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About Union Bank

Union bank was established in 1991 and was backed by a major Middle Eastern
Group. Union Bank expands and strengthens itself through acquisitions. With
enhanced accessibility and superior operational capabilities, the aim is to provide the
customer with a memorable banking experience.

Acquisition of Emirates Bank International

In an agreement signed in September 2002, Union Bank acquired the local

operations of Emirates Bank International making it one of the largest private sector
banking networks in Pakistan. Union Bank has made major investments in brand
acquisitions, branch network and information technology and customer contact
center, which would result in an unmatched level of service quality offered by Bank
in years to come.

Branch Expansion

During the year 2002 the Bank has expanded its branch network with the aim to
increase accessibility for its customers as per their own convenience. A total of 8
new branches were opened in various cities of the country. These include branches
in existing and new cities thereby taking the final toll to 42 branches in 17 cities. With
a correspondent banking network of over 500 banks in 87 countries, Union Bank is
rapidly gaining ground in the global financial market. The existing as well as new
branches successfully prepares the grounds to utilize new banking systems
including online real time connectivity and an automated front office system enabling
to deliver the service in accordance with highest quality standards.

Major Departments at Union Bank

• Retail Banking Department

• Operations Department
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• Cash Department

• Trade Services & Foreign Exchange Department

• Credit Department

Retail Banking department

Customer Services section

Functions performed by this department include:

• Account Opening

• Account closure

• Balance Confirmation

• Statement of Accounts

• Stop Payment Request

• Online information to customers

• Cheque Book request

• Monitoring System

Types of Accounts

• Saving Account

• Mahana Izaafa Account

• Current Account

• Munafa Max Account

• Fixed/Term Account

• Joint Account
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• Foreign Currency Account

• Partnership Account

• Sole Proprietorship Account

Account Opening Procedure

In order to open any type of account, the customer must have an introduction with bank staff or
with any existing account holder of the bank. First he has to get the followings from customer
service officer:

• Account Opening Form

• Two specimen signature cards

• Cheque book Order Form

• ATM service subscription Form (If customer wants)

• Online subscription Form

Customer has to fill AOF. All formalities and requirements are completed and verified and
all the required documents are checked. An account number is then allotted to the customer.
Customer’s account is opened in the system by putting all his particulars in to the system and
a letter of thanks is then sent to the customer.

Basic documents required for opening current and saving Accounts include:

§ Account Opening Form

§ Specimen signature Cards

§ NIC copy

§ Introduction

§ Initial Deposits
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Basic documents required for Joint Account include:

§ Duly filled and signed (joint) Account Opening Form

§ Specimen signatures of all Account Holders

§ Identification, Photocopy of NIC after sighting the original

§ Initial Deposits

Basic documents required for Sole proprietorship Account include:

• A written request for opening of account

• A filled and signed Account Opening form

• Specimen signature for sole Proprietorship

• Identification, photocopy of NIC after sighting the original

• Introduction

• Initial Deposit

Basic documents required for Partnership account include:

• AOF signed by all partners and company stamp affixed

• NIC copy of all the partners

• A certified true copy of partnership deed with company stamp duly attested

Public as well as private limited companies can open a bank account at the name of
company. They have to submit following documents to the bank in order to open an account
at their company’s name

• Certificate of incorporation/ commencement of business

• List of board of directors along with NIC copy

• Memorandum and articles of association certified by chairman/ company secretary

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• AOF signed by directors/ authorized signatories as per board resolution

• Specimen signatures of authorized persons

Business Account
Business Account is a flexible current account that gives you the freedom to transact
wherever your business takes you. Now you have the most secure way of transferring your
funds anywhere in Pakistan without the hassles of carrying Cash or Travelers Cheques. It’s
an ultimate solution to manage your financial resources effectively.

Features of Current Account

• Minimum cash balance to be maintained is of Rs. 20,000
• No profit is paid on current account
• Free ATM cards are available
• Free On-Line facility is available
• Deposits or withdrawals of funds at any time
• No restriction on transaction
Features of Saving Account
• Minimum cash balance requirement is of Rs. 20000
• Profit is paid on half yearly basis
• Profit and loss scheme, so zakat has to be paid
• Free ATM card and On-Line facility for customers
• Up to Rs. 25000 profit rate is 0.10% and over Rs. 25000 the rate is 2.00%

Fixed Deposit Account

Union bank offers two types of fixed deposit accounts
• Notice Deposit
• Term Deposit
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On 7days Notice Deposit the profit rate is 0.50%

On 30 days Notice Deposit the profit rate is 1.00%
In case of Term Deposit
• The profit is paid at maturity.
• Rollover facility is also available
• Payment is on vouchers
• Chequebook is not issued to the clients

Issuance of Chequebook
All the account opening formalities must be completed before issuing the chequebook.
Account number is stamped on every leaf of the chequebook. Chequebook serial number is
then entered in to the system.
Basically two types of chequebooks can be issued:
1. 25 leaves chequebook
2. 50 leaves chequebook

Closing of Account

There are many reasons that the bank closes an account. Some of the reasons are:

• At the request of the client

• Due to death of account holder

• Bankruptcy of an account holder

• Liquidation of a company

Procedure of Closing the Account

An account is closed at the request of a client or as a result of improper conduct of the account
holder or because of nil balance

First the customer has to submit the request for account closing. For this the customer service
officer gives him the account closing form, which he has to fill and put his signature on it.
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Account closing form contains the following information:

• Name of client

• Account number of the client

• Signature of the client

Customer’s signature is then verified. After the approval from either operational manager or
branch manager the officer request the customer to give back his remaining chequebook (if
any remaining) and destroys it in front of the customer.

Customer’s specimen signatures cards and his account opening form are then attached with
the account closing form and his account is marked as close and his name is deleted from

Stop Payment
If the chequebook of an account is lost or stolen then for safety purposes the respective
customer request his concerned personal banker to mark stop payment to his account so that
no other person can draw money from that account by presenting cheque of the lost
chequebook. Stop payment orders or instructions received will be time-stamped and the
customer’s signatures will be verified where applicable, prior to the processing. Accounts for
which chequebooks are reported as lost or stolen will be closed and a new account opened for
the customer. Charges for stop payment are Rs. 200

Union Bank Online

With Union Bank Online it’s no longer required to the customer to take time out to visit
branch for his routine banking needs. With just a single phone call the customer now has
access to a wide range of Tele-banking solutions and personalized banking services.

