THE BANK
The term "BANK" is derived from an Italian word "BANKO" which means "Bench" that is where people were meet and solve their financial matters.
The term bank is being used for a long time yet it has no precise definition. The basic reason is that the banks perform not just one but many types of functions originally the banks were supposed to make short term loans to the traders only. The banks now not only make short term loans to the formers, traders , industrialist etc. But also invest in a wide variety of long term earning assets.
The commercial banks also undertake and execute trust, deal in stock, shares and debentures, issue guaranties and indemnities underwrite and sell new securities, and deal in foreign exchange etc.
However some of the definitions of bank from different authors are as follows.
According to Dr. Hart
"Banker or bank is a person or company carrying on business of receiving money and collecting drafts for the customers subject to the obligation of honouring cheques drawn upon them from time to time by customers to the extends of the amounts available on their currents accounts"
In the words of G W Gilbert
"A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the borrower and lender. He borrows one party and lends to the another"
TYPES OF BANKS
1. Central bank or state bank.
2. Commercial bank.
3. Exchange bank.
4. Industrial bank.
5. Agriculture bank.
6. Investment bank.
7. Saving bank.
CENTRAL BANK
Every country has its central bank or state bank. Its major function is to carry out a country's monetary policy with an aim to safeguard its financial and economic stability. It has the monopoly of note issue. It is also the custodian of money market. State bank is the Banks bank and lender to the government.
COMMERCIAL BANK
Commercial banks are profit earning concerns. They receive deposits and advance loans to the borrows. They greatly help in financing for internal and external trade of the country.
EXCHANGE BANK
The main function of the exchange bank is to finance the foreign trade by the purchase and sale of foreign currencies in the form of drafts, bills of exchange, telegraphic transfers. They also perform the function of commercial bank. Receiving deposits and advancing loans.
INDUSTRIAL BANKSCommercial bank cannot afford to block their funds in long term investments. The industrial banks receive long term deposits and finance the industries by providing them long term credits. In Pakistan the Industrial bank named as Industrial Development Bank of Pakistan (I.D.B.P) was established in 1961 for this purpose.
AGRICULTURAL BANKAgricultural bank provides short and long period loans for financing agriculture. The agriculturists need short and long term loans for meeting their day to day and long term requirements for making permanent improvement in the land. In Pakistan Agricultural Bank is named as Agricultural Development bank of Pakistan (A.D.B.P) and it was established in 1961
INVESTMENT BANK
The main function of investment bank the merchandising of shares and other securities, managing and distributing the issue of shares and other securities.
SAVING BANKS
These are the institutions which are sponsored by the government for having facilities to the people and small means. These bank collect small saving of people and allow them to withdraw in small amounts. Also another institution i.e. National Savings is working in the same capacity.
HABIB BANK LIMITED
The working of the Habib Bank Limited was commenced on 25thAugust 1941 in Bombay and in 1948 it was established in Pakistan. It was the first Muslim Bank in the Subcontinent,
Now there are 1773 branches inside the Pakistan and about 66 Branches overseas providing financial services to its worthy customers.
Habib Bank is working for the last 50 years and become the largest commercial bank in the country. It has the Authorized capital of RS 5000 Million with a paid up capital and reserves of RS 858 Million and its deposits are more than RS 213 billion in approximately 10.7 Million accounts. It has the advances of 131 Million. Habib Bank has innovated a numbers of financial schemes like term deposits, Special notice term deposits, A.T.M. etc. As governments are hoping to be liberal and their policies are innovative and liberal the scope of banking is increasing and Habib Bank is on step ahead if the growth and participating very much in the economic growth of Pakistan.
Habib bank HEAD QUARTER is situated in KARACHI that building has highest number of stories in Pakistan.
Habib bank has basically 9 Regions all over the country those control the entire activity of Habib bank operation is countrywide.
REGIONAL HEAD QUARTERS
ZONES BRANCHES
1 Lahore Region 13 3132 Faisalabad Region 10 263
3 Islamabad Region 10 274
4 Multan Region 13 261
5 Karachi Region 15 204
6 Hyderabad Region 06 163
7 N.W.F.P. Region 10 261
8 Balochistan Region 02 46
9 Azad Kashmir Region 03 98
MISSION OF H.B.L.
To inherence the corporate culture in business society through quality oriented banking services. To increase the profitability of our shareholders through investing in financially sound and profit earning projects.
To maintain and increase the reliability and quality services to our accounts holders.
To strengthen the status economy through financing the export under control of state bank of pakistan.
To provide funds for increasing environmentalism, cultural and sociological thinking in society .
Lahore Region
1. Lahore Zone
2. Sheikhupura zone
3. Gujranwala zone
4. Gujrat zone
5. Hafiz Abad zone
DIVISION AT HEAD OFFICE KARACHI
1. Agriculture and small loan division .
2. Audit and inspection division
3. Cash and investment division
4. Computer service division
5. Customer service division
6. Corporate credit division
7. Engineering and Maintenance.
8. Finance division
9. General administration division
10. International division
11. Law division
12. Marketing and development division
13. O and M division
14. Planning development division.
15. Printing and stationary division.
16. Syndicated loans divisions.
17. Trade information division.
18. Training division.
1 AGRICULTURE AND SMALL LOANS IVISION
Divisional Head
Small loans department
2 AUDIT AND INSPECTION DIVISION
Divisional Head Management Audit
Circle Audit circle audit implementation
A & B Karachi (Karachi B & c) Wing
Circle Chiefs Circle Chiefs inspection team
3. CASH & INVESTMENT DIVISION
Divisional Head (SVP)
Vice President.
