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ACKNOWLEDGEMENT

I would like to thank Allah Almighty for blessing me with his divine support throughout the course of my internship. My deep sense of gratitude to my supervisor, Ms. Shaista Iqbal, for all her support, encouragement and kind guidance during my internship. I am very thankful to Mr. Saleem Ahmad for teaching me the procedure of account opening. I also like to express my gratitude to Mr. Sabir Habib who has given me great help and guidance in Clearing department. I would like to extend my thanks to my fellows for constructive criticism and valuable suggestions. Finally I like to convey my thanks to my family for their moral, unconditional and selfless support throughout the course of intership.

About Allied Bank


Allied Bank Limited was the first bank to be established in Pakistan. It started out in Lahore by the name Australasia Bank before independence in 1942; was renamed Allied Bank of Pakistan Limited in 1974 and then Allied Bank Limited in 2005. In August 2004, because of capital reconstruction, the Banks ownership was transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group. Today, with its existence of over 60 years, the Bank has built itself a foundation with a strong equity, assets and deposit base. It offers universal banking services, while placing major emphasis on retail banking. The Bank also has the largest network of over 800 online branches in Pakistan and offers various technologybased products and services to its diverse clientele.

VISION
To become a dynamic and efficient bank providing integrated solutions in order to be the first choice bank for the customers.

MISSION
To provide value added services to our customers

To provide high tech innovative solutions to meet customers' requirements To create sustainable value through growth, efficiency and diversity for all stakeholders To provide a challenging work environment and reward dedicated team members according to their abilities and performance To play a proactive role in contributing towards the society

CORE VALUES
Integrity Excellence in Service High Performance Innovation and Growth

ORGANIZATIONAL STRUCTURE
Commercial & Retail Banking Group
The Commercial & Retail Banking Group is the core business arm of the bank generating a major share in income. It caters to the needs of the customers from almost every segment of life including Individuals like salaried persons, students, senior citizens, house wives and Businesses from small shops and cottage industries to middle / large size organized businesses. CRBG offers full range of Deposit and Advances products from general to specific & tailor-made solutions to meet the customer needs. This includes various deposit products, Commercial & SME Loans, Agriculture Loan, and Trade Facilities, Banc assurance, online banking including instant transfer of funds within the entire

banking network. The Group is driven by the ambition to continue contributing as the leading Business, serving our 2.5 million longstanding customers with candid and reliable banking services. The Commercial & Retail Banking group is organized under four geographical territories consisting of 28 regions and over 800 branches (100% online) spread across the country for providing quality banking services to the customers. CRBG has always been focusing to establish Allied Bank as market leader by proactively identifying needs of its customers and satisfying those needs in true spirit. Accordingly innovative and unique business products were offered from the platform of CRBG including Allied Advance Profit Scheme, Allied Business Account, Allied Business Finance and Agriculture Finance Products & Banc assurance products which significantly contributed to our customer convenience. As a matter of fact Allied Advance Profit Scheme was first of its kind in the banking history of Pakistan. In terms of commercial assets, focus was laid on various sectors of economy and large number of customers was brought to the fold of the bank from different sectors, such as, Rice, Cotton, Pesticide, Wheat, traders and exporters. CRBG at ABL continued with its commitment to facilitate existing customers and expanding its reach with a comprehensive plan for branches & ATM network expansion.

Consumer
In line with the Banks aim to provide a host of products and services to its customers, substantial ground work has been done to establish a strong consumer banking business. Furthermore, to achieve this objective, professionals from across the industry have been recruited into areas of product development, sales,

credit policy, research, consumer analytics, call centers and service quality departments. The consumer portfolio, comprising the debit card, credit cards, auto loans, personal loans and mortgages will be established phase by phase. However, we are confident that our strengths, together with our largest network of online branches, a superior technology platform and a big customer base, will take the Banks profitability to new heights.

Corporate
The Corporate Investment Banking Group (CIBG) holds the Banks loan portfolio and enjoys a leading position in corporate lending in the country. It offers a wide range of financial services to medium and large sized public and private sector entities. These services include, providing and arranging tenured financing, corporate advisory, underwriting, cash management, trade products, corporate finance products and customer services on all bank related matters. The Bank has played a key role in the countrys economic growth by providing a vast amount of funds to large industrial and corporate sectors of the economy. And because it has played a big part in major investment and corporate banking transactions, Allied Bank is considered one of the top investment banks in the country today.