Key features of Union Bank Online available to the customers include:

• Checking transaction history of accounts
• Getting account statements through fax
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• Receiving information on various Union Bank products and services

• Obtaining the status of issued cheques
• Finding out the status of card or loan application
• Requesting balance or reference certificate
• Requesting change in address and telephone numbers

Union Bank Online is a complimentary service for all the customers and subscription to this
facility include the following steps:

1. First of all the customer has to fill out the online form which is available at all
Union bank branches. He can also download the form from Union bank web site
and sends it to head office

2. The customer then has to contact his Online Banker by dialing Toll-Free number
0800-44-444 and generate a T-PIN for himself. With that unique T-PIN he can
access Union Bank Online Contact Center, 24 hours a day, from anywhere in

Sales Marketing
Bank uses magazines, journals and newspapers for the advertisement of its products as well
as its services.

Financial Products

Special financial products offered by bank include:

• Mahana Izaafa Account

• Munafa Max Account

• Savings Account

• American Express cards

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Mahana Izaafa
It is a unique rupee saving account, which combines a high rate of monthly profit, flexibility
of withdrawal and convenience, all in one. It gives the most attractive returns month after
month. The special tiering structure ensures a higher profit on higher deposits.

Munafa Max
Munafa Max is a fixed deposit account with profit paid at maturity. Available tenures are 3
months, 6 months, and 1 year. It is a branded long-term savings deposit, with profit payment at
maturity. Additional value added features give customers the flexibility to meet their interim
liquidity needs. It is a product ideally suited to corporate as well as individual clients who want
a good return on their money.

Withdrawing the part of deposit

After three months from the date of opening the account, customer can withdraw as per his
need, in multiples of Rs. 25,000 while continuing to earn the rate of profit (applicable on
the tier you are in), on the remaining portion. For the withdrawn amount he will be entitled
to an attractive profit, calculated on the basis of the last completed tenure, which will be
paid at the time of maturity. If the need arises, customer has the option of withdrawing the
entire amount. Customer will still be paid an attractive profit of the last completed tenure.

Union Bank's Saving Account

This product combines a good rate of return, profit paid out on a six-monthly basis, and
outstanding services offered by Union Bank all in one.

Special Features of Saving Account

1. Saving account offers a good rate of 4% over Rs. 25000.

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2. Minimum average balance requirement is Rs. 25000

3. Profit on Saving Account is on a minimum balance basis and is credited to the

account every January and July.

American Express Cards

In July 2001, Union Bank signed an Independent operator agreement for American Express cards
in Pakistan, which is an American franchise for Union Bank Pakistan.

Union Bank is the proud issuer of American Express Cards in Pakistan.

These Charge Cards are positioned as the premier card products in the market, offering exclusive
benefits and value added services to a profile of financially independent and image conscious
customers. These cards include:

• American Express Personal Card

• American Express Gold Card

• American Express Corporate Card.

Union Bank's American Express Card products are developed through a unique fusion of global
experience and acceptance of American Express Cards, with local understanding and service
infrastructure of Union Bank.

Features of American Express Cards

A customer can experience a world of opportunity and unlimited possibilities with American
Express Card. Customers will never have to worry about access to their funds, no matter
where they are. Some of the product features of the new American Express Cards include:
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Key Features

• Support network of 1700 American Express travel locations in over 130 countries of
the world
• Worldwide Emergency Services
• Membership Rewards
• Extended Payment Program
• Travel Agency Services
• Supplementary Cards
• 24-Hour Toll Free Customer Service through Union Bank Online

Founder Member Program

If any customer applies for American Express Credit Cards before August 25, 2003 he can
get the following benefits:
• No Joining fees
• No annual fee for the first year
• Free supplementary Card
• Flexibility to pay over time with service charges as low as 2.25% per month
• Special balance transfer rate of 1.5% per month when you transfer your outstanding
balances from other credit cards to the American Express Card.
• Double membership reward points on all spending till August
Membership Rewards
American Express credit card earns 1 membership reward point for every Rs. 50 spent on the
Card. These points can be easily translated in to a wide range of exciting gifts from a wide
range of categories including travel, fashion retail e.t.c.

Balance Transfer
Its possible for the customer to conveniently from other credit or charge cards to American
Express Credit Card. Balance transfer rate is only 1.5% per month.

Express Cash
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American Express card can be used to avail instant cash advance facility from all branches of
Union Bank in Pakistan and over 550,000 ATMs worldwide

Supplementary Cards
Its possible to get the benefits from American Express Card in the form of supplementary
cards for up to four family members. Spending on supplementary will be added on to the
membership reward points.

Monitoring System
Purpose of such monitoring system is to help employees to improve their services towards their
customers. In monitoring system various monthly service indicators are prepared. These service
indicators are an essential and ongoing part of the service management process. Basic purpose of
these indicators is to measure both the accuracy and timeliness in the delivery of services to the

These include:
• Complaint acknowledgement
• Chequebook issuance
• Telephone timelines
• Teller time wait
• Thank you letters
• PO/DD issuance
• System availability

Complaint Monitoring System

Complaint monitoring system includes two indicators for monitoring:
1. Percentage of the complaint acknowledgement within 24 hours
2. Percentage of complaint resolution within 72 hours
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Sources of measurement
Complaints received by telephone, letters, comment forms and customer visits

100% of complaints acknowledge within 24 hours and 100% resolved within 72 hours

Complaint Monitoring Process Flow

Complaint monitoring system is centralized with the CRM of the branch. Each department
receives pre-printed Comment Forms (CFs). Four carbonized copies are printed.
• White copy is for the department responsible for causing the complaint
• Blue copy is for Personal Banker
• Pink copy is for CRM (customer relationship manager)
• Yellow copy is for the customer
Complaint monitoring is the step-by-step process and it works as follows:

First of all the customer fills the comment form and forwarded it to the CRM. Yellow copy of
CF is given to the customer.