4. COMPUTER DIVISION:
Divisional Head (AVP)
Lahore Hyderabad Quetta Peshawar Islamabad Faisalabad Multan
5. CUSTERMER SERVICES DIVISION:
Divisional Head
SP & VP
Branch Opening Cell Haij Cell Deptt for T.J Cell
Overseas Pakistan
6. CORPURATED CREDIT DEVISION:
Divisional Head (SVP) (EVP) (AVP)
7. ENGINEERING AND MAINTENANCE DIVISION:
Divisional Head (EVP)
8. FINANCE DIVISON :
Divisional Head (SVP) (EVP)
9. GENERAL ADMINISTRATION DIVISION:
Divisional Head
|
Purchase and Insurance security war Housing Deptt.
Expenditure cell cell
Control deptt.
10. INTERNATIONAL DIVISION:
Division Head (SVP) (A.P)
11. LAW DIVISION:
Executive Incharge (AVP)
|
Divisional Head (SVP) (VP)
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Litigation Non interest Recovery Zakat
Cell Banking deptt. Cell Cell
12. MARKITING AND DEVELOPMENT DIVISION:
PUBLIC RELATION PROTOCOL/TRAVEL SPORTS & CREDIT CARD
Department.13. O & M DIVISION:
Divisional Head (SVP &VP)
14. PERSONAL DEVISION:
INVESTGATION CENTERAL HOUSE Overseas personnel
Department finance committee Cell
15. PRINTING AND STATIONARY DIVISION:
Divisional Head (SVP &VP)
16. SYNDICATED LOAN DIVISION:
Divisional Head (SVP & VP)
17. TRADE INFORMATION DIVISION:
DIVISIONAL HEAD (SVP &VP)
|
Centeral Main Deptt School Banking
18. TRANING DIVISION:
Divisional Head
Trg. Institute Trg. Institute Trg. Institute Trg. Instute
Lahore Islamabad Karachi Multan
REGIONAL HEAD QUARTER
REGIONAL CHIEF EXECUTIVE
|
GM GM GM GM GM
Account Audit Finance M.I.S Dept. R&D
ZONE
|Zonal Chief
|
Staff Manager Staff officer
BRANCH
Manager
|
Sub. Manager
|
Cashier Guard Assistant
PRESIDENT
1. To implement the polices chalked out and decision made by the board of directors
2. To look after the affairs of the whole origination
3. To maintain good relation with the big Clint of bank in the interest of the origination
4. To promote the business activities of the bank
5. To find new areas for investment
6. To make liaison with the government and state bank
BORD OF DIRECATORS
1. To make the policies in order to promote the business of bank.
2. To declare the profits on deposits.
3. To announce the rate of interest on advances and loans.
4. To make the policies for the welfare of bank employees.
ZONAL CHIEF
1. To make visit at the branches in order to promote the business activities and make the discussion at the spot under his discriminatory powers.
2. To promote the business activities.
3. To make the relation with the industrialist business man Agriculturist etc. for the promotion of banking activities.
4. To solve the union problems.5. To approve loans for heavy industries i.e. big amount of loans.
BRANCH MANAGER
1. To look after the affairs of the branch.
2. To meet the depositor and borrowers and solve their banking problems.
3. To make try for increasing the profitability of the branch by capturing low cost/cost free deposits and giving the secured advance to the valued clients.
4. To reduce the expenses of the branch.
5. To make relation with the industrial business man agriculturist, industrialist of the branch.
6. To sanction small amount of loans and judge whether the client is genuine.
7. To solve the problem of the bankers working under him.
HABIB BANK LIMITED NOSHERA VIRKAN BRANCH
H.B.L branch is situated at NOSHERA VIRKAN which is the center of cotton and grain business. According to its location majority of its accounts holders are Cotton Broker , Traders and other business concerns. This branch is working under the experience hand of Mr. Mubashir Iqbal he is very hardworking and friendly to subordinates. He is used to go to his subordinate himself quires and other matters however a complete system of intercom is also installed in the branch in order to make the coordination .As the working of the branch is organized so different are made in order to make the working easier and error free.
The bank also issues creation form for the television license, account opening , deposit slip etc are also available at this place. Cheque books are also made by the persons at the counter.
GENERAL BANKING
ACCOUNT OPENING DEPARTMENT
This department is under the supervision of Mr. Mubashir Iqbal an ambitions young officer. Applications are received here and after the scrutiny of all the requisites the account is opened. There are mainly two types of accounts.1-CERRENT DEPOSIT ACCOUNT. (CD)
2-PROFIT AND LOSS ACCOUNT. (PL)
3-CALL DEPOSITS
Now profit and loss (PL) is divided into four types:
1-Profit and Loss Saving Account (PLS).
2-Short Notice Term Deposits Account (SNTD)
3-Term Deposit Account.
