening an account. Identification of the new customer. Ascertaining the genuineness of the stated occupation business of the customer. Determining the correct residential and permanent address. Completion of all relevant columns of the Account opening form. Proper completion of documentation.



Providing account opening form according to the customer's requirements, Guide the customer about the requirements of the account opening and form filling, Check the forms whether they are correctly completed or not, Preparing checklist, Stamping on the form, Maintaining account opening register,

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Pasting of forms in register after release from general banking in charge, Issuance of cheque books, Issuance of accounts maintenance certificate, Closure of account Verification of signature in case of cheque presented before releasing of account opening from SS card is not yet scanned

All physical movement of cash in the bank is made through the cash department. As bank is borrowing and lending institution, therefore cash is the top most priority of Bank. Another aspect is that cash department is for the security purpose, security in a sense that there should be no embezzlement of funds or in money leaded to bank by any party or person. The efficiency of bank is also related to this department the more efficient the bank is the stronger and busy is the cash department. Cash department perform following functions Cash department owes its important to the fact that it is a major point of contract between the bank and the customer, the banks most valued relationships. This department is the showcase of the bank and conveys the first impressions about the banks commitment to professionalism in its systems and procedures and to courteous and efficient customer service. Normally cash department performs following functions Collection of funds Acceptance of deposits

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Collection of utility bills Payment of checks Remittances Act according to any standing instructions Transfer of funds from one account to another Verification of signatures Posting Handling of Prize bond

The two main activities of cash department are as fallows:


When the customer want to deposit amount in his account at opening of account or after that then he has to fill a deposit slip that shows the amount and the account in which the cash will be deposited. Then teller will receive amount and credit the customers account that shows increase in customers bank account.


When the customer draws a cheque on the bank to pay a certain amount then BBO Operator will debit the customers account that shows reduction in his account balance.




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The cash is paid against the cheques of the client. The following points are important. Cheque is drawn on same branch Cheque is not post dated. Amount in words and figure are same. It should be bearer cheques so the word bearer should not cross.



After receiving the cheques the cheques the operation manager verify the signature of the account holder and the signature on the cheques. If the signature is not same it is returned back otherwise forward to BBO Operator for posting. C OMPUTER T ERMINAL P ROCESS The cheque is received in computer terminal, where BBO operator checks the balance of the account holder. The BBO operator also sees the stop payment instructions, whether received from account holder or not. After considering these points BBO Operator post the cheque in BBO (Branch back office system) and forward to operation manager. P AYMENT O F C ASH After posting the cheque the operation manager cancelled the cheque and returned back to cashier. The cashier enters the cheque in cash paid registered and pays against the second signature of receiver on the back of the cheque.

The primary function of BOP is to accept and receive surplus money from the people, which they willingly deposit with the Bank. Like all other Banks, BOP also take incitation to attract as much depositors as it can. The deposit department accepts/collects deposit from accountholders.

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The BOP offer different deposit schemes to its customers, which includes the following: Current Deposits PLS Saving Deposits Fixed Deposit Account ( Time Deposits) Foreign Currency Account BOP Premium Aamdani Foreign Currency Account

The bank is profit seeking institution. It attracts surplus balance from the customer at low rate of interest and makes advances at a higher rate of interest to the individuals and business firms. Credit extensions are the most important activity of all the financial institutions, because it is the main source of earnings. Advances department is one of the most sensitive and important department of the bank. The major portion of the profit is usually earned through this department. The job of this department is to make proposals about the loans; the credit management division of head office directly controls all the advances. The advances Department receive application from intending borrowers. After receiving application the advance department processes it further. After analyzing and detailed investigation, they decide whether to approve the loan or not. Some loan approvals are made by the Manager of the branch within his powers as prescribed by the banks higher authorities, while some loan applications are submit to higher authorities for their approval. Some advances are of the following nature

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Agriculture advance to farmers Medium term advance for working capital Long term advance for setting industry Short term advance to businessman

The Advances department deals in following transactions: 1. Preparation and submission of proposals of Running finance, Cash finance, Demand finance, Export finance, Staff finance, Finance against imported merchandise etc for sanction of finance limit from the hire authority. 2. Preparation and posting of vouchering of all type of finance. 3. Accruals & recovering of Markup on finances on periodical basis. 4. Approval of transfer of funds through DD-TT, PO, MT, IBCO etc to various branches by debiting the limits. 5. Preparation of weekly, monthly, quarterly, and annually statement to the hire authority. 6. Transfer of funds from one account to another account of the party taking the authority letter. 7. Preparation of advances record. 8. Timely submission of returns/reports, daily, weekly, monthly & quarterly. 9. Checking of computer outputs of the department on daily basis. 10. Balancing of all financing heads.


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This department is playing a very important role in making the banking procedures faster and helping the bank for providing better services to its customers. The BOP has three types of branches in all over Pakistan, these included


The branches, which are directly, link with central computer AS-400, through wide area networking through fiber optics. These branches have dumb terminal directly linked with central computer.



The branches where all transactions are carried out with the computer base system but these branches are not connected to the central computer with wide area net working. Batch branches are using three type of system, Branch Back Office (BBO) based on FoxPro, Branch Automated System based (BAS) on UNIX, Branch Integrated System (BIS) based on FoxPro in Karachi mostly branches are facing this problem. BAS was establish in the beginning while BBO is currently implemented now efforts are under way to convert all branches into Electronic Banking System (EBS) which is used by online branches as this system does not require a person to remain sitting till the branch closed its daily operation but the system automatically close it self when the branch timing is over. The database in head office is also based on this system.