CRM upon receiving the CF enter the following details in the complaint monitoring sheet:
• Date of receiving the complaint
• Account number
• Nature of complaint
• Complaint forwarded to
• Target date to resolve the complaint
• Acknowledgement letter’s date
• Personal banker’s name
• Complaint resolution date
• Indicator passed/failed
After all the entries have been made, CRM time stamp the comment form and forwarded it to the
concerned department for resolution
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Comment form receiving officer places his signature, date and time on it. He retains white copy
with him and forwards the remaining copies to CRM

Third copy e.g. Pink copy comes back to CRM and it is forwarded to Personal Banker, who
gives an immediate written response to the customer and forwards a copy of complaint
acknowledge letter to the CRM. CRM files this letter in the “Unresolved” complaint file.

Personal banker follows-up with the concerned department to resolve the complaint, which
resolve the issue, write down the comments on the white copy of the form and return it to
personal banker

One day third of the complaint, the CRM follows-up with the concerned personal banker about
the status of the complaint who sends resolution letter to customer via courier and forwards a
copy of this letter to CRM.

CRM will keep the entire record i.e. the white and pink copy, the acknowledge letter and the
resolution letter in the “Resolved” complaint file and writes in the monitoring sheet that whether
the indicator is passed or failed.

Safe Deposit Lockers

First the customer has to submit an application for renting safe deposit locker in which he has to
mention the type of locker that he wants to acquire and also whether he wants to operate the locker
singly or jointly.

Types of Lockers

There are three types of lockers at Union Bank:

• Small

• Medium
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• Large

Minimum Balance requirement

Minimum balance requirement for each type of locker is Rs. 25000.

Key Deposit charges

Key deposit charges are Rs. 1500 for each type of locker

Lien against Locker Issuance

Initially 3 years’ locker rental as per the size of locker is reserved from the customer’s account.
Following is the lien for each type of locker:

• For Small size lockers 3 year lien is Rs. 3000

• For Medium size lockers 3 year lien is Rs. 6000

• For Large size lockers 3 year lien is Rs. 9000

Terms and Conditions for the grant of safe deposit Vault license

Some terms and conditions for the applicant to follow are:

• If applicant looses key of the locker or misplaces the same, he should notify the officer
without any delay about such loss

• Bank should be immediately notified about any change of the address of applicant

• Applicant is required to keep his keys of the locker in a place of safety and should not
deliver the keys to any person except duly authorized dealers.

• Applicant should not divulge the number of their lockers and their passwords.

ATM service

Union bank has launched new and innovative services and a latest addition to such a wide range
of services is Online cash ATM service.
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With Union Bank Online ATM service customers now can get a convenient and secure access to
funds round the clock on ATM network of over 100 ATMs covering all major cities across

• While using ATM card if the customer needs any kind of help he can pickup the hotline
telephone installed next to ATM and can get assistance from his personal banker.

• For security purposes Union bank has created special rooms at ATM locations where a
customer can transact in complete privacy. A customer can perform his transactions
confidently with a complete peace of mind. Customer never feels insecurity while doing

• When issuing ATM card the customer is given a secret PIN which is customer’s
password to the ATM. So the customer has confidence that no one else can use his ATM

Online Cash- Banking transactions

With Online cash ATM card a customer can perform following banking transactions:

• Withdrawal of cash upto Rs. 20,000 per day

• Mini statement for the last 9 transactions

• Easy transfer of funds between accounts at Union bank

• Request for the chequebook

• Balance inquiry for the accounts

• Change of ATM PIN (Personal Identification Number)

Active Banks to be Linked

These banks include:

• Askari Commercial bank


• Habib bank

• Soneri bank
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• Bank Al-Habib

• Union bank

• National bank

• Bank Alfalah

• Allied bank



Now its possible for Union bank’s ATM card users to get their cash from ATMs of any of these
banks and also other banks’ ATM cards can also work on Union bank’s ATMs.

One-link Account type

One shared ATM network, the accounts between which funds can be transferred and about
which customers can inquire balance include:

• Saving account (Mahana Izaafa)

• Current account (Business accout)

• Default (Ready Cash)

ATM Card

It’s a plastic card. Personal Authentication number (PAN) on this card consists of three portions:

• Standard

• Account Number

• Card Authentication number

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Card captured reasons

There are three reasons for the card retained by ATM machine:

• After second attempt

• When Hot Mark

A cardholder is allowed a maximum of three PIN entries. Two entries are in case he enters the
wrong PIN first time. As the cardholder enters the wrong PIN code third time his card will be
captured/retained by ATM machine.

Hot Mark

If the customer’s card is lost or stolen then he has to inform to the bank immediately. Upon
receiving the instructions the bank hot marked his account in ATM machine. After that his card
will be blocked for any further transactions. As any person who got that person’s ATM card tries
to insert that in ATM machine, the machine will capture it.


Four types of cassettes are used in ATM for placing cash. Usually 25 packs of cash are placed in
each cassette. Denominations are in Rs.500 and Rs. 1000. In type 1 cassette 25 packs of Rs. 500
are placed and in type 2 cassette 25 packs of Rs. 1000 are placed.

Quality of Currency Notes

Currency notes that are placed in cassettes fulfill following quality criteria:

• No rubber band

• Not stapled

• Not folded

• No tape
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• No cutting on notes

Accounts Department
Account’s department at Union Bank is responsible for performing the following functions:

• To maintain all the accounts of different departments

• Checking and distribution of all system reports

• Checking of all previous day vouchers of the bank with system report

• Preparation of monthly, quarterly, semiannually, and yearly balance sheet of the branch.

• Calculations of profits and markups on different investment schemes

• To check the Accounts report

• Maintain SBP balance as per the requirements of SBP

• Reconciliation of all General Ledger accounts

• Calculation of taxes deducted on deposits, services and supply of goods.

• To Balance the branch at the end of the day

• To calculate expense of the branch and to check that expenses should be within the
estimated budget. Otherwise taking approval from head office if expenses exceeded from
pre-specified budget

• Preparing different types of reports for SBP.

• Preparing the statement of accounts as per the requirement of our head office and SBP.

Maintenance of balance

All the banks maintain their current accounts with SBP. Of total deposits, all the banks are
required to maintain 5% in their current account. If minimum balance falls below this amount
then bank will be declared as OD (Overdrawn) and is required to pay penalty to SBP for this.
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Banks place the request for funds from other banks, which have balance above the minimum
balance that is required to maintain. If any bank does not fulfill funds request then Union bank
Multan branch requests its head office to send TT (Telegraphic Transfer) to its Multan branch.
Head Office then sends requests to SBP where Union Bank account will be credited.