4-Golden Investment Scheme.
Now Short Notice Term Deposit (SNTD) is further divided into two:
1-Ordinery Term Deposit Receipt (TDR).
2-Khas Term Deposit Receipt (Khas TDR).
EXPLANATION:
1.CURRENT DEPOSIT:There accounts are opened by Rs. 500. No profit or interest is given on these accounts. These types of accounts are mostly maintained by the businessmen who may draw money at any time. Zakat is also not deducted on these accounts and no any notice is required for the withdrawal of money.
2-Profit and loss account:
A. PROFIT AND LOSS SAVING ACCOUNT(PLS)
This account may be opened by RS. 500. After every six months profit/interest is given on this account and the rate of profit is declared by the Head Office Habib Bank Limited. This year the management of the Habib Bank has decided to give the profit of 8.10% on their saving depositors . A 7days notice is required to draw the money exceeding RS. 15000, However bankers are used to give the relaxation of two, three thousands to their customers. A cheque book containing 10 leaves is given to the account holder which costs to him for RS 10 Mostly persons on jobs maintain these types of accounts. Zakat is also deducted on these accounts on the first of the Ramzan. A new tax i.e. with holding is also levied on the profit of the saving account. The rate of the with holding tax is 10%.
B. SHORT NOTICE TERM DEPOSIT:
Short notice term deposit accounts are categorized into three categories That are as under:
1. 7-Days notice.2. 15-Days notice.
3. 30-Days notice.
These accounts are opened for 7, 15,or 30days. But these can be encashed at any time. The rate of interest on these accounts is lesser ordinary PLS. Saving account. If it is encashed before its maturity the rate of profit is further reduced. With holding tax is also deducted on the profit .
This year the rate of interest on SNTD offered by the Habib bank isFrom 7 to 29 days 6.00%
For 30 days and above 6.60%
C. TERM DEPOSIT RECEIPT:
These accounts are opened for 1 month, 3 months, 6 months, 1year and so on. The rate of interest/profit goes on increasing as the time /period of the deposit is increased. These accounts can also be encashed at any time and ordinary PLS rate is given if these are encashed before its maturity. With holding tax of 10% is also deducted on the profit of TD RS. The of
Profit/interest announced this years are as under:
PERIOD RATE01 month 8.60%
02 month 9.00%
03 month 9.40%
06 month 10.50%
01 year 11.00%
02 year 11.60%
GOLDEN INVESTMENT SCHEME:
A Golden investment scheme is offered by the Habib Bank which offers you a rate of 14.50% per annum and the time limit for the said scheme is five years or seven and a half years or so . This scheme doubles the amount after 5 years and in years the amount is three times. But if the amount is drawn before its maturity no such profit is given on this behalf.
CALL DEPOSITS:
These are another type of accounts opened by the Government or companies. Construction companies/organizations require some percentage of total amount of the total contract to be deposited by the contractors as a security. Like when applications for shares are called or when some plots in a housing colony is to be allotted certain amount is called as a security that the applicant is genuine, these accounts are called call deposits. These accounts are refundable and no profit or deduction is made on this account.
FOREIGN EXCHANGE ACCOUNT:
As the Pakistani currency accounts are opened the requirements are same for the foreign currency accounts. All the transactions are made in the foreign currency in which the account is opened.
REMITTANCEDEPARTMENT:
As it is the function of the bank to remit the money to any place where there is a bank. It is the most easiest and safest way to send money to any place. Bank charges menial amount as a commission for the remittance. Here in the Habib bank Branch there is also remittance department. There are mostly four methods to remit the money. They are:
1. Demand Draft (DD).
2. Mail transfer (MT).
3. Telegraphic Transfer.(TT)
4. Pay Order (PO)
Now these all are discussed here separately in detail:
1. DEMAND DRAFT (DD).
It is the most commonly method used for the remittance of money. It is very simple, firstly a form is to be filled in , in which all details are specified that where and in which branch the draft is to be sent then the money is deposited which is called draft and money can by drawn after showing to the bank of the specified branch of the bank. Only specified person can draw the money on that draft. Another method to secure the payment of the draft could be the crossing of the draft which means that it will only be deposited in the payee's account.
To make it more secured and safe the bank has coded the amount exceeding Rs.15000. Only the banker or the person knows the actual amount of the draft. In return bank gets a commission which is its mode of earning.
The bank's commission rate is as under:
Rupees Min. amount %age
Up to 10,000 15 20%
10,001-100,000 20 15%
100,001 of above 150 07%
Now with holding tax is also levied, so bank also gets 20% with holding tax on the sum an excise duty of RS. 1 per leaf.
Now if the draft is to be canceled or duplicate of the draft is to be needed in case of misplacement Rs.20 is to be paid.
2. MAIL TRANSFER (MT)
The money is transferred through mail. One branch of the bank sends advice to the branch of the same bank to credit the account of payee. In this type of transfer the payee must have the bank account . For example, now a days PTV's licensees are made all over the Pakistan. The cash is deposited in the banks and after a week the bank mail transfers the amount to the PTV's Islamabad account. Bank also gets commission on the mail transfers, the commission rate is:
Rupees Min amount %ageUp to 10,000 15 20%
10,001- 100,000 20 15%
100,000 or above 150 .075%
The bank also charges the postage expenses of Rs.12 on it.