The branches where all transactions are carried out manually and records are maintained on registers usually stored in big wardrobes. Manual branches reports Regional head office regarding their daily transactions. In Regional head office through On Line, terminal data goes to head office central computer; Except for branches those are On Line as they transfer there daily data directly through there own terminal. As day-to-day, activities of all branches are recorded in a central computer.



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Data form batch branches reach the main branch in floppy diskettes while form manual branches it is in form of hard copy. Data comprises of transactions in profit loss account, current account, advances etc termed as Daily Transaction Report. Clerk in charge register all diskettes and manual in registers called job booking register one for each of two type of data. These floppies and manual are bring in by riders. There are fourteen riders in total who bring information form all branches located in Karachi region.




The next task after receiving the data is to enter that data in to a computer. The floppy disk is directly inserted in the computer. The program in used is based on COBOL language. This program is designed in away that it demand Hash Value value before opening the floppy for further action this value serve the purpose of password or pin code send by the branch on entering that value the data enter in to the computer. This computer is attached with the terminal of central computer. The operator of that terminal takes the data from the computer and converted it in to a text file through that terminal the data finally goes to the central computer.




Errors of different origin occur when the data goes to central computer. Sometime retrieving data from the system (BAS, BBO, and BIS), other than used in HO (EBS) also caused errors. Other errors include Unmatched (This error occurs when document no matched with the previous one exists), no master (when opening of new account is not mentioned), Date in Valid, duplicate cheques (this error occur when the last objection is not removed). These and other such errors are seen by the person in charge. In the end of day print out of the data enter in central computer is taken. Any Incomplete information for any branch and any information require by that particular branch is sent to that branch. More over material is used to make a WST which is sent to State Bank of Pakistan.

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5.1 Description of Accounts Structure
The structure of BOPs Accounts department is shown as Annexed at the end of this report. The Accounts department of the branch is controlled by the Chief Accountant under direct supervision of Branch Manager. The Branch has one cashier & two clerks for assistance and help of Chief Accountant. The BBO (Branch Back Office system) Operator has also assist Chief Accountant in various tasks. The head of branchs Accounts department is called Chief Accountant, who performs his functions under direct supervision of Branch Manager. The Chief Accountant is responsible for the central accounting records and controls over all financial transactions of the Branch. He also

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directs a wide variety of accounting activities and meets important deadlines& analyzes and interprets accounting data of the branch. The other responsibilities of Chief Accountant include: Plans and directs the activities of Cashier, BBO Operator and clerical employees of the branch engaged in the maintenance of a variety of accounting records. Directs and participates in the development and revision of procedures in order to meet requirements of law, provide services to Branch Manager, improve efficiency in branch activities, and coordinate branch activities with those of other departments. Directs and reviews the preparation of periodic and special financial statements, reports, projections, and recommendations, on which important administrative decisions are based. Directs and reviews the study of new and revised laws, rules, and programs affecting the central accounting system and records and installs or recommends changes as appropriate. Designing and operating a system to capture, record, process, and store all relevant documents and information about the financial activities of the branch. Ensuring the integrity and reliability of the information system, and preventing fraud from inside and outside the branch. Preparing financial statements that are reported to Regional Management of BOP. Preparing financial statements and accounting reports for distribution to the branch Manager for their planning, control, and decision-making needs. The Chief Accountant with the help of branchs clerical staff is preparing following reports: o Monthly Profit & Loss account- F48

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o Daily Statement- F21 o General Ledger o General Ledger Abstract o General Ledger head wise o Bank transfer Scroll o Misc Book o Monthly return file o Charger List o PLS Profit list o Weekly Telegram o Transfer Responding Advice Dispatched Register- F15 o Cash Remittance In o Cash Remittance Out o BOP General Account o Clearing register o Debit & Credit supplementary Debit supplementary is used for debit voucher and credit supplementary is used for credit voucher books and register maintained by bank are as fallows General ledger included:

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Statement of daily affairs Cash book or cash cum day book Transfer book Income & expenditure ledger

Income& expenditure includes: 1. Discount 2. Service charges 3. Commission from utility services 4. Salaries allowances & provident fund 5. Rent taxes insurance lighting 6. Profit paid on deposits and borrowings 7. Auditors fee & legal charges



Accounts Department
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

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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. The account department prepare following vouchers and reports

Monthly Profit & Loss account- F48 General Ledger General Ledger- Abstract Check Book Issue Register Western Union payments Register Demand Notices Miscellaneous Book Bank Transfer scroll General Ledger- Head wise Hash Value Register End of Day register Monthly return register Charges A/c register

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P-L-S Profit list Weekly Telegram Mail Transfer Register Provident file Transfer Responding Advice Dispatched Register-F15 Cash Remittance IN Cash Remittance OUT BOP General Account Utilities register Statement of affairs Closing entries Daily activity checking Minor expense recording



The organizations most senior executive role charged with leading and directing

financial strategy and operations.

Financial Management:

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PBOPic Financial Management (PFM) is the system by which financial resources are planned, directed, and controlled to enable and influence the efficient and effective delivery of public service goals.

