So Mia 1

Allied Bank Of Pakistan (Ltd)
Chapter. 01 BANKS AND SCOPE OF BANKING

WHAT IS BANK? BANKING IN DEVELOPING SOCIETIES NEW CHALLENGES OF CONTEMPORARY AGE HISTORY OF ALLIED BANK LIMITED DENATIONALIZATION OF ALLIED BANK LIMITED ALLIED BANK LIMITED TODAY PRIVATIZATION OF THE BANK BRANCH NETWORK & ASSOCIATED BUSINESSES INTERNATIONAL OPERATIONS ASSOCIATED BUSINESSES
Department of HRM Faculty of Administrative Sciences Kotli (A.K)
BANKS AND SCOPE OF BANKING 1.1: WHAT IS BANK?

A bank is an institution for the custody, loan or exchange of money for sanctioning credit, for transferring funds by domestic and foreign bills of exchange. It is a pipeline through which currency moves in to and out of circulation. As it is clear from the definition of banking, the main activity or function of banking is borrowing and lending of money with a margin of gain. However, as far as the present day banking is concerned, there are a number of different banks, set up under specific different objectives, performing various functions.
1.2: BANKING IN DEVELOPING SOCIETIES

In the developed societies, the banks do not have to make many efforts in mobilizing savings, as it has become a second habit with the people. The commercial banks are financing the short and long-term capital needs of the business. The loans and discounts of commercial banks include real state mortgages and long term loans, which extend to as long a period as ten years. These banks also administer estates, acts as insurance agents and underwriters, provide brokerage services and implement domestic as well as foreign economic policies of the government. Commercial banks in developing countries have to make vigorous efforts of resource mobilization at all levels. However, with the passage of time the commercial banking operations are under going remarkable qualitative change. In Pakistan for instance, banking facilities are being extended to the un-banked places. Planned efforts are being made to enhance the supply of bank advances to the new priority sectors in consonance with the present day socio-economic needs. A special scheme to induct commercial banks in the field of agricultural credit was introduced in December 1972. The scheme provides for short and medium term loans to farmers under a much-simplified procedure. State Bank's measures aimed at increasing the flow of credit to the small man in business and industry as well as to housing and nontraditional exports have also yielded positive results. The large risk to the commercial
banks in the sphere of agricultural finance and small loans are being covered to a reasonable extent by the "Credit Guarantee Scheme". Mandatory targets for small loan credit to the agriculture sector and for housing have been prescribed and are being enforced. Corporate banking is also being reorganized and reactivated on lines that are more viable.
1.3: NEW CHALLENGES OF CONTEMPORARY AGE

Banks play a vital role in the economic development of a country. They accumulate the idle savings of the people and make them available for investment. They also create new demand deposits in the process of granting loans and purchasing investment securities. They facilitate trade both inside and outside the country by accepting and discounting of bills of exchange. Banks also increase the mobility of capital. They provide a variety of facilities for remitting a large amount of money from one place to another by the transfer of a small slip of a paper. In a country like Pakistan, which is still in the initial stages of economic development, a well-organized banking system is the need of the day. There is acute shortage of capital in Pakistan. The banks have to play an important role in promoting capital formation, in controlling speculation in maintaining a balance between requirements and availability and in directing physical resources in to desired channels. In advanced countries of the world like America, Japan, Germany, the rate of capital formation ranges from 12% to 25% of their Gross National product. Where as in Pakistan the rate of saving has varied from 5% to 8% only. In order to accelerate the rate of economic development the Government has been acquiring foreign capital. The banks by launching a vigorous campaign in both the villages and cities can mobilize the idle savings and can increase the rate of investment. The country thus becomes independent of foreign capital, which in fact has let us down on almost all the crucial happenings in the country. This deficiency of capital accumulation is due to so many reasons like, lower per capita income, disparity of wealth, un-organized banking system, ineffective fiscal measures etc. One reason of this capital deficiency is the non-adoption of modern marketing tools, such as market research, sales organization, sales training, sales management, advertising etc.
for attracting deposits. Therefore, these are the new challenges for banks, which are to be achieved for the betterment of the economy.
1.4: HISTORY OF ALLIED BANK LIMITED

Allied Bank of Pakistan was the first Muslim bank in pre-partition which was established at Lahore. Initially It was known as Australasia Bank, with a paid up share capital of PKR 0.12 million, consisting of 2.444 shares of PKR 50 each. After nationalization in 1973, it was recognized in 1974. At that time, Sarhad Bank Limited and Pak Bank Limited were merged with it and were renamed as the Allied Bank of Pakistan. At that time, the Bank, operating 136 branches, had a paid up capital of PKR 5.83 million, deposits amounting to PKR 849 million and advances exceeding PKR 628 million. Post nationalized, ABL opened 116 new branches during 1974 alone, increasing its branch network to a total of 252, which gradually increased to 697 branches by 1979. in 1980, the Bank of England granted ABL recognition as a full-fledged bank, thereby allowing the Bank to conduct banking operations in England, where it maintained 4 branches. These are recently reconstructed as Habib Bank Limited (HBL). Between 1974-91, the Banks total net asset rose to PKR 24.4 billion and deposits to over PKR 21.3 billion, with a branch network of 747 branches.
1.5: Denationalization of Allied Bank Limited

This bank has denationalized in 1992. its deposits as on June 1992 are Rs. 25 billion, capital Rs. 5 billion, profit before tax Rs. 100 million. It has 748 branches. This bank has been sold to its 7500 workers, under the recently introduced Employees Stock Ownership Programme. (ESOP).
1.6: Allied Bank Limited Today

Allied Bank of Pakistan, represents a bank that has grown with time, experience in Pakistan. A major financial institution in scope and size, it symbolizes a fully evergreen fully-grown trees, strong and firmly rooted. ABL is one of the largest pvt. Sector banks in Pakistan in terms of assets, deposits and advances. As per the last available audited accounts, 31 December, 1999, the Bank had Department of HRM 4
Faculty of Administrative Sciences Kotli (A.K)
total assets of PKR 106.9 billion, total deposits of PKR 93.2 billion, total advances were PKR 55.3 billion and 925 branches were operational nation-wide with a total of 7,108 employees (as on 30th June 2001, ABL had reduced its branches network to 855 branches). The bank is principally engaged in providing corporate banking facilities to Pakistans most valued corporations and institutions. Additionally, it also provides general banking services to commercial, agricultural, industrial and individual customers throughout Pakistan. 89% of the Banks deposits base is composed of deposits from the urban area. The banks fundamental strengths lie in its strong lending capacity, as well as providing a variety of financial services, which has allowed ABL to diversify and enhance its deposits base.
1.7: Privatization of the Bank

The bank was operated as a national bank fully controlled by the Government of Pakistan (GOP) until September 11, 1991 when the GOP handled over the management of the Bank disinvested 51% of its shareholding to the employees when they approved the Employees Stock Ownership Plan (ESOP) for ABL. Under this plan, the employees of the bank were allowed to buy and manage the bank. The Allied Management Group (AMG) representing the employees of ABL was then formed. The AMG under the representation of Mr. Khalid Latif, the President of ABL at that time, purchased 26% of the total shares at a price of PKR 70 per share, leading to the transfer of management. Under the sale management, AMG had an option to acquire a further 25% of the share capital at the same bid price within one year of the 1st sale. This 2nd transaction was concluded in August 1993, resulting in AMGs 51% ownership.
1.7.1
Share Capital:
The authorized capital of ABL, as at Dec, 31, 1999, was PKR 5,000 million, divided in to 500 million ordinary share of PKR 10 each. The decision to increase the authorized share capital from 2,000 million to 5,000 million was taken by the Board of Directors of ABL in the AGM held on 19 April 1999. The issue subscribed and paid up capital of the Bank as on 31 December 1999, was PKR 1,063.2 million comprising 106,315,565 fully paid up
ordinary shares of PKR 10 each. The break down of the majority share holding based on the current outstanding shares of 106.3 million is as on next page Share Holding Pattern Name Shares Held %
Financial Institutions
National Bank of Pakistan Trustee Wing State Bank of Pakistan 393,717 45,185,333 42.50 0.37
Insurance Companies
Pakistan Insurance Corporation State Life Insurance Corporation 75,812 27,945 0.03 0.07
Investment Companies
Investment Corporation Of Pakistan 13,456 0.01
Others
Federal Government Of Pakistan Other Institutions Individuals Total 6,273,961 120,817 54,224,524 106,315,565 5.90 0.12 51.00 100.00
1.8: Branch Network & Associated Businesses

