Pakistan came into being on 14th August, 1947; sufficient banking services
were available in the areas forming Pakistan. Out of the total branches of the nearly
3,500 in the undivided India, as many as about 1,500 branches were existing in these
areas.
It was agreed between the two countries that reserve bank of India shall
continue to function in the Pakistan territory until 30th September 1948 and that
Indian notes would continue to be legal tender at Pakistan until 30th September 1948.
Unfortunately, relationship between the two countries became most strained
immediately after independence; banking was mostly in the lands of Hindus who
immediately started transferring their offices and assets into India. As a result most of
the banks in Pakistan were closed down and even those which were open were not
doing any effective business.
The number of banking office in Pakistan came down to about 200 on 30th
June 1948. Branches of some European banks were also functioning in a limited
manner, financing in export of crops, and their number was limited to about 20.
It was only the Habib bank, which transferred its office from Bombay to
Karachi Austral Asia bank was another bank, which was in existence in the Pakistan
territory at the time of independence. Despite of best efforts on the part of government
of Pakistan, no heady way could be made on this behalf and reserve bank of India was
in no mood to help the new country. Imperial bank of India, agent of the reserve bank
of India also started closing down its branches in Pakistan.
Reserve bank also refused to advance money to Pakistan to make essential
payments such as salaries etc, also Pakistan’s share of Rs.75 billion in cash balance
was with held by bank, causing hardships to the newly born state. In view of these
hopeless state affairs it was agreed between the two countries that reserve bank would
serve as monetary authority in Pakistan only up to 30th June 1948.
NATIONALIZATION OF BANKS
Foreign Banks
Specialized Banks
It has not so far been decided as to how the word ‘Bank’ originated. Some author’s
opinion is that, this word is derived from the word ‘Bancus’ or ‘Banque’, which
means a bench. Others authors hold the opinion that the word ‘Bank’ is derived from
the German word ‘Back’, which means joint stock fund. It is therefore so much
difficult to decide as to which opinion is correct.
Banking in fact is primitive as human society, forever since man came to
realize the importance of money as a medium of exchange, the necessity of a
controlling or regulating agency or institution was naturally felt. Perhaps it was the
Babylonians who developed banking system as early as 2000bc. It is evident that the
temples of the Babylon were used as ‘Banks’ because of the prevalent respect and
confidence at the clergy.
At the time of independence there were 631 offices of the scheduled banks in
Pakistan, of which 487 were located in West Pakistan alone. As a new country with
resources it was very difficult for Pakistan to run its own banking system immediately.
Therefore the expert committee recommended that the Reserve Bank of India should
continue to function in Pakistan until 30, September 1948, so that problems of time and
demand liability, coinage currencies, exchange etc, could be settled between India and
Pakistan. The non Muslims started transferring their funds and accounts to India. By
the end of June 1948, the number of officers of scheduled banks in Pakistan declined
from 631 to 255. There were 19 foreign banks with the status of small branch offices
that were engaged solely in export crop from Pakistan, while there were only two
Pakistani institutions, Habib Bank, and Australasia Bank, the customers of the banks
are not satisfied with the uncertain condition of banking. Similarly the Reserve Bank of
India was not in the favor of Govt. of Pakistan. The Govt. of Pakistan decided to
establish a full-fledge central bank. Consequently the Governor General of Pakistan
Quaid-e-Azam inaugurated the State Bank of Pakistan on July 1,1948 Thus a landmark
was made in the history of banking when the State Bank of Pakistan assumed full
control of banking and currency in Pakistan.
VISION STATEMENT
MISSION STATEMENT
CORE VALUES
HISTORY OF BOP
The Bank of Punjab was established in 1989 and was given the status of
scheduled bank in 1994. The Bank of Punjab is working as a scheduled commercial
bank with a network of almost 273 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 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 provides al ltypes of banking services such as Deposit in Local
Currency, Client Deposit in Foreign Currency, Remittances, Advances to Business,
Trade, Industry and Agriculture A wholly owned subsidiary of BOP First Punjab
Modaraba (FPM) was established in 1992 and is being managed by Punjab Modaraba
Services (Pvt) Ltd , a wholly owed subsidiary of The Bank of Punjab.
Lending under Islamic mode of finance, main vehicles are Morabaha, Ijarah &
Musharika to encompass requirements of corporate, commercial and individual
customers.
Liability generation through COM’s (Certificate of Musharika ) offers
attractive returns to individuals and institutional depositors for fixed tenure
instruments. FPM is working to introduce new and innovative products to enhance its
range of services.
The Central Board of Revenue presented "Excellence Award" to the Bank of Punjab
in recognition of the contribution made by the bank towards Government exchequer.
Annual Report of the Bank for the year 2005 won 5th position for "The Best
Corporate Report Award" for the Financial sector, adjudicated jointly by the Institute
of Chartered Accountants of Pakistan and the Institute of Cost and Management
Accountants of Pakistan.
The Bank was awarded Best Bank Award under 15th Bolan Excellence Awards
distributed in 2006.