TELEGRAPHIC TRANSFERS (TT)
It is a good safe and fast method of transferring money from one place to another. The advice is sent through the telegram and the bank to which the advice is made reconfirms that whether the advice is made or not. After the confirmation the money is paid to the payee. Telegraphic Transfer could be made by giving the name and the telephone number of the payee but account number is considered good and sage . The amount exceeding Rs.15000 is coded in order to keep security.
Bank charge commission on TT's and the rate is as under.
Rupees Min. amount %age
Up to 10,000 15 20%
10,001-100,000 20 15%
100,001 or above 150 .075%
The bank also charge the telegram expenses of Rs.20 TT
PAY ORDER ( PO )
Pay order is less expensive method of transfer money. Normally this method is used to transfer money inside the city. If it is used city wide, it takes a long time.
The bank charge Rs.10 which is flat foe the pay order and an excise duty of Rs.1 per leaf. With holding tax of 20% on the sum is also taken from the party.
Now if the pay order is to be canceled or duplicate of the pay order is to be needed is case of misplacement Rs.20 is to be paid.
LOCKERS AND BILLS DEPARTMENT:
Lockers are also available at Habib bank limited NOSHERA VIRKAN. The procedure to get a locker is same as of account opening and RS 600 is to be deposited as a security fee which is refundable. There are three types of lockers available i.e. small, medium, and large. The bank charges Rs.300 per annum for the small locker, RS 500 the medium and Rs.800 per annum for the large size locker.
People get the lockers for the security of precious items which include jewelry, bonds, documents etc. To ensure safety and security two key system is used. Firstly the lock holder is verified and then in the presence of banker the locker is opened with the help of the key which is in the custody of lock holder and is closed with the banker's key. Without these two keys it couldn't be opened or closed.
Bills here doesn't mean the utility bills like electricity bills or gas bills, but in the bills section those cheque are presented that are for the outstation or in station of any branch of any bank.
Now the procedure of collection is different for in both the cases, the outstation cheques are called the OBC cheque. Which stands for outward bills for collection or these are the collections inside the country or city wide and the in station cheque are those which belongs to the Lahore, may be from the Habib bank or any other bank.
Of the cheque is of Habib Bank, the cheque is sent to the HBL main branch GUJRANWALA the HBL GUJRANWALA branch sent those cheque to the branch where the cheque belongs. And after confirmation, in return, sent the IBCO inter Branch Credit Order. After the reception of the IBCO the HBL NOSHERA VIRKAN branch credit the account of the customer.
Now if the cheque belongs to the GUJRANWALA but the bank is other than
the Habib Bank i.e. UBL, MCB, NBP, etc, those cheque are sent to the
HBL main branch GUJRANWALA and from GUJRANWALA the banker will go to
the collection cell which is located at main branch GUJRANWALA.
Here all the representative from all the banks met and settled their inter
bank transaction after the confirmation from the respective bank. The
amount will be credited in the account of the Habib Bank at State Bank
and from their IBCO will be issued in the name of GUJRANWALA main
branch and further main branch will issue the IBCO to the NOSHERA VIRKAN branch.
Now for the outstation cheque the procedure is different. These cheque are sent to the Habib Bank main branch of that city where the cheque belongs. That main branch collects the money and sends a document which is name as IBCO which stands for inter branch credit order to the Habib bank NOSHERA VIRKAN Branch. Bank after the reception of the IBCO credits the account of the person who presented these cheques for collection. Now there are two types of outstation bills for collection,s . These are as under.
CLEAN
Clean OBC includes those instrument,s which do not need any documentation to be attached with it for the purpose of collection. This includes cheque draft etc. The bank charge commission on the clean OBC as .20% of the amount of the cheque or a minimum of Rs, 10. An additional amount of Rs, 30 for the Courier or Rs, 12 for the postage as instructed by the customer credit order to the Habib Bank Chowk Azam Branch and bank after the reception of the IBCO credits the account of the person who presented those cheques for collection. Now there are two types of Outstation Bills for Collection. These are as under.
CLEAN
Clean OBC includes those instruments which do not any documentation.To be attached with it for the purpose of collections. This includes cheque Drafts etc.
DOCUMENTARY
Documentary includes those instruments which includes an additional
documentation attached with that instruments for the collection. The
bank charge commission on documentary OBC as 35% of the amount of
that instrument or a minimum amount of Rs 25 an additional Amount of
Rs 30 for the courier or Rs 12 for the postage as instructed by the
customer .
If the instrument is dishonored or returned handling charges of Rs. 25/= per cheque or any instrument will be charged by the bank.
TRANSIT DELIVERY AND CLEARINGDEPARTMENT.
This department deals in those cheque and draft,s which are drawn upon the Habib Bank Branch.
The transit delivery section received those cheque and drafts which are through any branch of Habib Bank after proper verification of the genuine of the draft or cheques , this branch transfers the inter branch credit order IBCO to the main branch which further transfers the IBCO where the cheque or draft was presented the clearing section deals in those cheque and drafts which are drawn on Habib Bank. From other banks like UBL, MCB, NBP, etc.