1.8.1 Local Branch Network:

As of June2001, ABL has 855 branches nationwide, of which approximately 67%, i.e, 573 are located in large metropolitan areas. The network of 855 branches enables the Bank to generate a substantial and stable deposit base, provide a wide range of banking products and other financial services and diversify lending risks geographically, as well as on the basis of credit and customer type. 1.8.2 ABL Branch Network Region Wise Number Of Branches Computerized 32 23 37 67 104 67 16 37 49 36 10 20 14
Regional Office Location Faisalabad Gujranwala Hyderabad Islamabad Karachi Lahore Mirpur Multan Peshawar Quetta Sargodha Sialkot Sukkur
Total 69 39 62 100 104 67 52 63 61 40 35 45 34
Total
558
775
1.9: International Operations

1.9.1 Habib Allied International Bank Plc (HAIB)
ABL was maintaining 4 branches in the U.K. in London, Birmingham, Manchester and Glasgow. However, earlier this year, ABL and HBL, agreed To merge their UK operations into one bank, HAIB, with effect from 03 December 2001. HAIB has an initial paid up capital of GBP23 million, with ABL and HBL controlling 9.50% and 90.50% equity stake respectively. HAIB will be fully operational effective 01 January 2002.
1.9.2 Global Transactions:

The international banking division of ABL predominantly focuses on The international banking needs of domestic customers International correspondent baking.
International division caters to the needs of the Bank s domestic corporate and other customers in financing import and export transactions. ABL s products include foreign letters of credit, guarantees, remittances, acceptances and collections. In order to effectively handle the trade related business of ABL on global basis, correspondent- banking arrangements with 327 of the world s major bank franchises. Close long- term business relationships have been developed with 27 renowned exchange companies, operating in the Middle East to handle the remittances of Pakistan expatriate community.
1.10: Associated Businesses

1.10.1 First Allied Bank Modaraba:
First Allied Modaraba (FABM), managed by Allied Management Services (Pvt.) Ltd. (AMS), (a wholly owned subsidiary of ABL), was floated in January 1993. FABMs paid up capital, as of 30 June 2000, was PKR 350million with net profit (before management fee) of PKR 6.01 million. The primary function of AMS is to manage FABM.
1.10.2 Functions
As a fully functional commercial bank, the activities of Bank are organized around the following areas:
Commercial Lending: provides both fund as well as non-fund based

financial facilities, focusing on short- term trade related self-liquidation credits.
Consumer Banking: the Bank operates a growing credit card business,

under the Master Card franchise, with global acceptance capability and a wide-ranging merchant base. The Rupee-based travelers cheques product is one of the ABLs most attractive consumer products. The bank also intends to substantially increase its automated teller machines on a shared basis.
Treasury Operations: the Banks treasury employs some of the

industrys most respected professional. The treasury systems operate under up-graded technology for efficient and profitable funds management.
Credit Department: with its 59 year banking history, ABL is highly

experienced in handling various types of credits, including syndicated lending, project financing, agriculture credit, financing to small & medium enterprises and micro-credit.
Technology:
Currently,
there
are
558
computerized
branches out of 855 branches of the Bank, the highest amongst its peers. All branches are expected to be computerized by 2003. The ABL information Technology Division is working on improving the MIS of the Bank and developing the entire network on real time on-line basis.
CHAPTER. 02 PRODUCTS AND SERVICES OF THE BANK DEPOSITS ADVANCES

FOREIGN SERVICES UTILITY SERVICES
ABL MAHANA AMADANI SCHEME
2.0 PRODUCTS AND SERVICES OF THE BANK

The bank provides its customers various products and services to cater their needs of investments and other social or business requirements. These products and services offered by the bank are as follows. 2.1 DEPOSITS
To receive deposits is a basic function of all commercial banks. Commercial banks do not receive these deposits for save - keeping purpose only, but they accept deposits as debts.
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When a bank receives, a deposit from a customer becomes the creditor and the bank a debtor. When he bank receives the amount of deposit as a debtor, it becomes the owner of it. It may, therefore, use it, as it deems appropriate. However, there is an implicit agreement that the amount owned would be paid back by the bank to the depositor on demand or after a specified time. Deposits are the lifeblood of a bank and their classification is based on the duration and purpose for which the deposits are to be kept at the bank before the depositors can withdraw them. At present ABL accepts deposits in both local & foreign currencies and provides a variety of accounts where these sums are put in at the desire of the customers. Now a brief description is given about various types of accounts, in both local and foreign currencies: Local Currency Deposits In local currency (PKR) the following type of accounts is available at the Bank:
Current Account Saving A/c Short term deposits Fixed deposit receipts
A brief explanation of the above stated accounts is given below:
2.1.1
CURRENT ACCOUNT
These are payable to the customer whenever they are demanded. The Bank treats these deposits as current liabilities. No profit is given on these accounts and there is no restriction of minimum balance to be kept in these accounts. 2.1.2 Saving Account
In such types of account, the depositors are normally allowed to withdraw a limited amount of money only twice a week.
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2.1.3
Fixed Deposit Receipts
In these accounts, the amounts are deposited for a fixed period, which may be 1 month, 3 months, 6 months, and 1 year. 2.1.4 Short Term Deposits
In these accounts, the amounts are deposited for fixed period but shorter than that of Fixed Deposit Receipts, which may be 7 days, and 30 days. 2.1.5 Foreign Currency Deposits
At present ABL Main Branch, accepts US$, GBR, YEN and DM in shape of foreign currency deposits. For these foreign currency deposits bank has offered the following accounts. Foreign Currency Accounts Foreign Currency Saving Account
A brief description of above stated accounts is given under: 2.1.5.1. Foreign Currency Current Accounts In these accounts, depositors can deposit a sum of money in any of the above-mentioned currencies. The depositor can also withdraw any amount subject to the availability of the amount. No profit is given on these accounts and no restriction as per the minimum balance required.
2.1.5.2 Foreign Currency Saving Accounts ABL pays the interest that is earned on the sums available in the accounts by making investments.
2.2
Advances
Advances department of a bank provides many facilities to various individuals and businessmen against charging the interest from them.
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It is usual practice of the bank that it examines the personal character of the borrower and reputation and scope of business; he is doing or going to commence. However, there are three ways normally used to seem the account Pledge Mortgage Hypothecation
Pledge
It is contract between the borrower and the bank whereby the goods are transferred in to the bankers possession while the ownership remains in the possession of the borrower. This possession remains with the bank until the payment of loan is dully made. In case of default, the bank can sale the goods after giving the notice.
Mortgage
Mortgage is a contract whereby the interest in any specified immovable property is transferred to the banker in order to give the security for the payment of debts.
Hypothecation:
It is term where goods are charged for the purpose of security. But the possession and ownership remains with the owner of the goods.
2.2.1 Categories of Advances