Branches & ATMs


Online Banking facilities are available to customers maintaining accounts at all online branches across the country. The following facilities are available: Cash Deposit for immediate credit to a remote branch. Remote Cheque Encashment from any online branch.

Instant Funds Transfer between any 2 online branches. Remote Balance Inquiry and Statement of Account.

Fields of Activities
Account Opening
Receiving of deposits is the primary function of any commercial bank. Deposits are regarded as the oil for bank operations. Allied Bank Ltd has offered numerous Accounts at competitive interest rates to bring the deposits.

Types of accounts offered


The Accounts offered by Allied Bank Ltd are as follows: 1. Current Account 2. PLS deposit 3. Monthly Income 4. Foreign Currency

Nature of accounts
Individual account
In individual Accounts, single person operates Account. This type of Account is usually opened by salaried class. Just copy of national card is sufficient to open individual Account.

Joint account
As evident from the name these accounts can be jointly opened by any number of persons. The minimum

number of persons required to open a joint account is two but there is no maximum limit. All of them have to sign the application form and specimen signature cards Mandate for joint Account is also got signed by all the Account holders so that in case of death of any of the member the other person can operate the account. The options available to operate the account are 1. Either or Survivor. 2. Jointly 3. Any one of us

Account of partnership firm


The partnership firm can open Account of any type offered by Allied Bank Ltd. The documents required are 1. 2. 3. 4. Partnership Deed, Certified Copy (Form C) Registration Certificate Photocopies of National ID card of all partners Partnership Mandate (Prescribe Format)

Accounts of limited Companies


A lot of documentation is required in case of these Accounts. The following documents are required 1. 2. 3. 4. 5. Copy of Certificate of Incorporation Certificate of Commencement of Business Memorandum of Association Article of Association Copy of Resolution of the Board (Prescribed Format)

6. 7. 8.

List of Directors (Form 29, Latest Copy) Stamp of Company, which is to be affixed on the NIC copies of Directors All Documents must be verified by the Chief Executive of the company.

account opening form.

Account of illiterate
These accounts can be opened individually or jointly For men right hand impression is taken on account opening form For women left hand impression is taken on account opening form The customer has to come to the Bank himself in order to withdraw any amount of cash. The following documents are required 1. Photocopy of NIC of Account holder 2. A Passport size photograph

Account of Minor
of account of the schemes Signatures of guardian are always used to perform any transaction The following documents are required 1. 2. Birth certificate of minor Photocopy of NIC of guardian The account can be opened in any one The name of guardian is written in title

Procedure of account opening

Step 1
First of all after inquiring from the customer about what type of account he wants to open, the account opening form is got filled from the customer and is also got signed. The accounts opening form contains the following information 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. resident) 15. 16. Next of Kin (this is required so that in case of death of Type of organisation (this option is filled in case a account holder nominee gets the authority to operate Account) corporate Account is opened, in order to have information whether business is a limited company, partnership, club/society or a sole proprietorship) Currency in which the account is to be opened Type of account Title of account Address Individual/joint account General information about the customer Name of applicant Fathers/husbands name Occupation Nationality Country of residence NIC number Passport number Date and place of issue (it is required for account of non

17.

References

Step 2
After the necessary verifications laid down in Allied Bank policies and basic precautions, CRO takes two signatures on SS (signature specimen) card and get it scanned in computer for future reference.

Step 3
Afterwards, CRO gets the signature of Introducer on application form. This is very important part of account opening procedure, without this account cannot be opened. The main purpose of introduction is to ensure that the client is a suitable person to be entrusted with cheque books, which are not issued before all formalities are filled. Introducer can be client. repute Customers employer if he is of good Anyone from the staff members A well reputed customer of the bank Another bank of good repute, which can

be consulted about the business practice of the

Step 4
Afterwards, a requisition slip is also got signed by the customer so that the cheque can be issued to the customer. Two signatures

are taken from the customer on this slip. Cheque book is issued after two days of receiving the requisition slip. After giving the account number to the customer, a deposit slip of the amount with which the customer wants to open the account is filled and got signed by customer and is deposited at cash counter.

Step 5
After the account is opened A letter of thanks is send (the very same day the account is opened) to the customer in order to thank him for opening the account and ensuring that all the information about his account will be kept confidential. After issuing Letter of Thanks entry is made in Dispatch Register which has the following columns 1. 2. 3. 4. 5. 6. Date Serial number Address Destination Subject (letter of thanks) Initials

Clearing
A process by which the counter-claims of bankers are offset and balances are settled or cleared through the entries in the books of the bank acting as clearing house.