The procedure is same that after proper verification the IBCO is transfer to the main branch which sends the credit note to the State bank,
And State bank credits the account of that bank with the specified amount the bank charge noting on those cheque which belongs to Habib Bank but if the other bank is involved the bank will charge the commission and courier charges.
CURRENT DEPOSIT & PLS SAVING DEPARTMENT
Current deposit and profit and losses department at Habib Bank branch is working for the maintenance of the account holder's record. This department maintains all the record regarding the account of the account holders, specimen signature card is with them and the verify the signature of the account holders.
All cheque drawn of Habib Bank branch are sent to this department and
they properly judge and verify the validity of the cheque and after
verification they sent it to the cash department. Firstly that verify for the
signature then they see whether the cheque is within the due date, is
there a balance in the account of the account holder. After the
verification of all these pre-requisites the cheque is cleared. It is also the
function of this department to maintain the record of all transactions of
the day certain calculation of interest of profit is also made by them.
They also prepare the statement of account holders. All the records of
the account holders their transactions, their profit on PLS accounts
interest on SNIDS, TDRs etc. is maintain by this department.
CASH SECION
Like all the banks there is cash counter is the Habib bank branch working two or three bankers. They pay the cash to the cheque, which are properly verified from the CD & PLS, Department. People cashier returns a counterfoil of the deposit slip by stamping it with cash receipt stamp.
Cashier also maintained a register in which all the transactions at the cash counter is maintained. At the end of the day cash in hand must tally with the balance in the register.
TOKEN DEPARTMENT
All the cheque holders go to this department. They present the cheque to the person at the department. He checks that whether the cheque belongs to the same branch, the amount in words and figures is same, cheques is not outdated, there signatures are there etc. Then he allots a number to the cheques and a token is given to the cheque holder and the cheque is sent to the CD & PLS Department. After the proper verification the cash is paid to the cheque holder from the cash counter after taking token from him.
Transfer book is a book in which all the transactions of the day is written and the balance is tally with the cash book. The translator book is also maintained by the said department.
ADVANCES / LOANS SECTION
This dept. has been working under the supervision of knowledgeable experienced & well qualified banker Mr. Saleem Mirza who has been serving this bank for last 20 years.
This Dept. has boon playing one of the primary functions of the bank because a bank is the organization that accept deposits & give advances.
There are basically two types of loans:
a) Fund baseb) Non fund base
a) in fund base the cash is involved.
b) While is non fund base cash is not involved.
These are following types of advances those are given by the BANK.
1. Cash Finance (CF)
2. Running Finance (RF)
3. Machinery Loan.
4. International Development Agency Loan(IDA)
5. Transport Loan.
6. Staff Loan.
1. CASH FINANCE (CF)
Cash Finance is the biggest loan given to the businessmen, industrialists, its limit is in crores and bank do require security for this purpose. After the proper investigation and documentation these finances are given and genuine property is pledged as a matter of security.
These loans are taken for the purchase of stocks etc. The bank appoints its staff of two or three persons at the place where that stock is lying. Bank also keeps the record of the stock and current position too. A notice is also written at the place that the stocks are pledged with the bank. To get these types of loans prior permission from the zonal office of the Habib bank is also required. The bank gets back its principal amount and also markup for the loan. The rate of markup is Rs.0.52/1000 per day and to calculate the markup for finance period as per formula is:
Amount of Amount ofFinance + One installment
MARK UP=------------------------------------ Rate of Mark-up
2
Mo. of Period of
Installment one installment
Documents Require for the Loan.
1.Demand Promissory Note(DP Note)
This document is filled in by the party that they promise to pay the amount whenever it is demanded.
2. Facility Letter:
This is the requisition of the finance facilities to the bank By the party.
3. Balance Confirmation:
After the approval of the loan this letter is written by the Party that such amount is in the account of the party.
4. Letter of pledge (IB26)For the getting of the cash finance a letter of Pledge is to be given to the bank that such property is to be pledged with the bank as a security.
5. Letter of Guarantee(IB29)A letter for the personal guarantee is also required in which the guarantee from a sound person to the party is attached with the application
6. Agreement for Financing(IB6)This agreement for the short term medium term/long term on the mark up basis. At most these are the documents required in attaining of the loan.
2. RUNNING FINANCE:
Running Finances are also given for the purchase of stock etc. But its limit is not too much. Normally upto RS 15,00,000 is given as a Running Finance and no staff is appointed. This is termed as Hypothecation, which means that party is wholly liable for the stock and payment of the principal amount and markup. The procedure is almost same as for the cash finance and the loan is given to thoseparties which are able to prove its genuineness and satisfies the bank. The bank also pledges the genuine security of the party which normally more valuable then the amount of loan. To get this type of loan prior permission of the zonal office is necessary.
The rate of mark up is RS 0.52/1000 per day and to calculate the mark up for the finance period as per formula is:Amount of Amount of
Finance + one installment
Mark Up----------------------------- Rate of Mark up
2
No. of Period of
Installments One Installment.
Document Required for the Loan:
1. Demand Promissory Note(DP Note)
The party that they promise to pay the amount whenever it is demanded fills this document.
2. Facility Letter.This is the requisition of the finances to the bank by the third party.
3. Balance ConfirmationAfter the approval of the loan the party writes this letter that such amount is in the account of the party.