The bank can make the advances in the following three ways 1. Overdraft 2. Loan 3. Cast Credit Overdraft
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Under such arrangement the customer is allowed to withdraw the amount excessive from his balance. But the limit of amount is sanctioned by the manager and given for a fixed period. Loan
When the bank makes the advances in a lump sum, to be repaid in lump sum or in forms of installments with interest at any future date, it is known as loan. These loans may be short, medium or long term. Cash Credit
These advances are made against the security of the goods which may make like in the form pledge or hypothecation. The bank credits the borrower account with the account making as loans. The amount cannot be withdrawn lump sum. While interest is paid on the amount withdrawn from the bank. ABL deals and sanctions all about kinds and categories of advances. 2.3 FOREIGN SERVICES
Following is the list of major foreign services provided by the ABL to its customers: e.g; Documentary Letter of Credit Bills for Collection
A brief description on of above stated services is given under: 2.3.1 Documentary Letter Of Credit
A documentary Letter of Credit may be defined as an authority issued by the opening bank on behalf of the importer in favor of the exporter with the stipulation that the drafts drawn there under will be duly honored, if the terms and conditions as mentioned there in are duly complied with. With respect to the documentary credit, the following types of documentary letter of credit are offered by ABL: Revocable LC Irrevocable LC
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Confirmed LC Transferable LC Back to back letter of credit Stand by LC Sight LC Usance LC
In some cases, the exporter is not willing to wait for the proceeds of collection to be remitted. In such cases exporter requests the Bank to negotiate the bills i.e. he sends the documents to Bank. In this case, Bank examines the documents and arranges them with the requirements mentioned in the Letter of Credit. When bank satisfied, it pays to the exporter. Now Bank has the right to collect the proceeds on his own behalf from the importer's Bank. ABL performs the functions of both the exporter's and the importer's Bank as per its customer's status. 2.3.2 Bills for Collection The exporter's bank receives the documents from the exporter, examines and dispatches them to the importer's bank. The importer's bank confirms these, as per the requirements stated in the letter of credit, if founds correct, gets the amount from the customer, advice the exporter's bank about the receipt of payment and in the end makes the payment to the exporters bank.
2.4 Utility services

The bank provides its customers the non-banking services, such as collection of utility bills, etc. Utility bills can be paid through cash or cheques drawn on any branch of the branches at their convenience cheque drop in system. The bank mails the bills after payment to the customer.
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2.5 ABL Mahana Amadani Scheme

The main purpose of this scheme is to attract saving and win over new clients.Rtd.Civil and armed forces employees can make the investment. Widows and the children being brought up by guardians. Expatriates looking for payment monthly Nome. Investments can be individually as well as collectively.
CHAPTER. 03 DEPARTMENTS ACCOUNT OPENING AND CLOSING DEPARTMENT TYPES OF ACCOUNTS CASH DEALING DEPARTMENT
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STOP PAYMENT INSTRUCTIONS COMPUTER TERMINAL PROCESS CLEARING DEPARTMENT POSSIBLE INSTRUMENT AT CLEARING DEPARTMENT COLLECTION OF CHEQUES
DEPARTMENTS
ACCOUNT OPENING AND CLOSING DEPARTMENT
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Function of A/c opening & closing in ABL is performed under Accounts department but I am discussing it with separate heading for better understanding. Firstly, all types of Accounts, which can be opened in ABL, have been described:
3.1
TYPES OF ACCOUNTS
Current account Saving account
Brief explanation of these accounts is as follows: 3.1.1 CURRENT ACCOUNTS
Current A/c is used to meet the daily transactions. Current account provides safety to the customer's money, gives the advantage of paying debts by the convenient and safe means of sending cheques through the post thus avoiding the trouble and loss that units in PKR, US$, GBP and DM. 3.1.2 SAVING ACCOUNT
In case of saving accounts, account holder gets profit. There is a time limit for drawing cash; customer cannot draw money before a certain time. In ABL, saving a/c is used as current a/c, & there is no main difference between current & saving account except profit. Limited company, Partnership Company, club societies & associations joint & sole proprietorship can open this account. 3.2
CASH DEALING DEPARTMENT
Cash department of ABL is given the complete responsibility of handling all receipts & disbursement of cash, because of transaction in both local & foreign currencies & near cash items such as traveler cheque etc (when they are issued against cash). Consequently, it is also responsible for the bookkeeping of these transactions & the safe custody of cash & near cash securities. Following are the major functions of the cash dealing department of ABL: Cash receipts (or receive deposits) Encashment of cheque
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Cash department of ABL is a separate close part covered with glasses. No one other than cash department's employee is allowed to enter into that area. Cash receipt The depositor uses cheque deposit slip (or cash deposit slip) for depositing the amount. There are two types of cash deposit slip: One for current account-holders Other for saving account holders.
Both are in different colors for clear identification. There are two parts of cash deposit slips: PROCEDURE The cashier first verifies all the requirements of the cash deposit slip that whether these are fulfilled or not & verifies the amount written in words & figures. After that, he enters the detail of the receipt in the "Inward Cash Register". The deposit slip is stamped, cash is received & counter foil is given to the depositor. The adjacent credit voucher is used for recording & posting purposes. Counter foil Adjacent credit voucher.
3.3
Encashment of cheque
Cheque enactment involves following four main steps. These steps are: Accepting of cheques Affirmation of signatures Computer terminal process Payment of cash Requirements to Encash a Cheque
Following requirements are essential to encash a cheque. No Stop Payment Instruction

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No stop payment instruction is presented for the account. Instrument in Writing
It must be in writing. However, there is no bar on writing material but the cheque written with lead pencil is not honored by the bank in practice because unauthorized alternations can also easily be made are difficult to detect so a cheque should be either typed or pen written or printed. Cheque must not be crossed
The cheque which could be presented to the drawee bank for encashment over the counter should not be crossed whereas crossed cheques are deposited into account. words must be same. Drawer's Signature The sum of money must be certain
A cheque must contain an order to pay a certain sum of money only amount in figures and
The document in order to be validly called a cheque must bear the drawer's (account holder) signature or that of his authorized person. At the time of opening an account a customer provides a banker with a specimen of his signatures, so the signature on the cheque must tally with that. Sufficient Balance
Sufficient balance should be present in the customer's (drawer's) account to encash cheque.
STOP PAYMENT INSTRUCTIONS

If a customer lost his chequebook, he would make stop payment instruction to cash department of ABL. Stop payment instructions can be made in two ways. Verbal Written
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The customer could inform the cash department on telephone or face-to-face meeting to stop payment, but later a written instruction must be made on a prescribed form. If customer make stop payment instruction to the bank and bank make payment to some one else after lodgment of stop payment instruction in the computer, Bank would become liable for this fault. 3.3.1 ACCEPTANCE OF CHEQUE
The cash is paid against the cheque of the client. The following points are kept in mind while receiving the cheque from the client. Cheque should be drawn on ABL. It should not be post dated. It should be a bearer cheque so the word bearer should not be crossed. Payment is not stopped by the drawer. Amount in words & figure should be same. Alternation in date/figure/word require drawer's full signature, with signature on the cheque. If signatures are not the same then it is returned back otherwise forwarded to computer terminal. 3.3.2 AFFIRMATION OF SIGNATURES
After receiving the cheque the officer verifies the signature of the account-holder with the signature on the cheque. If signatures are not the same then it is returned back otherwise forwarded to computer terminal.
3.4
COMPUTER TERMINAL PROCESS
The cheque is received in computer terminal, where the computer operator checks the balance of the account holder. The operator also sees whether the stop payment instructions
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are received from account holder or not. After considering these two points computer operator posts the cheque in account holder ledger & returns the cheque back to the officer. 3.4.1 PAYMENT OF CASH
The cheque is cancelled after posting & is returned to cashier. The cashier enters the cheque in "cash paid register" & pays against the second signature of the receiver on the back of the cheque. Nearly everyday in the morning time, cash comes from State Bank of Pakistan through Brinks (which provide safe cash delivery services). This cash is required by the bank to meet the current needs of cash. This cash is received from the Brinks in the presence of an authorized officer & cashier of bank, with full satisfaction. 3.5 CLEARING DEPARTMENT Nearly all the banks provide a variety of services to their depositors. One valuable service provided is that of clearing. Clearing department also plays an important role in performing the activities of the bank. The basic function of clearing department is to provide services to customers in collection of their cheques of other banks, whether they are in city or outside the city. The customer can get the money in his account at ABL from the cheques drawn on another bank. The bank accepts the cheque in the clearing department & later on collects these cheque from the bank on which it is drawn through the clearing house i.e., State Bank of Pakistan. For example, sometimes the account holder of ABL presents a cheque, which is not drawn on ABL but the person, is not drawn on ABL but the person has an account in ABL, in this case bank accepts this Cheque in clearing department & after collecting the amount from that bank on which cheque is drawn, ABL credits the account of customer (accountholder). This function is called clearing function.
3.5.1 CLEARING
We can define clearing as, "the transfer of funds from one branch of bank to the other branch of the same bank or the other bank on which the instrument is drawn, without
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involving cash through "State Bank's clearing house" or we can say in other way that cheques which can not be cashed at the cash counter of the bank.
3.5.2
CLEARING HOUSE
It is one of the services provided by central bank i.e, State Bank of Pakistan to the other commercial banks. SBP acts as a clearinghouse. Different banks are the members of the clearinghouse. A representative of each bank represents his bank in the clearinghouse. A clearing house is an association of commercial banks set up in a given locality for the purpose of interchange & settlement of credit claims". A representative of each bank represents his bank in the clearinghouse. Each banks representative has cheques on behalf of his banks customer (these cheques are not drawn on their own bank) in the clearinghouse. They hand over these cheques to the respective banks on which these cheques are drawn & receive cheques from other banks, if any. The SBP maintains the accounts of the ABL like other scheduled banks, debits the account of the drawee bank, and credits the presented bank, which is ABL in that case.
3.5.3 TYPES OF CHEQUE

