Allied Bank Limited – Internship
Report
The function of commercial banking and application of the fundamental
principles of the depositor bank relationship have remained essentially
the same since about 500 B.C. Bank operation methods and procedures,
on the other hand, have undergone a constant process of evolution
because of economic growth, the mounting volume of transactions and
greater use of banking facilities.
As a result of these contributing factors, methods and practices necessary
to handle the increased volume of detail work have been developed while
an other and quicker methods have been adopted in order to cope with the
increased volume, much of which has been accomplished without unduly
increasing the cost of doing business.
During the last twenty years we have experienced a constant transition
from the old to the new - from manual to mechanical methods and
procedures - from old established practices to current techniques and to a
more scientific approach to the solution of problems brought about by
day to day changes in business practices.
OUR BANKING SYSTEM TODAY:
The Banking Business as we know it today is composed of three separate
and distinct principal functions.
1- The acquiring of funds to invest and loan.
2- The investing of such funds in loans and bonds.
3- The servicing of such funds, such as providing of checking/saving
facilities, and the collection of draft, notes and checks.
These functions, while differing in detail of operation, follow the same
principles established hundreds of years go by money-lenders and
exchangers.
Bank Definition
"Banks are institution that enjoys the public money doing nothing for the
public".
According the banking ordinance 1962 sec (6),
"Banks mean the acceptance of deposit for the purpose the lending or the
investment of deposit of money from the public repayable on demand or
otherwise withdraw able by cheques, drafts, orders, and otherwise"
Banker
Banker includes a body of persons whether incorporated or not who carry
on business of banking.
Customer
Customer is defined as one who has account with the bank, the word
customer signifies a relationship in which duration is not of the essence.
A person whose money has been accepted by the Bank on the footing that
they undertake to honour cheques up to the amount standing to this credit
is a customer of the Bank in the sense of the statute, irrespective of
whether his connection is of short or long standing. All the city branches
accounts are computerized.
Types of banks:
Today the principal banking and financial facilities available to serve
commercial are provided, and made available to them through five types
of banks.
1. Commercial Banks
2. Trust companies
3. Saving Banks
4. Saving and Loans association
5. Finance companies
Commercial Banks:
Commercial banks may be defined as "moneyed" corporations,
authorized by law to receive deposits and pay such funds to others on
order discount and negotiate promissory notes, drafts, bills of exchange,
and other evidences of debt; to lend money on real or personal security;
to make collectives; and conduct such other moneyed transactions as are
not inconsistent with its charter or the law under which it operates.
INTRODUCTION TO ALLIED BANK LIMITED
At the time of independence in 1947 the banks services were very badly
affected and by June 30, 1948, the number of offices of scheduled banks
came down to only 81 in the territories comprising Pakistan; but by
December 31, 1973 there were following 14 scheduled Pakistani
commercial banks with 3323 offices all over the Pakistan and 74 offices
in foreign countries.
1. National Bank of Pakistan
2. Habib Bank Limited.
3. Habib bank (Overseas) Limited.
4. United Bank Limited.
5. Muslim Commercial Bank Limited.
6. Commerce bank limited.
7. Standard bank Limited.
8. Australasia bank limited.
9. Bank of Bahawalpur Limited.
10. Premier bank limited
11. Pak bank limited.
12. Sarhad Bank limited
13. Lahore commercial banks limited.
14. Punjab Provincial Cooperative bank limited.
The facts show that commercial banking has made tremendous progress
and achieved a phenomenal growth since independence and that the
commercial banks have duly played a vital role as a mobilizer of people's
saving to constitute the most important source of financing in country
economy. However it was felt that these bank failed to ensure that the
resources so mobilized by them flow in those sectors of economy where
they would produce the goods and services needed badly by a very large
number of people in Pakistan.
HISTORY OF ALLIED BANK LTD
ABL is the first Muslim Bank established on territory that later on
became Pakistan. It was established on December 3, 1942 as Australasia
Bank at Lahore with capital of 0.12 million. At that time the chairman
was Kh. Bashir Baksh. ABL’s story was one of the dedication,
commitment to professionalism and adaptation to changing
environmental changes.
The bank's history is divided into many phases. During 25 years of united
Pakistan the bank advanced forward in all areas of its activities. 1970’s
were a difficult decade for all Banks of Pakistan. In 1971 East Pakistan
was separated and Australasia Bank lost its 50 branches and a lot of
capital as well. Nevertheless the growth remained steady.
In 1974 all the Banks were nationalized including Australasia Bank. The
small provincial Banks were merged into Australasia Bank. On 1st July
1974 the new entity was renamed as ABL of Pakistan Limited. Then it
started its operations as Public sector financial institution.
Different Phases of the Bank Are as Follows:
THE PRE INDEPENDENCE PERIOD (1942-47)
Australasia Bank had the unique distinction of being closely identified
with some of the country’s most Prominent leaders of the freedom
moment. Such as Mian Mumtaz Daultana (Board of directors), Mian
Iftikhar Hussain and Maulana Zafar Ali Khan.
The bank originally started its operation in the garage of Khawaja Bashir
Baksh’s bungalow (who was the chairman) near the Lahore Railway
Station. But the success of Bank enforced the directors to open its another
branch in Anarkali on 1st March 1944. Kh. Bashir was first chief
executive. He was the person who was really working in its development.
His sincerity of purpose can be judged from his great moments.
Another branch was opened at Amaratsar in 1945. In June 1946, the bank
earned the status of scheduled bank. During 1946-47 many other
branches were opened at Mcleod Road Lahore, Jallandhar, Ludhiana,
Agra and Delhi.
At independence the industrial and commercial sectors were
underdeveloped but ABL contributed a lot in the development of these
sectors.
AUSTRALASIA BANK IN PRIVATE SECTOR (1947-74)
It was the only full functional Muslim Bank on the land of Pakistan. On
August 14, 1947 bank was identified with Pakistan moment. Many of its
Board of Directors were prominent Muslim League leaders. Jallandhar
and Ludhiana branches were attacked by rioters because of Muslim staff
appointed in these branches of bank. But when the Pakistan flags wee
hoisted on the branches then all the banks in India were closed down.
With this, the bank lost a lot of capital and its deposits and almost 6
branches. During 1948 new branches were opened at Karachi,
Rawalpindi, Peshawar, Sialkot, Sargodha, Jhang, Gujranwala and Kasur.
But later on its branches were spread to Multan and Quetta. At that time,
the bank financed trade in cloth and food grains and thus maintained
consumer’s supplies during the riot effected early months of 1948.
Australasia Bank made a profit of
50,000/= in 1947-48.
In August 1948, Australasia Bank became the first Pakistani Bank to
successfully negotiate and open L/C for a Sialkot based importer of
books. So it also made correspondence relations with Midland (UK),
Chase Manhattan (USA) and Lloyds (India).
During the treasury functions of Federal Govt. of Pakistan and it also
acted as Banker to several local Govt. Bodies and to the Punjab
University during this period. Treasury functions were taken by National
Bank of Pakistan in 1949. In 1950-51, Chairman was replaced with his
own brother Kh. Sharif Baksh.
During 1955-56, Mr. Naseer A. Sh. became the Chairman of Board and
close working relationship was forged between the new Chairman and
Managing Director. This partnership proved in modernizing its operations
and consolidating its financial position.
In 1963, Bank had 29 branches in various cities. And deposits were 89
million and advances were 66 million. Bank was mainly concerned with
general banking and trade financing (including foreign exchange
transactions). It helped a lot in development of small and medium sized
business houses. These were Nishat, Crescent, Pak Cement, Haroon
traders, Takht Bhai Sugar, Insaf, Punjab soap, Pak fruit and Saboor Oil
Mills etc.
In 1964, 13 new branches were opened including 3 in East Pakistan. In
1965, 17 new branches were opened and over 83 % of gross profit for the
year was earmarked for development expenditure in connection with
opening of new branches.
In 1966 bank opened 26 new branches and doubled its reserved funds.
For the first time in history, its advances were increased to Rs. 160
million and deposits raised by almost 58 % exceeding Rs. 232 million
mark. In 1966, Central Office was built in Karachi but Head Office
remaining at Shah Chiragh Building, Lahore.
16 new branches were opened in 1967 and 20 in 1968. Respectively their
funds were increased gradually. 21 new branches were opened in 1971.
But separation time the 51 branches were lost by the bank which was a
big loss.
ALLIED BANK: PUBLIC SECTOR YEARS (1974-91)
Under the Nationalization Act of 1974, 14 scheduled banks were taken
over by the Government. Australasia Bank’s Board of Directors was
dissolved and the bank was renamed as Allied Bank of Pakistan Limited.
Sarhad Bank, Lahore Commercial Bank and Pakistan Bank Limited were
merged into Australasia Bank. At time of merge, ABL was second
highest among all the banks Nationalized in 1974.
Allied Bank’s first Executive Board was constituted of Mr. Iqbal A. Rizvi
as President, Mr. Ajmal Khalil as Joint President and Mr. Khadim
Hussain Siddique as member. In 1974 Mr. I.D. Junejo and Mr. Safdar
Abbas Zaidi joined the Board later. 116 new branches were opened in
1974 and it started participation in commodity Operation program of
Government.
In 1970’s Bank played an important part of agricultural area loans and
other loans. In 1976 Mr. Ajmal replaced Mr. Rizvi as Chief Executive
and President. During 1974-77, 361 new branches were opened and 230
of these were located in villages and small towns. It also opened its
foreign branch in London, near the Bank of England. In 1980 the Bank of
England granted Allied Bank recognition as a full fledge Bank under the
U.K. Banking Act.
In 1981, President was changed. In 1984, again new president was come
to know. He tries to increase the international business. It also initiated a
major counter program. In 1985, mainframe computer was installed and
effective management system was developed. During this period
profitability was increased. New President Mr. Maqbool introduced
different schemes in 1987-88. In 1989, new 13 branches were installed.
Over 1991, 745 branches were there in all over the Pakistan.
A NEW BEGINNING
In November/ December 1990, the Government announced its
commitments to the rapid privatization of the Banking sector. Allied
Bank’s management under the leadership of Mr. Khalid Latif decided to
react positively to this challenge. In September 1991, ABL entered in a
new era of its history as world’s first bank to be owned and managed by
its employees. The 850 executives and 7200 staff members spread over
750 branches throughout the Pakistan established a high degree of
cooperation and family feelings
After this, it grows more and more, even at present it has 900 branches
throughout the country and 4 foreign branches in U.K.
Allied bank Objectives:
Allied bank has following objectives:
i) Main objective of Allied bank is to earn profit.
ii) To provide services to their customers and assistance in the
development of commerce and trade.
Allied bank also have another responsibility to give service to their
communities. It watches the growth and development of his community
especially the commerce and business of the area.
MANAGEMENT SYSTEM OF ABL
Successful and profitable banking management depends on two principal
factors.
a) The manner in which the functions of banking, that is the acquiring of
deposits, the investing or converting such deposits into earning assets,
and the servicing of such deposits, are performed.
b) The degree to which officers and employees contribute their talents to
the progress and welfare of the bank in discharging duties and
responsibilities.
Allied Bank Management
Banks are managed by board of director or similar group of men who are
responsible to the owners, creditors, and the government for the well
being of their institutions. The government selects all or some of directors
of ABL. Management of ABL are given as follows:
Bank’s Information
1. Directors:
Rashid M. Chaudhry is the chairman and Mohammadi Yaqoob is
secretary of ABL, are also the board of directors.ABL’s other directors
are M. Saleem Shaikh, S. Jauhar Husain, I.A. Usmaini, Raja Raza
Arshad, Mohammad Saleem Sethi, Athar Mahmood Khan. Stockholders
elect the directors for a term of one year and they are eligible for reelection. Voting is cumulative, that is, each shareholder has the right to
vote the member of shares owned by him. The boards may format major
policies and select officers to execute them. They may supervise these
officers, review their act.