Achievement Award
The Lahore Chamber of Commerce & Industry (LCCI) awarded the Bank "LCCI
Achievement Award" 2006.
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.
Finance Department
Government of the Punjab.
BRANCH NETWORK
• Lahore Region
• Faisialabad Region
• Gujranwala Region
• Rawalpindi Region
• Karachi/Queta Region
• Multan Region
• Gujrat Region
HEIRARHICAL FLOW
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The Bank of Punjab
BOARD OF DIRECTORS
Name Designation
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The Bank of Punjab
DEPOSIT DEPARTMENT
In modern times very few business enterprises are carried out solely with the
capital of the owners. Borrowing funds from different sources has becomes an
essential feature of today business enterprise. But in the case of a entire banking
system is based on it. The borrowed capital of the bank is much greater then their own
capital. Banks borrowing is mostly in the form of deposits.
These deposits are lent out to different parties. The larger the difference
between the rate at which the deposits are borrowed and the rate at which they is lent
out the greater of the profit margin of the bank. Furthermore, the larger the deposit the
larger will be the funds available for employment; larger the funds lent out the greater
will be the profit of the bank.
To receive the deposit is the basic function of all commercial banks. The bank
does not receive these deposits for save keeping purpose only, but they accept
deposits as debts. When banks receive deposit from a customer, the relationship of a
debtor and creditor is established where by the customer become the creditor and the
bank a debtor. When the bank receives amount of deposit as a debtor, it becomes the
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The Bank of Punjab
owner of it. It may, therefore use it as deems appropriate. But there is an implicit
agreement that the amount owned would be paid back by the bank to the depositor
after a specified period.
NATURE OF DEPOSIT
CURRENT DEPOSIT
Current deposit are those which are payable to bank whenever demand by the
customer. Bank doesn’t pay any profit on current deposits. There are of different
scheme of saving deposits, which are classified under different duration purpose and
rate of interest. Fixed deposits are those which are by the bank under the conditions
that will not be payable on demand but will be payable under fixed or determinate
future time date.
SAVING DEPOSIT
This type of accounts is one step towards the Islamization of banking system
in Pakistan. There are two types of PLS Accounts.
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The Bank of Punjab
Under PLS saving account the depositor undertakes to share profit or loss on the
deposits earned or sustained by the bank. Secondly the bank is at the liberty to invest
the funds of the deposits in any avenue, it deems fit. The PLS deposits are invested in
non-interested channels.
This kind of deposit is for a short period. The depositor may withdraw his
deposit at any time by giving seven days notice to the bank. This type of deposit
facilitates the depositor to withdrawn his amount with interest of the deposited period.
CALL DEPOSIT
Call deposits are the sorts of deposits, which are deposited with the banker
against any tender. This is without interest deposit. This may be with interest provided
the depositor has agreed to keep this amount with the bank for some fixed period.
ACCOUNT OPENING
The necessary condition for a customer, who wants to open an account with the bank,
is introduction, which is preferably by the bank officers or any account holder of the
bank. The different categories of accounts that are available are as under.
• Individual Account
• Joint Account
• Partnership Account
• Limited Company Account
• Clubs, Society, Association, or Trust Account
• SNTD
• TDR
• Foreign Currency Deposit
The general banking department performs various functions among them the
first and most important function is Account Opening. The bank reserves the right to
open any account, which in its opinion is suitable as a customer. The process of
opening an account is very simple and any body that would like to open his account
could do it easily without any difficulty.
The person would like to open his account is required to meet with the manager
or second officer, who will give him an Application form specifically used for
account opening. Along with the form a card for specimen signature is also supplied
to the customer. Manager has every right not to accept this contract if he is not
satisfied with the details provided by the customer. But in case the contract is
acceptable to both, the next step is official account opening.
This begins with the Account Opening Register which can be thought as a
customer’s master file. The manager records the necessary details into this register5
and allots an “Account Number” from this account opening register. This register is
maintained for each type of accounts and the account numbers are allotted serially.
After opening the account every applicant’s date is entered in the computer to
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The Bank of Punjab
maintain the safe record and application form is also safely put off, so that it can be
available whenever it is needed. Checking officer is responsible to tally the manual
data with computerized account opening file. For fix deposit only the application
form is needed, which is prepared manually, because most of the procedures of fix
deposit is done manually. Signature specimen card contains three signatures of the
applicant, applicant account number, account type, branch code, and title of account.
It will be attached with the account opening form. Banker uses this card when he
receives the cheque, he compares signature on the cheque with the Specimen card, for
avoiding the frauds.
CLEARING DEPARTMENT
This department receives the cheque and other negotiable instruments drawn on
local branches of other banks. State bank of Pakistan has clearing house, in which
cheque, and other negotiable instruments are brought by each local bank
representatives and the mutual claims of each bank on other and offset and a
settlement is made by the payment of difference. Clearing system is help full for both
the customer and saving currency, time and labor.
• Cheques
• Demand Drafts
• Telegraphic transfers
• Mail Transfers
• Pay Order
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The Bank of Punjab
• Dividend Warrants
CLEARING
Any instruments which drawn on BOP branches and other banks in same city
that’s instruments are called clearing. A clearing and date stamp is a fixed on these
instruments these are two types of clearing!