Funds Transfer Process Flow

If Union bank’s balance in current account is above minimum balance and any other bank places
the request for funds, then Union bank will send SBP cheque to the demanding bank. In reverse
transaction, the demanding bank’s head office will send SBP cheque to State bank where Union
bank’s account will be credited for that much amount.

Rupee Fund Report

Rupee Fund Report is prepared on daily basis and contains following ingredients:

• SBP balance (opening) as per SBP books

• SBP balance as per bank’s books

• Cash in hand (LCY)

• Cash in hand (FCY)

• Advances to customer (Other than Refinance)

• Demand and time liability (PRS & FCY including FE25)

• Net DTL

• 5% of Net DTL

• Today’s approximate closing balance with SBP

• Net surplus/ short fall

SBP balance as per SBP books and SBP balance as per bank’s books must be the same. If not then
the mistake will be in bank’s books of accounts. Shortfall if any will be maintained by Union bank
head office.
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Expenses at Branch Level

If the expenses are significant then its approval will be taken from head office. All fixed asset
expenses are approved from head office. Estimated useful life of assets is of 5 years and after that
time period assets are fully depreciated. Depreciation is calculated on monthly basis. If bank buys
stationary of Rs. 25000 or above then tax will be deducted at a rate of 3.5%.

Statement of Taxes

Different reports are prepared by Accounts Department for State Bank. One of these reports is the
Statement Of Tax, which is submitted to State bank after 3 months, 6 months and on the basis of
which tax account will be debited.

Collection Process

All the cheques including demand drafts and pay orders are received along with the deposit slips
duly filled. Counter folio of paying slip is given back to the customer. A register is maintained in
which the record of all the cheques (either collection or clearing) is written by customer services
officer as the cheques are received. If the cheque is of some other bank then collection stamp will
be affixed on the slip and also on its counter folio.

Types of Collection Bills

Two types of collection bills are:

• OBC (Outward Bill of Collection)

• IBC (Inward Bill of Collection)

Cheques for collection are entered in OBC register and handed over to the Accounts Department.
A crossing stamp is affixed on all the cheques, DD, and PO, which shows that now these cheques
are the property of Union Bank. endorsement stamps are affixed on cheques.
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Clearing is the process by which cheques and other negotiable instruments are exchanged between
banks drawn on one another and ensuring the financial settlement.

Two types of clearing are:

• Inward Clearing

• Outward Clearing

Inward Clearing

When cheques and drafts of Union Bank Multan branch, which are presented at other banks, are
sent to that branch for clearing. These cheques first sent to cash section for signature verification
purposes and after verification come back to clearing officer.

Outward Clearing

Cheques and drafts of other banks, which are presented at Union Bank, are sending to those banks
for clearing. For outward clearing, stamp affixed is “Our Branch Endorsement Confirmed”.

Clearing Process (Inward/ Outward)

Clearing officer checks and verifies the titles of all the cheques deposited by the customer.
Cheques are scrutinized properly and slips are separated from cheques. Special crossing and
endorsement stamps are affixed on each cheque. Cheques are then sorted branch wise. An inward
clearing sheet is prepared which contains the following details:

• Name of banks

• Total number of cheques belonging to each bank,

• Total amount of the cheques delivered

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• Total amount of the cheques received

Next morning these cheques are delivered to the respective banks in the clearinghouse of State
Bank between 9:00 A.M. and 9:30 A.M. Other banks present their clearing drawn on Union Bank
Multan branch. Details of the amount of the cheques of other banks received and amount of
cheques delivered are written on that schedule.

Transactions in SBP books of accounts

Inward clearing:

State bank debit the Union Bank account and credited the other banks’ accounts in its books.

Outward clearing:

State bank will debit the other banks’ accounts and credited the Union bank accounts in its books.

Transactions in Union Bank’s books of accounts

Inward clearing:

Union bank will debit the customer’s account and credited the State bank account in its books.

Outward clearing:

Union bank will debit State bank account and credited the customer’s account

Clearing in favor and against

In clearing house if the amount of total cheques of Union bank received from other banks is less as
compare to the amount of total cheques that are delivered to other banks, then clearing will be in
favor of Union bank, else, clearing will be against bank.

If clearing is against bank then bank is required to raise funds from other banks having funds in
excess of the minimum required to maintain in their current accounts at State bank.
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Trade and Foreign Exchange Department

Banks play very important role in providing the services to the exporters and importers of a
country. Banks facilitate the import and export process by acting as third party and are the
authorized dealers in trading process.

Trade Services and Foreign Exchange department at Union Bank is divided in to following

• Import Section
• Export Section
• Refinancing

Import Section

This section deals in Letter of Credit. But before opening L/C it is necessary that the importer
must be the license holder.

Letter Of Credit

Letter of credit is an authority or undertaking in which issuing bank open on behalf of importer
in favor of exporter. It’s a banking instrument that is issued at the request of the importer.

Types of Letter of Credit Offered by Union Bank

• Sight L/C
• Usance L/C
• Revocable/Irrevocable L/C

According to sight L/C the beneficiary will receive the payment from issuing bank at the
time when it present the documents to the bank and these are found to be as per L/C. so the
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tenure of such L/C is sight i.e. as soon as the issuing bank sights exporter’s documents, the
payment becomes due.

Sight L/C

The sight L/C is most commonly used in international trade. In a sight L/C, the payment is
on demand or on presentation of the negotiation documents to the paying bank or the
importer. In practice, the bank may pay within three (3) working days (not instantly) after the
receipt and review of the negotiation documents and if they are in order, that is, the
documents comply exactly with the letter of credit (L/C) stipulations.

In certain countries where the business relationships between the exporter and the bank is
well established, the bank may pay the exporter a few hours after the receipt of the
negotiation documents that are in order.