4. Letter Of Equitable Mortgage (IB24)
For the getting of the running finance a letter of equitable mortgage is to be given to the bank that such property is to be mortgaged with the bank as a security.
5. Letter Of Guarantee (IB29)A letter for the personal guarantees is also required is which the guarantees from a sound person to the party is attached with the application.
6. Agreement for Finances (IB6)This agreement for the snort term /medium term/long term on the mark up basis. At most these are the documents required in attaining of the loan.
Letter of Hypothecation (IB25)
This letter that for all types of stock the party is liable and bank not needs to appoint any person.
3. MACHINERY LOAN
Certain loans are given for the purchase of machinery. These loans are called Local Machinery Manufacturing Loan (LMM LOAN). The bank finances for the machinery, which is manufactured in Pakistan. Like other loans after the proper verification and proper documentation and
With the prior approval from the zonal office, these loans are given. The bank pledges some genuine property as a security. Personal security is also required in the getting of this loan. The loan is to repay in certain installments which includes the mark-up also. Normally these loans are for the period of five years and first six or three months are exempted from the installments as the ease or as the terms and conditions may be. The rate of the interest to be paid by the party is 8% per annum.
DOCUMENTS REQUIRED FOR THE MACHINERY LOAN:
1.Demand Promissory Note(DP Note)
These documents filled in by the party that they promise to pay the amount whenever it is demanded.
2.Facility Letter.
This is the requisition of the finance facilities to the bank by the party.
3.Balance Confirmation.
After the approval of the loan the party writes this letter that such amount is in the account of the party.
4.Letter Of Pledge.(IB26)
For the getting of the machinery loan a letter of Pledge is to be given to the bank that such property is to be pledged with the bank as a security.
5.Letter of Guarantee (IB29)
A letter for the personal guarantee is also required, in which the guarantee from a sound person to the party is attached with the
Application
6. Agreement For Financing(IB6)
This agreement for the short term medium term/long term on the
Mark up basis. at most these are the documents required in attaining of the loan.
INTERNATIONAL DEVELOPMENT AGENCY LOANS.
These loans are given for the purchase of foreign machinery , stocks, etc.
Though these loans are not in practice but there is a provision for this loan. The cause of in practicing of the loan may be the unawareness of the people about the provision.
The rate of interest on these loans is 11% per annum.These finances are provided by the World Bank.
DOCUMENTS REQUIRED ON/AFTER THE APPROVALOF LOAN.
1.In respect of the applicant.a. Sole Proprietorship
b. Partnership Concern Copy of registered partnership deed.
c. Limited Company.
- Copy of the Memorandum and Article of Association.
- Copy of the certificate of Incorporation
- Copy of the certificate of Commencement of Business.
- Resolution of the Board of Directors authorizing the management to obtain the loan from the Bank specifying the
purpose of the loan required for.
MODERN BANKING
1- A.T.M.2- MASTER CARD
1-AUTO TELLER MACHINE
Now a days banks are going to inter in the world of Computer & technology, Each & every mark which was done by the men is being done through computer
H.B.L. is innovators to introduce A.T.M. facility to its customer first time in Pakistan A.T.M machine basically provide 24 hours cash service
To its customer you just have to enter your code & amount requirement you could get it when ever you want in throughout 24 hours. A.T.M. card facility can be given to all those who are the customer of the bank But having certain average balance.
For getting A.T.M. card simple procedure is adopted.
-Filling of Application for A.T.M. card
-Attestified from two bankers.
-All kind of necessary related documents are also required.
WITHDRAWL OF CASH
a- On daily bases RS 2000/-
b- On weekly bases Rs.9000/- can be drawn.
c- Normally on deposit of 25000/- the limit of with drawl on deposit and RS 3000/- per 30 days
d- It is limited on the city only card of some city can't be used in other city.
e- There are total 20 A.T.M machines working in Pakistan,
Karachi 8
Lahore 4
Islamabad 3
Multan 1
Faisalabad 1
PESHAWAR 1QUETTA 1
A.j.k. 1
TERMS & CONDITION
1) Individuals personal current and PLS saving account holder can get A.T.M Card.
2) The HBAC shall allow the card holder access to the bank auto cash terminal to
- Obtain cash up to previously arranged limit
- Request a new cheque book
3) The HBAC is not transferable and shall be used exclusively by the card holder.
4) The cerd holder further undertakes to maintain sufficient funds to meet with drawls and he/ she undertakes not to overdraw the account unless over draft arrangements have previously been agreed to by the bank.
5) In the event of the card holder at any time drawing amount in excess of the credit balance the bank a will be entitled to create an overdraft in his account and card holder agrees to repay.
6) The card holder irrevocably authorized the bank to debit his/her A/C with the amount of withdraw.
7) The HBAC issued to the card holder shall remain at all times the property of the bank and shall surrounded to the bank on demand.
MASTER CARD
Master Card is another modern facility, which is given by H.B.L. Master Card is having following benefits & privileges
1) H.B.L. master card is accepted at over 123 Million establishment's word wide.
2) Free air travel accident insurance is provided.
3) This is the card having a photograph & signature of the cardholder, which gives the security against misused.