• Outward Clearing
• Inward Clearing
Inward clearing means the cheque drawn on BOP and outward clearing means the
Cheques drawn on others
OUTWARD CLEARING
INWARD CLEARING
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The Bank of Punjab
Deposit held by bank at SBP serves as check clearing and collection balances.
Rather than physically transferring funds between banks, check clearing and
collection can be done by simply debiting or crediting a bank’s account at SBP.
REMITTANCE DEPARTMENT
TYPES OF REMITTANCE
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The Bank of Punjab
PROCEDURE
2) A credit voucher is filled in order to get the excise duty and exchange
commission.
3) The sender deposits the total amount of the two vouchers i.e. the debit and credit
vouchers.
4) Then the cashier sends the cash receipt voucher to the accounts department and
the account records the amount paid in his cash scroll.
5) Accountant gives the DD leaf along with the DD voucher to his assistant who
records the sender’s name, amount and receiver’s name. After writing all the
information in the DD register he gives it to the officer along with the DD for
authentication.
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The Bank of Punjab
6) After authentication the DD is handed over to the sender and bank sends the
advice to the concerned branch. So when the party presents the DD in the
concerned branch its payment could be made.
PARTIES INVOLVED
MAIL TRANSFER
It is the transfer of money from one branch to another branch of the same bank
through mail service. In mail transfer there is no need of advice as the amount is
directly credited to the receiver’s account.
PROCEDURE
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The Bank of Punjab
1) First a voucher is filled in whish the sender writes the amount to be sent, name,
account number of the receiving person with the branch name and date.
2) A credit voucher is filled in order to deduct exchange, postage charges according
to the amount of the mail transfer.
3) The sender deposits the total amount in the cash department.
4) The cash officer gives the vouchers to the officer after affixing received cash
stamp and writing the amount in red ink.
5) Then the officer writes the amount paid in the cash scroll and gives the MT to his
assistant.
6) MT leaf is filled according to the information provided in credit voucher. He also
writes the same information in the MT register. Then he gives the MT leaf and
MT register to the officer for authentication.
TELEGRAPHIC TRANSFER
This is the most urgent method of remitting the money from one place to
another place. This method is used when the sender desires to send urgently, in this
case the sender request the manager of the branch to issue TT.
PROCEDURE
For sending the TT the manager and officer apply a test. In the test the
manager and officer uses a coding technique. They write their own code numbers,
which is allotted, to them as the bank branch code. After making all the conformation
the concerned branch makes the payment to the receiver. If the sender wants to
convey the same message through telephone then he has to pay the charges of
telephone along with the TT charges. First the person deposit the TT amount along
with the charges through the credit voucher then his TT sent to the relevant branch.
PAY ORDER
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The Bank of Punjab
A pay order is a written order issued by the bank on its own branch, drawn
upon and payable by itself to pay a specified sum of money to the person. The
purpose of a pay order is to transfer the fund from one place to another. It is usually
not issued in favor of the parties of other cities. Usually the pay order is issued for the
local transfer of money from one person to another or from the person to any other
department. It is used for different purposes. The purpose may be the repairs of the
branch or renovation of the branch.
PROCEDURE
The procedure of a pay order varies with the nature of the purpose. If the work
is of huge amount then first the manager writes a letter to the Zonal Chief in order to
get sanction of the work. Then the advertisement of the work is given in the
newspaper in order to invite the contractors. But if the work is small then the branch
manager has discretionary power to select the party whose rate is lowest. After
finishing the work the contractor submits the bill of work on his stamp pad. Then the
bank issues a pay order, against the pay order the contactor gets the amount from the
issuing branch.
.ACCOUNT DEPARTMENT
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The Bank of Punjab
TYPES OF VOUCHERS
• Debit Voucher
• Credit Voucher
These two types of vouchers are again classified under following types: -
• Cash voucher
• Transfer voucher
• Clearing voucher
All the daily transaction in cash, transfer and clearing is done through these
vouchers. A sheet is prepared on which all the vouchers passed during one day are
consolidated and summarized. This sheet is called supplementary sheet. There are two
types of supplementary sheet.
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The Bank of Punjab
Paid sheet is used for all debit vouchers and receipt sheet is used for all credit
vouchers.
CASH BOOK
Cash book is prepared daily to keep the record of daily paid vouchers. Cash
book contains the opening balance and the closing balance of a working day. Before
writing and balance the cash book firstly there is needed to properly arrange all the
vouchers of that day.
One of the functions of accounts department is to maintain and update the term
deposit ledgers and books manually. Term deposit receipt or TDR ledger is updated
after every month for estimating profit on customer’s accounts. Accountant prepares
different ledger for all schemes of term deposit. With the help of TDR ledger
accountant prepares “provisional ledger”. From this ledger accountant calculate the
monthly product of each account and estimate the profit for a half-year. The
semiannual profit on each account will be the expenses of branch.