ROLE OF CFO (Chief Financial Officer):

Traditional role of Chief Accountant: The Chief Accountants used to perform several tasks which were preparing accounts, preparing budgets, operational reporting and interpreting, evaluating operating results, preparing income tax returns, establishing internal control procedures to safe-guard the companies assets. Transition from Chief Accountant to Chief Financial Officer: Due to increased governance requirement there arises a need to empower the chief accountant and to make him responsible by requiring him to sign the accounts. There comes the code of corporate governance, which makes the chief accountant powerful and more responsible. With the new role, Chief Accountant becomes Chief Financial Officer (CFO). APPOINTMENT AND APPROVAL REQUIREMENT: The appointment, removal and remuneration terms and conditions of employment of the chief financial officer of a listed company shell be determined by the Chief Executive Officer with the approval of the Board of Directors. QUALIFICATION REQUIREMENT: The qualification requirement is defined under the code of corporate governance that is the person appointed as the Chief Financial Officer must be Member of recognized body of professional accountants or A graduate from a recognized university or equivalent, having at least 5 years experience in handling financial and corporate affairs of a listed company.

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Attending Board Meetings: The Chief Financial Officer of a listed company is required to attend the meeting of the board of directors. THE CFO IN A PUBLIC SERVICE ORGANIZATION: 1 Is a key member of the Leadership Team, helping it to develop and implement

strategy and to resource and delivers the organizations strategic objectives sustainably and in the public interest; 2 Must be actively involved in, and able to bring influence to bear on, all material

business decisions to ensure immediate and longer term implications, opportunities and risks are fully considered, and alignment with the organizations financial strategy; and 3 Must lead the promotion and delivery by the whole organization of good

financial management so that public money is safeguarded at all times and used appropriately, economically, efficiently and effectively. To deliver these responsibilities the CFO: 4 5 Must lead and direct a finance function that is resourced to be fit for purpose; Must be professionally qualified and suitably experienced.

Implication of New Responsibilities: The new responsibilities apply to all Chief Financial Officers of Listed Companies, Insurance Companies, Banks and DFIs. Mostly the CFO presents the financial position relating to the period which has been over, and the period which has to come that is the financial position attained and the financial projection i.e. where the organization will be.

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Responsibilities towards Board of Directors: The Chief Financial Officer is required to furnish necessary and classified information to the board of directors along with his analysis and suggestions as the Chief Financial Officer attends the board meetings, any issue with financial implications is being discussed, the person likely to be most in command of these implication is on the spot and immediately available for questions. In order to strengthen and formalize corporate decision-making process, significant issues are required to be placed for the information, consideration and decision of the boards of directors by the CFO. These are: Annual business planes, cash flow projection, forecasts and long term planes. Budgets include capital, manpower and overhead budgets along with variance analyses. Quarterly operating results of the company as a whole and in terms of its operating divisions or business segments. Details of joint ventures or collaboration agreements or agreements with distributors, agents, etc. Default in payment of principal and/or interest, including penalties on late payments and other dues, to a creditor, bank or financial institution, or default in payment of public deposit. Failure to recover material amounts of loans, advances, and deposits made by the company, including trade debts and inter-corporate finances. Significant public or product liability claims likely to be made against the company, including any adverse judgment or order made on the conduct of the company.

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Responsibilities towards Shareholders: The Chief Financial Officer is required to provide all the necessary data to be presented in the Directors Report. For this purpose Chief Financial Officer must ensure the following. The financial statement, prepared by the management of company, present fairly its states of affairs, the results of its operation, cash flows and changes in equities. Proper books of accounts of the company have been maintained Appropriate accounting policies have been consistently applied in preparation in financial statements and accounting estimates are based on reasonable and prudent judgment. International accounting standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure there from has been adequately disclosed. The system of internal control is sound in design and has been effectively implemented and monitored. There are no significant doubts upon the companies ability to continue as going concern. There has been no material departure from the best practice of corporate governance as detailed in the listing regulations.

Internal And External Reporting for Decision Making

Chief Financial Officer now has extensive responsibilities for internal and external reporting. All the information required for decision-making by the Board of Directors and Chief Executive is processed and furnished by the Chief Financial Officer. Apart from this, external reporting requirement is fulfilled by Chief Financial Officer, the accounts and financial

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statements are signed by the Chief Financial Officer before they are sent to concerned authorities. CCG requires that the listed companies submit their quarterly accounts to the shareholders within one month of the close of the first and third quarter of year of account. The CCG does not prescribe the time for submitting half yearly accounts to the shareholders. Here we can refer to section 245 of companys ordinance 1984 for this purpose, which requires half yearly accounts to be submitted within two months of the close of first half. The CCG requires a limited review of half yearly accounts by external auditor. Annual audited accounts are now required to be submitted within four months of the close of financial year.




Electronic data gives exact values and figures which top level management required. Because of electronic data they came across to know those minute things which impacts a lot on final place. Through this they can measure exact profit and loss accounts, assets and liabilities up to a branch level from where they can decide which should be kept and which should not. Through this top level management is able to decide which product should be taken into course for further level or which should stop. Electronic data make management able to take decision at any point of time.