Clearing is done for within city transfers. The Clearing System is very advantageous both for banks and customers at large. In fact, it is an essential adjutant of a developed banking system. In Pakistan, State Bank of Pakistan acts as Clearing House and where there is no branch of this bank the Clearing House Function is performed by the National Bank of Pakistan. All member banks (only scheduled banks can be full-fledged members of the Clearing House) have their accounts with the State Bank.

National Institutional Facilitation Technology


Clearing House of SBP has shifted a tiresome part of its work to a private institution named National Institutional Facilitation Technologies (Pvt) Ltd. NIFT collects cheques, demand drafts, pay orders, traveller cheques,etc from all the banks branches of different within city through its carriers and send them to the

branches on which these are drawn for clearing. After branches approve the instruments drawn on them, NIFT prepares a sheet for each branch showing the number of instruments and amount in its favour and drawn on it and sends it to each branch. A similar sheet for each bank is also sent to Clearing House of SBP where accounts of banks are settled in the manner described in above example. The cheques deposited by the customers may be local or outstation cheques. The local cheques are sent for the local clearing but the outstation cheques are sent for collection.

Internally, in banks following two processes of clearing are done: 1. 2. Outward Clearing Inward Clearing

Outward Clearing
In outward clearing, cheques , demand drafts, pay orders, etc., received by parties ( account holders) are processed at bank for clearing i.e. bank collects their proceeds on the behalf of their customers. The following steps are taken by the officer. The customer deposits local cheque, PO etc alongwith deposit slip. The officer makes the following verifications. 1. 2. 3. 4. Whether cheque is post date or stale Whether cheque is local or outstation Tally amount in both figures and words Signature

Inward Clearing
In inward clearing, bank receives the cheque drawn on it. A carrier of NIFT brings these cheques along with the summary showing the details of cheques, Pay Order, Demand Draft. The following steps are taken by the officer The officer makes the following verifications 1. Three stamps on cheques

2. 3. 4. 5. 6.

Whether cheque is post date or stale Whether cheque is local or outstation Tally amount in both figures and words signature Sufficient balance in Account.

Demand Draft
A Demand Draft is an instrument in writing drawn by one branch

of a bank on another branch of the same bank for a certain sum of money; payable on demand to the order of the payee mentioned therein.

Issuance of Demand Draft against cheque


The following steps are taken to issue Demand Draft against cheque.

Step 1
The customer deposits cheque along with Demand Draft application form The application form contains the following information 1) Date of issue of Demand Draft 2) Demand Draft number 3) In favour of i.e the person in whose favour Demand Draft is issued 4) The amount of Demand Draft 5) Name and address of applicant 6) Instrument issued against whom Demand Draft

7) Charges received against issue of Demand Draft 8) Signature of applicant

Step 2
The officer makes the following verifications 1) 2) 3) Whether cheque is not post dated or stale Amount in both figures and word tally signature

Step 3
After making verifications the officer makes entries in computer "Smart Program" Dr Cr Dr Cr Customer Account Demand Draft Account Customer Account commission on remittance Account

(to deduct amount from Customer Account )

(to deduct charges) at the end of the day the following entry is made Dr Cr Demand Draft Account Head Office Account

Step 4
The officer prints 3 copies of Demand Draft. Original copy is handed over to customer, 2nd copy is retained for record and 3rd copy is send to head office for reconciliation.

Issuance of Demand Draft against Cash Step1


The customer deposits cash along with Demand Draft application form to cash department.

Step 2
The cash department makes the following entry Dr Cr Cash in hand Account sundry creditor Account

Step 3
Afterwards cash department officer affix cash stamp on Demand Draft form and forwards to remittance department.

Step 4
The officer in remittance department makes the following entry in computer "Smart Program" Dr Cr Cr sundry creditor Account Demand Draft Account commission on remittances Account

Pay Order
A Pay Order is an instrument in writing issued by bank for a certain sum of money; payable on demand to the order of the payee mentioned therein.