Usance L/C

The usance L/C is used in a deferred payment arrangement. The payment is on the maturity
date determinable in accordance with the stipulations of the letter of credit (L/C). The
maturity date can be at a stated period after sight or after date

Payment tenure

In Usance L/C the payment tenure is 30, 60, 90, 120, and 180 days. For instance:

• 90 days from date of shipment (when the exporter shipped the goods)
• 90 days from sight (date when the buyer’s bank receives the documents)
• 120 days after sight (date after the buyer’s bank receives the documents)
• DA (Document Against Acceptance)

A Revocable L/C can be amended or canceled by the openers before the expiry date of the
Letter of Credit
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An Irrevocable L/C can’t be altered or cancelled without the consent of all the parties i.e.
Opener, the opening bank, the collecting bank, and beneficiary.

Parties Of Collection

1. The drawer is the party who issues the draft/bill and to whom the payment is made.
2. The drawee is the party who owes the money or agrees to make the payment and to
whom the draft/bill is addressed (made out).
3. Remitting Bank

The exporter's bank to whom the exporter sends the draft, shipping documents and
documentary collection instructions,

Collecting Bank (Presenting Bank)

The bank in the importer's country (the importer's bank usually) involved in processing the

Details required in L/C application

L/C application agreement should contain the following details:

• Name and address of the applicant

• Name and address of the advising bank
• Name and address of the beneficiary
• Currency and amount of L/C
• Country of origin
• Details of documents required
• Import license and registration number
• Bill of lading
• Shipment port
• Destination port
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Procedure for opening Letter of Credit

Customer wanting to open L/C must fill out an application form. The application form
contains the following information:

• Name and address of applicant

• Currency and amount
• Tenor
• Mode of shipment
• Shipping arrangements

First the exporter will send his Performa invoice to importer and importer will send his
Performa invoice to exporter. On Performa invoice the terms and conditions of payment are
mentioned. If both the parties agree these terms and conditions and duly signed that agreement
then it becomes a contract. Contract has no legal binding. To make contract irrevocable the
importer’s bank will open L/C in favor of exporter on behalf of importer after taking collateral.
L/C opening bank will communicate with its corresponding bank (advising bank) in exporter’s
country. Advising bank then communicate with the exporter’s bank which is the
negotiating/collecting bank. Negotiating bank will collect exporter’s documents and send them
to advising bank, which then send them to the importer’s bank. While the importer’s bank will
send L/C to its corresponding bank in exporter’s bank. Exporter will shipped the goods to the
importer’s country. Documents sent to the importer’s bank include:

• Commercial invoice
• Bill of lading/airway Bill
• Certificate of Origin
• Packing list
• Bill of exchange

Documents send by the exporter’s bank will be verified as per L/C requirements by the issuing
bank. It is the responsibility of importer’s bank to inform about any discrepancies, that may
exists in exporter’s documents, to the exporter’s bank within 7 days. Otherwise the documents
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are considered to be acceptable by the importer’s bank. Payment is made to the exporter after
verification of documents and according to the payment tenor specified in L/C.

If exporter needs finance before the date of payment for the shipment of goods then he can
negotiate the bills with his negotiating bank. The negotiating bank then on behalf of supplier
receives the payment from importer’s bank.

Export Section

Export section deals with the particularities relating to export. It handles export documents
complying with rules and regulations prescribed with State bank. All exports from Pakistan,
which are subject to exchange control regulations, are required to be declared on Form-E to
authorized dealer (bank) for certification.

Basic requirements for export from Pakistan

As per the SBP regulations, all the exporters are required to register themselves with Export
Promotion Bureau (E.P.B.). This registration has to be renewed every 5 years. Basic
documentation required for registration include:

• Original and photocopy of NIC

• Original and photocopy of memorandum, Articles of Association, and certificate of
• Original and photocopy of partnership deed
• Membership certificate from Chamber/ Association
• Copy of NTN number

Exports-SBP regulations

SB exchange control regulation covers exports of all goods and applies to four key areas:
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1. Furnishing and declaration to customs in shape of Form-E

2. Scrutinizing of export documents against Form-E
3. Title of transport documents
4. Realization of export payment

Declaration to Customs (Form-E)

SB requires that any good exported from Pakistan be reported to customs in

Form-E. Before form-E is submitted to customs, all four copies have to be certified by the
bank. Before the bank certifies Form-E it has to ensure that:

1. Exporter is registered with E.P.B.

2. Particulars of Form-E comply with Letter of Credit
3. Adequate arrangements have been made for realization of proceeds. Special care has
to be taken if documents are on D/A basis
4. The Exporter or his authorized agent must sign export form.

After Form-E has been certified by the exporter’s bank, it has to be submitted to the customs
authority. At shipment time along with shipping documents, customs authority than fills out
portions relating to them and affixes their seal at the bottom of Form-E, detaches the original
copy and returns other three copies to the customer (Exporter). Exporter keeps the
quadruplicate copy and has to submit the duplicate and triplicate copy to his bank along with
shipping document.

All export documents are scrutinized against L/C and each other. Important documents

• Customer’s covering letter

• Letter of Credit
• Bill of exchange
• Commercial Invoice
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• Bill of lading
• Certificate of Origin
• Packing List

Checking of Letter Of Credit

• Is original L/C is available

• Signature verified
• Is L/C not restricted
• Valid for shipment
• Valid for negotiation
• Is L/C amended
• If amended, are original amendments are available
• Presentation of documents as per L/C
• Is L/C negotiable

Checking of Bill of Exchange

Bill of Exchange checking involves:

• Amount in words and figures

• Amount matches invoice
• Is issuance date is mentioned
• Signed and stamped by customer
• L/C number is mentioned correctly
• Tenor as per L/C
• Drawing bank as per L/C

Checking of Invoice

• L/C reference and date correctly mentioned

• Is invoice duly signed
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• Description of goods as per L/C

• Quantity as per L/C
• Unit price as per L/C
• Marks and numbers match with bill of lading

Checking of certificate of Origin

• Is copy of origin is available

• Is authentication is required
• Chamber of commerce embossed stamp available
• Description as per L/C
• Certified by respective consulate

Refinance section

Banks are directed to give loans under refinancing scheme to exporters. Any bank will first
finance to the exporter and then bank in return claims the same amount from SBP.

Parts of Refinancing

• FAPC-I Pre-shipment loan

• FAPC-I Post-shipment loan

Part-I pre-shipment/post-shipment scheme provides export finance to the exporters on case-

to-case basis against irrevocable L/C or firm export order. While Part-II allows sanctioning
of the export finance limits to the exporters on the basis of their previous year performance as
measured by their export realization.