2. Executive Committee
Executive Committee consists of Rashid M. Chaudary (president), M.
Salim Shaikh, S. Jauhar Husain, I. A. Usmain, Naveed Masud, Bilal
Mustafa, M. Saleem Khan Durrani, Ashfaq Hassan Qureshi, Shariqe
Umar Farooqi (secretary).
3. Officers:
Officers are selected by the directors to manage their banks. An officer’s
relationship to the board is that of an employee to an employer. Chief
Officer (Rashid M. Chaudary) of ABL is known as Chairman, Senior
Executive Vice President (M. Saleem Sheikh, S. Jauhar,). They are also
members of the board of director and are large shareholders. They are in
a position, to dominate the bank's policies as well as its administration.
The Chief duty of the chairman is to lend the bank's funds. This work is
often subject to little supervision by the board of directors.
STRUCTURE OF ABL LIMITED
No bank can be expected to operate efficiently unless all employees with
in a department, division or section know:
A) From whom they are to receive the work they are to do.
B) What they are supposed to do with the work after they receive it.
C) How they are supposed to handle the operation of item.
D) When they are supposed to do work, perform the operation.
E) To whom they give the item or function after finishing it.
To perform the functions efficiently the bank has its Head Office in
Karachi, which is controlled by the president of the Bank. The bank has
regional office under head office in major areas of the country. Regional
Chief heads this office. The region Consist of many zonal offices with a
zonal chief. There are many branches in a zone to carry the functions
effectively and performing customer services locally.
ABL Ltd. is functionally organized into divisions and divisions are
further divided into department and sections. Every province has its own
regional office and zonal offices. Executive vice president heads the
divisions and departments are further headed by OGI (Officer of Grade
I). Manager heads branches.
BRANCH NETWORK
There are Four Provincial Headquarters of Allied Bank Limited situated
at Lahore (Punjab), Karachi (Sind), Peshawar (NWFP & Azad Kashmir)
and Quetta (Baluchistan).
PROVINCIAL HEADQUARTERS
PUNJAB:
7E/3, Main Boulevard, Gulberg, Lahore
SINDH:
Jubilee Insurance House, I.I. Chundrigar Road, Karachi
NWFP:
1st floor, State Life Building, The Mall,
AZAD KASHMIR:
Peshawar Cantt.
BALUCHISTAN:
C.C. & I Building, Zarghoon Road, Quetta.
CIRCLES
There are 22 circles of ABL through out the country under which 46
zones are present. Their detailed is as follows:
City Circle Karachi
Zones 3
Branches 36
Sadar Circle Karachi
Zones 2
Branches 37
Nazimabad Circle Karachi
Zones 2
Branches 34
City Circle Hyderabad
Zones 2
Branches 34
Commercial Circle Hyderabad
Zones 2
Branches 37
Sukkur Circle
Zones 2
Branches 33
City Circle Lahore
Zones 2
Branches 47
Project Circle Lahore
Zones 2
Branches 29
Gujranawala Circle
Zones 3
Branches 73
Islamabad Circle
Zones 2
Branches 27
Rawalpindi Circle
Zones 2
Branches 43
Jhelum Circle
Zones 2
Branches 46
Faislabad Circle
Zones 2
Branches 46
Sargodha Circle
Zones 3
Branches 67
Multan Circle
Zones 2
Branches 66
Bahawalpur Circle
Zones 2
Branches 41
City Circle Peshawar
Zones 2
Branches 27
Cantt Circle Peshawar
Zones 2
Branches 47
Mardan Circle
Zones 2
Branches 31
Abbottabad Circle
Zones 2
Branches 38
Azad Kashmir Circle
Zones 2
Branches 50
Quetta Circle
Zones 1
Branches 36
Foreign Branches 4
Total Branches 929
TRAINING ACADEMIES
Allied Bank Limited has five training academies, two in Lahore, two in
Karachi, and one in Islamabad. In these training academies the new as
well as the existing staff get training. When a new employee comes in
ABL then most often he is sent to any of these academies for training.
The training period may be minimum of one-month upto maximum of
one year. The training period depends upon the nature of the job. During
the training the new employees are acquainted with all the necessary
information about their jobs.
When any change occurs in the policies of the Bank, then the seminars
are held in these academies in which employee as well as executives
participate to get information about the new policies of the Bank. For
example if the Bank policy regarding the financing schemes change then
the Managers of the Advances Section are invited in these seminars. They
learn about the new changes and then implement these changes in their
branches.
In these academies a permanent staff is present for the training of
employees. However, if requires, subject specialists are invited to deliver
lectures on certain subjects. For example the Bank has a contract with
Sajjad Associates which send its executives to deliver lectures on project
financing. Exams are also held in these training academies.
ORGANIZATIONAL STRUCTURE (MULTAN CIRCLE)
ALLIED BANK OF PAKISTAN
JAHANIAN BRANCH
The Branch of ABL Ltd. is responsible to provide all services to its
customer. This branch is located in Jahanian.
FUNCTIONS OF JAHANIAN BRANCH OF ABL LTD
There are following functions which are performed by Allied bank
Limited Jahanian Branch.
ACCEPTS DEPOSITS
The Bank provides deposit facility to its customers. The types of deposits
are:
a) PLS Saving Account:
In this type, the depositor shares profit and loss with the bank.
b) Fixed Deposits
They bear high profit, but these can only be withdrawn after a fixed
period of time
c) Current Accounts
No profit is paid on these deposits but amount could be withdrawn
without any restriction.
Branch Setup
REMITTING OF FUNDS
The Bank provides the facility to its customers for remitting large
amounts of money in the form of bank drafts, T telegraphic Transfers and
Mail Transfers to where ever the customers want.
The Senior Vice President heads the personnel department. Its head office
is at Karachi. All the policies and rules, regulations etc. This department
deals about personnel.
HIERARCHY OF POWER
Senior Vice President.
Vice President.
Assistant Vice President.
Officer.
CATEGORIES OF WORKERS
The work force in the personnel department is as follows:
Officers
Clerical staff
Non-clerical staff
OFFICERS
Officers are designated according to their grades.
Executive grade.
Sr. grade-I
Sr. grade-II
Sr. grade-III
Officer grade-I
Officer grade-II
Officer grade-III.
CLERICAL STAFF
Cashiers
Assistants
Senior Assistants
Typists
Steno typists
Steno graphers
Telephone operators
Telex operators
Godown keepers
NON-CLERICAL STAFF
Drivers
Messengers
Guards
Godown Chowkidars.
Sweepers
ELIGIBILITY CRITERIA FOR PROMOTIONS
From Clerical to Officers Cadre
QUALIFICATION LENGTH OF SERVICE
Graduate two years
Intermediate four years
Matriculate six years
From Typist and Stenotypist and Stenotypist to Stenographer Cadre
Confirmed staff in clerical cadre.
Required shorthand typing speed.
Stenotypist 80/45 words per minute
Stenographer 120/45 words per minute
From Clerical to Non Clerical Cadre
QUALIFICATION LENGTH OF SERVICE
Intermediate one year
Matriculate two years.
For the purpose of promotion it is important consideration that an
employee has rendered service in rural areas.
PROBATIONARY PERIOD
The probation period varies for various posts. It is usually from 1 to 2
years.
CONFIRMATIONS
After the probation period comes the confirmation period. The branch
manager refers him/her for confirmation. The confirmation of various
post rights rests with the zonal/area chief. For big posts the confirmation
is centralized by central office Karachi. Confirmation is made after 1 year
of probationary period.
PHYSICAL ACTIVITY
The personnel department also takes case of physical activities of the
employees. They encourage the employees in physical games like cricket,
Football, tennis, hockey etc. They hold regional and zonal competitions.
For
Publicity purposes the bank also employs famous players to play on
behalf of the bank. In this way the bank on the other side provides
financial help to our talented boys.
EMPLOYEES MATTERS
ABL policy is very socialistic about its employees, its motto is:
“Every employee is the owner of the bank”
Literally the bank has given power to even an officer to sell the ABL
assets; the authority of an employee is unlimited. This attitude encourages
the employees to get most involved in to the bank affairs. ABL also
provides lot of facilities to the employees. Here is a list of loans and
leaves, which can be granted to the employees:
LEAVES
Casual leave
Sick leave
Maternity leave
Disability leave
Privilege leave
Extra ordinary leave
Hajj and Ziarat leave
Leave preparatory leave
CAUSAL LEAVE.
One can take fifteen days causal leave in one year, five days maximum at
a time. The unvalued leaves are not granted in coming next year. These
leaves should be availed in the respective year.
SICK LEAVE.
There is a criterion for sick leave.
With full pay the staff can take 12-month sick leave in the entire service
of his life with out pay the staff can request the sick leave, as he/she
requires.
MATERNITY LEAVES.
The maternity leave is granted once in three years. It’s for female
employees. It varies from 15 days to three months. The bank gives full
pay during the leave.
DISABILITY LEAVES.
The disability leave is conditional to following rules:
The disability is caused during the service of the employee.
It is brought into the notice for prompt action with in three months of its
occurrence.
Its period lies between one day to 24 months as recommended by the
doctor.
Six month pay is granted and afterwards its half pay.
PRIVILEGE LEAVES.
Privilege leave is granted one per eleven days in a year and accumulated
up to 90 days.
EXTRAORDINARY LEAVE.
This leave is with out pay. When sick leave is unsatisfactory or some
special occasions occurs, when no leave is due then the extra leave is
granted.
HAJJ AND ZIARAT LEAVE.
It is provided after completing five years of the service. Its period extends
to one month. It’s on full pay basis.
PREPARATORY AND RETIREMENT LEAVE.
It’s the kind of leave which is allowed to a person retiring from the
service for the period of leave earned and due up to 90 days.
· AUTHORITY FOR LEAVE SANCTIONING
Causal and privilege leave or sanctioned by mangers, zonal chief, but all
other is dealt in the central office Karachi.
PROMOTION PLANS
OFFICERS.
Normally promotion is done on seniority basis. A promotion is due after a
person has completed three years in the same grade.
CLERICAL AND NON CLERICAL STAFF.
It’s on the basis of their length of service and the written tests and
qualifications.
QUALIFICATION LENGTH OF SERVICE
Matriculate. Six years service.
Intermediate. Four years service.
Graduate. Two years service.
More over interviews and tests also contribute in promotion.
LOANS FOR EMPLOYEES
Allied Bank has a long list of loans, which it offers to its employees. The
hire the post is, the more facilities are given to the employees.
Loans are as follows.
PROVIDENT FUND LOAN.
Provident Fund loan is loan which is given after the retirement of the
employees. Its is equal to own contribution plus the interest on the
amount. Three basic salaries plus banks own contribution.
OLD OPTION BENEFITS.
In P.F.L a lumps is taken in this case and the pension is not given.
New option benefit.
In case of option pension, loan against general provident fund is allowed
equal to own contribution and 3 months basic salaries.
CONVINCE LOANS.
The convince loan include scooter loan, car loan, cycle loan. Etc.
The car loan is equivalent to 12 basic salaries, which is sanctioned to
officers, executives drawing basic salary of. RS. 1250. Month. Such loans
bear interest of ten 10% pa. They are recoverable in 120 monthly
installment
MOTOR CYCLE LOAN.