Most of the daily working is done through ledgers. In BOP all the daily
transaction in deposit, cash, clearing, transfer, remittance and advance are performed
these daily ledgers; accounts department receives the following output of general
ledger.
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The Bank of Punjab
The formats of all these ledgers are same. They contain the following head
account no. description, previous balance. Codes are assigned to all these items.
Income will be credited in the branch account and expenses will be debited I the
branch at the month end.
All the expenses of circle, regional, audit, inspection office is debited in the
head office account, because it is the responsibility of the head office to bear the
expenses of its offices. For all the heads of general ledger there is closing balance and
opening balance. These ledgers are helpful in preparing the daily, monthly,
semiannually and yearly statements. Some of these statements are prepare for the
purpose of record keeping of branches and some are prepared to send to the circle
office, head office and state bank of Pakistan.
Some of these statements are
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The Bank of Punjab
BILLS DEPARTMENT
This department deals in bills for collection for all kinks such as cheque, draft,
and pay orders, call deposits etc. with outstation branches of BOP or with other banks.
It provides service to their customer to get payment from the nearer bank at nominal
charges. The four main heads of bill department is.
Bills department receive cheque or other of bills from its kinks client whose
account must be opened in that branch. The branch forwards the check with schedule
or covering letter to that branch on which bills is drawn. The checking officer of bills
department will cross the cheque with special bank stamp before forwarding the
cheque.
OBC register is also maintained for proper record keeping of outward bills.
This register is updated two times once at the time of receiving bill from clients and
the other when the confirmation advice of this cheque is received from the payable
branch. Bank gets a commission Rs. 25/- and courier charges Rs. 40/- on the service.
The branches which receive bill have to verify these bills for payment. The party
account must be opened in that branch. The responsibility of this branch is to verify
the bills for collection with in three days and send the advice to the originating
branch.
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The Bank of Punjab
In case of verification of bills is approved, banks debit the account of the respective
account holder and send a debit advice to the originating branch and at the same time
credit the head office account for inward bills IBC register is maintaining for keeping
the proper record of the bills.
Originating branch receives the documentary bills from their clients and sent
them to out station branches of the same bank or other bank. Customer account must
be opened in that branch. The documentary bills are i.e. trust receipt, railway receipt,
sales invoice, receipts of courier service etc. bank gets as commission 0.35% plus
postage charges plus courier service charges of this service. Seller and producer both
can avail the facility of bank in case of selling and purchasing their product or goods.
Bank receives the documentary bills from the other outstation branches of the
same banks or other banks for collection the amount from purchaser.
In this case back acts as a buyer’s bank, when bank receives the documentary bills
they send intimation to buyer about his arrival of goods. If the buyer is the account
holder then bank will debit his account otherwise purchaser deposits the amount of
the bills. Bank hand over these documents to purchase, on behalf of which buyer
receives the goods. Bank also charges commission
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The Bank of Punjab
ADVANCES/CREDIT DEPARTMENT
It is the loan function, which produces the major person of bank’s income, and
as such it is the major areas of professional banker’s concern and attention.
• Disposal
• Remuneration
• Suitability
FORMS OF LENDING
RUNNING FINANCE
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The Bank of Punjab
DEMAND FINANCE
This is common form of financing to commercial and industrial concerns and
is mad available either against pledge or hypothecation of goods produce or
merchandise. In Demand Finance the party is financed up to a certain limit either at
once or as and when required. The party due to facility of paying mark-up only on the
amount it actually utilizes prefers this form of financing
.
• Ordinary Shares
• Preferred Shares
It can be
• Quoted or Unquoted
• Registered
• Bearer
• Inscribed
A mortgage is the transfer of and interest in specific immovable property for the
purpose of securing the payment of the money, advanced or to be advanced. By way
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The Bank of Punjab
of loan, and existing debts or the performances of the engagement this may rise the
pecuniary liability.
The transfer is called the ‘mortgager’ and the transferee the ‘mortgagee’ the principal
money and interest of which payment is secured for the time being and instrument by
which the transfer is effected, is called the letter of the mortgage deed.
Availability of adequate flows of credit for industry and agriculture are a sine qua non
for the growth and development of an economy. This acquires added importance
when agriculture is the mainstay of the economy as also the sector where the bulk of
the poor are concentrated. Growth and productivity in Pakistan's agriculture has
slowed down in recent years and is, therefore, of serious concern given its importance
for the economic prosperity of the country. Apart from various other weaknesses in
the infrastructural support of the agricultural sector, inadequacy and lack of efficacy
of credit, flows to support agriculture related activities has been a major constraining
factor.
Agriculture is the largest sector of the economy. It contributes 25 percent to GDP,
provides raw materials to 80 percent of industry and employment to over 50 percent
of the population. This is a sector that has the shortest gestation period for
investments and, therefore, a remarkable capacity to bring about a turn around in the
economy. This important sector in Pakistan is suffering from a number of maladies
and is consequently witnessing stagnation in productivity.