Pre-shipment loan is extended when exporter needs finance before shipping goods. Basic
documentation required for advancing pre-shipment loan includes:
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• Particulars showing the stages of completion of the product to be exported by direct

• Certificate to be given by the bank in case of substitution of firm’s export
order/Letter of Credit under export finance scheme
• Particulars of the new firm export order (s) and L/C (s).
• Particulars of the original firm export order (s) and L/C (s) or a transferred portion of
• FCR (Forwarder’s Cargo Receipt)

After the shipment of goods the risk of being unable to pay back loan from exporter’s side
reduces. In post-shipment loan actually the markup rate reduces because of less risky
condition as the markup rates depends on risk. Only the texture of loan changes

In advancing Post-shipment loan the documents required are:

• List of indirect exporters

• List of major foreign buyers
• Demand Promissory Note
• Particulars of the export receipts in respect of eligible commodities of the export
finance scheme for a specified monitoring period
• Sales purchase order payment

In refinance part-I a new documentation is prepared for each export order by SB. While in
Refinance part-II the customer (Exporter) is given lump sum amount on the basis of the
entitlement of last year export, as the exporter has frequent foreign bills.
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Credit Department

Deposits are the liabilities of bank while advances are the assets of the bank. To balance these
two sides, bank attracts the current as well as prospective customers to deposit their savings by
offering high rate of interest/ profit, while in order to increase its assets, bank attracts its
customers by

Corporate Banking Group

The Corporate Banking Group at Union Bank is dedicated to providing its clients the highest
level of service possible. Union Bank is dedicated towards developing relationships with
corporate clients to service their financial needs worldwide.
The Corporate Banking Group manages a high quality asset portfolio being an active player in
many sectors including textile, sugar, leather, pharmaceutical, fertilizer, petrochemical, power,
automotive, telecommunications, oil and gas distribution, marketing and refining and fast
moving consumer goods industries.

Union Bank offers a full range of financial services to support any or every part of a
customers’ business transaction. Each solution is tailored to meet their specific business

Working Capital / Term Loan

Corporate banking group works closely with customers to understand the dynamics of their
business so that it can anticipate and serve short-term and long-term funding needs in the most
efficient manner, drawing from the full range of its resources and capabilities.
Small And Medium Enterprise Group
SME Group strives to apply a unique blend of finance, industry and technological expertise to
keep pace with dynamic markets and translating insights into solutions that meet diverse
financial needs.
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Credit Department is bifurcated in to two parts:

• Marketing
• Credit Administration

Marketing Section

Marketing section deals with attracting and informing the customers about new credit facilities
offered by bank. This section also deals in approving the credit for the customer.

Credit Administration section

When the credit facility is approved then work of credit administration department starts. It
performs two functions:

• Pre-dispersal function (before advancing facility)

• Post-dispersal Function (after credit facility is dispersed)

When the credit application is approved, it is sent to the credit administration department. This
department then checks all the regulatory requirements of SBP for all types of credit facilities.

For instance if a loan of above Rs. 500,000 is to be advanced to the customer then a CIB report
sponsored by SBP is to be reviewed for the purpose of independent checking on the borrower.

Documents Required for Providing Credit facility

All facilities whether long or short term in nature are reviewed annually to evaluate that how a
borrower has performed during its most recent fiscal year. Such reviews are conducted based
on written analysis. Such analysis communicates to the credit approving officers the
information needed for arriving at a credit decision. A credit presentation package consists of
the following documents:

• Credit Approval (CA)

• Obligor Risk Rating Form
• Basic Information Report
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• Management Assessment Form

• Financial Spreads
• Financial Projections (For Term Financing)
• Credit Memorandum
• CIB checking
• Bank/Market checking

Credit Approval (CA)

CA form is a three-page document. This form once completed summarizes the aggregate credit
risk being approved, description of individual credit lines, and details of security obtained
against each line.

Obligor Risk Rating Form (ORR)

• This form enables to weigh all Union bank credits regardless of type, nature, or
location of the borrower. Risk ratings are assigned on an obligor level on a scale of 1 to
10, 1 being the highest quality risk and 10 being the lowest, classified as doubtful of
recovery. Risk Ratings are assigned and approved when credit is initially extended and
is updated annually. Risk rating is also reviewed immediately and accordingly adjusted,
if necessary, whenever there is a material adverse event such as adverse classification
of the credit facilities.

Basic information Report

It’s the responsibility of relationship manager at credit department to collect as much

information about customer as possible at the time of initiation of a relationship.

Financial Spreads

Purpose of this form is to meet financial analysis requirements. This form consists of four
pages, which are developed on “Excel” system. A summary of financial statements is
automatically generated which also provides key financial indicators, growth historic patterns,
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and ratio analysis. Relationship manager analyzes three years historic audited-financial
statements, as well as the recent financial statements.

Financial Projections

Financial projections are prepared by customers, which forecast their performance in near
future. Financial projections help credit department to determine the expected assets and
liabilities position and cash generating ability to repay debts.

Credit Memorandum

Credit decisions are made on the basis of the contents presented in this document. Credit
memorandum is prepared with precision and accuracy of information. A well-structured credit
memorandum usually evolves around the following topics:

• Purpose of presenting the credit memorandum

• Relationship background of borrower with Union Bank
• Relationship profitability
• Relationship strategy
• Management assessment
• Financial Analysis

Bank/Market checking

These checkings provide unbiased information about borrower, which is obtained, from his
customers, competitors, and suppliers. Credit checking on borrower is also obtained by
manager from his bank.