Such loans are sanctions to lower grade officers and clerical, non-clerical
staff. The limit of the loan is not more then Rs. 10,000. It is conditioned
that the employees have completed 3 years of service in the bank. Motor
Cycle loan is interest free loan.
HOUSE BUILDING LOANS.
This loan is given if the employees have completed of full 5 years of
service, as a confirmed officer. It is equal to 80 months salary.
FACILITIES
MEDICAL FACILITIES
Banks provides medical facilities to its employees. It also has fixed
amount, which is limited in order for tremens of employees. The record
of medical expenses is maintained at zonal office and monthly statement
is sent to central office Karachi.
TRAVELLING ALLOWANCE
There is facility of TA. /DA. For employees who go on official visit out
side the city.
EDUCATION ALLOWANCE
Education allowance is given to the children of the employees and
employees as well. The maximum allowance for one employee will be
RS. 450. App. Per month for maximum three children.
HOUSE ALLOWANCE (RENT)
House rent allowance is upto 90% of basic salary at all stages. The house
rent allowance differs according to the areas and its rates.
LOCAL COMPENSATORY ALLOWANCE
Local compensatory allowance is given in accordance with areas of work
such as Islamabad and Karachi maximum Rs. 200 and at Lahore,
Rawalpindi, Peshawar and Quetta it is Rs.100 per month.
CONVEYANCE ALLOWANCE
The conveyance allowance is given to the employees in accordance of
their designation.
DOMESTIC SERVICE
The Allied Bank provides the services to top men in the bank such as
Executive Vice President, Sr. Vice President, Vice president and Asst.
Vice President etc.
They also provided by Mali/Chowkidar and furnishing the house is also
bank facility.
TELEPHONE ALLOWANCE
There is fixed amount of telephone bills for executives/officers, which is
paid every month to them.
PENSION/GRATUITY FACILITY
The pension is given when an employee completes his ten years in the
bank. The gratuity is given if employee qualify the rules then he can ask
for the pension of 15 year at one go.
PROMOTIONS
Upto clerical staff the promotions are on tests and their daily
work/efficiency and their length of service. The promotion of officers is
with seniority.
RECRUITMENT
After the Privatization of ABL central office at Karachi is dealing with
the appointments to different officers posts. And the central office also
fills other executive posts. For certain posts the executives also have right
to appoint the qualified persons. But the main criteria of appointment are
by test and interviews.
Allied Bank has a criteria already prepared for the appointments of
employees. the criteria involve:
Academic work.
Extra curricular activities
Working experience.
The candidates must be the citizens of Pakistan and the state of Jammu
and Kashmir should not be more than 25 and less than 18. However in
certain cases the age can be relaxed. Normally the citizen for under
developed areas of Pakistan has the age relaxation. The executives also
have the power to employ an over age person etc.
General banking is one of the major departments of Allied Bank, Ltd. It
consists of sub department, which are fol-lowing.
1. Current department
2. Token department
3. Remittance debarment
4. Clearing department
5. Accounts department
CURRENT DEPARTMENT
This department maintains all formalities of the accounts and accounts
holder, like accounts name, account holder's name, code No., and full
address. Different cheques debit and credit voucher come from different
departments like Token, Clearing, Remittance, Cash, and Foreign
Exchange, Advance and posted against different ac-counts.
A working Journal called Manual is prepared daily which shown the
balance accounts of all parties. Mark-up and profit are calculated daily.
That would be debited or credited from or to Account holder's account
after specific period of time. Mark-up is debit from the account after
every three month and profit is credited to accounts after every 6 month.
New accounts are also opened in this department. Total function perform
by this department is shown by block diagrams. These diagrams show the
sequence of activities. These are simplified diagram of what is ac-tually
being done in current department and what happen to a customer who
comes to open an account in the branch.
Following are the three accounts, which are maintained by this
department.
· Current Account
· Saving Account
· Fixed Account
TOKEN DEPARTMENT
In token department, token are issued for the encashment of cheques
Demand draft, Telegraphic transfer, Mail transfer and miscellaneous
expanses voucher of bank before issuing term we check the following
Ø Date should be current or previous not advance.
Ø Specimen Signature of account holder should there.
Ø Signature of bearer should on backside of cheques.
Ø Amount should be same both in figure and words.
In case of DD, checking sign of authorized officer of bank if there is any
discrepancy in above-mentioned point, no to-ken would be issued. Before
issuing token, we stamped on backside of cheques and write the no. Of
token both front and back-side of cheques, etc.
After all the process, the entry of cheques would be posted on the given
register, which include token no. Code no. and amount. After banking
hours. Total amount on register would be tallied with the cash department
amount, that which has been paid. Any cheques that is returned from the
current department be-cause of any discrepancy, is debited from the total
amount on the register in token department.
CASH DEPARTMENT
Cash department deals with the cash, which either comes in the Bank or
goes out side the Bank. Cash can be in any form of currency.
SOURCES OF THE CASH
There are different sources through the cash inflows the Bank. These
sources are as follows.
DEPOSITS
This is the major source of the cash inflow. When someone deposits the
cash in the Bank in any currency, it means that the cash is coming in the
Bank.
1. DEMAND DRAFT AND TELEGRAPHIC TRANSFER
COMMISSION
These are the second major sources of the cash inflow of the Bank. When
the Bank issues the DDs and TTs on the behalf of customer then the Bank
takes certain charges as commission. These DDs and the TTs can be
issued in any currency on the demand of the customer.
2. PRIZE BONDS, FEBCS, NDSCS ETC
Prize bonds, FEBCs, and NDSCs are other sources of cash. These
instruments are sold to the general public and cash is received from them.
Though this cash is ultimately transferred to SBP but still the Bank has to
manage this cash.
MANAGEMENT OF CASH
It is necessary for every branch to maintain a specific amount of cash
with it at any time, so that when a customer comes to get cash, he may
get it promptly. If a branch is not able to maintain such appropriate level
if cash then it will have a bad effect on its repute and it will not be able to
fulfill the customer expectations. So effective management of cash is very
necessary for every Bank. ABL has put an appropriate limit on its
branches that they should keep that minimum levels of cash wit them at
any time. This limit is different for main branch and other sub-branches.
TREATMENT OF SURPLUS CASH
The surplus cash means the cash, which is over and above the limit of any
particular branch. It may happen that a branch may have the surplus cash
with it. If a sub branch has surplus cash with it than that of limit, then it
will transfer it to the main branch on daily bases. If the main branch has
the surplus limit then he will transfer the surplus money to head office in
Karachi through the SBP. If these surplus funds remain with the main
branch, they will be of no use and will act as idle money because they are
earning no profit. So these funds are remitted to the head office, where
they are invested and will earn profit for the Bank. The main branch earns
the profit on the funds, which it remits to the head office. Currently this
rate of profit is 13%. There is no profit given on the funds which the subbranches which they transfer to the main branch.
TREATMENT OF CASH DEFICIT
As surplus of the cash occurs, similarly the deficit can also be there in the
Bank. It means that the cash shortage is there in the branch. To cover this
shortage the patterns are followed. If shortage is there in sub-branch, then
it may take the cash from the main branch. If the main branch has the
shortage of cash, then it may take the funds from the head office. The
head office charges certain rate of profit, which is 13 % on the funds,
which it remits to the main branch. There is no profit charged by the main
branch on the funds provided to the sub-branches.
CASH IN TRANSIT
The cash, which is transferred from any sub-branch to Main branch or
from main branch to SBP is called cash in transit. There is limit of cash in
transit on main branch. This limit is of Rs. 20 millions i.e main branch
can take the cash from any sub-branch or can transfer the cash to SBP
upto the limit to the 20 millions.
INSURANCE OF CASH
All the cash of the Bank is insured. The major companies, which insures
the cash include Adamjee Insurance Corporation, General Insurance
Company and East West Insurance Company. The Central Office pays all
the expenses of the insurance of cash.
SECURITY ARRANGEMENTS
Few years earlier, the Bank has its own guards for the transfer of the cash
from main branch to SBP or from sub-branch to the main branch. But
now the Bank has hired a security company for the transference of cash.
This company is “Brinks”. The commission which is charged by the
Brinks company varies from place to place and is different for different
amounts of cash.
CLEARING DEPARTMENT
introduction
The Bank is the member of the Clearing House and receives Cheques,
demand drafts and other negotiable instruments for presentation of its
payment by the branch of a drawee bank located within the city other
then ABL. The proceeds of the clearing instruments are credited into the
account of the customer. The clearing facility is available on all working
days.
Wherever the clearing facility is bot available or the drawee institution is
not the member of clearing house the Bank receives Cheques, demand
draft or negotiable instruments for collection and upon receipt of payment
from the drawee the same is credited into the account of the customer.
Clearing may be outward or inward.
OUTWARD CLEARING
Suppose a customer deposits cheque in ABL HASSAN ARCADE
BRANCH, drawn on Habib Bank Multan Cant branch. Then the
representative of ABL HASSAN ARCADE BRANCH will take this
cheque to the Clearing house in SBP, where representatives of all banks
gather daily. Now in first clearing this cheque will be exchanged with the
representative of Habib Bank Multan Cant branch. In the second clearing,
if the cheque is honored, he will tell it to the ABL representative and so
the SBP credits the account of ABL HASSAN ARCADE BRANCH and
debits the Habib Bank Multan Cant branch through the clearing account.
This is called Outward Clearing.
INWARD CLEARING
Suppose a person deposits a cheque in Habib Bank Multan Cant branch,
drawn on any ABL Multan branch; let it be the ABL main branch Cant.
The representative of HBL will exchange this cheque with the ABL’s
representative in the first clearing in Clearing House. If the cheque is
honored by the ABL main branch then SBP will debit and credit the
respective accounts. This is called Inward Clearing.
TRANSFER DELIVERY
The clearing between the ABLs own branches within one city is called
Transfer Delivery. During this clearing Pak Account is not involved. In
ABL, it is done twice in a week. The Bank charges no commission from
its customers for this transfer delivery.
BILL/REMITTANCE DEPARTMENT
Bills for collection means the Cheques or DDs/TTs/POs which are
received from or sent to other branches outside the city for collection,
drawn on any other Bank. Bills for collection may be inward or outward.
Remittances means, the transfer of cash from one place to other place
through paper transaction. Remittances may be inward and outward.
BILLS FOR COLLECTION
There are two types of bills for collection
Inward bills for collection (inland & foreign)
Outward bills for collection (inland & foreign)
INWARD BILLS FOR COLLECTION
Suppose a customer of ABL Mall Branch Lahore deposits a cheque
drawn in the name of Habib Bank Multan Cant Branch. Now the ABL
Mall Branch Lahore will send this cheque to ABL Main Branch of
Multan for collection from Habib Bank Branch. Now ABL Main Multan
branch will collect this cheque from Habib Bank Branch through
clearing, and will remit the amount to the ABL Mall Branch Lahore. This
is called Inward Bills for Collection (inland) for ABL Main Branch
Multan. It will be recorded in Inward Bills Collection Register. In the
same way if the cheque is received for collection drawn on any other
Bank from Foreign Branch of ABL, then this will be called as Foreign
Inward Bills for Collection. It will also be recorded in Inward Bills
Collection Register.
OUTWARD BILLS FOR COLLECTION
When any branch of ABL sends a cheque or DD/TT/PO to main branch
ABL in another city for collection from any other Bank, then it is known
as Outward Bills for Collection. Suppose a person deposits a cheque in
ABL Rashidabad Multan branch drawn on Habib Bank Lahore branch.