Due to policy and administrative exigencies, the savings in the agriculture sector
remain low and, therefore, the sector has perpetually remained capital starved. The
pricing of input and output in agriculture over the years has forced the majority of
farmers in Pakistan to plough back their incomes into agriculture and non-institutional
credit, and has more often than not served to sap their potential earnings. Needless to
say, that shortage of savings and lack of availability of capital is one of the major
reasons for poverty in the country. The agricultural and rural sectors in Pakistan in
general and in Punjab in particular are, therefore, suffering from severe under-
development. Under a desirable development model, Punjab can:
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The Bank of Punjab
Control massive migration to the urban centers that in turn is causing a number of
social, administrative (i.e. law and order) and economic problems for the urban
areas
Elevate poverty and improve the income generating capacity of the agri-based
population.
AGRICULTURE SCHEME
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The Bank of Punjab
SERVICES
Commercial Banking
Corporate & Investment
Cash Management Services
Utility Bills
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The Bank of Punjab
Lockers
COMMERCIAL BANKING
The Commercial Banking Group has been formed to cater the needs of small &
medium size customers for increasing Bank’s business significantly with clear focus,
repositioning of resources and active marketing to improve Bank’s profitability.
Commercial Banking will deal with customers having sales turnover and aggregate
credit exposure as per benchmarks prescribed in the SBP’s Prudential Regulations.
This Group’s emphasis will be to meet necessary business needs of customers which
are numerous as compared to CIB clients but their individual credit requirements are
relatively much smaller. In view of this peculiar nature of this business segment that
involves a higher turn over a much wider network is needed. The SME will
concentrate on rebuilding its set up which suits to its peculiar needs on all locations.
Corporate Banking
The BOP Corporate Banking endeavors to market new clients and retain the existing
relationships and build market share by offering superior services, competitive pricing
and wide product range to valued corporate clients including Public Sector Entities
and Multi National Companies. BOP facilitates its customers for all sorts of their
banking needs including working capital, trade finance, BMR and project financing
etc. BOP has worked on some of the local markets’ largest and most complex
transactions and infrastructure projects.
Investment Banking
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The Bank of Punjab
Investment Banking Unit offers full spectrum of services, which include TFCs,
Syndicated Finances, Structured Finances, Leveraged Buyouts, Project Finance,
UTILITY SERVICE
Customers can pay their utility bills e.g. electricity, water gas, telephone, mobile, at
any of our 272 branches across Pakistan. For your convenience bills are collected on
all working days from 9:00 am to 5:00 pm (Monday to Friday) except lunch & prayer
breaks and from 9:00 am to 1:30 pm on Saturday.
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The Bank of Punjab
You can also pay your bills by availing our drop box facility. Just drop your Cheque
along with bill at your branch and collect the receipt in the evening, avoid the hastle
of standing in queues and save your precious time
BOP LOCKER
Discover peace of mind, enjoy personalized service and operate your locker in a
friendly and pleasant environment at The Bank of Punjab.
Small Rs.1,200
Medium Rs.1,800
Large Rs.3,000
ATM Facility
On-Line Banking
Lockers Facility
Demand Drafts
Letter of Credit
Pay Order
Mail Transfer
Debit Card
Collection of Utility
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The Bank of Punjab
Through the ATM’s 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 account holder. Cash withdrawal limit
is up to Rs.20, 000 per day. Annual charges of ATM is Rs.250/- per card.
ONLINE BANKING
LOCKERS
It is one of the utility services that BOP provides to their customers for
keeping jewellery, important documents and other valuables.
DEMAND DRAFT
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.
LETTER OF CREDIT
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The Bank of Punjab
BOP is offering its business customers the widest range of option in the area
of money transfer. BOP’s 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.
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.
MAIL TRANSFER
Moves money safely and quickly from BOP Mail Transfer service. The rates
for this service is quiet impressive as compare to the market.
DEBIT CARD
1. The front of the card will have the following matter on it:
• Card Holder’s Name
• International Bin Number (6 Digits - XXXXXX)
• Magnetic Strip
• Signature Panel
• Conditions of Usage
• M-Net and M-Net logo
LIMITATIONS
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The Bank of Punjab
FINANCIAL ANALYSIS
To analyse the financial position of BOP, different tools are use, which includes Ratio
Analysis, Common size Analysis of the last five years. Importance of Financial Analysis
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The Bank of Punjab
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The Bank of Punjab
BALANCE SHEET
2008 2007
(Rupees in ‘000)
Assets
Cash and balances with treasury banks 10,685,057 14,210,302
Balances with other banks 2,178,455 1,927,662
Lendings to financial institutions 633,333 2,450,000
Investments 22,711,980 73,461,695
Advances 131,731,158 133,893,585
Operating fixed assets 3,471,838 3,252,759
Deferred tax assets 8,388,162 -
Other assets 6,109,137 5,805,097
185,909,120 235,001,100
Liabilities
Bills payable 1,219,801 937,647
Borrowings 12,278,773 17,842,915
Deposits and other accounts 164,072,532 191,968,909
Sub-ordinated loans -- -
Liabilities against assets subject to finance lease 30,632 40,321
Deferred tax liabilities - 2,205,530
Other liabilities 4,564,257 3,009,984
182,165,995 216,005,306
Net Assets 3,743,125 18,995,794
Represented By
Share capital 5,287,974 4,230,379
Reserves 7,427,232 7,427,232
(Accumulated loss) / Un-appropriated profit 3,452,842
(7,658,686)
5,056,520 15,110,453
(Deficit) / Surplus on revaluation of assets - net (1,313,395) 3,885,341
3,743,125 18,995,794
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The Bank of Punjab
INCOME STATEMENT
2008 2007
(Rupees in ‘000)
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The Bank of Punjab
Balance Sheet
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The Bank of Punjab
RATIO ANALYSIS
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The Bank of Punjab
Gross spread ratio defines the total spread of interest between borrowing and
lending.Spread: Difference between funded revenue as a percentage of average
earning assets and the cost of funds as a percentage of average paying funds.