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Decision making can be regarded as an outcome of mental processes leading to the selection of a course of action among several alternatives. Every decision making process produces a final choice. The output can be an action or an opinion of choice.A significant part of decision making skills is in knowing and practicing good decision making techniques. One of the most practical decision making techniques can be summarized in following simple decision making steps: 1. Identify the purpose of your decision. What is exactly the problem to be solved? Why it should be solved? 2. Gather information. What factors does the problem involve? 3. Identify the principles to judge the alternatives. What standards and judgment criteria should the solution meet? 4. Brainstorm and list different possible choices. Generate ideas for possible solutions. See more on extending your options for your decisions on my brainstorming tips page. 5. Evaluate each choice in terms of its consequences. Use your standards and judgment criteria to determine the cons and pros of each alternative. 6. Determine the best alternative. This is much easier after you go through the above preparation steps. 7. Put the decision into action. Transform your decision into specific plan of action steps. Execute your plan. 8. Evaluate the outcome of your decision and action steps. What lessons can be learnt? This is an important step for further development of your decision making skills and judgment. The decision making of Management of BOP rely on information system resources which includes people and a variety of hardware, software, data, and communications network technologies as resources to collect, transform, and disseminate information in Bank.

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The major sources of funds are: Public Source

As the largest regional bank of Pakistan according to asset base with specialized in Agriculture has a large deposits with 80% from the rural areas of the Punjab. The Banks major source of funds is from the Public. Money Market

Figurative expression for the informal network of dealers and investors over which shortterm debt securities are purchased and sold. Money market securities generally are highly liquid securities that mature in less than one year, typically in less than ninety days. Corporate treasuries and Government Institutions

Corporate sector is one of the major sources of funds in all types of Banking. All major organisations, financial institutions and government & private organisations are the major sources of the funds e.g., WAPDA.


BOPs funds are allocated to the following departments. The banks major focus is on short term financing. Major allocation of funds are on these divisions.


Long term financing includes a tenure more than one year.

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Short term financing includes period less than one year. The banks major focus is on short term financing. From the above it is further sub distributed to 1. SME Division 2. Agriculture financing 3. Consumer financing 4. Corporate financing The distribution of funds to these departments are Banks internal matter and they avoid to disclose. Through Financial Statements it is only possible to analyze long term and short term financing.

The bank provides adequate and timely financial assistance to the farmers to improve production potential of agriculture sector. Insurance of leased assets, animals, crops and life assurance of borrowers are all source of money for the bank.

The bank has a centralized database that is web-enabled. All the services that the bank has permitted on the internet are displayed in menu. Any service can be selected and further interaction is dictated by the nature of service.

The bank also makes possible the payment of electricity, gas and telephone bills for its customers charging some commission on each payment.

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Commission charged on lockers provided by bank for customers, is also a source of inflow for the bank.

Personal Finance, mortgage finance, business finance, smart cash, auto financing and travelers cheques are all sources of funds for the bank. The bank finances all these loans and facilities on competitive mark up rates.

The bank provides adequate and timely financial assistance to the farmers to improve production potential of agriculture sector. Insurance of leased assets, animals, crops and life assurance of borrowers are all source of money for the bank.


Rupees in Millions Year
2007 2008 2009 2010 2011

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Share Capital Reserves Borrowings

4,924,106 10,813,914 11,084,790 465,571,71

5,908,927 13,536,041 8,756,847 463,426,60 2 24,974,450

7,090,712 13,879,260 11,704,079 501,872,24 3 26,596,300

8,154,319 15,772,124 10,886,063 591,907,43

8,969,751 19,941,047 40,458,926

Deposits Other Liabilities

7 23,068,314

5 624,939,016 30,869,154 39,656,831

Horizontal Analysis (%)

Share Capital Reserves Borrowings Deposits Other Liabilities
Table 5.1

100 100 100 100 100

120 125 79 100 108

144 128 106 108 115

166 146 98 127 134

182 184 365 134 172

Sources: BOP Annual Report

Rupees in Millions Year
2007 20,947,33 Markup/return/interest earned Net markup/interest income 3 14,387,93 2008 33,692,66 5 23,370,89 2009 44,100,93 4 30,153,71 2010 50,569,48 1 33,629,47 60,942,798 37,058,030 2011

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5 12,639,77 Net markup/interest income after provisions 0

7 21,146,97 0

6 27,782,17 0 12,162,89

0 28,906,73 5 13,544,84 5 42,451,58 0 28,060,50 1 23,000,998 42,503,078 16,415,862 26,087,216

Total non-markup/ Interest income

8,304,716 20,944,48

9,392,351 30,539,32 1 19,056,02 8

2 39,945,06 2 26,310,57 7

Total income ( Interest + non-Interest)

6 11,977,60


Horizontal Analysis (%)

Markup/return/interest earned Net markup/interest income Net markup/interest income after provisions Total non-markup/ Interest income Total income ( Interest + non-Interest) PROFIT BEFORE TAXATION Table 5.2 100 100 100 100 100 100 Sources: BOP Annual Report 161 162 167 113 146 159 211 210 220 146 191 220 241 234 229 163 203 234 291 258 206 198 203 192


Rupees in Millions Year Lendings to Financial Institutions Investments
2007 2008 2009 2010 2011

10,511,322 149,350,09

16,282,942 156,985,68

23,012,732 139,946,99



210,787,86 170,822,491

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6 220,794,07 Advances Operating Fixed Assets Other Assets 5 9,202,969 19,141,569

6 268,838,77 9 9,454,365 23,941,056

5 316,110,40 6 9,681,974 37,113,698

8 340,677,10 0 412,986,865 25,922,979 30,994,965 24,217,655 44,550,347

Horizontal Analysis (%)

Lendings to Financial Institutions Investments Advances Operating Fixed Assets Other Assets
Table 5.3 100 100 100 100 100 155 105 122 103 125 219 94 143 105 194 204 141 154 282 162 163 114 187 263 233

Sources: BOP Annual Report



During Internship it was my prime objective to furnish my knowledge (Theory) to various practical situations. The practical work presents an analytical problem while relating theory with practice. As a result, analysis of practical versus theory requires a distinct approach. This part of report is the essence of the internship, as this will help to better understand the working environment of the bank by finding the relationship between what is written in the books and what is actually going on in fields. The theory written in the books in cases is not implemented as it is. In some cases theory is implemented with a little modification but in other cases theory has nothing to do with practice.