Now ABL Rashidabad branch will send this cheque to ABL main branch
Lahore for collection from Habib branch Lahore branch. ABL main
branch Lahore will collect this cheque through clearing from Habib Bank
branch through clearing and will remit the amount to ABL Rashidabad
branch Multan. This is called) Outward Bills for Collection (inland)
and it will be recorded in Outward Bills Collection Register.
In the same way, if ABL Rashidabad branch Multan sends any cheque or
DD/TT/PO to its foreign branch for collection from any other Bank, then
it will be called as Foreign Outward Bills for Collection and will also be
recorded in Outward Bills Collection Register.
COMMISSION
The rate of commission for both Inward and Outward Bills for Collection
is .25 %, with a limit of minimum of Rs.20, plus courier charges.
REMITTANCES
The remittances can be made through the following mode of transference.
Demand Draft (DD)
Telegraphic Transfer (TT)
Payment Order (PO)
SBP Cheque
DEMAND DRAFT
It is a kind of cheque, which is issued by the ABL to the other banks, or
other branches of the ABL on the demand of the client. On the Demand
Draft there are different heads mentioned on that. Such as the amount to
be sent, the name of the person to whom it is to be sent. It is very
convenient and safe method of sending the money from one place to
another. The businessman to transfer or send the money from one place to
another usually uses it. If one person issues the DD in the name of other
person, then it can be transferred to the account of the second person
easily. DD can be in Pakistani Rupee or in any Foreign Currency. When
DD is issued, it is given to the person, who wanted to make it. At that
time Bank will have no concern with that DD but an advise is sent to the
concerned branch that we have issued the DD of such amount and on the
name of this person, and you will pay him on the demand of the client.
This DD can be closed before the issuing the amount. On issuance the
DD, Bank take some commission.
TELEGRAPHIC TRANSFER
It is also a way of sending the money from one place to another. Like DD
certain farms are to be filled. In this the message sill not be sent through
the paper, but with the help of the fax or things like that. All other
processes are same as of the DD.
PAYMENT ORDER
It is an order issued by the Bank and payable on itself, through this client
can easily transfer the money from one person to another within the same
city. It is a written document on which the certain commission is to be
paid and certain documents are filled by the client. For this certain
amount is needed to deposit with the Bank.
PROCESS FOR REMITTANCE
All branches of ABL deal with each other through a central account
named as “Pak Account”.
PAK ACCOUNT
Pak Account is maintained in Central Office Karachi. In Central Office
there is an account of every branch and all these accounts of all branches
are maintained through this Pak Account. In Pak Account, a specific code
has been allotted to every branch’s account. These Pak Account controls
all the remittances made by different branches. Remittances may be
outward or inward.
REMITTANCES OUTWARD
Suppose a person comes to the ABL HASSAN ARCADE BRANCH and
asks to make a Demand Draft (DD) of Rs.50, 000/- in the name of
beneficiary whose Bank is ABL Mall Branch Lahore. Now the ABL
Multan branch will receive the cash and prepare the DD of Rs.50, 000/and will send it to the ABL Lahore branch. At the same time it will also
prepare an advice and send it to the Central Office. In this advice, the
ABL Multan branch will tell the Central Office that it has sent a DD of
amount Rs. 50,000/- to the ABL Mall Branch Lahore, so make its account
debited by Rs. 50,000/- and make the account of ABL Mall Branch
Lahore credited with the same amount This is called “Remittances
Outward”
REMITTANCES INWARD
Similarly when the ABL Mall Branch, Lahore sends a DD/TT/PO or
cheque to ABL Multan Cant Branch then it will be remittances inward for
this branch. This type its account will be credited by central office in PakAccount and the account of ABL Mall Branch, Lahore will be debited.
REMITTANCE IN TRANSIT
Suppose the ABL Main Branch, Multan wants to send the surplus fund to
the central office Karachi. This branch will first deposit the funds in the
State Bank of Pakistan, which will transfer these funds to central office,
Karachi. Here the SBP acts as a cash agent. Now the ABL Multan,
Branch will send an advice to central office, Karachi that it had remitted
that many amounts through SBP. This is called Remittance in Transit.
Now the SBP Multan, Branch will remit this fund to the SBP Karachi,
Branch and from there, funds will be ultimately transferred to the central
office.
In the same way when ABL Multan, Branch requires the funds then
Central Office will remit these funds through SBP and will send an
advice to the ABL Multan, Branch. The funds will be ultimately
transferred from SBP Multan, Branch to ABL Multan, Branch. This is
also Remittance in Transit.
FOREIGN BILLS AND REMITTANCES
These can be
Foreign Currency Telegraphic Transfer
Foreign Currency Demand Draft
Allied bank can transfer funds to the remotest fart of the country for
payment/credit to the account of the customer himself or a third party,
through Telegraph Transfer for the payment on the same or next day.
The Bank also issues the Demand draft for remittance of fund by
customer. The Demand draft can be issued in favor of the purchaser
himself or a third party. It is secured and convenient to send/carry,
instead of cash.
TELEGRAPHIC TRANSFER
In this case the authority is given to one bank from another bank on the
behalf of the customers through telecommunication to debit their inter
office account with them and credit his/her or party's account mentioned
in telegraphic transfer (T.T.) This is the fastest way of transferring money
from one place to another within the country as well as out side the
country.
As we know that when a bank issues a T.T. it is given some service to the
customers, so service charges for issuing T.T'S, credit vouchers are
prepared. Crediting the cable charges and a debit advice is made for the
party telling them that so much services charge have been deducted from
your account with us. All the TT'S are serially numbered. There are two
types of TT'S.
1. Incoming TT'S
2. Out-going TT'S
So far both type of T.T'S separate registers are maintained. While issuing
a TT a confidential code no. called the test numbers is also being given to
TT by two authorized officers and this code number is only under stood
by the two other authorized officers in the receiving bank. By this test
some multiplications 'C done which confirm the instructions in the body
of T.T.
MAIL TRANSFER
As it is clear from its name that in this case the transfer of money (in the
shape of a document) takes place through mail. The procedure is like TT,
that is instructions are given to the receiving bank that inter office
account should be debited and 'edited to the mentioned party’s account. It
is slower as compared to the TT. Records are maintained in the same way
as of telegraphic transfer, commission is also charged in the same manner
but at a different rate.
ACCOUNT DEPARTMENT
Every Transaction, which takes place, is recorded in the computer.
Transaction takes place through different vouchers which are finally
posted to computer. As I already wrote that total branch was
computerized so all transaction in different dept. Would be made on
computer. Each dept prepare a summary of daily transaction 'at is
forwarded to Account dept. Since all voucher from differ-it dept. also
forwarded to current dept. So this dept. will tally it such transaction with
current dept after maintaining the ledger each dept.
The dept take care about bookkeeping, maintains ledger and current
accounts of different dept.
Following are the different functions performed by this de-partment.
1. Preparation of monthly, quarterly, semiannually and yearly balance
sheet of the branch.
2. To maintain all accounts of different department.
3. Calculation of profit of different investment schemes.
4. Calculation of mark-up of different advances.
5. Preparation of different type of reports for state bank of Pakistan.
6. Preparation of daily position report of cash and every account.
7. The most important function is the checking and tallying daily
summaries of different departments with ledger's balanceDEPOSITS SCHEME
Deposits to the bank are as the backbone to the body of man it is
lifeblood of a bank. The bank borrow money from general public by
accepting or by an offering suitable rate of lit on them, or simply promise
to repay on demand.
When the bank receive the deposits, it become the debtor and client
assumes position of creditor.
At ABL the main thrust is on customer satisfaction. The Bank provides
many opportunities to place the funds in variety of deposit accounts
including foreign currency deposit account and offer a wide range of
facilities and services tailored to suit the personal as well as domestic and
foreign business requirements of its customers. The different deposit
schemes offered by ABL are as follows:
1. Current Deposit Scheme
Purpose
The purpose of this account is to provide the facility to the account holder
that he can deposit or withdraw any amount of money from his balance at
any time.
Deposit of Funds
Funds can be credited into the current deposit account in the form of
cash, Cheques and other financial instruments drawn on any other Bank
or any other branch of ABL.
Minimum & Maximum Balance
This account can be opened with a minimum balance of Rs. 100 and there
are no maximum limits on balance.
Mark-Up
No Mark-up is given to the current deposit account holders. Furthermore
the current accounts are exempted from Zakat.
2. PLS Saving Bank Deposit
Minimum & Maximum Balance
Profit and Loss sharing Bank account can be opened with a minimum of
Rs. 100. There are no limits on the maximum balance.
Deposit of Funds
Funds can be deposited into this account through Cash, Cheques and
other financing instruments drawn on any Bank or any other branch of
ABL. The Bank will take care of to see that the credit and debit entries
are correctly recorded in the accounts of the account holders but in case
of any error, the Bank shall be responsible make the correct adjusting
entries without noticing the account holder and recover any amount due
from the account holders.
Profit
The profit is given after every six months and the rate of profit is
announced semi annually. The overall profit of Bank for six months is
determined and on that basis the rate of profit on this account is
calculated. The profit is given to the account holder on the monthwise
product. It is determined on the minimum balance of account from 7 th to
31st of every month.
The PLS saving rate announced by ABL on 31st Dec. 1998, for the next
six months is 8%.
Eligibility for Sharing Profit/Loss of the Bank
PLS saving account having a running minimum credit balance of Rs. 100,
would be eligible for sharing profit/loss of the Bank the proportion of the
profit or loss on PLS Saving Account shall be determined by the Bank in
its sole discretion and the Bank decision shall be final and binding on the
PLS Account holder.
The Bank shall be within its rights to make investment of credit
balances/deposits in PLS Saving Account in any manner at its sole
discretion and to make use of the funds to the best of its judgement in the
banking business under the PLS system.
Withdrawals
Account holder can only withdraw sums from his account by means of
Cheques supplied to him by the Bank for that particular account.
Cheques should be signed as per specimen signature supplied to the Bank
and if there is any alteration in the signature of the drawer, then it must be
authenticated by the drawer’s full signatures.
Post dated and stale Cheques shall not be paid.
Withdrawals from PLS saving accounts are allowed not more than eight
times in a month and a total amount not exceeding Rs. 25,000. For
withdrawal of larger amount, seven days notice is required to be given.
CERTAIN OTHER FEATURES
Every account holder will be required to give a specimen of his signature
for record. If there is any slightest doubt realized by the Bank regarding
the signature of the account holder, Bank is entitled to refuse payment of
cheque drawn by the account holder.
Each account will be given a number and account holder should always
quote this number when writing to the Bank regarding his account or
when making deposits or withdrawals.
Any change in address of account holder should be immediately
communicated to the Bank.
Account may be transfer from one branch to another branch of the Bank
free of charge, without effecting the profit/loss accruing position of the
account.
The account holder wishing to close the account must present the
passbook and unused Cheques to the Bank, in order to draw the balance
amount. In case of account holder wishing to close the account within a
period of six month from the date of its opening a charge of Rs 5 on
account of cost of passbook will be made.
No credit facilities will be allowed against the balances in PLS Saving
Accounts.
The Bank has a right to close any account without giving any previous
notice to the account holder, which in its opinion is not being satisfactory
operated upon.
3. PLS High Premium Account
Minimum & Maximum Balance
This account can be opened with the minimum of Rs. 2, 50,000 and there
are no limit on the maximum balance.
Profit
The profit is paid on the daily product, i.e., the minimum balance from 1st
to 31st is calculated and on that balance the profit rate is applied. The rate
of profit on this account as announced on 31st Dec. 1998, is 8%.