The higher the spread the higher will be the profit margin.
GSR= Rev/CGS
GSR= (Mark-up earned – Mark-up Expense)/Mark-up earned
GSR is 2nd highest all over the globe in Pakistan.
GSR of the bank is decreasing because of the decrease in margin, a SBP rise up the
interest rates on the deposits.
80
70 72
60
56
50
40 %
35
30
20 21
10
6.42
0
2004 2005 2006 2007 2008
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The Bank of Punjab
100
59.19 66.11 67.89 53.71
50
0
-50 2004 2005 2006 2007 2008
-100
%
-150
-200
-250
-300
-316.29
-350
tim es
5 5.08
3 2.79 times
2 1.94
1.65
1.32
1
0
2004 2005 2006 2007 2008
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The Bank of Punjab
100
0
2004 2005 2006 2007 2008
-50
%
-100
-150
-200 -189.03
-250
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The Bank of Punjab
tim es
0.14
0.12 0.12
0.1 0.1
0.09
0.08
0.07 tim es
0.06 0.06
0.04
0.02
0
2004 2005 2006 2007 2008
3
2.65 2.76
2.5 2.49
2.22
2
1.5
%
1
0.5
0 -0.05
2004 2005 2006 2007 2008
-0.5
tim es
12
10 10.23
9.31
8 7.71
7.25
6
tim es
4
0
-0.6
2004 2005 2006 2007 2008
-2
120
80
65.9
60
EPS
40 DIVIDENT
VALUE
20
9.08 10.01 13.14 10.51 11.5
4 5.2 3.25 3.5
0 0
2004 2005 2006 2007 2008
-20 -19.02
-40
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The Bank of Punjab
C.A
14
12.83 12.78
12
10 10.09 9.69
8
C.A
6
4
2 1.92
0
2004 2005 2006 2007 2008
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The Bank of Punjab
SWOT ANALYSIS
SWOT analysis is an acronym that stands for strengths, weakness,
opportunities, and threats SWOT analysis is careful evaluation of an organization’s
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 organization’s mission by
:
• Exploiting an organizations opportunities and strength.
• Neutralizing it threats.
• 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
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The Bank of Punjab
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.
STRENGTH
• The Bank officers of BOP are considered as one of the most able professionals in
the banking world. 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.
• 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
WEAKNESSES
• 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.
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The Bank of Punjab
• 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.
OPPORTUNITIES
• 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
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
THREATS
• 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
can’t 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.
PEST ANALYSIS
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The Bank of Punjab
PEST analysis of any industry investigates the important factors that affect the
ECONOMICAL
industry and influence the companies operating in the sector. PEST stands for
• GDP
Political, Economic, Social and Technological analysis. The PEST Analysis is a tool
• MONSOON
to analyze the forces that drive the industry and how those factors can influence the
• INFLATION
industry. • SAVINGS &
ACCOUNTS
• AGRICULTURE
CREDIT
• INTEREST RATES
POLITICAL • RAISING LIVING
ECONOMICAL STANDRED
• DISPOSABLE
SOCIO CULTURAL INCOME
TECHNOLOGICAL
SOCIOCULTURAL
• CHANGES IN
LIFE STYLE
• LITERACY
RATE
• DEMOGRAPHIC
OF LARGE
POPULATION
• SHIFT
TOWARDS THE
NUCLEAR
FAMILY
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The Bank of Punjab
POLITICAL
• GOVERNMEN
T POLICY &
BUDGECT
• BUDJECT
MEASURES
Organization
• MONATORY
POLICY
• FDI LIMIT
POLITICAL FACTORS
Government policies affect the banking sector. Sometimes looking into the
political advantage of a particularTECHNICAL
party, the Government declares some measures to
their benefits like waiver of short-term agricultural IN
• TECHNOLOGY loans, to attract the farmer’s votes.
BANKS
By doing so the profits of the bank get affected. Various banks in the cooperative
• CORE BANKING
sector are open and run by the politicians. They exploit these banks for their benefits.