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In accounting, banks dont prepare worksheet, but part of worksheet is prepared like trial balance. The securities for the loans are handled in the same way as theory says like mortgage, pledge, hypothecation, advances against insurance policies or liquidation procedure is the same. There is some difference lies in types of loans in bank that is theory talks about four or five types of loans that is cash finance, overdraft, loans etc., but in practice there are some more types used by bank like running finance, demand finance etc. All other concepts of remittances, bills, foreign exchange deposits, letters of credit are in accordance with theory almost. A bank's balance sheet is different from that of a typical company. You won't find inventory, accounts receivable, or accounts payable. Instead, under assets, you'll see mostly loans and investments, and on the liabilities side, you'll see deposits and borrowings. C ONCLUSION To me, Theory gives the direction to understand the processes and the terminologies going across the World using best business practices in a broader view covering each and every aspect of possible business scenarios. On the contrary practical life is specific, enclosed in a jar.


Financial analysis is a process which involves reclassification and summarization of information through the establishment of ratios and trends. Financial statement analysis is the process of examining relationships among financial statement elements and making comparisons with relevant information. It is a valuable tool used by investors and creditors, financial analysts, and others in their decision-making processes related to stocks, bonds, and other financial instruments. The goal in analyzing financial statements is to assess past performance and current financial position and to make predictions about the future performance of a company. Investors who buy stock are primarily interested in a company's profitability and their prospects for earning a return on their investment by receiving dividends and/or increasing the market value of

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their stock holdings. Creditors and investors who buy debt securities, such as bonds, are more interested in liquidity and solvency: the company's short-and long-run ability to pay its debts. Financial analysts, who frequently specialize in following certain industries, routinely assess the profitability, liquidity, and solvency of companies in order to make recommendations about the purchase or sale of securities, such as stocks and bonds. The analysis of financial statement refers to the examination of the statements for the purpose of acquiring additional information regarding the activities of the business. The users of the financial information often find analysis desirable for the interpretation of the firms activities. The overall objective of financial statement analysis is the examination of a firms financial position and returns in relation to risk. This must be done with a view to forecasting the firms future prospective. Analysts can obtain useful information by comparing a company's most recent financial statements with its results in previous years and with the results of other companies in the same industry. Three primary types of financial statement analysis are commonly known as horizontal analysis, vertical analysis, and ratio analysis.

Ratio analysis enables the analyst to compare items on a single financial statement or to examine the relationships between items on two financial statements. After calculating ratios for each year's financial data, the analyst can then examine trends for the company across years. Since ratios adjust for size, using this analytical tool facilitates intercompany as well as intercompany comparisons. Ratios are often classified using the following terms: profitability ratios (also known as operating ratios), liquidity ratios, and solvency ratios. Profitability ratios are gauges of the company's operating success for a given period of time. Liquidity ratios are measures of the short-term ability of the company to pay its debts when they come due and to meet unexpected needs for cash. Solvency ratios indicate the ability of the company to meet its long-term

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obligations on a continuing basis and thus to survive over a long period of time. Financial ratios allow for comparison: Between companies Between industries Between different time periods for one company Between a single company and its industry average

This technique is also known as comparative analysis. It is conducted by setting consecutive balance sheet, income statement or statement of cash flow side-by-side and reviewing changes in individual categories on a year-to-year or multiyear basis. The most important item revealed by comparative financial statement analysis is trend. A comparison of statements over several years reveals direction, speed and extent of a trend(s). The horizontal financial statements analysis is done by restating amount of each item or group of items as a percentage. Such percentages are calculated by selecting a base year and assign a weight of 100 to the amount of each item in the

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base year statement. Thereafter, the amounts of similar items or groups of items in prior or subsequent financial statements are expressed as a percentage of the base year amount. The resulting figures are called index numbers or trend ratios. Formula = Current Year amount / Base Year amount * 100 Horizontal analysis, whilst simple to execute and useful to a certain extent, has its limitations. These limitations include: Being highly dependent on the selection of base year and the period under examination in the financial model. Horizontal analysis provides little insight into why the trend occurred in a financial model. Horizontal analysis does not provide insight into whether the trend in the financial model results was superior/inferior to some benchmark. Horizontal analysis does not address the challenge of negative numbers.