Issuance of Pay Order against cheque

Step 1
The customer deposits cheque along with pay order application form The application form contains the following information 1) Date of issue of Pay Order 2) Pay Order number 3) In favour of i.e the person in whose favour Pay Order is issued 4) The amount of Pay Order 5) Name and address of applicant
6) Instrument against whom Pay Order issued

7) Charges received against issue of Pay Order 8) Signature of applicant


9) Signature

of

cahier

and

two

authorised

officers

Step 2
The officer makes the following verifications 1) 2) 3) Whether cheque is not post dated or stale Amount in both figures and word tally Signature

Step 3
After making verifications the officer makes entries in computer "Smart Program" Dr Cr Customer Account Pay Order Account

(to deduct amount from Customer Account ) Dr Cr Customer Account commission on remittance Account

Step 4
After making entries, officer post the transaction in Pay Order register The Pay Order register contains the following columns 1) Date of issuing of Pay Order 2) Number of Pay Order it going on sequence wise 3) Payee i.e the person in whom favour Pay Order is issued 4) Amount of Pay Order

Issuance of Pay Order against Cash Step 1


The customer pay cash along with Pay Order application form to cash department.

Step 2
The cash department makes the following entry in computer with the amount of Pay Order plus charges Dr Cr cash in hand Account sundry creditor Account

The cash department after affixing cash stamp on the Pay Order application form forwards it to local remittance department.

Step 3

The officer in local remittance department makes the following entry in computer Dr Cr Cr sundry creditor Account Pay Order Account commission on remittance Account

Letter of Credit
Letter of credit abbreviated as LC stands at the centre of international commercial transaction, issued by the bank at the request by the importer. Letter of credit states that the bank will pay a specified sense of money to a beneficiary, normally the exporter on presentation of particular, specified document. The importer applies to the bank, say, the allied bank limited for the issuance of letter of credit. The Allied bank then undertakes a credit cheque of the reporter if the bank is satisfied with credit worthiness. It will issue a letter of credit However, the bank might require a cash deposit or some other form of collateral from the customer in addition the bank charges the importer a fee for the service typically this amount to between 5 percent and 2 percent of the value of letter of credit, Depending upon the importers creditworthiness and the size of transaction. Assume the Allied bank is satisfied with importers credit worthiness and agree issue a letter of credit the letter stated that the Allied bank will pay the Bangkok exporter for the merchandizing as long as it is shipped in accordance with specified instruction and conditions at this point the letter of credit becomes a financial contract between the Allied bank limited and The Bangkok exporter bank. The Allied bank then sends the letter of credit to the Bangkok exporter bank, say, the

Citibank tells the exporter that it has received letter of credit that he can ship the merchandizes. After the exporter has shipped the merchandisers, he draws a draft against Allied bank limited in accordance with the term of letter of credit, attaches the required document and presents the draft to his own bank, Citibank, for payment. The Citibank then forwards the letter of credit and associated document to the Allied bank limited. If all the terms and conditions in the letter of credit have been complied with, the Allied bank limited honor then draft and will send payment to the Citibank. When the Citibank receives the funds, it will pay the Bangkok exporter. As for the Allied bank limited, Once it has transferred the funds to the Citibank in Bangkok, it will collect payment from the importer. Alternatively, Allied bank limited may allow the importer sometime to resell the merchandisers before requiring payment. The Allied bank limited will treat such an extension of the payment as a loan to the importer and will charge an appropriate rate of interest.

Bill of Exchange/Draft:
Bill of Exchange is the instrument normally used in international commerce to affect payment. A draft is simply an order written by an exporter instructing an importer, or an importers agent to pay a specified amount of money at specified time. The person or business initiating the draft is known as the maker. The party to whom the draft is presented is known as Drawee.

Bill of Lading:
The third key document for financing international trade is the Bill of lading. The bill of lading is issued to the exporter by the

common carrier transporting the merchandise. It serves three purposes: it is a receipt, a contract and a document of title. As a receipt, the bill of lading indicates that carrier has received the merchandise described on the face of the document. As a contract, it specifies that the carrier is obliged to provide a transportation service in return for a certain charge. As a document of title, it can be used to obtain payment or a written promise of payment. Before the merchandise is released to the importer.

Partys involved
1. Importer 2. Issuing bank 3. Exporter 4. Advising bank Process of opening letter of credit

Mutual agreement:
First of all importer and exporter enter into a mutual agreement. The importer who is in need of some commodities approaches an appropriate exporter and asks for samples, price list and quotation. When both the parties come into an agreement then the importer places an order to exporter for the supply of certain goods.

