Introduction:

In finance, a loan is a debt evidenced by a note which specifies, among other things, the principal amount, interest rate, and date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular instalments, or partial repayments; in an annuity, each instalment is the same amount. The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants Consumer loan granted for personal (medical), family (education, vacation), or household (extension, repairs, purchase of air conditioner, computer, refrigerator, etc.) use, as opposed to business or commercial use. Such loans are either unsecured, or secured by the asset purchased or by a co-signor (guarantor). Unsecured loans (called signature loans) are advanced on the basis of the borrower's credit-history and ability to repay the loan from personal income. Repayment is usually through fixed amount instalments over a fixed term.

Types of personal loan

There are a great many types of personal loan finance products for you to choose from. However, broadly speaking they fall into one of two categories; secured or unsecured personal loans. Generally speaking you would only seek to take out a secured personal loan to borrow money for something that required a very large amount of money and was to be repaid over a long period of time. Whereas, an unsecured personal loan would be used for relatively smaller amounts of money, that are typically repaid in a few years if not months.

Secured Personal loans.

As stated above a secured personal loan would normally be taken out only for a very large amount of money, which you would then need to repay over a long period of time. As the loan is for a large amount and the repayment period is a long one, the lender is incurring a potential risk that you might not be able to repay the entire loan. So the lender secures their loan against something of value to you, to act as a guarantee for them that they can recover their outlay, if you default on the repayments. Perhaps the best example of a secure personal loan is a mortgage.

Unsecured personal loans:

If youve just read the information above about secured loans, then itll be pretty obvious that you can have an unsecured personal loan without risking losing your home or other property/items that you own. An unsecured personal loan does present a greater risk to the lender, as if you default on the loan repayment it would be more difficult for the lender to reclaim the money owed. However, on the basis that unsecured personal loans are for smaller

amounts of money and are repaid relatively quickly, most personal loan providers accept those risks.

Brief History

Askari Bank was incorporated in Pakistan on October 9, 1991, as a public limited company. It commenced operations on April 1, 1992, and is principally engaged in the business of banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on Karachi, Lahore and Islamabad Stock Exchanges. Askari Bank has since expanded into a network of 245 branches /sub-branches, including 31 dedicated Islamic banking branches, and a wholesale bank branch in Bahrain. A shared network of 5,319 online ATMs covering all major cities in Pakistan, internet banking (i-net) and call canters operating on 24/7 basis supports the alternate delivery channels for customer service. As at December 31, 2011 the Bank had equity of Rs. 17.0 billion and total assets of Rs. 343.8 billion, with 919,096 banking customers, serviced by their 5,994 employees. Askari Investment Management Limited and Askari Securities Limited are subsidiaries of Askari Bank engaged in managing mutual funds and share brokerage, respectively.

The Banks Vision

To be the bank of first choice in the region

The Banks Mission

To be the leading bank in Pakistan with an international presence, delivering quality service through innovative technology and effective human resource management in a modern and progressive organizational culture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to all our stakeholders, and contributing to society

The Banks Values

Integrity is the most valued standard in whatever the bank does. It understands that its commitment to satisfy customers needs must be fulfilled within a professional and ethical framework. It subscribes to a culture of high ethical standards, based on the development of right attitudes. The intrinsic values, which are the corner stones of the banks corporate behaviour, are:

o o o o o

Commitment Integrity Fairness Teamwork Service

The Banks Customers

Knowing their customers and their needs is the key to the banks business success. Their products and services are as diverse as their market segments. Their client relationship managers are well equipped and well trained to provide the most efficient and personalized service to the customers. Askari Bank is proud of its pioneering role in providing the most modern and technologically advanced services to its 885,764 relationships.

The Banks Investors

The Bank believes that the bottom line of any business is creating shareholder value. To gain their trust and confidence, they believe in providing their investors timely, regular and reliable information on their activities, structure, financial situation, and performance.

The Banks Regulators

The Bank firmly believes in regulatory discipline and harmony of our corporate objectives with regulatory framework. Their business methodologies are designed to ensure compliance with the directives of all our regulators.

The Banks Employees

Askari Bank strongly believes that the interests of the Bank and the employees are inseparable. At Askari they try to create a we culture where there is mutual trust and respect for each other. They encourage ownership behaviour so that everyone feels responsible for the performance and reputation of the Bank. They are committed to develop and enhance each employees skills and capabilities through extensive in-house and external training programs and job rotations. In order to ensure meritocracy, their appraisal system is purely performance based.

The Banks Communities

The Bank fully recognizes their corporate social responsibility, and their contributions to different areas of the social sector are aimed to help improve the quality of life in the Country.

REGULATIONS FOR PERSONAL LOANS REGULATION R-23 CLEAN LIMIT PER PERSON FOR PERSONAL LOANS
Banks/DFIs may assign personal loan limits to one person with a maximum unsecured limit not exceeding Rs 1,000,000/, subject to mandatory credit check & prescribed debt burden and condition that total unsecured personal loans limits availed by that person from all banks/DFIs does not exceed Rs. 1,000,000. Banks/DFIs may merge the clean limits to single person for Personal Loans and Credit Cards subject to the condition that total clean limit availed by him/her from all banks/DFIs does not exceed Rs. 2,000,000 at any point in time. It is re-emphasized that the aggregate clean limit of the borrower should not exceed Rs. 2000,000 in any case. Banks/DFIs shall ensure that overall personal loan limits and credit card limits, both on secured as well as on unsecured basis, availed by one person from all banks/DFIs in aggregate should not exceed Rs 5,000,000/-, at any point in time, subject to the condition that the overall unsecured/clean facilities on account of personal loan and credit card of that individual does not exceed Rs 2,000,000. The loan secured against liquid securities shall, however, be exempted from this limit. The loans against the securities issued by Central Directorate of National Savings (CDNS) shall be subject to such limits as are prescribed by CDNS/Federal Government/State Bank of Pakistan from time to time.