2007 Operating Results





58.2857 Markup/ return/ interest earned % -24.399 Markup/ return/ interest expenses % 105.785 34.8728 32.6842 8 1 73.0610 7

47.1025 1 64.4559 9 46.12956 33.98141

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35.7298 Net markup income % 9.0678 5 24.2479 Non-markup based Income % 54.994 5 12.8695 Non-markup based expenses % 4.09182 7 82.9787 Provision against NPLs % -575 2 42.2811 Net profit before tax % 56.8862 1 85.8006 45.1500 8 41.8614 Net profit after tax Balance Sheet 34.2264 Total Assets % 32.2964 8 53.4876 Advances (net) % 63.9065 6 29.2628 Investments % 27.6052 7 30.9502 Shareholders Equity % 22.5754 3 36.9698 Revaluation Reserve % 55.9165 7 36.1559 Deposits % 31.9738 8 5.22598 Borrowings from FIs % 51.9374 9 34.7794 50.3989 6 38.1405 1 58.2977 5 -26.0838 35.7683 3 2.83302 3 60.83058 28.25508 -40.7207 40.3350 3 38.0123 9 10.1409 1 37.2049 36.1527 3 36.4199 3 29.45731 61.56789 24.3282 32.5746 9 29.84117 % 58.7808 49.6345 5 46.875 17.5807 7 10.9217 7 15.086 54.9424 5 31.4027 6 11.4973 3 33.6338 9 38.1440 6 14.43995 1.588939 80.19068 17.78069 45.52831 -13.0556


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What Does Nonperforming Loan - NPL Mean?

A sum of borrowed money upon which the debtor has not made his or her scheduled payments for at least 90 days. A nonperforming loan is either in default or close to being in default. Once a loan is nonperforming, the odds that it will be repaid in full are considered to be substantially lower. If the debtor starts making payments again on a nonperforming loan, it becomes a reperforming loan, even if the debtor has not caught up on all the missed payments.

Nonperforming Loan - NPL

Institutions holding nonperforming loans in their portfolios may choose to sell them to other investors in order to get rid of risky assets and clean up their balance sheets. Sales of nonperforming loans must be carefully considered since they can have numerous financial implications, including affecting the company's profit and loss, and tax situations.

2011 Non Advances Performing 48,593









Advances NPL Ratio = Loans Non /






Performing Advances (%)






It represents the percent of a line item (expenses, tax, interests, dividends) impacts on total revenues.

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Markup/ return/ interest earned Non-markup based Income Markup/ return/ interest expenses Non-markup based expenses Provision against NPLs Net profit before tax Net profit after tax

% % % % % % %

66.69 33.31 19.40 40.16 0.32 40.16 27.62

69.96 30.04 19.69 31.49 1.29 47.54 37.46

82.15 17.85 35.80 17.31 4.44 42.45 31.56

79.67 20.33 51.67 12.95 2.57 32.81 26.17

76.38 23.62 60.70 9.97 8.22 21.10 19.36

Ratios Gross spread ratio Profit before tax to total income Markup/ Interest cover ratio Profit after tax to total income Total assets turnover Return on avg total assets (after tax) % % Times % times %

2007 71 49.8 5.15 34.26 0.06 1.88

2008 72 59.19 5.08 46.65 0.06 2.49

2009 56 66.11 2.79 49.16 0.07 2.65

2010 35 67.89 1.94 54.16 0.09 2.76

2011 21 53.71 1.65 49.27 0.1 2.22

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Price earning ratio EPS (Non dilutive) Dividend per share Market value per share No. of branches Staff Strength Gross margins Net margin Net Interest Margin Total revenue Equity / Assets RoE Cost/Income

times Rs./share Rs./share Rs./share No. No. % % % % % % %

5.09 6.86 2.5 34.95 241 3,019 4.00% 3.30% 3.23% 5.50% 11.60% 16.20% 49.80%

7.25 9.08 4 65.9 253 3,144 3.51% 3.41% 3.34% 5.34% 11.90% 21.00% 38.10%

10.23 10.01 5.2 102.45 266 3,430 4.19% 3.99% 3.90% 5.39% 12.10% 21.90% 26.90%

7.71 13.14 3.25 101.25 266 3,681 3.10% 3.03% 2.95% 4.81% 10.80% 25.50% 26.40%

9.31 10.51 3.5 97.8 272 3,859 3.30% 3.16% 3.09% 4.91% 10.30% 25.40% 24.70%

Bank Analysis with reference to commercial Banks listed on stock exchange

Financial Position of Commercial Banks Registered in Pakistan
Name of Commercial Paid up Reserves Assets (Rs. Bank Capital (Rs. (Rs. Bn) Bn) (Rs. Bn) (Rs. Bn) As of June 2010 Deposits Advances Profit After Tax (Rs. Earnings Branch Per share (Rs) Network Rating (Nos) Credit

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Bn) Habib Bank UBL Allied Bank MCB United Bank First Women Bank of Punjab Soneri Bank Askari Bank Bank Al- Habib Bank of Khyber Bank Al- Falah Saudi Pak Faysal Bank KASB Bank Meezan Bank NIB Bank Mybank Atlas Bank Standard Chartered JS Bank Habib
38.72 5.11 6.02 1.95 0.01 6.7 276.38 24.16 192.45 173.81 14.08 128.97 126.27 9.57 101.22 7.59 8.97 6.46 6.28 10.12 0.28 5.29 4.11 4.06 4.79 4 8 5 5.3 4.02 4.54 28.44 4.24 5.01 23.6 18.54 5.48 35.88 12.82 0.22 7.43 1.88 7.59 2.8 1.34 2.95 0.22 3.57 0.17 0.81 8.46 0.41 0.52 735.71 788.12 344.7 450.34 576.02 8.04 217.85 81.61 194.21 167.36 34.43 333.02 50.83 137.31 53.66 71.74 177.98 45.47 30.7 584.85 621.53 293.97 350.72 465.54 6.4 180.82 64.73 153.32 136.75 24.4 287.77 42.35 99.61 44.33 57.84 112.12 31.96 22.18 411.36 173.42 168.45 228.98 328.55 3.09 142.85 45.83 114.04 93.25 11.14 180.02 27.62 87.61 32.65 38.3 85.43 23.03 17.5