Some specific types of cheque are being entertained in the clearing department of ABL Main Branch, Lahore. These types of cheque are: Local cheque Out station cheque In house cheque Local Cheque
By local cheque we mean collection of cheques from the banks which are the members of the clearinghouse and which are located within the city. Out Station Cheque
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By out station cheque we mean collection of cheque from the banks, which are situated outside the city. It means that presenting bank and the bank on which the cheque is drawn are not situated in the same city.
In House Cheque
In house cheque are drawn on one branch of NBP and presented to another branch of NBP such cheques are marked with transfer stamp. 3.5.4
TYPES OF CLEARING

Clearing department deals with the two type of the clearance. These are stated below: Inward clearance Outward clearance
3.5.4.1
Inward Clearance
Cheque drawn on NBP and presented to other Banks or handed over to NBP agent in clearing house. That is inward clearance for NBP. So inward clearing results in outflow of funds to collecting banks reducing the balance in the clearing account. 3.5.4.2 Outward Clearance Similarly cheque, which is drawn on other, bank and presented to NBP are known as outward clearance for NBP. So outward clearing results in inflow of funds from paying bank into the clearing account maintained with the clearing house, increasing the balance in the clearing account. Outward clearing thus may be: Local clearing Outstation clearing
Excess of outward clearing over inward clearing produces a net increase in the clearing account balance. Excess of inward clearing over outward. Clearing produces a net decrease in the clearing account balance. The first case is referred to as favorable clearing & the second case as unfavorable clearing. The balance of incoming & outgoing clearing should be nil (zero).
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3.6
POSSIBLE INSTRUMENT AT CLEARING DEPARTMENT

Following instruments can be presented at the clearing department: Cheques Demand drafts Pay orders
3.7
COLLECTION OF CHEQUES
The Pay-in-slip is checked & entered in the "Inward collection" or outward collection". After making the entry, the counter foil is returned to the client. Inward Bills for Collection (IBC)
Inward collection means the cheque received & drawn on NBP for payment. Inward bills for collection means cheques received from another branch for clearing. These cheques first cleared & then transferred to the account of branch account e.g. cheque deposited in Karachi branch for UBL, Lahore branch, will receive in Lahore branch at first then issued for clearing in UBL. Outward Bills for Collection: (OBC)
Outward collection means the cheque of other banks. Outward bills for collection are the reciprocal of IBC that is drawn on bank & deposited in other bank. For example, he will make person A, who is in Islamabad & payment. Now seller will deposit, the cheque deposit slip in his bank, UBL Islamabad. UBL will prepare a draft & letter & send it to NBP Main branch, Lahore. NBP Main Branch, Lahore will debit his customer A's a/c & credit clearing. This draft will be then transferred back to Islamabad through clearing where credit will be given to customer & debit to clearing house. Within 3 days payment should be received otherwise reminder will be send to the payer to pay amount. This reminder will be through either courier service or TCS etc. If payment is not received within 15 days then reminder should be send after 8 days of 15 days limit. STAMPING
Three stamps will be used in case of IBC & OBC. 25
Stamp of OBC (or IBC) whichever is the case. Crossing stamp. Payee's a/c will be credited.
First two will be in front side of cheque while the 3rd stamp will be on the backside of the cheque. Entry is made in the register of OBC (or IBC) & from the register the no. of OBC (or IBC) is given on the cheque. PROCEDURE OF CLEARING THE CHEQUES: Pay in Slip
The customer fills pay in slip; this slip is just like deposit slip. The cheque number, date, amount, & account number must be written on this slip. Stamping and Scrutinizing
The officer on receipt of cheque and pay in slip will stamp the pay in slip with "Cheque Received" and give a portion of slip to customer and the remaining portion is attached with the original cheque. The original cheque will marked with two stamps: ABL Clearing Stamp
Before 12:30 P.M, all cheques are counted and then scrutinized in bank wise and sent to clearing house. Stamping Of The Instruments The instrument of payment accompanied by pay-in-slip (cheque receipt) is received at the counter of the bank by the concerned officer who conducts scrutinizing of the instruments. If no discrepancies are noted then the officer should sign the pay-in-slip & its counter foil. The counter-foil & the pay-in-slip should then be stamped in the following manner. The clearing stamp bearing the date of the next working day should be affixed on the face of the cheques. Special crossing stamp containing "the name & branch name of bank" should also be affixed on the face of the cheques.
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The third necessary stamp indicates the paying bank to "credit payee's account". It is the conformation of outward clearing. If "payee's account only" is mentioned on the cheque, the payee should sign on the back of cheque for endorsement of cheque to another person.
3.7.1 FORMS OF CLEARING Clearing is of two forms: Local clearing Collection Local Clearing
By local clearing, we mean collection of cheques from the banks, which are member of clearinghouse within the city. Banks take responsibility by endorsing these cheques. Sort out these cheques bank wise; prepare the settlement sheet bearing the name of the bank and number of cheques with total amounts. There is a time for presenting the cheques in clearing house. If before that time, cheques are not sent to clearing house. Then they will be delayed for next day. On the specific time gate of clearing house has been closed and nobody can enter into it. So next day bank presents cheques in clearing house. Cheques sent to clearing department must be debited to SBP and credited to customer account, and when bank receive back these cheques then debits customer and credits SBP. A simple example for understanding the entries made is that, when cheque comes to clearing house from Citibank (e.g., any customer of NBP has made payment to a person who is customer of Citibank) then SBP will credit the City bank and debit the NBP account because cheque is of NBP. In case if any bank or branch of bank is not the member of the clearing house then bank present or receives cheques through collection. 3.7.2 ITEMS TO BE CHECKED ON CLEARING CHEQUES
When cheques are received from the clearing following items should be checked immediately:
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Cross stamp Clearing stamp Date (which should be current) Endorsement stamp on backside Amount in figures and words should be matched
CHAPTER: 04
MANAGEMENT
RESPONSIBILITIES STRATEGIES HUMAN RESOURCE DEVELOPMENT IN ABL
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JOB ADVERTISEMENT CLASSIFICATION OF STAFF APPOINTMENT RECRUITMENT CONDITIONS OF APPOINTMENT
MANAGEMENT
The Board of Directors of the Bank consists of 8 members, named below, with Mr. Khalid A. Sherwani as Chairman. Khalid A. Sherwani Asif Bajwa Shaukat Hayat Durrani Muhammad Sami Saeed
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Mozaffar Iqbal Saeed Anwar Justice (Retd.) Aamer Raza Muhammad Azam Khan
4.1: Responsibilities
Boards of Directors are held responsible by the stock holders for the management of the bank. Because of the scope of responsibility and detail of management involved, they usually delegated some of the responsibility. Generally, following the stockholders meeting and their election, the Directors: Elect one of their members as Chairman of the Board and delegate to him the responsibility of presiding at all meetings. Elect one of their members as President and Chief Executive Officer of the bank Elect corporate records of the bank. Approve the compensation to be paid to the various officers and employees of the bank.
4.2: Strategies
The management, anticipation the prior years provisioning in line with the ongoing banking sector reforms, has already initiated major re-engineering and re-organization of the Bank. The Bank had embarked upon a two-prolonged strategy of adopting a nationalized program to bring down cost, introduce innovative products and offers specialized financial solutions and services to customers. Measures, which have already been implemented, are set out below: With the objective of achieving decentralization and cutting down expenses, the decision-making has been reduced from four to two tires, 68 controlling offices, comprising of 4 provincial, 18 circles and 46 zonal offices have been consolidated into 16 regional offices. With a view to improving efficiency and right sizing the ABL network, 66 branches have been closed or merged.
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The corporate units have been re-structured by reducing the number of divisions and redefine their functional responsibilities, so as to provide valuable support to field operations.
Treasury operation has been re-organized on a modern technology platform. A centralized Special Asset Management Division has been established for expeditious recover and settlement of non- performing loans.
Expensive deposits have been reduced, improving the interest margin. Deposit mobilization through innovative products like Tahfuz (launched in February 2001)are being developed & implemented.
The implementation of the aforementioned steps has been successful in Cutting down costs and improving efficiencies, resulting in enhanced Operational profits. The Bank now plans to focus on further strategic Objectives, as set out below:
4.3: Human Resource Development in ABL