SOLUTIONS
• ATMvarious chairmen of the banks. Various policies
Sometimes the government appoints
are framed by the SBP looking• atINTERNATE
the present situation of the country for better control
• I.T SERVES AND
over the banks MOBILE
BANKING
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The Bank of Punjab
MONETARY POLICY
FDI LIMIT
The move to increase Foreign Direct Investment FDI limits to 49 percent from
20 percent during the first quarter of this fiscal came as a welcome announcement to
foreign players wanting to get a foot hold in the Indian Markets by investing in
willing Indian partners who are starved of net
worth to meet CAR norms. Ceiling for FII investment in companies was also
increased from 24.0 percent to 49.0 percent and have been included within the ambit
of FDI investment
ECONOMIC FACTORS
Banking is as old as authentic history and the modern commercial banking are
traceable to ancient times., banking has existed in one form or the other from time to
time. Every year SBP declares its 6 monthly policy and accordingly the various
measures and rates are implemented which has an impact on the banking sector. Also
the Union budget affects the banking sector to boost the economy by giving certain
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The Bank of Punjab
concessions or facilities. If in the Budget savings are encouraged, then more deposits
will be attracted towards the banks and in turn they can lend more money to the
agricultural sector and industrial sector, therefore, booming the economy. If the FDI
limits are relaxed, then more FDI are brought in India through banking channels
It is great news that today the service sector is contributing more than half of
the Indian GDP. It takes PAKISTAN one step closer to the developed economies of
the world. Earlier it was agriculture which mainly contributed to the GDP. The
Pakistani government is still looking up to improve the GDP of the country and so
several steps have been taken to boost the economy. Policies of FDI
SBP controls the Interest rate, which is based on several monetary policies.
Recently SBP has reduced the interest rate which stimulates the growth rate of
banking industry. Call money rates (borrowing & lending) were in the range of
1.50/3.47 per cent as compared with 5.25/11.00 per cent on the corresponding date of
last year
INFLATION RATES
Inflation represents a rise in general level of prices of goods and services over
a period of time. It leads to erosion in the purchasing power of money. Resultantly,
each unit of currency buys fewer goods and services
Different fiscal and monetary policies have curbed the Inflation rate. To fight against
the slowdown of the Economy, Government of Pakistan & SBP took many fiscal as
well as monetary actions. Clubbed with fiscal & monetary actions, decreasing
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The Bank of Punjab
commodity prices, decreasing crude prices and lowering interest rate, we expect that
Indian Economy could again register a robust growth rate in the year 2009-10
AGRICULTURE CREDIT
Agriculture has been the mainstay of our economy with 70% of our population
deriving their sustenance from it. In the recent past, the sector has recorded a growth
of about 4% per annum with substantial increase in plan allocations and capital
formation in the sector. The target for agriculture credit flow for the year 2009-10 is
being set at Rs.3,25,000 crore. To achieve this, I propose to continue the interest
subvention scheme for short term crop loans to farmers for loans upto Rs.3 lakh per
farmer at the interest rate of 7% per annum. For this year, the government shall pay an
additional subvention of 1% as an incentive to those farmers who repay their short
term crop loans on schedule
Socio culture factors also affect the business. They show in which people
behave in country. Socio-cultural factors like taboos, customs, traditions, tastes,
preferences, buying and consumption habit of people, their language, beliefs and
values affect the business. Banking industry is also operates under this social
environment and it is also affect by this factor.
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The Bank of Punjab
These factor are changing continuously people’s life style, their behavior,
consumption pattern etc. is changing and also creating opportunities and threat for
banking industry. There are some socio-culture factors that affect banking in India
have been analyzed below.
Life style of Pakistan is changing rapidly. They are demanding high class
products. They have become more advanced. People want everything car, mobile,
etc.. what their fore father had dreamed for. Now teenagers also have mobile and
vehicle. Even middle class people also want to have well furnished home, television,
mobile, vehicle and this has opened opportunities for banking secter to tap this
change. Every thing is available so it has become easy to purchase anything if you do
not have lump sum.
POPULATION
Increase in population is one of the important factor, which affect the private
sector banks. Banks would open their branches after looking into the population
demographics of the area. Percentage of deposit in any branches of banks depends
upon the population demographic of that area. About 70% of population is below 35
years of age. They are in the prime earning stage and this increase the earning of the
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The Bank of Punjab
LITERACY RATE
TECHNOLOGICAL FACTORS
TECHNOLOGY IN BANKS
ATM
The latest developments in terms of technology in computer and
telecommunication have encouraged the bankers to change the concept of branch
banking to anywhere banking. The use of ATM and Internet banking has allowed
‘anytime, anywhere banking’ facilities. Automatic voice recorders now answer simple
queries, currency accounting machines makes the job easier and self-service counters
are now encouraged.
Credit card facility has encouraged an era of cashless society. Today MasterCard and
Visa card are the two most popular cards used world over. The banks have now
started issuing smartcards or debit cards to be used for making payments. These are
also called as electronic purse. Some of the banks have also started home banking
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The Bank of Punjab
Today banks are also using SMS and Internet as major tool of promotions and
giving great utility to its customers. For example SMS functions through simple text
messages sent from your mobile. The messages are then recognized by the bank to
provide you with the required information. All these technological changes have
forced the bankers to adopt customer-based approach instead of product-based
approach. Technology advancement has changed the face of traditional banking
systems. Technology advancement has offer 24X7 banking even giving faster and
secured service.