7.5 8.1 2.51 7.68 5.59 0.05 -2.63 0.47 0.05 1.25 0.11 1.69 -0.81 0.75 0.08 0.44 -0.73 0.43 -0.2 9.75 9.03 3.88 12.22 5.53 1.67 -4.97 1.13 1.01 2.61 0.27 2.12 -1.54 1.41 0.39 0.98 0.23 1.02 -0.39 1400 1249 757 1038 1100 38 272 90 155 203 34 231 55 111 41 111 240 69 31


1.31 0.16 1.57

0.34 -0.31 2.6

176 11 100


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A stock exchange is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities.The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. In Pakistan securities are traded on three stock exchanges which are Karachi stock exchange, Lahore stock exchange and Islamabad stock exchange. The financial position of commercial banks registered on stock exchanges in Pakistan, are shown in preceding page in terms of their: Paid-up Capital Reserves Assets Deposits Advances Profit after tax Earnings per share Credit rating

The best way to analyze these commercial banks is to analyze their credit ratings. The BOP enjoys the highest credit rating amongst Pakistani banks; JCR- VIS Credit rating Co. Limited

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awarded highest standalone credit rating of AAA to BOP. The JCRVIS Credit rating Co. comments about BOP say a lot about the bank:
The organization has been able to strategically manage and build on its competitive advantages

whichhas translated into the strong and well managed improvement in profitability trend observed over the lastfew years, a substantial balance sheet of sound asset quality, and strong liquidity and capitalizationlevels BOPs key strength remains its extensive outreach and a low cost, stable deposit base. Deposits are also guaranteed by the Government of Pakistan under the Banking Nationalization Act, 1974. There have also been significant improvements in the management practices of the bank and a focus on enhancement of systems and controls. In this regard the management has entered into an agreement for the acquisition of a core banking software which is likely to be implemented over the next few years. JCR-VIS believes that the current economic situation puts certain leading industrial sectors and the general consumer under financial stress. Therefore, the second half of 2008 and 2009 are likely to be challenging for the banking sector as a whole, in terms of maintaining growth, asset quality and profitability.2 The JCR-VIS Rating Process include following steps:3 1. Signs agreement for an initial rating 2. Submits preliminary information materials 3. Conducts a preliminary study 4. Submits a detailed questionnaire to the issuer/client 5. Provides detailed information in response to detailed questionnaire 6. Conducts pre due diligence meeting analysis 7. Conducts due diligence meetings

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8. Conducts post due diligence analysis 9. Brief for internal rating committee meetings is prepared 10. Sub Committee recommends preliminary/initial rating 11. Rating Committee decides the preliminary/initial rating 12. Discusses the rating rationales and rating issues with client 13. Notifies issuer of the preliminary/initial rating, deliberates on appeals by client, if any 14. Consents to release of preliminary/initial rating to the public in case of non-mandatory ratings 15. Releases the preliminary/initial rating to the press

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SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and threats SWOT analysis is careful evaluation of an organizations internal strengths and weakness as well as its environment opportunities and threats. SWOT analysis is a situational which includes strengths, weaknesses, opportunities and threats that affect organizational performance. The overall evaluation of a company strengths, weaknesses, opportunities and threats is called SWOT analysis. In SWOT analysis the best strategies accomplish an organizations mission by: 1. Exploiting an organizations opportunities and strength. 2. Neutralizing it threats. 3. Avoiding or correcting its weakness.

SWOT analysis is one of the most important steps in formulating strategy using the organization mission as a context; managers assess internal strengths distinctive competencies and weakness and external opportunities and threats. The goal is to then develop good strategies and exploit opportunities and strengths neutralize threats and avoid weaknesses.

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The Bank officers of BOP are considered as one of the most able professionals in the banking world (some belong to BCCI). However, they have added some local flavour in accordance with their targeted segmented. In my observation that they interact with their clients as if they are their personal friends and discuss about their problems as their own.

As a result of the compassionate and personalized services of the officers, the clients perception for BOP is very high. They have trust and feel themselves to be secure while dealing with BOP.

BOP has opened all its branches at commercial areas so that the customers or clients face no problems in reaching to the bank. For example, Khanewal Road Branch is being situated in business and commercial hub of Multan as big volume in trade.

BOP has got a reliable and easy to use internal computer system. Every information regarding the transactions in customers deposits has been computerized. Data are properly maintained.

Good security system Not excellent but good facilities are given to employees

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Lack of proper internal controls is one of the major weakness of BOP. It is also pointed by the auditor in his review.

BOP has formulized a lot of products and services for its customers, even more than other commercial banks, but any advertisement on electronic media has not been seen.

I observed during my internship that some of the employees were burdened with over work. So I think that the work should be distributed according to their post and capabilities.

Biased selection of employees.