Recruitment and Selection Training and Development Employees services, Safety, Health & Welfare Salary Administration Industrial Relation System of Communication Negotiating with Union; and Terms & Conditions of Employment, etc. in ABL For this purpose, I met Human Resource officials of ABL in Human Resource Division. I made the following questionnaire and asked from him about above vital heads. The questionnaire was What is your source of employee supply?
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What method and procedure you adopt to select somebody? What are the criteria for selection and induction of new ones? Are you satisfied with your banks selection procedure? How and when you feel to conduct training programme for newly selected as well as old ones?
What is the method training? What is the normal and usual training tenure? When and how salary is determined and given to employees? Do incentive, bonus system exist? In which way and direction the communication process take place in organization? Do upper management is in direct contract with medium and management? lower level
What equipments are used for communication within and outside the organization? How much sound industrial relationship do you have? What is the role of union and its influence? Are you in favor of union activities or against it? What privileges bank offer for the welfare, Health and safety of its employees? Are you satisfied with the policies of bank regarding terms and conditions of employment?
The officers not only listened to my questions with kind attention but also gave me a lot of information regarding above heads without hurry and in a very sophisticated manners. The abstract of our talk is as Allied Bank of Pakistan Limited is governed by the service rules made by the Board of Directors under Article 133 (VI) of memorandum and Article of Associations, read with Section-11(4) of the Banks (Nationalization) Act, 1974)
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According to the rules, following aspects are accomplished as
4.4: Job Advertisement

The job is advertised through both electronic and print media. But usually, print media that are newspapers are preferred. In newspapers, the job is advertised without mentioning the name of the bank rather P.O Box is used to cancel banks identity. This is done for avoiding any political or any other pressure, influence or approach for selecting any particular individual or group of people.
4.5: Classification of Staff

The permanent staff of the Bank shall be classified under the following categories:-
4.5.1: Category
Senior Executive Vice President/Executive Vice President :( Executive grade) Senior Vice President: (senior grade-I) Vice President: (senior grade-II) Assistant Vice President (senior grade-III) Officer Grade-I Officer Grade-IIOfficer Grade-III
4.5.2: Category
Head Casher/Stenographer Draftsman/Estimator/Overseer Senior Casher/Stenographer/Teleprinter/Key punch operator Assistant, Typist, Casher, Godown Keeper, Machine and telephone operator, Construction supervisor, Tracer and other techniques.
4.5.3: Category
Electrician/Ferro Printers
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Driver/Chief Jamadar BankGuard, Chokidar, Messenger, Electrician, Plumber, Carpenter, Mali and such other staff.
Sanity Worker
The board of directors shall have the power to determine the classification of any new posts that may be created, if they do not fall under any of the classifications in category I. In the case of other Categories the classification of such posts will be determined by the president.
4.6: Appointment
Appointing shall be made both by direct recruitment and by promotion. Employees serving in lower grades in categories II and III who possess the requisite qualifications shall be eligible to compete when direct recruitment is made in higher grades of categories II and III.
4.7: Recruitment
All appointments of employees shall be made the competent authority in accordance with the policy laid down by the Board of Directors. A person selected, as trainee officer in the Bank shall be governed by the terms and conditions of his letter of appointment.
4.8: Conditions of Appointment

4.8.1: Domicile
Candidates must be domiciled in Pakistan or Azad Jammu and Kashmir. Provide that the competent authority in special cases may waive this condition. Every employee shall, on his appointment, declare his domicile in writhing and shall submit domicile certificates. Lace of domicile means the permanent home place of employee. No employee, who has once declared his place of domicile, shall be allowed to changer or alter the same.
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4.8.2: Educational Qualifications

The minimum educational qualification for recruitment to posts in Category I shall be Bachelors Degree from a University recognized by the Federal Government. This qualification shall not be waived except in special cases by the competent authority. Other qualifications necessary for recruitment to posts in Category I shall be as follows, namely: Officer Grade-III A pass in part-I of the Institute of Bankers or an equivalent examination and at least 5 years experience in supervisory capacity in a scheduled bank. Officer Grade-II A pass in Part-I of the institute of Bankers or an equivalent examination and at least 7 years experience in supervisory capacity in a 1st class scheduled bank. Officer Grade-III A pass in Part-I of the institute of Bankers or an equivalent examination and at least 15 years experience in supervisory capacity in a 1st class scheduled bank. Senior Grade-III A pass in Part-I of the Institute of Bankers at least 20 years as an officer including 10 years in a senior position in a 1st class scheduled bank. Provided that the condition prescribed in clauses (a), (b), (c) and (d) may be relaxed by the competent authority in special cases. The minimum educational qualifications and experience for the posts in Categories II and III shall be as follows: Cashier Assistant Typist Steno typist Stenographer Intermediate Intermediate with 30 w.p.m. typing speed. Intermediate with 45 w.p.m. typing speed. Intermediate with shorthand and typing Speed of 80/45 w.p.m. Intermediate with shorthand and typing speed of 120/45 w.p.m.
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Key Punch Operator Telephone Operator Construction Work
Intermediate with experience of operation the key Punch machine. Intermediate with experience of operation PABX. Metric with diploma in Electrical, Mechanical or Civil Engineering with 5 years of experience.
Overseas Tracer Electrician Plumber/Fitter/
Metric with diploma in Electrical, Mechanical or Civil Engineering. Metric with certificate in drawing. Wiremans Competency License with 2 years Experience. Certificate in the respective trade where available.
Polisher/Mechanical/ Carpenter Drafty/Messenger Chowkidaar/ Watchman 8th class pass. Preferences to ex-serviceman
Provided that the conditions prescribed in the sub-rules (a)-(n) may be relaxed by the competent authority in special cases if in conformity with statutory provisions.
4.8.3 Age Limit

A candidate shall not be less than 18 years or more than 25 years of age at the time of recruitment in the Banks service. Provided that the competent authority in suitable cases may relaxed the upper age
4.8.4 Medical Examination
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The Banks Medical Officer or any Medical authority specified by the Bank in this behalf must declare every candidate physically fit.
4.8.5 Probation
A candidate for appointment in category-I shall be on probation for one year. The period of probation may be relaxed or dispensed with by the competent authority in suitable cases. Employees other than Category-I shall be placed on probation initially for a period not exceeding six months at the discretion of the competent authority. On the satisfactory completion of the period of probation, an employee shall be confirmed.
4.8.6 Extension of Probation