4. Overseas PLS Account
Overseas Pakistanis can open this account by remitting their amount into
this account. This account can be opened only when the Client remits his
amount here from abroad.
Deposit of Funds
Funds can be deposited into this account through Cheques, DDs, TTs and
other financial instruments drawn on any Bank or any others branch of
ABL.
Profit
To attract the overseas Pakistanis, ABL offers 3% higher rate of profit
than the PLS term deposits for Pakistani residents. The current rate of
profit on this account as announced by Bank on 31st Dec. 1998, is 11 %.
5. PLS Term Deposit
The client deposits the amount for a specific period of time in this
account and the Bank issues a certificate in the name of client for that
period. After maturity period the Bank pays back the principle amount.
Maturity Period
The minimum period of PLS term deposit is of three months and the
maximum period is five years. The PLS term deposit may be for 3
months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 years.
Profit
Longer the period, for which the amount is deposited, higher will be the
rate of profit. The rate of profit given by ABL on PLS term deposit
ranges from 8% to 14%, depending upon the period of deposits. The rates
of profits on different term deposits with respect to their maturity period
are as follows:
PLS Term Deposits Rates Of Profits (per annum)
3 Months 8.8 %
6 Months 9.9 %
1 Year 10.4 %
2 Years 11.3 %
3 Years 12.2 %
4 Years 13.1 %
5 Years and above 14.0 %
6. Overseas PLS Term Deposits
This scheme is only for Overseas Pakistanis. Here the rate given to clients
is 3% higher than the PLS term deposits. Like the PLS term deposits, the
maturity period ranges from three months to five years. All other features
are same as that of PLS term deposits.
Overseas PLS Term Deposits Rate OF Profit
3 Months 11.8 %
6 Months 12.9 %
1 Year 13.4 %
2Years 14.3 %
3 Years 15.2 %
4 Years 16.1 %
5 Years and above 17.0 %
7. Allied Super Premium Term Certificates
Minimum and Maximum Balance
The minimum balance for this account is Rs. 1,00,000 and no maximum
limit. However the balance should be in multiples of Rs. 1,00,000.
Maturity Period
The maturity period of Allied Super Premium term certificates is fixed
and it is three years.
Profit
There are three different categories for the payment of profit. For each
category the profit rate is different. Normally the profit ranges from
13.5% to 14.5%. The profit may be paid quarterly, semi annually or
annually. The rates of profit for these categories are as follows:
Quarterly rate of profit
13.5 %
Semi annually rate of profit
14.0 %
Annually rate of profit
14.5 %
When these Certificates are issued to the customers, different profit
coupon is attached with them. When the customer shows the coupon, the
profit is paid to him. If the term certificate carries annually payment of
profit then it will bear three coupons, one for each yearly payment.
Similarly, a semi annually profit payment certificates will have six
coupons and annually profit payment certificate will have twelve
coupons.
Suppose a client has yearly profit term certificate and he does not take his
first year profit, then this profit will remain with the Bank and he can take
it in the next in the next year with the second payment. But no markup
will be given on his previous profit.
8. Allied Mahana Amadani Certificates
Salient Features
Minimum investment in Allied Mahana Amadani Certificates is Rs.
25,000.
The maximum investment limit in these certificates is Rs. 1,000,000.
The maturity period for Mahana Amadani Certificates is five years.
Investment can be made by:
— Individual or jointly.
— Proprietorship, Partnership concern or Corporate bodies in their
names.
It carries special attractions for:
— Retired, civil and Armed forces employees.
— Widows and Children being brought up by guardians.
Expatriates looking for permanent monthly income.
Profit
Profit on Mahana Amadni Certificates is given on monthly bases. The
estimates minimum rate of profit is 1.1 % per month. The expected
monthly profit on various amounts would be as follows.
Amount Monthly Profit
Rs 1,000,000 Rs 11,666
Rs 500,000 Rs 5,830
Rs 100,000 Rs 1,160
Rs 50,000 Rs 583
Rs 25,000 Rs 291
TAX AND ZAKAT DEDUCTION
Payment of profit is subject to deduction of Withholding Tax and Zakat
as per rules.
Exemption on Zakat is available as per law.
Mode of Payment
Client will enjoy the facility of receiving the profit through Payment
Order /Demand Draft/Postal Money Order, every month at his doorstep.
At Client’s discretion he or his authorized representative can also receive
the profit through Cash/Pay Order/Demand Draft.
Since the profit shall be payable by the Branch where Client will open his
account under the ‘Allied Mahana Amadni Schemes’ it can also be
credited to his account every month
9. Allied Young Saver Certificates
This scheme has been offered specially for the children. This scheme has
the maturity period of ten years. This scheme was introduced, on the
same footings as that of National saving certificates, which are issued by
National saving centers. The amount deposited in these Certificates
becomes four times after the maturity period of ten years. For example, if
a person deposits 5,000 Rs in this account, then after maturity period this
amount will be 20,000.
Standing Instructions
The Bank extends the facility to its customer to give standing instructions
to meet financial obligations or commitment, such as payment of loan
installment of HBFC, payment of insurance premium, etc. The Bank
provided there is a balance in the account or some other arrangements
have been agreed upon between the Bank and the customer carries out the
standing instructions.
Standing Instruction Fee
Standing instruction fee will be recovered in addition to the usual charges
on remittances, if any. The standing instruction fee is Rs. 30 per
transaction.
Stop payment instructions
If a client wants to stop the payment on the issued cheque, when it will
come for clearing to the bank, then he has to give an application. in this
application the client has to give some reasons because of which he wants
to stop the payment on the issued cheque. This stop payment application
is recorded in the stop payment register and a caution is marked on the
account of the client so that, when the issued cheque comes for clearing it
may not be cleared.
Advances department of a bank provides many facilities to various
individuals and businessmen against charging the interest from them.
It is the usual practice of the back level it examines the perusal
characteristics of the borrower and the reputation and scope of the
business, he is doing or going to start.
However, there are there ways normally used to seem the account.
1. Pledge
2. Mortgage
3. Hypothecation
1. PLEDGE
Pledge is a contract between the borrower and the back whereby the
goods are transferred into the banker's 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
back can sale the goods after giving the notice.
2. 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.
3. HYPOTHECATION
Hypothecation is a term where goods are charged for the purpose of
security. But the possession and ownership remains with the owner of the
goods.
CATEGORIES OF ADVANCES
The bank can make the advances in the following three ways.
1. Overdraft
2. Loan
3. Cash Credit
1. OVERDRAFT
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.
2. LOAN
When the bank make the advances in a lumpsum, to be repaid in
lumpsum or in forms of installments with interest at any future date, is
known as loan. These loans may be of short and long term.
3. CASH CREDIT
These advances are made against the security of the goods which may be
made like in the form pledge or hypothecation. The bank credits the
borrower's account with the amount making as loan. The amount can not
be withdrawn in lumpsum. While interest is paid on the amount
withdrawn from the bank.
TYPES OF LOANS
The Bank provides the facility of two types of financing.
1. Funds based Financing
2. 2. Non Funds based Financing
FUNDS BASED FINANCING
The type of Financing in which the funds of the Bank are directly
involved is called Funds based Financing.
There are following types of Funds based Financing.
· Running Finance
· Cash Finance
· Demand Finance
· Demand Finance against Foreign Currency Account
· Demand Finance to Staff
· Finance Against Local Manufactured Machinery
· Allied Equity Building Plan
· Unorganized Sector Financing Scheme
· Housing Finance
· Agricultural Finance
· IDA Financing
· Consortium Finance
· Finance Under Small Business and Small Industries
· Overseas Employment Financing Scheme
· Finance Against Trust Receipt
· Term Finance Certificates
· Finance for Government Operations
1. RUNNING FINANCE
PURPOSE
Running Finance is short-term loan usually given for the working capital
management. The running finance is suitable for meeting day to day
financial needs of the Business. The running finance account can be
operated and daily sale proceeds can be deposited into the account.
SECURITY
The Bank requires following types of securities in running finance.
PRIMARY SECURITY
The primary security requires by the Bank is stock. Bank hypothecates a
specific amount of stock, that is, stock remains in the custody of
borrower, but the lien is of Bank. The borrower is responsible for keeping
and managing the stock well and providing the regular stock reports to
the Bank. The Bank advances a certain percentage of the value of the
hypothecated stock as loan after keeping some margin.
PERSONAL GUARANTEES
Under the SBP laws, ABL can give the loan to the extent of Rs. 50,000
on two personal guarantees along with the primary security.
PRINCIPLE SECURITY
If the loan required by the borrower is greater than Rs. 50,000 then the
Bank requires some collateral security along with the Primary security.
The security taken as collateral is usually immovable. However,
according to ABL laws, the agricultural land cannot be taken as collateral
security. In some rare cases it may also happen that a creditworthy firm
may keep some moveable security as collateral but provided that it is
very easily encashable, e.g. defense saving certificates etc.
MARK-UP
Normally the cost of running finance is 14% but it is negotiable and may
vary. 1-% rebate is given to a client who gives three times more business
to Bank than his limit. Furthermore, 1% more rebate is given to a client
who exports three times more than his limit.
Limit means the maximum amount of finance, which is sectioned from
the Bank authorities in favor of client.
PERIOD
Running finance is usually given for a period of one or less than one year.
REPAYMENT SCHEDULE
The borrower has to repay the loan on the daily sail proceeds of stock. It
is necessary for the borrower to adjust the account on the date of expiry
of loan period. However, Bank may give a period of one month after the
maturity of loaning period, so that the borrower may repay the loan
during this period. This period is called ‘Date of Final Adjustment’.
2. CASH FINANCE
INTRODUCTION
Cash finance is the account of the Bank. It is like the current account. In
this account a certain amount of cash is available for the borrowers at all
the times. A limit is first sanctioned to the borrower and then, on his
needs, the amount is transfer from cash finance account to the borrower’s
current account from where he can withdraw the money. This transfer of
cash from the Bank’s cash finance account to the borrower’s current
account is just the paper transaction and the borrower takes the finance in
no time. The borrower can take finance unto his limit sanctioned by
Bank’s authorities. However, the Bank cannot keep the cash finance
account greater than 30% of its equity.
PURPOSE
Cash finance is normally giver for seasonal needs e.g. in Cotton season,
Rice season etc. But in some cases it can be given for regular needs.
SECURITY
Following securities are required by the Bank.
PRIMARY SECURITY
The primary security required by the Bank is stocks. But unlike running
finance, in which the stock is hypothecated, here the stock is pledged by
the Bank. The stock pledged is kept with the Bank at the cost of the
borrower. Usually the stocks are kept at the warehouses of the Borrower
Company, but certain representative of Bank as Inspector is always there
to keep a check on the stock. The Bank advances certain percentage of
the pledge stock after keeping some margin.
PRINCIPLE SECURITY
Like running finance, some collateral security is taken as principle
security.
MARK-UP
The Mark-up of cash finance is normally 14%, but is negotiable.
PERIOD
The maximum period for cash finance is one year.
REPAYMENT SCHEDULE
Repayment of the loan is made after the completion of loaning period,
along with the markup.
3. DEMAND FINANCE
PURPOSE
Demand finance is usually given for the financing of new Projects. For
example, if a person wants to open the Floor mill or textile mill, he can
get the demand finance from the Bank.
MODE OF FINANCE
Demand finance is given in installments to the borrower. First installment
is given to purchase the land, then second installment is given for the
construction of building and finally the remaining amount is paid to the
supplier to install the Machinery.
SECURITY
The Bank requires the following types of securities.