Satisfy dynamic consumer needs, BOP has made significant in roads in its entire service spectrum. A lot of products have been introduced especially in Retail Banking (Agriculture side) and people are increasingly becoming loyal to the bank and because of feasible transactions. Optimum pricing and branding strategies of the bank are helping to make customer feel secure and convenient.

All the opportunities of the 21st century are to be availed in the information technology. Information technology is the future of this dynamic world. Therefore

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BOP should emphasize much on IT, especially on E-Banking. Bank can design a universal account like other foreign banks, to enhance online facilities. BOP has introduced a number of financial schemes including special Deposit Accounts. These accounts have their unique features. During the last three years, BOP deposits have been increasing @ 40%, which is a very healthy sign. Therefore, with the commencement of new schemes there can even be a greater increase in its deposits


Despite the difficult circumstances that confronted the banking sector in particular and the country in general, BOP has been still highly profitable. But, the facts cant be denied and there might be an adverse impact of such situation.

BOP is facing a strong competition by its competitors, Business of all these Banks are growing at very high pace.

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BOPs share is currently trading at PKR 97.80 (On closing of fiscal year at 30 th June, 2007). And by looking at the growth track of BOP it can be analyzed that it will real grow up. Through different estimations and by viewing remarks of analysts it is expected that it would grow up to PKR 125 by DEC. It shows real future profit. This evaluation is based on a normalized ROE of 25.3% (ROA of 2.7%), cost of Equity of 17.0 % and a long-term growth rate of 11.2%. A sensitive analysis shows: With every 10% change in credit costs, fair value would change by 3.3%. For every 10% change in NIM, BOPs fair value would change by 7.5%. A100bp change in loan growth estimates for 2007, 2008, and 2009 would cause a Change of 1.0% in fair value. The calculations made in sensitivity of changes in the cost of equity and the Terminal growth rate. The cost of equity is based on a 10.2% risk free rate, a 6% equity risk premium, and a fundamental risk-weighted of 1.13. The perpetual growth assumption implies a dividend payout ratio of 25%. For every 50% change in the cost of equity, and the terminal growth rate the banks fair value would change by 4.6%.

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It can be confirmed by looking at share price performance. BOPs share price has performed well in the last year. It is up 31.2% in the past 12 months, and is up 21.1% YTD. The stock has outperformed the local benchmark KSE-100 by 5.0%. Performance is quiet amazing.


Weakness are the internal attributes of the bank to decrease in comparison with competing bank. Most of employers are not well qualified and dont have right professional attitude that may hinder BOP to perform up to the mark and to satisfy their sophisticated clients. most of them are graduates and under graduates The management of the bank offered low profit on profit and loss account approximately 6% before deducting the tax. The other banks offer more then this. employees are involved in internal politics which is creating ghastly effects over the banks environment Very few employees are honest to the banking repute as well as to the banks management, while others are by nature very hypocrite and diplomat. Favoring some customers and neglecting and even treating them very badly is a very common practice by staff, I myself noticed this behavior during my internship. Facilities like e-mail fax and link through net is not available at every desk, it should be provided in every department.

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HRM is not much effective and active in the bank. Every branch must have one HR counter

They are not using modern techniques like prizes scheme of other banks Most of the loans have been converted in to bad debts. All the branches are not computerized.

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The bank should hire new enthusiastic, energetic and hardworking staff with professionals abilities and knowledge BOPS top management must adopt such strategy , that will helpful in eradication of internal politics The bank should make some strategies to educate the employers and general public about the banks services and products BOPS management must introduce some teams that should do investigation about the creditors worthiness, so that the non-performing loans due to frauds can be reduced The bank must make a counter only for giving guidance and information regarding banks services Effective training and qualified, dutiful and vigilant inspection teams are inducted per force in all the banks. This branch is not doing many functions to open the L/C and to deal in export and import facilities. So bank should hire export staff for such type of activities and start them in the branch The bank must have to apply the marketing strategies to attract the customers which are depositors, like other banks are doing such as City Bank and in the Pakistan banks now a days they are introducing new schemes like Crore Patti Scheme by Habib Bank and Prizes on travelers cheque by M.C.B.

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It is evident from this report that it is making progress by leaps and bounds. the profit of BOP have grown considerably during last few years and this is trend is expected to continue into future. Therefore, we conclude that BOP has very prosperous present and future, which assures the shareholders of wealth maximization. Side by side of it I think that if bank would be able to cover and control on the above mentioned sentences, I think there is also a fault of the customers and in order to make the proper working of the bank, the customer should also cooperate with the bank which will be really a good, ambitious and diligent condition for the bank. And then bank will be really in such a situation and position to compete its competitors in the country as well as on international level.

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Internet Bank Staff Fundamental of Financial Management (James C. Van Horne, John M.

Wachowicz,Jr.13th Edition ) Advance Accounting (Simons and Karrenbrock 4th Edition) Murphy, H. A., Hildebrandt, H. W., & Thomas, J. P. (2007). Effective

Business Communication (7th Edition) NBF Islamabad. Robbins, S.P., & Coulter, M. (2007) Management (8th Edition) NBF


The Bank, Financials. Retrieved January 20, 2010 from Kotler, P. & Armstrong, (2006) Principles of Marketing (10th Edition)

Pearson New Jersey.

Corporate Governance By Abdul Naeem Khan Professional I ICMAP

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Branch Manager Operational Manager Account Opening




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