4) On this card cash withdrawal are available over 29000 outlets all over the world.
5) H.B.L. give an essay to manage monthly statement to keep track of your transaction.
TERMS AND CONDITIONS
1) The card can be used to individuals on their request having current /PLS saving Accounts.
2) The card must be signed by the card holder immediately upon receipt
3) The card is not transferable & shall be used exclusively by the card holder name.
4) All possible steps shall be taken to safe guard the card.
5) The cardholder irrevocably and unconditionally authorizes the bank to debt his/her account with the amount of withdraw/ purchase effected through the use of his/her card.
6) While using the caed, the cardholder should sign the establishment bills and charges slips with the same signature as that on the card.
7) The cardholder should promptly notify the bankin knitting of any changes in detail of employment/ bussiness or any change in address office/ Residence.
8) The joining fee, annual and other payments made by the card holder to the bank shall be non refundable
9) The card remains the property of the bank at all times and has to be returned by the cardholder on the bank's demand.
CURRENT ISSUE
World trend has been changing very rapidly and competition is becoming more & more stiff. Our country is the tendency towards the privatization now a days.
As we know H.B.L. is an Govt. organization and one of those organization those one suffering loses due to heavy operational & management expenses H.B.L. is bearing of its extra employee those are real cause of heavy management expenses. These expenses are making H.B.L weaker & weaker day by day. Now the Govt. has decided to privatize this org also along with other big organization.
If we technically examine the reason behind the down sizing then wecould see that H.B.L. is increasing 5% operational & management
expenses against the deposit while it 2% all over the world. In down
sizing employees of H.B.L regardless grade designation are offered a
golden shake hand scheme in which people are inviting to great benefits
against taking retirement from the job.
This Golden handshake scheme has following
main features.
GOLDEN HANDSHAKE SCHEME
The employees may excise their option during the period from
25th August 1997 to 10th Sep 1997.
This scheme is a one time offer . when that much expenses will be incurred these will also add up in loan those are given an normally 18% to 20% when
They will become of 20% to 25% those will be more expensive then that of any other bank which has expenses less than the Habib Bank does.
So now-a-days H.B.L. has been passing through the downsizing process president H.B.L. Mr.. Shasta Tarn has made several refers and it is one of more significant reform.INCENTIVES
1) Three months basic pay for each completed years of service.
2) An account equivalent to 10 years normal post retirement medical facility will be paid in lump sum to retiring employees.
3) Benevolent fund grant equipment to 10 years will also be paid in lm sum in advance at the time of settlement dues as a final payment.
4) The residential facilities for six (6) months after retirement and sale of can if already provided, furniture shall be allowed as a special case to all those executives, who accepts this scheme.
BALANCE SHEET as At 31st December, 1998
1998 1998
(U.S $000) (Rs.000)
ASSETS
Cash 328,672 14,478,010
Balance with other Banks 372,820 16,422,727
Money at call and short notice 75,566 3,328,669
Investment net of provision 1,262,669 55,620,567
Loans and advances
(Less loan loss provision) 2,712,554 119,488,013
Operating fixed assets 122,282 5,386,508
Capital work in progress
civil works 8,022 353,373
Other assets 920,935 40,567,215
------------ ----------------
5,803,520 255,645,082
LIABILITIES
Deposits and other accounts 4,800,264 211,451,635
Borrowing from other Banks 431,816 19,021,509
Bills payable 100,334 4,419,732
Other liabilities 284,393 12,527,502
-------------- ---------------
5,616,807 247,420,378
--------------- ---------------
Net Assets 186,713 8,224,704
--------------- ---------------
Cash Flow Statement For The Year Ended December 31, 1998
1998 1998
(U.S $000) (Rs.000)
CASH FLOW FROM OPERATING ACTIVITIES
Loss before taxation (71,150) (3,134,140)
Add: Dividend income ( 2,273) ( 100,134)
Profit on sale of fixed assets
Profit on sale of shares of Habib Credit
and Exchange
Bank Limited (currently Bank Alfalah Ltd) (27,650) (1,218,000)
----------- --------------
(101,462) (4,469,416)
Adjust for non-cash items
Depreciation 4,191 184,627
Provision for diminution in value of
investments 306 13,480
Provision against non-performing loans
and advances 8,289 365,131
Exchange gain on translation of assets
and liabilities of foreign branches 23,168 1,020,549
Provision for gratuity 9,848 433,800
Amortisation of deferred cost 6,581 289,909
------------ --------------
52,383 2,307,496
------------ --------------
(49,079) (2,161,920)
(Increase)/decrease in operating assets
Government securities 22,517 991,897
Loans and advances (43,067) (1,897,090)
Other assets (excluding taxation, voluntary
golden handshake scheme cost and amount
paid on behalf of Funds) (77,930) (3,432,816)
------------ --------------
(98,480) (4,338,009)
Increase /(decrease) in operating liabilities
Deposits and other accounts 134,350 5,918,076
Bills payable 11,991 528,244
Other liabilities 51,715 2,278,036
---------- ------------
198,056 8,724,356
---------- ------------
50,497 2,224,427
Cash inflow/(outflow) before tax and other adjustments