In the event of an employee falling to show satisfactory progress during his probationary service, the competent authority may at its discretion extend his period of probation or offer him an appointment in a lower grade or dispense with his service.
4.8.7Record of Service
A record of service shall be maintained by the Bank with following particulars: Name Fathers Name Personal/Employee Number National Identity Card No. Date of Birth Domicile Nationality Qualifications Educational Professional
Previous experience
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Non banking Banking
Permanent address Date of appointment (with reference to letter of appointment l). Date of joining service Promotions-Dates & Grades Appointment held Pay Allowances: Leaver record An employee shall not have access to his confidential reports: Provided that shall be informed of adverse remarks relating to remediable defects, if any, in order to give him any opportunity to explain his position or to correct himself. House rent/rent ceiling Other
4.8.8: Seniority
An employee will ordinarily rank for seniority in the grade on the basis of the date of his confirmation in the grade and, in this case of an employee not appointed on probation, on the date of his appointment in the grade.
4.8.9: Promotions
All promotions shall be made on the merits of each case and no employee shall have a claim to be promoted to any particular posts or grade by virtue of seniority alone, promoted to all categories and grad shall be made by the competent authority in accordance with the promotion policy laid down from time to time by the competent authority.
4.8.10: Training and Development of Employees

For the training and development of newly recruited as well as existing employees, the Human Resource Division has a training wing which has 3 Training Academies.
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These Training Academies are situated at Karachi: It covers the areas of Singh and Baluchistan Lahore: It covers the Punjab and Northern Areas. Peshawar: It ranges to NWFP and Azad Jammu and Kashmir.
At these training academies, lectures, seminars etc, are conducted throughout the year on different sectors and field operations, like general banking, foreign exchange, letter of credits, advances etc. New techniques and methods are used to keep the employees well-informed and abreast of the repaid and new changes due to sheer competition and globalization. There is a monthly course on computer orientation to equip employees for cyber competition and war. Both in house as well as mobile courses are held and conducted for the training and development of the employees. In addition to above, trainers training is arranged and held at Institute of bankers. For these outsiders, experts from every field and renowned professors, doctors etc. are invited to deliver and share their practical experience to polish, groom latent stills of the officials of the Bank.
4.8.11: Employees Safety, Health and Welfare

As ABL is not an industrial concern, so there is as such no extra-ordinary need for safety and precautionary measures which are taken by almost all industrial concern and factories which working on machines and big plants etc. As regards Health and Welfare of workers, job security is there. Medical allowances and compensation for accidental loses are granted. At Officers level: 2 basic salaries or medicine; Basic salary is or consultancy, hospitalization and laboratory charges etc Lower Level: Medicine as a part of salary and consultancy expenditure are given. All these facilities are given on re-imbursement basis that is to get the money after presenting the bills. Besides this, following allowances are given for welfare of employees Recognized Provident Fund
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Post Job Allowances like Pension, Gratuity, Life time Medial Facility even at Abroad
Benevolence Grant Superannuation Fund Group Insurance Scheme etc.
In addition to above, the following types of leaves may be granted to an employee to facilitate him when they are submitted to competent authority and through proper channel. Privilege Leave On Full Pay On Half Pay Extraordinary Leave Leave not due Special Leave Maternity Leave Disability Leave Leave ex-Pakistan Leave Preparatory To Retirement Causal Leave
For the social welfare of employees loans on very easy installments and mark-ups are given for house, conveyance etc. too. For example, for house constructions 80 B.S. is given out of which 40 are free and remaining are on 7% interest, which is very low as compared to others.
4.8.12 Man Power Planning

The competent authority and Board of Directors review and finalize every year how employees should be promoted, indulged or departed according to the changing Department of HRM 40
circumstances and economic and financial position of the Bank. In addition to that, there is also a political pressure from Govt. to do so. For instance, now a day, this Bank is being privatized so there so there is a policy of downsizing as there is slump in the global as well as in domestic market and recession in business activities. So Bank is offering golden shake hands to its employees to curtail extra expenditure being incurred on them. On the other hand, the bank is inducting new, young and talented persons from backward areas to promote banking functions in remote areas. The bank recently recruited a group of employees from Azad Jammu & Kashmir on probation to capture market and customers of these areas.
4.8.13 Salary Administration

The Bank distributes salary on monthly basis to its employees. The amount of salary varies according to the scale or grade of an employee. In addition to Basic salary, Increments, fringe benefits, cash prices are given and facility to visit abroad in special cases is awarded. Besides this, following allowances (other than traveling allowances) are given to employees basing upon their grades and job nature. Special Duty Allowance House Rent Allowance Extra payment Allowance/Ceiling Extra payment for Extra Work Entertainment Expenses Conveyance Allowance/Transportation Facility Winter Allowance Teaching Allowance Evening Banking Allowance Unattractive Area Allowance Education Allowance
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Washing Allowance Discomfort Allowance Acting Allowance
Following is the list of various forms of Traveling Allowances Daily Allowance, day, fare, mileage etc. Traveling Allowance Rates for employees in Category-I Traveling Allowance Rates for employees in Category-II Other Journeys Traveling Allowance on first Appointment Travel by shortest route Journey/on con official duty Traveling expenses higher than entitlement Certificate to accompany traveling bill Transfer on request
4.8.14 Industrial Relation

As ABL is a commercial bank, so it has strong industrial relationship with its fellow beings. The Banks fundamental strengths lie in its strong lending capability, as well as providing a variety of financial services, which has allowed ABL to diversify and enhance its deposit base and hence good industrial relationship. The bank has one of the most extensive branch networks with deep penetration in both urban as well as rural Pakistan. This acts as a major competitive advantage over its more urban private sector competitors and foreign banks. The extensive branch network has allowed these banks to tap into a lucrative base of low cost and stable deposits. There are number of key and famous firms to whom Allied Bank Limited of Pakistan has financed and lend loans. ABL is one of the largest private sector banks in Pakistan in terms
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of assets, deposits and advances. Because of this, the Bank is in a position not to develop strong and healthy relationship but also to maintain sustaining them.
4.8.15 System of Communication

In ABL, upward and downward or ascending and descending or vertical communication occurs for internal communication. Top level management give instruction to medium and lower level management by face-to-face meetings. Besides this, faxes, phones, emails etc that is electronic media for circulars regarding instruction are also used. The management or organizational structure is split into different heads/divisions. These divisions are in a continuous contact with each other to inform each other regarding any issue, as they are dependant heavily on each other. Apart from electronic media, ordinary mails through TCS and other swift couriers services are sent regarding different issues and matters. For communication externally, a part from direct face meeting, both print as well as electronic media is used. ATMs and credit cards are gaining Popularity in now a day fast and dynamic market and business situation.
4.8.16 Influence and Role of Union

No one can deny the positive role of union. Union of any organization really works for the social, economic welfare of the workers of any firm or organization. It can really fights of the employees and convince the management to adopt such system, witch is necessary for the safety of guarding and protective shield against all malpractices of owners or management. The union in ABL is established and is guided by Labor Act. Its role and influence varies from time to time. But Allied Banks union is strong enough to ply its role as it comprises of the employees of the Bank and the Bank is owned by the employees too. At the time, when Government was ready to sell the shares of ABL to general public, the Allied employees union was quite active at that time and they purchased 51% shares of the Bank. The union was quite unanimous at the juncture. It was the real representative of employees of the Bank. The banks president Mr. Khalid Latif, at that time, promoted and encouraged union activities to convince government to sell the Banks share to its employees. Unfortunately, with the passage of time, the union splited into segments due to different
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policies and interests and is no more active and efficient as it was in the past. Government and the new top management snub it and its activities as they have their own axe to grind. Now the union is weak and under pressure currently.
4.8.17Terms & conditions of Employment