PRIMARY SECURITY
No primary security is required as the finance is given for the new
projects and the Borrower Company has no existing stocks with it.
PRINCIPLE SECURITY
Like running and cash finance, some collateral security is required as
principle security. This collateral may be land, building or machinery.
MARK-UP
Normally 14% but negotiable.
PERIOD
Demand finance is usually given for the long-term period e.g. for two
years, five years or even upto fifteen years.
REPAYMENT SCHEDULE
The repayment of loan is made in installments. A grace period of one
year is given, after the maturity of loaning period. But this grace period
can be extended to two years. The installments may be quarterly, semi
annually or annually. The markup is also included in these installments.
IMPORTANT FEATURE
Demand finance is given on the basis of debt equity ratio which 40-60. It
is standard ratio. It means that a borrower can finance 60 percent of its
project cost through demand finance scheme. But the remaining 40
percent should be financed himself.
4. DEMAND FINANCE AGAINST FOREIGN CURRENCY
ACCOUNT
PURPOSE
To attract the foreign currency, ABL has offered this scheme. This
scheme is useful for those Foreign currencies account holders who don’t
want to incash their currency, but at the same time want to start a new
project. So they can get the required finance against their foreign
currency.
SECURITY
The security for this scheme is the foreign currency of the borrower,
which is prevailing in his foreign currency accounts. The Bank advances
a certain percentage of the foreign currency as loan after keeping its
margin. The Bank charges a Lien on this Foreign Currency Account of
the borrower.
MARK-UP
Mark-up of this scheme is 13.0%.
PERIOD
Demand finance against foreign currency is given for one-year period.
REPAYMENT SCHEDULE
No installments are made on the repayment of the loan. After the
completion of the loaning period (i.e. one-year) he whole amount along
with the markup is paid back.
5. DEMAND FINANCE TO STAFF
PURPOSE
This scheme has been started to give the benefit only to the employees of
Allied Band Limited. If any employee of ABL wants to start a new
project then he will be given the demand finance on the priority bases.
SECURITY
Some collateral security is required such as land building or machinery.
MARK-UP AND PERIOD
The Mark-up is less than 14% but not fixed. The demand finance to staff
is given for long term period. It may be upto 15 years.
REPAYMENT SCHEDULE
Repayment is made in installments. The installment may be quarterly,
semi annually or annually.
6. FINANCE AGAINST LOCALLY MANUFACTURED
MACHINERY
PURPOSE
This scheme has been started by State Bank of Pakistan. The basic
purpose of this scheme is to encourage the local manufacturers and to
boost up the local industry. Usually people buy the machinery of out side
the country due to non-availability of that in Pakistan. To produce the
machinery in the Pakistan this scheme is introduced so that people will
buy it from their own country.
SECURITY
Land, building and machinery are mortgaged with the Bank.
MARK-UP
To encourage the investors the Mark-up on this scheme is comparatively
very low, which 12.0%.
PERIOD
The maximum period for which this finance is given is 8 years. A grace
period for the repayment of loan is also given which is maximum of two
years.
REPAYMENT
The repayment of loan is made in installment, which may be semi
annually or annually. The amount, which the ABL finances to borrower,
is refund to it by SBP. The ABL acts only as the Sponsor. So the periodic
installment of the repayment of the loan are paid back to SBP.
PROCESS OF GIVING THE FINANCE TO THE BORROWER
According to the scheme the total finance is not given to the borrower
once. Instead of it, he is given the finance in three different installments
and these installments are subjected to the installation of the machinery.
Allied Bank Limited has no recognized supplier (manufacturer of
machinery). So the client himself goes to any supplier, gets quotations of
machinery from him and shows these quotations to the Bank. Then the
Bank’s Engineers visit the supplier and examines his capability of
installing the machines. After his approval, the quotations are accepted
and loan is sanctioned to the borrower. As a first installment, a cheque of
normally 30% of total finance is given to the borrower. In response the
supplier installs the 50% of machinery. After this, another cheque of 40%
of total finance is given to the borrower and at this time the supplier
installs the remaining 50% of machinery. The remaining 30 % of finance
will be given to the borrower when the project starts working.
7. ALLIED EQUITY BUILDING PLAN
PURPOSE
The equity building plan has specially been designed to help accelerate
the industrial pace in the country. The plan is primarily designed to
provide financial assistance to those professionals, technocrats and
overseas Pakistanis who are planning to set up their own industrial units.
Through this executive plan the investors will be able to build up their
30% to 40% equity over a specific period of time and after taking 60% to
70% from the Bank, will be able to put up their own industrial projects.
SALIENT FEATURES
Equity investment can be made both in local as well as well foreign
currency.
Plan periods are 3 years and 5 years in local currency and 18 months 24
months in foreign currency.
Minimum monthly deposit in local currency for 3 years plan would be
Rs. 8,000 and for five years Rs. 5,000. For both plan periods the monthly
deposits would be acceptable in the multiple of Rs. 1,000.
Minimum monthly deposit in U.S. Dollars would be $ 680 and $ 515 for
24 months and 18 months plan period, respectively. Similarly, minimum
monthly deposit in Pound Sterling would be 360 Pounds and 280 Pounds
for 18 months and 24-month plan period, respectively.
At any stage if the customer decides not to invest his funds in a project,
he shall be offered to place his funds in any other scheme of the Bank.
ADVISORY FACILITY
The Bank will also extend on request of the investors’
consulting/advisory facility in selection of project free of cost.
RATE OF RETURN
The deposit installments for the first year will be placed in PLS-SB
Deposit Account and thereafter transferred to PLS-TDR Account for the
remaining period of investment. The rate of return on PLS-SB and PLSTDR will be in accordance with the half yearly rates of profit declared by
the Bank. The rate of profit as announced by Bank on 31st December
1997 is 8%.
8. UNORGANIZED FINANCING SCHEME
PURPOSE
This scheme has been started for the following purposes:
To assist the entrepreneurs in the Unorganized sector and to increase their
productivity.
To encourage expansion in employment level within the Unorganized
sector.
To participate in community development work and help build country's
economy through the Unorganized sector.
SALIENT FEATURES
The scheme aims at elevating and enhancing the earning capacity of
small men.
Under the scheme, financial assistance is provided to individuals or group
of individuals requiring capital to establish a new business or expand his
existing enterprise.
FINANCING UNDER THE SCHEME.
The financial assistance will be given for meeting working capital
requirements and fixed investments. Under this scheme the maximum
amount of financial assistance to the individual borrower is Rs. 25,000
and to group of borrower is Rs. 50,000. This loan can be obtained from
designated zonal offices and branches of Allied Bank throughout the
country.
9. HOUSING FINANCE
PURPOSE
The Bank extends Housing Finance to customers, under the scheme
envisaged by the State Bank of Pakistan. The housing finance can be
given for the following purposes:
* For the construction of new houses or flats.
* For the purchase of new houses or flats.
SECURITY
The housing finance is given to the customers against the mortgage of
land or building. The mortgaged land may that one on which the hose is
to be built or it may be any other.
LIMIT
The housing finance can be made to a person once in his or her lifetime.
The finance is considered for an amount of more than Rs. 150,000 and up
to Rs. 300,000. The finance is admissible maximum up to 60% of the
value of the house or flat to be constructed or purchased.
PERIOD
The housing finance is given for a maximum period of 15 years.
REPAYMENT
The hosing finance is repayable in the installments and has to be paid
back during the maximum period of 15 years.
10. AGRICULTURAL FINANCE
PURPOSE
Bank under agricultural financing scheme envisaged by the State Bank of
Pakistan extends short, medium and long-term credit. The Bank gives
two types of credits, i.e. farm and non-farm credit. Farm credits are
extended for production (inputs) and the development purposes. Nonfarm credits are allowed for livestock (goats, sheep and cattle), poultry,
factory including social forestry and fisheries (inland) and marine
excluding deep-sea fishing).
LIMIT
Agricultural finance is given on the basis of cultivated area. Bank
normally advances Rs. 2,000 per acre (cultivated). But this amount varies
from crop to crop i.e. different for "Rabbi" and "Kharif" crops.
PERIOD
The agricultural finance is given for both short and long-term periods.
RATE OF MARKUP
For short-term agricultural finance the rate of markup is 11%. For long
term and high value financing, the rate is normally 14% but it is
negotiable.
TYPE OF LOAN
MARK-UP
Production loan (including sugar cane 12% per annum
loan) upto the maximum of Rs.
25,000/Production loan (including sugar cane 12% per annum
loan) above Rs. 25,000/Production loan (including sugar cane 14% per annum
loan) upto Rs. 50,000/- against
guarantee of two creditworthy parties.
Financing against guarantees of
14% per annum
Processing Units
Tractor
11% per annum
Other development loans
13% per annum
11. INTERNATIONAL DEVELOPMENT AGENCY FINANCING.
PURPOSE
International Development Agency provides finances to the different
Banks in Pakistan to encourage the industry. These Banks then forward
this finance to their customers. Allied Bank also has such financing
scheme. IDA gives this finance on concessional rates, normally ranges
from 6% to 7%. ABL then gives this finance to its customers.
SECURITY
The Bank gives this finance by mortgaging land, building or machinery.
MARK-UP
The Bank charges 14% markup on this financing. From this 14%, SBP
charges 2-3% from the Bank.
PERIOD
IDA finance is given for long term basis. The maximum period of this
financing is 10-12 years.
REPAYMENT
Repayment is made on installments, which may be semiannually or
annually.
12. CONSORTIUM FINANCE.
When the project cost is high, usually several banks under a lead bank
form a consortium to finance the project. ABL participates in such
consortium financing. The Bank itself has constituted such consortium
and is playing a lead role. The Bank is a lead bank in multimillion
consortium financing to Pakistan Steel Mills Corporation, Sui Northern
Gas Pipelines Limited, etc.
13. FINANCE UNDER SMALL BUSINESS & INDUSTRIES.
ABL has started this scheme in order to support the small business
owners, e.g. welders, electricians, etc. The Bank advances the loan of
minimum Rs. 25,000 and of maximum Rs. 50,000. The loan is repayable
in installments which may be quarterly or semiannually.
If some one wants to start a very small business, e.g., a shopper making
factory, a plastic toys making factory, etc, then he can take finance from
the Bank through this scheme. The maximum limit of finance given by
this scheme is of Rs. 300,000.
14. OVERSEAS EMPLOYMENT FINANCING SCHEME
SALIENT FEATURES
The scheme extends financial assistance to emigrants going abroad for
employment through Overseas Employment Corporation (CEO) in
meeting their preliminary expenditures.
The maximum finance of Rs. 15,000 and Rs. 25,000 is made available to
unskilled and skilled emigrants, respectively.
The scheme also covers doctors, engineers, professors and highly
technical individuals.
REPAYMENT SCHEDULE
The finance under the scheme is repayable in ten equal monthly
installments.
The first installment is payable within 60 days from the date of financing.
ELIGIBILITY
Persons only drawing salary equivalent to Pak Rs. 5,000 p.m. And above
will be eligible for availing the finance under this scheme.
The applicant will undertake to regularly canalize home remittance
through Allied Bank or its Correspondent bank.
15. FINANCE AGAINST TRUST RECEIPT
The Bank delivers the imported consignment to the importers against the
execution of the trust receipt by him. Suppose an importer imports certain
commodities, from abroad through Bank L/C. But it has not the enough
finance to release the documents from the Bank and in turn release the
consignment. So he asks the Bank to release his documents and he will
repay the Bank’s amount from the sale proceeds of the consignment. In
turn, he deposits the receipts of the sale proceeds to the Bank. This is
called finance against trust receipt.