Payment to employees on account ofvoluntary golden handshake scheme cost (164,534) (7,247,705)
Payment of retirement benefits on behalf of
funds (63,308) (2,788,743)
Taxes paid (40,192) (1,770,415)
------------ --------------
Net cash outflow from operating activities (217,537) (9,582,4360)
------------ --------------
CASH FLOW FROM INVESTING ACTIVITIES
Investments (excluding Government
Securities ) 21,443 944,575
Sale proceeds on disposal of subsidiary 9,535 420,000
Dividend income 2,273 100,134
Fixed capital expenditure (11,084) (488,250)
Sale proceeds of fixed assets 804 35,385
----------- -------------
Net cash inflow from investing activities 22,971 1,011,844
----------- -------------
CASH FLOW FROM FINANCING ACTIVITIES
Borrowing from other banks, agents etc. 77,512 3,414,391
----------- -------------
(Decrease)/increase in cash and cash
equivalents for the year (117,054) (5,156,201)
Cash and cash equivalents at the beginning
of the year 894,112 39,385,607
------------ ------------
Cash and cash equivalents at the end of the
year 777,058 34,229,406
------------ -------------
Cash and cash equivalents at the end of the year
Cash 328,672 14,478,010
Balance with other banks 372,820 16,422,727
Money at call and short notice 75,566 3,328,699
------------ -------------
777,058 34,229,406
------------ -------------
FIVE YEAR PROGRESS
1994 1995 1996 1997 1998Paid-up-capital 2,478 2,478 2,478 2,478 2,478
Reserve funds 4,308 4,508 4,844 4,862 5,835
Total Assets 288,919 306,851 336,573 328,830 320,634
Total Deposits 166,834 178,647 194,661 213,595 211,383
Advances 102,811 105,502 119,256 121,909 119,758
Investment 57,024 64,874 63,148 60,929 55,445
Total Income 18,752 19,582 22,873 27,714 25,156
Total Expenses 17,986 18,916 22,164 31,121 28,282
INTERPRETATION
1) Paid –up- capital remained same during the last four year no minor change has been observes.2) Reserves has remained same in 1996 & 1997 but these are increased as compared to 1995 & 1996 the purpose may be was to retain more funds in hand for the planning & development of the bank.
3) In total assets smooth change can be observed the reason may be the increase of clients of banks because in only 1997 3 million clients bank with H.B.L. within the country & overseas branches.
4) Total Deposit of the bank has increased in each previous year the main reason of this increase is Bank's foreign currency deposits in Pakistan have increased.
5) Advances increased through all four years because banl has continued its policy of supporting the priorities established by Govt. and rendering services to all sectors of the economy with specific emphasis.
6) THE investment slightly declaimed due to increased diversion of bank's resources for financing the requirement of priority sectors of the economy.
7) Total Income & Total expenditure remained slightly unfavorable due to increasingly competitive environment and structural problems of public sector Financial institution continued to put sever strain on the bank's operation.
STATUS OF
H.B.L. IN BANKING SECTOR OF PAKISTAN
Total Bank H.B.L.Acquiring Acquiring
Total Schedule 8718 1773
=Domestic Branches
Total Assets 1540.69 362.33
(Billion) (Billion)
Advances 583.68 131.805
(Billion) (Billion)
Deposits 963.73 213.491
(Billion) (Billion)
Note:
On the bases of this Analysis H.B.L. is rated among the top 7 banks in
Financial set up of Pakistan.
SWOT ANALYSIS
STRENGTH
H.B.L. has very effective Network of branches all over the country. Every 10thPakistani is A/C holder of H.B.L. has made huge investment in almost all the important economic sectors of Pakistan. H.B.L. not only has made investment in industry but also in small scale industry as well. H.B.L. has efficient & less bureaucratic set up H.B.L. has introduced monthly income scheme that provides almost highest interest rate .A.T.M. Was introduced in Pak. By H. B. L. master card facilities is also available to the clients.WEAKNESS
No consumer banking has offered by the H.B.L. to its clients like phone banking evening banking etc.
- Bed Debt rate is very high no special effort has been made to recover the bed amounts.
- No marketing set up or structure is there. Most of people do not know how they have to promote their activities.
OPPORTUNITIES
H.B.L. is oldest bank in the country people do rely on this bank with some additional efforts bank can attract high deposit from Pakistan and overseas.
Instead of emphasizing on big & long term projects bank should concentrate on small scale investments heaving small maturity period.
Now-a-days H.B.L. has been investing almost 18% of its total investment on cotton business, along with investment in cotton it should invest in other cash crops, i.e. Rice, Sugar Cane, Tobacco, Wheat etc and there related agro based industry.
THREATS
First threat that bank has to face is the Privatization, down sizing & restructuring these changes could make drastic effects as well.
New incoming local & specialy foreign banks those are main cause of stiff competition in the market
DFI's are going very well in financial set up of Pakistan. So, these are also effecting on the operations of bank. Along with other threats the threat of corruption has vital importance.
CONCLUSION
Habib Bank limited was rated among first 500 banks of the world but now it is in among 1000 banks in the world, H.B.L. is not progressing due to political influence, in efficient management & corruption. If these draw backs have removed then bank will not only join its previous position rather we hope it will be rated among world top ten banks.