As mentioned earlier that ABL is governed by Service (Staff) Rules, 1981, so it has certain and specified terms and conditions for its employees which must to be fulfilled by them, so Every employee shall confirm to and abide by these rules and shall observe, comply with and obey all orders and directions which may from time to time be given by any person or persons under whose jurisdiction, superintendence or control he may, for the time being, be placed. Every employee shall sever the bank honestly and faithfully And shall maintain strict secrecy regarding the Banks affairs and the affairs of its constituents. He shall use his utmost endeavors to promote the interest of the Bank and shall show courtesy and attention in all transactions which officers of Government, the Banks constituents and the Public. No employee shall be member of any political party, take part in, subscribe in aid of, or assist in any way, any political movement in Pakistan or relating to the affairs of Pakistan. No one shall express views detrimental to the ideology of Pakistan No employee shall leave his station overnight, shall not absent from Bank without prior permission from competent authority. No one shall make any personal representation direct to the Board of Directors/Government/Government Agency. No employees shall bring or attempt to bring political or other outside pressure/influence directly or indirectly to beet on the authority.
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No employee shall accept any gift from a constituent or a subordinate employee of the Bank.
Except with the permission from competent, no employee incurs an unsecured debt to an extent exceeding his emoluments of three months.
No speculation in stocks, shares, giving of guarantee without permission from competent authority. No employee shall marry a foreigner without permission of president except Muslim citizen of India. No one shall open and maintain an account with ay other bank is banker without previous permission from competent authority.
An employee guilty of infringing any of the provision of rules mentioned will render himself liable to disciplinary action including dismissal from service.
4.8.18 Punishment
Without Prejudice to the other provisions contained these rules where an employee who commits breach of the regulations/other orders issued to him in connection with his official work or who displays negligence, inefficiency, or indolence or who knowing does anything detrimental to the interest of the Bank or is guilty of any other act of misconduct or in subordination the competent authority may impose on him one or more of the following penalties: reprimand; postponement or stoppage of increment or promotion; forfeiture of pay for any period of unauthorized absence from duty; recovery from pay of the whole or part of any pecuniary loss caused to the Bank by the employee; degradation to a lower stage of pay in his grade to a lower grade; compulsory retirement from service;
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removal from service which dose not disqualify for future employment or calls upon an employee to resign from service; and
Dismissal which will involve permanent disqualification for future employment in the Bank.
CHAPTER. 05 FINANCIAL STATEMENTS ALLIED BANK OF PAKISTAN LIMITED
BALANCE SHEET PROFIT AND LOSS ACCOUNT COMPREHENSIVE INCOME CASH FLOW STATEMENT
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CHANGES IN EQUITY
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48
49
50
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CHAPTER NO.06 My Personal Experience
PAYMENT OF CHEQUES ACCOUNT MAINTENANCE REMITTANCE DEPARTMENT OTHER WORK DONE
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My Personal Experience 6.1 PAYMENT OF CHEQUES
The first work that was assigned to me was Scrutiny and payment of cheques. It is considered, as the simplest work in consumer banking operations, but actually it is not that simple. The cheques that are presented for either payment or for deposit are the main points where most of the frauds occur. Due to this fact, the Token clerk must be vigilant in his job. There are few points to be noted while scrutinizing a cheque for payment or deposit, Date of the cheque Signatures of drawer Signature of Presenter Amount in figures and words Branch stamp Account number of the drawer Crossing in favor of any other person
Cheques for cash payment are taken from presenter, scrutinized and the presenter is issued a token. But the cheques, which are presented for deposit in accounts of customers, are not taken against tokens, rather a pay-in-slip is to be filled in and the cheque is presented along with that slip. As the cheques are taken for deposit in customers account, a Cheques Receipt Summary is prepared in which cheques are entered according to their category, i.e., Transfer Delivery, Clearance or Collection.
6.2
ACCOUNT MAINTENANCE
The second major department in consumer banking is the Maintenance of different types of Accounts. This department consists of the following main tasks:
Account opening procedures

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Issuance of cheque books Deposit and withdrawal of cash Monthly provision of profit Posting of deposit and withdrawals in computer Issuance and payment of Term Deposit Receipts Issuance of Call Deposit Receipts Daily balancing of accounts in computer with other summary sheet Printing of daily transactions Printing of Balances of all types of accounts (Jotting) Checking of print-outs
All these procedures, except few, are daily repeated. I have done many of these works with my own hands and watched carefully the remaining procedures. I have also operated computer for a few days, which mainly comprises of posting of cheques and vouchers, posting of transfer delivery and clearance cheques, balance confirmation etc. I have also issued Call Deposit Receipts. The reason for this activity is that the customer wanted to take out there money from the accounts in order to skip the deduction of Zakat. For this purpose, Cars were issued having both applicant and beneficiary the same person. I havent issued any Chequebook personally, but the procedure is very simple for issuance. I have opened only one account (Current), and I think it to be sufficient to know the procedure.
6.2.1
Procedure of opening of an account:
In order to open an account, first of all the customers have to fill a form prescribed by the bank. The person is required to bring some reference or introduction for opening of the account. Some important information regarding introducer e.g. the name and a/c number of the introducer is written on the space provided on the specimen signature card. Then in order to Department of HRM 54
find out whether he is a true introducer or not, a letter is sent to him thanking him for this introduction so that any thing wrong may come into notice. There are different requirements for different types of accounts and a/c holders.
6.3.
Remittance Department
The fourth major department in consumer banking is the Remittance department. This department is meant for transfer of money to same city or other cities. Money can be remitted in the following ways: The first and the most popular way of remittance is Demand Draft. During the onemonth training, I have worked on every aspect of Demand Draft from issuance to payment. Procedure of issuance is the same as that in the manuals of MCB except that two excise duty vouchers are prepared rather than one, Rs.2 voucher is prepared for sundry creditors and Rs.2 for excise duty. The Head Office notifies this by a circular during training. Telegraphic Transfer is the second way to remit money. I have made and processed only one TT during my training session due to lesser business of TTs. Third method is the Mail Transfer. MT business in Rawalakot branch is also low. I have made two MTs during my training session. Pay order is the last instrument to remit money. I have made about six to seven Pay orders. The procedure is almost the same as those of DD, TT & MT except that the date on PO leaf is not entered at the time of issue. Moreover the pay order register is required to be balanced daily for POs issued and paid during that particular day. Another type of remittance instrument is the Rupee Travelers Cheque. Rawalakot branch also deals in the issuance and encashment procedures. Unfortunately I have not worked personally on Rats.
6.4.
OTHER WORK DONE

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The Consumer Banking is not restricted up to the above-mentioned departments. There are some more activities at the branch, which are as under. Lockers The Rawalakot Branch also extends the facilities of lockers. Lockers are safe custody boxes for keeping valuable things of customers. During the training I also got the opportunity to work on Lockers. Cash Closing at Day End. I have also watched the process of cash closing at day end. I have tallied the payment and receipt sheets with Token register & cash books and also checked the vouchers and cheques paid. Preparation of Transfer & Summary Sheets I have made transfer sheets and summary sheets at the branch. This process is rather a critical one because the balances of these sheets must tally with the printed balances of computer each day.
CHAPTER: 07
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PROBLEMS AND RECOMMENDATIONS
PROBLEMS
RECOMMENDATION
Chapter: 07
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Problems and Recommendations