16. TERM FINANCE CERTIFICATES
Term finance certificates are redeemable equity based instruments issued
by the Bank. In TFC the rate of markup is determined through mutual
agreement between the Bank and the Sponsors of the company in
between the minimum and maximum rates determined by the SBP. The
TFC may be for short or long terms.
17. FINANCE FOR GOVERNMENT COMMODITIES
OPERATIONS
The Bank gives finance to the Government for purchase of different
commodities. The Government then sells these commodities and repays
the loan to the Bank. For example Bank may give finance to the
Government to import wheat and when Government sells this wheat to
the floor mills, it repays the loan to the Bank.
In addition to above mentioned financing schemes, the following finances
schemes are also available, which will be discussed in Foreign Exchange
Department.
Export Finance
Finance Against Foreign Bills Negotiated
Finance Against Foreign Bills Purchased
Finance Against Documents (Sight)
Finance Against Imported Merchandize
Finance Against Inward Bills purchased
NON-FUND BASED FINANCING
The type of financing in which the funds of the Bank are not involved is
called "Non-Fund Based Financing". Under non-fund based financing,
the following schemes are available in Allied Bank Limited.
Letter Of Guarantee
Performance Bonds
Bid Bonds
Letter Of Credit (Inland)
Letter Of Credit (Import)
1. LETTER OF GUARANTEE
The Bank issues the letter of guarantee in local and foreign currency and
thereby undertakes the responsibility on behalf of the customer for the
debt, default or miscarriage by the customer, whether such requirement is
domestic or overseas. There are many types of Letter of Guarantee.
Suppose a person wants to purchase pesticides from Pan Pacific on credit
and Pan Pacific says to him that we will provide you the pesticides, if you
give us the bank guarantee, so that if you will not be able to pay the
amount on the specific date, the bank will pay the amount on your behalf.
So that person will come to the Bank and the Bank will give him the
guarantee after fulfilling its requirements.
The Bank also issues the Letter of Guarantee in favor of collector of
custom. Suppose person imports some inventory as raw material, but the
collector of custom says that this imported inventory is not the raw
material but the finished goods. So he charges the custom duty on this
inventory by considering it as the finished goods. As the custom duty on
the imported finished goods inventory is more than the raw material, so
the importer will protest it and the matter is taken to the court. Now the
court asks the collector of custom to release the inventory of importer and
at the same time ask the importer to give the bank guarantee in favor of
collector of custom. So the Bank gives the guarantee that if later on the
court gives the decision against the importer, he will pay the full duty. If
he becomes default, then the Bank will pay the amount.
SECURITY
The Bank issues the Letter of Guarantee by either mortgaging the security
or keeping the security as collateral. Besides this, the Bank may also
issue the Letter of Guarantee by hypothecating the stock. The type of
security depends upon the credit worthiness of the customer.
PERIOD
Normally the Letter of Guarantee is issued for the period up to 1 year.
COMMISSION
The Bank charges a commission fee on the issuance of Letter Of
Guarantee which is o.45% quarterly.
2. PERFORMANCE BONDS
Performance Bond is a type of guarantee which a Bank issues in the favor
of technical know how of its customer. Suppose a person engaged in
construction, made an agreement to construct a building within six
months. Now suppose, if the owner of the building is not satisfied with
the technical ability of the constructor and he is not sure that the
constructor will be able to construct the building within six months, then
he may ask the constructor to make him available with the Bank
guarantee. Now the Bank issues the performance bonds on seeing the
technical abilities of the customer and gives guarantee that he will
construct the house within a period of six months.
3. BID BONDS
Bid bond is also a type of guarantee that is issued in support of the
customer who is getting a contract from any company. Suppose a person
gets a contract from corporation of worth one million and promises to pay
the amount of contract in four installments. But the corporation may ask
him to give the Bank guarantee. So the contractor comes to the Bank and
the Bank issues the Bid bond in his favor and gives guarantee that the
contractor will pay the amount of contract. Bid bonds are issued in both
local and foreign currency.
The following non-funds based schemes will be discussed in foreign
exchange department
Letter of Credit (Inland)
Letter of Credit (Import)
RECOVERY OF LOANS
If the loans are not returned within their maturity period, then Bank
adopts the following process.
First of all the Bank will personally request the customer to repay the
loan.
After this, first legal notice is sent to the customer. If the customer does
not respond to this first legal notice, then after fifteen days the second
legal notice is sent to him.
In the third step the Bank sue the customer in the court. Two types of
courts have been setup under two difference ordinances, especially to
hear and decide recovery suits i.e.
1. Special Courts (banking)
2. Banking Tribunals
Special courts were established under the banking companies (recovery
of loans) ordinance 1979 to hear allowed interest-based system of
Financing.
INTRODUCTION
In the very beginning of this era people were not aware of foreign
exchange. All the foreign money was kept at hand and this idle money
did not contributed in the Pakistan economy at that time. But in 1991
foreign department introduced was introduced by the government of that
time. After being introduced people deposited their currency in the Bank.
It was the amount equal to the total Pak Rupees that were in the
circulation in the economy of Pakistan.
After the foreign currency accounts were opened, the economy gradually
improved because foreign currency contributed a lot. Before the facility
of foreign currency accounts, nearly 60% foreign currency was held by
the people as idle.
ABL FOREIGN CURRENCY ACCOUNTS
In Allied Bank Limited, Foreign Currency account can be opened in four
major currencies.
US Dollar
Sterling Pound
Japanese Yen
Deutsche Mark
CRITERIA FOR OPENING FOREIGN CURRENCY ACCOUNT
There are not hard and fast rules for becoming the Foreign Currency
Account holder. Bank wants only introduction of the Client and very little
about the background. I.D card is also not necessary, if someone has; well
and good, otherwise no restriction will be there for him. Minimum
requirements are not also fixed F.C.Accounts. It can be operated by 10$
only. But other Banks may have some limits on minimum requirement.
INCENTIVES TO FOREIGN CURRENCY ACCOUNT HOLDERS
The following incentives will be granted to the Deposit Holders who
maintain a Foreign Currency Deposit with minimum balance of US.
$50,000/- or Japanese Yen 5,000,000/- pr P. Stgk.35, 000/-or D.M
75,000/The branches Authorized to deal in Foreign Exchange and maintain
Foreign Currency Accounts will ensure that the following services will be
rendered by the bank to the Foreign Currency Account Holders in above
category, free of charge/or reducing the commission in certain
transactions as mentioned against each item.
Issuance of Foreign traveler Cheques to the Account-holders to the debit
of there Foreign Currency Accounts.
Remittance abroad through Foreign Currency Accounts commission
@US $2/-per US 1000/and telegraph transfers charges are 200/Issuance of Balance Confirmation Certificates (free of charge)
Delivery of Cheque Books Registered Mail (free of charge)
Issuance of Proceeds Realization Certificates (free of charge)
FEATURES OF FOREIGN CURRENCY ACCOUNTS.
There will be legal protection for the account holders.
According to foreign exchange rules and regulation every citizen of
Pakistan, either within the Pakistan or outside the Pakistan, can open the
foreign currency account.
Resident firms and Resident Companies including investment Banks can
open Foreign Currency Accounts.
All foreign nationals and foreign Companies in Pakistan or abroad can
open Foreign Currency Accounts.
Opening of Foreign Currency Accounts in the joint names of
residents/non-residents is permissible. Foreign Currency can be deposited
by:* Remittance received from abroad
* Traveler Cheques
* Foreign Currency Notes
* Foreign currency bearer Certificates
There will be no restriction and questioning to him about the currency,
which he wants to deposit that from where he got that money.
No Zakat will be deducted on these accounts; no Income Tax deduction,
no Wealth Tax deduction will be there.
These incentives reinforce and motivated the people to invest in foreign
currency accounts rather to keep the foreign currency idle.
Foreign currency accounts can easily be transferred from one person to
another, one place to another, with in the ABL Branches or in other Bank.
This facility is not available in Pak Rupee account.
The account holder can transfer the funds freely, in any currency to any
part of the world.
Traveler Cheques can be issued for abroad to the account holders without
any limit.
Foreign currency Accounts can be used for payment of purchases at Duty
Free shops.
Foreign Exchange Bearer Certificates and U.S. Dollar Bearer Certificates
can be purchased from Foreign Currency Accounts.
FOREIGN DEPOSITS SCHEMES
Deposit Schemes of Foreign Currency Accounts are very much related
with Pak Rupees Accounts such as saving deposit, current deposit and
fixed deposits.
SAVING ACCOUNTS
In these accounts there is no Minimum limit for opening the account and
the Bank offers certain rates of interests on all Foreign Currency
Accounts.
RATE OF INTERESTS ON SAVING ACCOUNTS
For Dollar, 6.5% rate of interest is offered
For Sterling, Pound 8% rate of interest is offered
For Deutsche Mark, 4.2 % rate of interest is offered
For Yen 1% rate of interest is offered
FIXED DEPOSITS
PERIOD
Fixed deposit facility is also provided to clients. These deposits can be for
three months, less than six months, six months, less than twelve months,
twelve months, two years, three years, four years and for five years.
Rate of Interest
Rates of Interests are different for different Currencies for different
Periods.
CURRENT DEPOSITS
Multiple withdrawals of any part of balance can be made on demand.
Funds can be credited into the current deposit account in the form of
cash, Cheques and other financial instruments drawn on any bank or
other branch of ABL. The current account is suited to meet both domestic
and business requirements of the customer.
FINANCING SCHEMES
In foreign exchange department both Fund-based and Non-fund based
Financing schemes are present. First Non-based financing schemes are
discussed.
Non-fund based Financing schemes
Letter of credit (Import)
Letter of credit (Inland)
First of all Letter of Credit is explained.
LETTER OF CREDIT
Letter of credit (L/C) is the type of guarantee, which the Bank extends on
behalf of its customer in favor of the exporter.
PROCESS OF L/C
Suppose a person wants to import certain commodities from abroad. He
asks the export to send the commodities and he will pay the amount later
after receiving the commodities. But the exporter asks the importer to
give him the Bank guarantee. Suppose the importer is the very loyal and
creditworthy customer of ABL, so he will come to ABL and will ask the
Bank to open a letter of credit in favor of exporter. The Bank will now
issue a letter of credit in favor of exporter on behalf of its customer and
promises to stated amount if the customer becomes default. In return the
Bank keeps some security from the customer. This security may be any
property, machinery etc. The Bank will send this letter of credit to its any
correspondent Bank in that country and asks the Bank to give this L/C to
that exporter. The L/C contains specifications of the imported
commodities along with other necessary details. Now the correspondent
Bank will inform the exporter about the L/C. The exporter will receive
the L/C and after seeing all the requirements of the contract, ship the
commodities to the importer according to specified manner discussed in
L/C. After shipping the commodities the exporter will go to the
correspondent Bank or any other Bank and will receive money after
handing over the documents to the correspondent Bank. The
correspondent Bank will give him the money after analyzing the
documents of shipment. Then correspondent Bank will send a covering
letter and documents of shipment to the Allied Bank Limited. This
covering letter specifies that the correspondent Bank has given the
amount to the exporter and documents of shipment are sending to ABL.
After receiving the documents ABL contacts the importer and tell him
that his commodities have arrived and his documents of consignment are
with the Bank. Now he can take these documents of shipment by paying
the specified amount of L/C to the Bank and can release his consignment.
The Bank charges certain rate of commission on the days, which start
from the payment to exporter by the correspondent Bank till the day of
payment by the importer. This is called Letter Of Credit Import.
TYPES OF L/C
There are many types of L/Cs but two are of most importance.