It is the buzzword today and every bank is trying to adopt it is the centralize
banking platform through which a bank can control its entire operation the adoption
of core banking solution will help bank to roll out new product and services.
INTERNAL CONTROL
To me the major and the most important flaw in the BOP is lack of internal
controls and inter communication between different branches of the bank. As far as
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The Bank of Punjab
financial aspect is concerned there is no proper system is configured that’s why there
is always a risk of big frauds with in the bank. I during my internship also pointed out
that point but no one bothered. To me the bank should install some proper resource
planning and controlling systems like other banks do i.e., oracle financials etc.
PROFESSIONAL TRAINING
BOP staff lacks professionalism. They lack the necessary training to do the job
efficiently and properly. Although staff colleges are in all major cities of the Punjab
but they are not performing well. For this purpose these staff colleges should be
reorganized and their syllabus should be made in such a way which can help the
employee understand the ever-changing global economic scenario.
Banking council of Pakistan should also initiate some programs to equip the staff with
much needed professional training.
DELEGATION OF AUTHORITY
Employees of the bank should be given a task and authority and they should
be asked for their responsibility. The sense responsibility in employees mind is one of
the most important factors in the success of any organization.
PERFORMANCE APPRAISAL
During Internship I felt that there is no or very less appraisal of any ones cool
performance. The manager should strictly monitor the performance of every staff
member. All of them should be awarded according to their performance and result in
the shape of bonuses to motivated and incite them to work more efficiently.
TRANSFERS
Transfer is not properly carried out. Some of the employees are continually
serving at the same post. They are simply rotated at the same branch. Therefore it is
recommended that evenly rotation of every employee should take place after every
three years in different braches of the bank.
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The Bank of Punjab
TECHNOLOGICAL IMPROVEMENT
I would like to suggest that at least all the main branches of BOP should be
fully computerized in order to expedite the dealing process among bankers and their
customers. Every department should be provided a computer with adequate training
STAFF RELATIOSHIP
Good relationship among staff member leads to the peak performances in any
organization. I observed that the staff relationship was normal other wise but some
time I noticed that there exists little conformity among the staff members. Another
syndrome from which the staff suffered was that all of them considered themselves
more important than others.
In the branch during my internship I saw that when some of the employees are
transfer to other places, due to their relation with influential people and with top
management they can cancel their transfer in few weeks, when they are unsatisfied at
that place.
So I suggest that in the organization there should be no favouritism, nepotism and
politics and their transfer and promotion should be made on merit and according to
the rules and regulations of the bank and provided favourable environment to the
employee to show their performances.
MARKETING POLICY
The branch should adopt various marketing strategy and promotion strategy to
promote the bank and its product.
The most important in my opinion is personal marketing; it is the most effective of all
when you think in term of branch level. But on the whole organization level, they
should arrange the seminar with in the bank and outside the bank. They should do
more advertising through newspaper and media and through channel of personal
contacts.
Great care should be taking while extending the loan. Loans should be
awarded against reasonable securities, where market value should be equal to the loan
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The Bank of Punjab
In this section some recommendations for those students who are planning for
an internship at BOP particularly and in any other bank generally. The most important
of all is the difference between what we learn from the books i.e. the theory and what
actually is done i.e. in practice. This difference is described in detail below:
During my internship I observed that other internees in the bank use to stick
with one department only. An internee with specialization in Finance was of the view
that he should be in Finance department same was the case with other specialized
Internees. But I would suggest that one must work in every department for some time
to gain a hand on experience of all the departments. As in real working environment
employee have to coordinate with other departments, so he/she must know what the
other departments operations are and how they work.
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. In accounting, banks don’t prepare worksheet, but part of
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The Bank of Punjab
worksheet is prepared like trial balance, but little differences, theory and practice has
substantial relationship. 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. The difference is there in the case of loans.
Theory talks about four or five terms of loans that is cash finance, overdraft, loans
etc., but in practice there are some more terms used like running finance, demand
finance etc. All other concepts of remittances, bills, foreign exchange deposits, letters
of credit are in accordance with theory almost. So for a internee it is more important
to learn new things which he/she has never heard about in his/her course book.
To me, Theory gives you 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. In practical professionalism and firm’s
environment is each and every thing. Professional life only builds on the knowledge
based on books even though it may only use 1% of the theoretical knowledge.
CONCLUSIONS
By analyzing the financial statements of the bank, I came across to know that
it is one of the most growing bank in the subcontinent. Now they should carry on with
the present management which too k it from one of the ordinary bank to this level. No
doubt professionalism and internal controls of the bank are one of the major issues
which may results some major losses to the bank. Bias in hirings and between
colleagues should be removed.
Bibliography
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The Bank of Punjab
Online References
• http://www.bop.com.pk
• http://www.sbp.org.pk
• http://www.business-standard.com
• http://www.sheshunoff.com
Personal References
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The Bank of Punjab
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