Covenants Check-offs

In term lending multiple covenants, financial as well as qualitative, are imposed by lenders. At
the time of annual review of the term facilities it is checked that if borrower adheres to these
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Steps involve in Credit advancement process includes:

• Customer relationship (customer must open current account with the bank)
• Customer’s facility request
• Credit application
• Facility offer

Types of Loans

Basic purpose of credit department is the advancement of loans to its customers. Loans are
basically of two types:

1. Funded Facilities

In funded facilities bank’s cash is physically involved. Funded facilities include:

• Running Finance
• Term Finance
• Finance against Bill Purchased (FBP)
• FBP (Own Acceptance Purchase)
• FAFB (Finance against Foreign Bill)
• Export Refinance Part-I SBP (pre-shipment)
• Export Refinance part-I SBP (Post-shipment)
• Export Refinance part-II (SBP)
• Forced Acceptance
• FIM (Finance against Imported Merchandise)
• FATR (Finance against Trust Receipt)
• Dollar Financing (Pre-shipment)

2. Non-Funded Facility

In non-funded facility bank’s cash is not physically involved. Non-Funded facilities include:
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• Sight L/C
• Usance L/C
• Acceptance
• Guarantee (L/G)

Term Finance

It’s a long-term finance facility, which is acquired to purchase fixed assets of a business.
Customer borrows from bank a fixed amount repayable either in periodic installments or in
lump sum at a fixed future time. Utilization of term finance decreases with the payment of

Payment tenor

• I year
• Over 1 year
• 1-5 years

Syndicate Financing

Such financing is used to finance some mega project. Equity of the firm is considered when
providing this type of financing. The credit-requesting firm must maintain its 40% equity. To
meet remaining capital requirements the firm signs a syndicate in which three or four banks
jointly finance the project. One of these banks will be the leading bank, which contributes
major portion of financing. So the leading bank has the major share in the installment amount
received from the borrower.

Money Market Deal

It’s term finance. This type of financing is between banks. Different banks interact with one
another. If a bank has more over night funds available, which are not in use, then banks offer
different rates to lend or to acquire those extra funds. Normally such sort of financing is
discouraged at Union bank and it is proffered to use funds available at treasury department of
Union bank head office.
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Finance Against Foreign Bills (FAFB)

When the exporter needs finance before the payment date, he can give the bill of exchange to
the negotiating bank and get the finance against that bill. In this case the bill is given as
security. Ownership is not transferred to the bank. FAFB is the post -shipment finance.

Foreign Bills Purchased (FBP)

When the bank purchases the bills then ownership/title of security is transferred to the bank. So
the bills become the property of the bank.

Finance against Imported Merchandise (FIM)

This type of finance is related with sight L/C. in this type of finance, the goods imported are
taken by the importer’s bank as the security. As the demand for goods arise, the importer get
the units of goods according to the demand from bank and pays markup and amount for that
much amount of goods.

Finance against Trust Receipt

It is also related with sight L/C. when the goods arrive at the port, then in order to release the
goods, the importer needs documents. If the importer has not yet made payments then the
importer’s bank gets a Trust Receipt signed by the importer for the time period for which the
bank, for releasing the goods, gives the documents to him. It’s a strong legal document. If the
importer refuses to make payment after getting his goods, then the bank against him can take a
strict legal action.


Collateral is the amount of assets the applicant has available for use in securing the credit. The
larger the amount of the available assets, the greater the chance that a bank will recover its
funds if the applicant defaults. A review of the applicant’s balance sheet and any legal claims
filed against the applicant’s assets can be used to evaluate the collateral.
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Types of Securities

1. Pledge

Pledge is the advancement of loans against the security of current assets i.e. inventory, trade
receivables. In this type of security the ownership and possession of the security is with the

2. Mortgage

In this type of security, the credit is given against immovable property i.e. land, building. Bank
has the right to sell the property if the payment is not made.

Types of Mortgage

• English Mortgage
• Equitable Mortgage
• Token Registered Mortgage
• Full Registered Mortgage

English Mortgage

In this type of mortgage the mortgagor (applicant) binds himself to repay the mortgage money
on a certain date, and transfers the mortgage property absolutely to the bank. The banks will re-
transfer both the possession and ownership of that property upon the payment of the mortgage

Full Registered Mortgage

In this type of mortgage the applicant will fully registered his property. More commission is
charged in this case.

Token Registered Mortgage

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In this type of mortgage, small portion of the property will be registered with the registrar
office while the remaining will be Equitable mortgage. In this way less commission will be

Equitable Mortgage

In this type of mortgage, the bank will take all the title deeds from registrar office. A
memorandum of “Deposit of title deeds” is signed by the mortgagor in which he mentions that
he is giving his property as the security to the bank. After the bank takes title deeds there will
be no copy of the title deeds with the registrar. In case of equitable mortgage the ownership is
with bank and possession is with customer.

Bank’s Lien

Lien is the banks right to withheld property until the claim on the property is paid. In lien the
borrower remains the owner of the property while the possession is with the bank. Bank has no
right to sell the property.


It’s a legal transaction in which the goods may be taken as security for a debt without
transferring either property or possession to the lender. It’s a security against current assets.
Security is granted by means of the letter of hypothecation.


Charge is the right of payment out of certain property. Charge gives the right of pledge,
hypothecation, mortgage and lien. Banks have to register their charge/right with SECP
(Securities and Exchange Commission Pakistan). SECP maintains the records of all the
companies i.e. what are the assets of companies, their board of directors. Every limited
company keeps its records with SECP.Charge involves:

• Ranking
• Pari Passu
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In ranking if the customer (company) has already taken loans from other banks then SECP
ranks those banks. The settlement of the loan amount will be done according to the ranking of
the banks.

In case of pari passu the bank from which the customer is going to get facility is ranked
equivalent to the first/highest priority bank. in this case the priorities of other banks will
decrease. For this the customer has to obtain NOC (No Objection Certificate) from other


A guarantee is the promise by one person, called the guarantor, to another for answering the
present or future debts of a second person called the principal debtor.

Types of Guarantees

Union Bank issues the following types of guarantees depending on the needs of the

• Tender Guarantees (Bid bonds)

• Performance Guarantees
• Advance Payment Guarantees
• Financial Guarantees



• Union bank has achieved marked success in its strategy of expanding and diversifying
its customer base and launching new and innovative financial products.
• Union Bank has undoubtedly become one of the most progressive and well-networked
banks in Pakistan.
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• Union Bank has also invested heavily in information technology resources, which has
now allowed the bank to develop one of the most comprehensive and advanced systems
available. With the help of this system, Union Bank has

now achieved an "online" status via real time facilities and features available through
nation wide network. With a team of highly qualified professional, Union Bank is able
to use its real time system resources to provide customers with a comprehensive
account of their transactions on a daily basis. With the new improved system, Union
Bank is able to map all transactions and is able to provide all necessary details to cash
management clients.