In the current scenario of globalization, perfect competition in banking sector and slump in the words economy, when we study the performance of ABL, it is considered that on the whole the bank is contributing a lot towards the industrial development and capital formation in the country. As it is exhibited from the data regarding the banks financial performance as shown in this report that the bank is sharing major banking business of the country. Further, the polices and schemes as are introduced and carried on by the bank are of great source of half in industrial and trading growth. All these things reflect the great and valuable efforts on the part of executive command of the bank. But as it is said that nothing is perfect in this world, this might true in the case of ABL too. So far as my own observations are concerned, I have concluded a major drawback in the inner current banking system. In addition to that I have also learnt some disciplinary wrong practices; I discuss these one by one.
7.1 Problems
7.1.1 No proper guidance There are so many customers both literate and illiterate who even do not know to fill cheques, pay in slips, application forms, etc. They fritter a lot of precious time of the bank staff. 7.1.2 Lengthy Procedure The book keeping system and filing system of the bank is so lengthy, ring and time consuming that its output is adversely affected. There is an element of sluggishness associated with it too. 7.1.3 No Equality in Attitude The behavior of almost all the bankers with all of their customers is not the same; they pay more attention and good services to some of the customers and neglect a major portion of them. Some of the customers approach to the bank officials and get their work done before others. It is definitely not good practice.
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7.1.4 Favoritism No doubt that bank enhances credit and finance facilities to persons and parties seeking such financial assistance for the establishment of industries or trading units, or for enhancement, of already existing projects. But the bank provides who may also ensure the prepayment of amount advanced by providing securities arrangements to comer the risk of non-repayment. Exactly, the bank should do so because later on the when question of repayment of debt arises the condition of being financially sound providing securities only can satisfy this question. Sometimes, some person or group of persons chalks out a very useful, sound and successful plan, goes to the bank and request to advance them credit facility. But the pray being not financially sound and having no arrangement of securities. So the bank rejects application of such pray. In this way, such talented persons of country discouraged. This happens usually due to favoritism, nepotism and red tapism.
7.2 Recommendation
7.2.1 Effective Advertisement The bank really lacks a sound advertisement, which could attract more and more people, and should not rest upon existing customers. The bank should launch luring advertising campaigns thought out the year to promote habit of saving in the people and to attract new deposits and sustain. 7.2.2 Proper Planning Bank should make a plan to accelerate its recover efforts on war footing and re-organize the recovery function on global basis. In addition to this, bank should tighten up control on expenditures, curtail extra lavishness and costs. Risky schemes should avoid in which return is uncertain. Right people for right job must be appointed.
7.2.3 Division of Labor

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If bank wants to get specialized in every walk of banking field then there must be division of labor to eliminate extra and un-necessary burden on the employee of the bank. Working conditions must be improved resulting in enhancement of efficiency of employee. 7.2.4 Concentration on Current Deposits More and more stress should be laid on acquiring current deposits and sustain existing ones in order to reduce cost (interest) on deposits. Deposits must be taken at a lower cost and given at higher interest rates to earn more profit. 7.2.5 Check On Expenditures Un-necessary and non-productive expenditures must be controlled and cut-down. Lavishness and extra-ordinary protocol for the entertainment of executives should be curtailed and abolished. 7.2.6 Proper Guidance Bank should adopt such an induction plan that when a customer opens his account with the bank he should be supplied with a booklet written in simple language which enables him to know the procedure of filling the cheques, pay in-slips, etc. It will save a lot of the banks staff precious time during the conduct of banking business and also ease the customers. 7.2.7 Recruitment Procedure There should be an open invitation to competitive and qualified professional degree holders and young energetic blood purely on merit basis to get the efficient and hardworking employee. Political pressures, influential approaches should be accommodated.
7.2.8 Qualitative Advancing /Financing The bank should avoid as much as possible to give loans to the politicians, ministers and corrupt people or groups because recovery of loan is almost impossible form them. The
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honest and deserving industrialist will always repay the loan before time to maintain his reputation and credit standing in the eyes of bank.
CONCLUSION
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Allied Bank of Pakistan, no doubt, doing well in the field of banking and it is aimed to provide better services to its customers. It is specially performing its activities in the customer advances. It has a lot of potential to progress in future. The bank can do the good job of opening branches in the rural areas that will, not only boost saving but also help the people to raise their standard of living through these savings. The staff in the bank is found to be very cooperative towards subordinates. I wish that the bank may progress by leaps and bound, and keep on providing internship to students with the same dedication. Summing, I pay my deep gratitude to the bank for providing me with the opportunity of having internship with it.
Bibliography
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Doyle E.P Practice of Banking 3rd. Ed., Richard Clay, Bungay, Suffgolk, 1981, pp.
Meen S.A Money and Banking in Pakistan2nd.Ed.Royal Book Karachi, Pakistan,1977.pp.
Allied Bank Limited, Annual Report 2003 printed at a Elite Fax 2579536. pp.4, 6, 14, 59.
ABLMonthly Economic Letter Federal Budget 2000-2001, Researchwing, Karachi pp-33
www.abl.pk.com
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Allied Bank Of Pakistan (Ltd)

Chapter. 01 BANKS AND SCOPE OF BANKING

Department of HRM Faculty of Administrative Sciences Kotli (A.K)

Allied Bank Of Pakistan (Ltd)

BANKS AND SCOPE OF BANKING 1.1: WHAT IS BANK?

1.2: BANKING IN DEVELOPING SOCIETIES

Allied Bank Of Pakistan (Ltd)

1.3: NEW CHALLENGES OF CONTEMPORARY AGE

Allied Bank Of Pakistan (Ltd)

1.4: HISTORY OF ALLIED BANK LIMITED

1.5: Denationalization of Allied Bank Limited

1.6: Allied Bank Limited Today

Allied Bank Of Pakistan (Ltd)

1.7: Privatization of the Bank

Allied Bank Of Pakistan (Ltd)

1.8: Branch Network & Associated Businesses

Allied Bank Of Pakistan (Ltd)

1.8.1 Local Branch Network:

Total 69 39 62 100 104 67 52 63 61 40 35 45 34

1.9: International Operations

Allied Bank Of Pakistan (Ltd)

1.9.2 Global Transactions:

1.10: Associated Businesses

Allied Bank Of Pakistan (Ltd)

Commercial Lending: provides both fund as well as non-fund based

Consumer Banking: the Bank operates a growing credit card business,

Treasury Operations: the Banks treasury employs some of the

Credit Department: with its 59 year banking history, ABL is highly

CHAPTER. 02 PRODUCTS AND SERVICES OF THE BANK DEPOSITS ADVANCES

Allied Bank Of Pakistan (Ltd)

FOREIGN SERVICES UTILITY SERVICES

ABL MAHANA AMADANI SCHEME

2.0 PRODUCTS AND SERVICES OF THE BANK

Allied Bank Of Pakistan (Ltd)

A brief explanation of the above stated accounts is given below:

Allied Bank Of Pakistan (Ltd)

Fixed Deposit Receipts

Allied Bank Of Pakistan (Ltd)

2.2.1 Categories of Advances

Department of HRM Faculty of Administrative Sciences Kotli (A.K)

Allied Bank Of Pakistan (Ltd)

Allied Bank Of Pakistan (Ltd)

Confirmed LC Transferable LC Back to back letter of credit Stand by LC Sight LC Usance LC

2.4 Utility services

Department of HRM Faculty of Administrative Sciences Kotli (A.K)

Allied Bank Of Pakistan (Ltd)

2.5 ABL Mahana Amadani Scheme

Allied Bank Of Pakistan (Ltd)

Department of HRM Faculty of Administrative Sciences Kotli (A.K)

Allied Bank Of Pakistan (Ltd)

Brief explanation of these accounts is as follows: 3.1.1 CURRENT ACCOUNTS

CASH DEALING DEPARTMENT

Allied Bank Of Pakistan (Ltd)

Following requirements are essential to encash a cheque. No Stop Payment Instruction

Allied Bank Of Pakistan (Ltd)

No stop payment instruction is presented for the account. Instrument in Writing

STOP PAYMENT INSTRUCTIONS

Allied Bank Of Pakistan (Ltd)

COMPUTER TERMINAL PROCESS

Department of HRM Faculty of Administrative Sciences Kotli (A.K)

Allied Bank Of Pakistan (Ltd)

Allied Bank Of Pakistan (Ltd)

3.5.3 TYPES OF CHEQUE