REGULATION R-24
In cases, where the loan has been extended to purchase some durable goods/items, including personal computers and accessories thereof, the same will be hypothecated with the bank/DFI besides other securities, which the bank/DFI may require on its own.

REGULATION R-25
The maximum tenure of the loan shall not exceed 5 years. However, this period may be extended to 7 years for loans/advances given for educational purposes, provided that disbursement of such loans shall directly be made by the bank/DFI to the educational institution and the borrower shall not be allowed to utilize/withdraw cash directly from the bank/DFI under this head for any other purpose.

REGULATION R-26

In case of Running Finance/Revolving Finance, it shall be ensured that at least 15% of the maximum utilization of the loan during the year is cleaned up by the borrower for a minimum period of one week. In case the cleanup is not made by the borrower, the loan will be appropriately classified. However, banks/DFIs who require their customers to repay a minimum amount each month, will be considered compliant with this regulation subject to the condition that the aggregate cumulative monthly instalments exceed the 15% clean up requirement and accordingly the loans where the specified minimum repayments are being made by the borrowers regularly, will not require classification under this regulation.

REGULATION R-27
The personal loans shall be classified and provided for in the following manner: CLASSIFICATION DETERMINANT TREATMENT OF INCOME Substandard. Where markup/ interest or principal is overdue by 90 days or more from the due date. Unrealized markup/interest to be kept in Memorandum Account and not to be credited to Income Account except when Realized in cash. Unrealized mark up/interest already taken to income account to be reversed and kept in Memorandum Account. Unrealized markup/interest to be kept in Memorandum Account and not to be credited to Income Account except when Realized in cash. Unrealized mark up/interest already taken to income account to be reversed and kept in Memorandum Account. PROVISIONS TO BE MADE Provision of 25% of the difference resulting from the outstanding balance of principal less the amount of liquid assets.

Loss.

Where markup/ interest or principal is overdue by 180 days or more from the Due date.

Provision of 100% of the difference resulting from the outstanding balance of principal less the amount of liquid assets.

Schedule of Askari bank charges regarding Personal loan.

a. Processing fee for civilians. I. Clean:

1.6 %( comm. 1%+FED0.16%) of loan amount OR Rs.2900 (comm. 2500+FED400) which is higher.(including legal & documentation charges) II. Secured:

1.51 %( comm. 1.30%+FED0.21%) of loan amount max. up to Rs.6960 (comm. 6000+FED960)(including legal & documentation charges at actual.) b. Processing fee for Armed forces personnel. I. Clean:

1.6 %( comm. 1%+FED0.16%) of loan amount min.Rs.2204 (comm. 1900+FED304) (including legal & documentation charges) II. Secured:

1.51 %( comm. 1.30%+FED0.21%) of loan amount max. Up to Rs.6786 (comm. 5850+FED936) (including legal & documentation charges at actual.)

c. Late payment charges.

Rs.1000 (comm. 862+FED 138) or 10 %( comm. 8.62%+FED 1.38%)of the installment amount which is higher. Rs.700 per Cheque. Up to 5 %( comm. 4.31%+ FED 0.69%) of the outstanding amount.

d. Cheque returns charges. e. Early settlement charges.

PERSONAL FINANCE Features Applicant/ Borrower: Age: Salary/ Income: Employment Status: Debt Burden: Credit Limit: Tenure: Mark up : Secured Mark up : Unsecured Reference: Processing / Others Charges: Details Pakistani Resident (SEB/SEP cases are not entertained currently). Salaried: 21-61 years (maturity of loan at 61 yrs.). Rs. 30,000/-per month. 1 Year. Maximum 50% of the net disposable income. Up to Maximum of Rs. 500,000/- (Subject to maximum of 50% DBR & Industry benchmark is maximum Rs. 1.000 M). 1 - 5 years. Salaried: 19% p.a. Salaried: 21% P.A & Contract Employees 24.2% p.a. Two (2) references with complete details (one should be relative). As per "Schedule of Bank Charges". 1. Application Form duly filled & Signed by the applicant in his/her own handwriting. 2. Clear copy of valid CNIC. 3. Two passport size latest photographs. 4. Last two month original salary slip or attested photocopy required. Documentation 5. Last 6 month bank statement of salary account. 6. Copy of the latest paid utility bill received at the residential address in case of salaried individual. 7. Copy of the latest bill received at the business address & residential address, in case of SEB/SEP. 8. BBFS, DDA, Undertaking CF-1, undertaking regarding other credit facilities.

Eligibility to Apply: Age: Between 21 to 65 years.

Income:

Minimum gross monthly income of Rs. 10,000/- only. Maximum upto Rs. 500,000/. (Clean)

Financing Limits:

Employment:

Salaried: Minimum length of confirmed service with present employer is 6 months with a total length of 1 year service. Self Employed: Minimum 1 year in business. As per current schedule of charges

Charges/Fees:

References:

https://en.wikipedia.org/wiki/Loan http://www.sbp.org.pk/publications/prudential/PRs-Consumer.pdf http://loanpk.blogspot.com/2008/08/askari-bank-personal-finance.html

http://www.askaribank.com.pk/consumer_personal_finance.php