Performa Invoices:
Exporter then prepares an important document known as Performa invoices. In performa invoice details about the contract regarding name of product, its type, quality, brand, quantity, size, color, price are stated specifically. Exporter sent it importer.

Contacting the bank:


Importer contacts the bank and requests for opening L/C in favor of exporter. Filling formal application: The bank examines the documents and asks the importer to file a formal application for the L/C, which is prescribed printed form Margin Requirements: If the goods to be imported are subject to margin requirements the importer will be asked to deposit the amount of the same. The margin requirement is fixed by the State Bank and generally it is from 10 to 20 % of the total amount for which the L/C is opened. It is a refundable amount.

Writing the L/C:


After complete processing of the application the bank opens the L/C in the favor of exporter. The L/C is also a standardized printed form. It contains almost all the details and conditions mentioned in the application. Four copies are prepared (for its own use, for importer, for exporter, for advising bank).

Dispatch of L/C:
Having completed the required copies of the L/C, the opening bank dispatches it to exporter, usually through advising bank.

Shipment of goods and obtaining the documents:


After receiving L/C the exporter will arrange with a shipping company for the goods to be carried to the port of importer country. After the goods have been shipped the exporter will obtain the Bill of Lading from the Shipping Company and will obtain and prepare all documents specified in the L/C.

Submission of draft and documents:


Exporter will submit draft and documents and pay the draft and get it negotiated to itself.

Forwarding documents:
The negotiate bank will negotiate the draft (endorse in favor of) the opening bank. The negotiating bank will forward it to the opening bank.

Receipt of documents and advice to opener:


After receiving draft and documents the opening bank examines them with care. The opening advice to the importer about the arrival of the documents.

Obtaining of the documents:


The importer goes to bank and after paying the draft and other documents obtains the Bill of lading and other documents.

Clearance of the goods:


Now importer can get the goods cleared through the clearing agent.

Some of the Documents Called for under a LC Financial Documents


Bill of exchange, Co- accepted Draft

Commercial Documents
Invoice, packing list

Shipping Documents
Transport Document, Insurance Certificates, Commercial, Official or Legal Documents

Official Documents
License, Embassy Certificate legalization, Origin Certificate, Inspection

Transport Documents
Bill of Lading (ocean or multi-modal or charter party), Airway Bill, Lorry/truck receipt, railway receipt, CMC other than Mate Receipt, Forwarder Cargo Receipt, Deliver Challan..etc

Insurance Documents
Insurance policy, or certificates but not a cover note

The Letter of credit Application


The following information should be addressed when establishing a letter of credit 1. Beneficiary The seller should provide to the buyer its full corporate name and correct address. A simple mistake here may translate to inconsistent or improper documentation at the other end. 2. Amount The seller should state the actual amount of the letter of credit. One can request a maximum amount when there is doubt as the actual count or quantity of the goods. Another option is to

use words like approximate, circa, or about to indicate an acceptable 10% plus or minus from the stated amount, For consistency, if you use this wording you will need to use it also in connection with quantity. 3. Validity The seller will need time to ship and to prepare all the necessary documentation. Therefore, the seller should ensure that the validity and period for documentation presentation after the shipment of the goods is long enough. 4. Sellers Bank The seller should list its advising bank as well as a reimbursing bank if applicable. The reimbursing bank is the local bank appointed by the issuing bank as the disturbing bank. 5. Type of payment availability The buyer and seller may agree to use sights drafts, time drafts, or some sort of deferred payment mechanism. 6. Desired Documents The buyer specifies the necessary documents. Buyers can list, for example, a bill of lading, a commercial invoice, a certificate of origin, certificates of analysis, etc. the seller must agree to all documentary requirements or suggest an amendment to the letter of credit. 7. Notify Address This is the address to notify upon the imminent arrival of goods at the port or airport of destination. A notification listing damaged goods is also sent to this address, if applicable. 8. Description of Goods

The seller should provide a short and precise description of the goods as well as the quantity involved. Note the comment in step # 2 above concerning approximate amounts. 9. Confirmation Order With international arrangements, the seller may wish to confirm the letter of credit with a bank in its country.

Some Types of LC:


Documentary Revocable Letter of Credit Documentary Irrevocable Letter of Credit Standby Letter of Credit Special Letter of Credit Back-to-Back Letter of Credit Deferred payment (Usance) Letter of credit Red Clause Letter of Credit Revolving Letter of Credit

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