• With One-link network of ATMs, it is easy for the customers to get their cash from any
ATM machine of the partner banks with minor charges to be paid for transactions. Thus
if ATM machine at Union Bank is not working, then its possible to draw cash from any
other ATM of the partner bank. Now ATM card is accepted on more than 100 ATMs in
all major cities across Pakistan.
• Union bank has been successful in employee retention, customer satisfaction and high
profit generation. Happy employees help create happy customers. Good reputation of
the bank is because of good behavior and response of the employees.

• Good and friendly attitude of the workers is the result of excellent management of
bank. The entire environment of the bank gives the impression that customers are very
important to the bank. They are offered seats even when they come for a small purpose.
• Union Bank provides excellent trade related facilities, for an appropriate period, in
line with working capital cycle, to assist in financing imports/exports. It works
closely with customer to determine their needs based on the type of goods involved,
and their terms of trade. Additionally, its range of options will ensure that customer
will enjoy the most appropriate financing instrument to meet his business needs.
Bank works with customers to understand the working capital needs of their company
to facilitate the financing of their entire trade cycle. It also provides the structured
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solutions for exporters of commodities or capital goods to emerging markets.

Exporters can raise offshore finances on competitive terms against the underlying
terms in their export contracts.
• Customers are allowed to give suggestions regarding banking services. If there is any
complaint by the customer the bank authorities investigate the reasons for complaint.
Complaint monitoring system is an excellent one at Union Bank that shows that bank
values more to its customers.


• Union bank has the centralized system of processing trade related transactions. Any
customer who wants to export or import any product needs spontaneous transactions to
take place. But due to centralized system the approval of all the transactions has to
taken from head office. Although this system is good on part of bank but not favorable
on part of customer, as the processing time for transactions lengthens which create bad
impact on customers.
• Credit setup at Union bank is such that the credit customer is handled at different
counters. Such segmentation of credit approval processing is useful for handling credit
related tasks but customer who comes to the bank for getting credit facility doesn’t
understand it. He wants that he must be handled at one place. So the lengthy process of
credit approval creates a feeling of dissatisfaction among customers.
• Organizational structure of Union bank is Functional based. Functional structure groups
the members of organization based on their work activity. Every employee is
responsible for his own operations and no co-ordination exist among departments.
• The advertising media used by Union Bank for publicity include mostly newspapers and
journals. Although this media is good one in attracting customers to bank with Union Bank,
but the most powerful media is of television through which people within Pakistan as well
as outside Pakistan can have an instant information about new products and developments
of Union Bank with just a click of TV button.
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• Union bank is now looking in to new ways of providing banking service to its
customers. New concept of mobile banking has been introduced by the bank, which
will prove to be a remarkable success in the field of consumer banking group.
• Competition in the field of consumer banking has been intensified as large
consumer banks continued to play a significant role in terms of products and
services. Union bank is preparing for this competition by establishing a dynamic
platform that will enabled it to launch a series of new products in years to come.
This dynamic platform will be supported with a robust operational infrastructure
and delivery mechanism.
• For banking industry acquisitions are the best way and Union Bank has adopted this
strategy for the acquisitions of funds and for strengthening and expanding itself
through affiliation with leading international brands and acquiring the operations of
leading banks. It’s the fastest growing bank in

Pakistan and it will prove to be the largest bank by continuing its strategy of merging
and acquisitions. Acquisition of Bank of America’s local operations, and operations of
Emirates Bank International in Pakistan are the recent acquisitions by Union Bank.

• Union bank has now decided to slowly expand its core banking operations in selected
emerging markets. Union Bank has selected Sri Lanka as the first venue for
commencing its international business.
• Union Bank is an active player in the loans business. Its strength in loaning stems from
its ability to forge strong relationships not only with borrowers but also with bank
investors. Bank can capture more markets by introducing new products for business
community, as it is the only group, which can contribute more towards increasing the
assets of the bank. The products, which the bank currently offering includes, Ready
cash, Business Power, and Business Account. Bank can touch new customer segments
through these products.
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• Although merging and acquisitions are a good way of expanding the operations but at
the same time competition and challenges also increase. Bank is required to maintain
competitive rates and facilities for its depositors and its borrowers. Bank has to
maintain a balance between its liabilities and assets structure.
• The sad part is that our industrial base isn't growing and industrial demand for credit
is, therefore, low. Banks is aggressively lending in the consumer sector. Cars,
motorcycles, home mortgages. Industrial sector is the most powerful sector which can
contributes towards assets of bank. But in Pakistan due to instability in economic
condition this sector is not flourishing too much. As a result the rate of industrial
loaning is also very low. If bank continues in advancing consumer loans then it will
become a threat for the assets of bank and resources of the bank will continue to be

Observations and Conclusion

Union bank is a financially sound bank. It is now financially more powerful and secure with
superior operational capabilities, wider distribution, and greater depth in human resource skills.
This development has led to the formation of one of the largest local private bank in Pakistan.
The bank has come a very long way in a very short span of time. With stronger brand image
and firmer footings the bank has been able to leverage its infrastructure to launch new products
and services.

For Union bank customers are the first priority. Sole of any business are the customers and
their satisfaction is an achievement for the organization. Union bank is using customer services
and automation as its marketing weapon. Management believes that satisfied customers are one
of the key factors for future growth of bank.

Keeping in mind the diverse needs of customers, Union bank has launched several products
and services ranging from deposit generating liability products to mortgage and financing asset
products to ATMs and charge cards. Bank has restructured its consumer banking division by
further dividing it into three major business units:
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• Consumer assets
• Personal finance
• Cards

This allows having a more focused approach on different segments of the market. Union bank
has stepped into highly dynamic cards industry with the launch of Rupee denominated
American Express Charge cards. The Charge cards are positioned as the premier card products
in market offering benefits to a profile of financially independent and image conscious


Union bank will remain an aggressive and innovative financial institution and continue to
adhere to the tradition of understanding its customer’s needs and looking for new ways to serve
them. Further integration and productivity gains will result in stronger performance in terms of
revenue as well as service quality in the coming years. The strong leadership of Board and
management and the relentless effort of the staff at Union bank will be able to offer more
superior products and services to customers and to contributes more to economic and social
development of Pakistan while developing a bigger future for itself.