SIGHT L/C
If the L/C specifies the payment to the exporter immediately after the
shipment of consignment to the importer, then it is called “Sight L/C”.
USANCE L/C
If the L/C specifies the payment to the exporter within specific period of
time after the shipment of consignment to the importer, then it is called
“Usance L/C”.
L/CS ESTABLISH BY ABL
ABL establishes following kinds of confirmed and irrevocable letters of
credit.
Sight credit
Usance letter of credit
Reimbursement letter of credit
Revolving credit
Transferable credit
Deferred payment standby L/C
Term credit
Negotiation credit
LETTER OF CREDIT (IMPORT)
The Bank in order to finance commerce and trade, extends its prestige
financial strength by establishing overseas letters of credit, on behalf of
the customers and thereby undertakes to pay the amount stated on the
letter of credit or accepts a bill of exchange on behalf of customer, in
return for delivery of the commercial and shipping documents.
LETTER OF CREDIT (INLAND)
The Bank, in order to finance trade and commerce within the country
establishes inland letter of credit and thereby undertakes to pay the
amount stated on behalf of its customer, in return for the delivery of
commercial and other documents provided there documents are strictly in
accordance with the terns and conditions of the letter of established by
the Bank.
Fund based Financing Schemes
Among fund based financing schemes, the following schemes are
present:
Export Finance
Finance Against Foreign Bills Negotiated
Finance Against Foreign Bills Purchased
Finance Against Documents as Security
Finance Against Imported Merchandise
Finance Against Inward Bills purchased
1. EXPORT FINANCE
The Bank makes available finance for export. This finance may be preshipment or post-shipment.
PRE-SHIPMENT FINANCING
The pre-shipment finance is to meet the financial requirements of the
export order before shipment. Suppose a person who exports certain
commodities to various countries, receives a huge order to export. The
importer will send him the L/C through his Bank, which has many
correspondent banks here. Let ABL is one of them. Now if the exporter
has not enough finance to meet the export order, then he will come to
ABL and will get the financing against L/C of the contract and by
pledging some security. After shipping the consignment to the importer,
the exporter will take the documents of shipment to the Bank and will ask
it to collect the amount from importer. This is pre-shipment financing.
POST-SHIPMENT FINANCING
The Bank makes post-shipment finance available after shipment of export
consignment. Usually in case of usance L/C, the post-shipment financing
is made.
Suppose an exporter has usance L/C in his favor which shows the
payment of exported consignment after a period of say 6 months, but the
exporter needs money now. So he will go to the Bank and ask them to
purchase or the shipping documents and give him the finance. So the
Bank will give him the finance by purchasing the shipping documents.
This is post-shipment financing.
2. FINANCE AGAINST FOREIGN BILLS NEGOTIATED
When the exporter exports the commodities and gets the L/C from the
correspondent Bank of the importer’s Bank let it be any Bank other than
ABL and the L/C is open L/C. Now after the shipment of exported
consignment the exporter has the option to negotiate the shipping
documents with any Bank and gets the amount of exported commodities.
Suppose it comes to ABL. Then ABL on seeing the repute and good will
of the importer’s Bank will negotiate the shipping documents and will
give the finance to the exporter.
3. FINANCE AGAINST FOREIGN BILLS PURCHASED
Suppose the importer sends the usance L/ C in favor of exporter here. The
usance L/C specifies the payment to the exporter after the 6 months. But
if the exporter wants to get the amount now. So he will go to the Bank
and asks the Bank to purchase the documents. Now the Bank will
purchase the documents at discount and give him the finance. The
difference between the purchase price of these foreign export bills and the
amount due against these foreign bills is the profit of the Bank.
4. FINANCE AGAINST DOCUMENTS AS SECURITY
In this type of financing the Bank accepts shipping documents from the
exporter and finance against that documents by seeing the worth of the
documents. It keeps the documents as security but not purchases it. Bank
also takes some security by the borrower.
5. FINANCE AGAINST INWARD BILLS PURCHASED
The Bank also extends finance against bills of exchange drawn by the
beneficiary of inland letter of credit provided such Bill of Exchange and
other related documents are strictly in conformity with a term and
conditions of letter of credit.
6. FINANCE AGAINST IMPORTED MERCHANDIZE
The bank extends facility of clearing the consignment through its
approved clearing agents and considers finance against pledge of
consignment imported through the Bank. This is called Finance against
Imported Merchandize.
7. EXPORT REFINANCING
It means to finance the persons for export purposes. Government
introduced this scheme on the basis of bad conditions of exports as
compared to the imports. Before this scheme the Exports of the country
were very poor. All the money was spend on the imports. To increase the
exports this scheme was introduced. Under this scheme only those goods
are manufactured which the Government allows. Rate of Markup offered
is very less as compare to others. Once the ABL has financed the
customer, then the State Bank of Pakistan will return it to ABL after two
or three days, so it is called the refinancing. Period of payment for this
scheme is 150 days but for the carpets, it is extended to the 180 days.
8. FORWARD COVER
When a customer deposits the foreign currency in a Bank then the Bank
has to send this foreign currency to SBP on daily basis. In return SBP
gave an equivalent amount to the Bank in Pak-rupees. When the client
comes back to withdraw his money the Bank gets back the foreign
currency from SBP and it gives it back to the client. All these transactions
occur in paper. Now it may happen that the rate at which the Bank
deposits the foreign currency, say US$ in SBP is lower than the rate at
which the Bank gets back the US$ from SBP. It means that Bank may
suffer loss. To avoid this loss the Bank makes an agreement with the
SBP. According to this agreement the rate at which the Bank deposits the
foreign currency in SBP, gets back the currency at the same rate
regardless of the period of time. This is called Forward Cover. The SBP
charges certain rate of commission on forward cover of different
currencies. Currently the rate charged at US$ is 5.25% and at Pound
Sterling is 4.5%.
The bank provides its customer various products & services, to cater
there need of investments, and other social or business requirements.
These Product & Services offered by the bank are as follows:
LOAN FOR COMPUTER
Now a days ABL is also standing with the government of Pakistan in
spreading the IT education through financing in the purchase of
computer. ABL provides computer to those professionals who are
interested to get computer related education.
ABL finances 80% of total cost while,
The clients have to bear 20% of total cost.
Markup is 14%
And the repayment period is 5 years.
TRAVELER CHEQUES
Allied Bank issues Traveler Cheques both in foreign currency and in Pak
Rupees. The traveler Cheques issues in foreign currency are called ABL
Traveler Cheques while those issue in Pak Rupees are known as ABL
Rupee Traveler Cheques.
DENOMINATION
ABL Rupee Traveler Cheques are issued in the denominations of Rs
1,000, Rs. 5,000, Rs 10,000 and Rs. 50,000.
SERVICE CHARGES
The bank charges Rs 20 on the issuance of traveler cheque of any
denomination.
REQUIREMENT
The Bank requires Identity Card on the issuance of the Traveler Cheque.
VERIFICATION
Client makes one sign on the Traveler cheque when he is purchasing it
and the other sign is made when he will cash the cheque.
LOCKER FACILITY
The list of Lockers is maintained in the register. In this register the name
of locker holder is mentioned along with the locker number. The key is
provided to the locker holder called the Normal or Ordinary key. The
Bank keeps himself one key himself. When the locker holder wants to
operate to the locker, then he will operate the locker firstly entering the
name in the register along with the initials. The date and time of the
transaction will also be recorded in the register. Then the leaving time
will also be recorded in the register.
Criteria for Acquisition of Locker
There are certain criteria for acquiring the locker facility.
OPENING FARM
There are opening farms, which are filled by the client to get the locker
facility. In this form the name is mentioned along with the signatures of
the locker holder. In the locker number is also mentioned on the farm.
SECURITY
Certain security is kept by the while providing the locker facility. This
security is in shape of the cash.
SIZES OF LOCKERS
There are four sizes of lockers, small, medium, large, or extra large, on
which certain security is made and the locker holder pays the following
amount of rent annually.
Locker Size Security Rent
Small Rs. 1,500 Rs. 750
Medium Rs. 3,500 Rs. 1500
Large Rs. 5,000 Rs. 2500
The key, which is with the Bank, is called Master key and the key, which
is kept by the holder, is called normal key. A locker cannot be operated
with one single key. Both the master and normal keys are required for
operating the lockers. If the key is lost from the locker holder, then the
locker holder will pay the entire recovery fee and the client launches FIR.
If person wants to operate the locker, he will operate it alone.
ALLIED BANK MASTERCARD
Types of MasterCard
Allied Bank issues two types of MasterCard.
Local MasterCard
International MasterCard
The normal limit of local MasterCard is Rs. 25,000, but it can be
extended upto Rs. 50,000 only for creditworthy customers. The
maximum limit of International MasterCard is Rs. 100,000. The Bank
charges 8 to 10 % commission on the used amount.
It’s the any time shopping card
Having the ABL MasterCard is likely having an account with hundreds of
shops, restaurants, and hotel outlets all over Pakistan and abroad. The
client no longer waits for his bonus to start shopping.
Lost card liability
If ABL MasterCard is lost or stolen, the cardholder will have to bear only
the first Rs. 100 from the amount misused, provided the Credit Card
Division of the Bank is notified immediately.
Its “Free Credit Card”
If the total outstanding amount is settled by the due date, (approximately
15 days from the statement date), no mark-up is charged. This means that
you enjoy a maximum of 45 days of “frees credit” from the date of
transaction.
Free Personal Accident Insurance
As a holder of prestigious ABL MasterCard, the Bank covers the client
with the personal accident insurance value that Rs. 50,000/- in case of
death or permanent disability.
It’s an Instant Cash Card
ABL MasterCard enables the cardholder to obtain the cash advance from
his MasterCard account from any designation branch of ABL during
banking hours, at a two percent service charge.
Extra Cards. Supplementary +
As an ABL MasterCard holder, client can receive the extra cards with
different names and signatures for two other eligible persons of his
immediate family nominated by the client himself, may be his spouse.
The two cards are absolutely free any membership fee.
It’s the Invaluable Expense Planner
The sales slip client receives any time, when he makes a purchase and his
monthly statement helps him to plan out his monthly expenses. Thus the
client will never overshoot his Budget while holding the ABL
MasterCard.
RATE OF CHARGES
Local Card Rate of Charges
Membership fee Rs 500 (flat)
Annual fee Rs 1,000 (flat)
Supplementary card fee Rs 500 per card
Cash advance 2.5 % per transaction
Replacement fee Rs 350
International Card rate of Charges
Membership fee Rs 500 (flat)
Annual fee Rs 1,500 (flat)
Supplementary card Rs 750 per card
Cash advance 2.5 % per transaction
Forex markup 1.25 %
Replacement fee Rs 350
UTILITY SERVICES
The banks also provide 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 under "Cheque Drop-in" system. The
Bank mails the bills after payment to the consumer.
HAJ SERVICES
The bank serves the intending pilgrims by helping them in performing
their religious obligation. The Haj forms and other related services are
provided by the bank.
However the terms and conditions for accepting the Haj forms from
intending pilgrims are in accordance with the Haj Policy announced by
the government each year.
BANK’S FINANCIAL POSITION
Financial position of the ABL can be judged from different financial
heads that on which level it stands, with respect to the other banks.
Total Assets
Total assets of the bank increased from Rs. 72 (billions) in 1997 to Rs. 89
(billions) in 1998, thereby increasing at the rate of 23.3% over the last
year. This is the highest rate of growth for the last five years, and better
than other banks..
Advances
Advance, net of provision, have increased from Rs. 36 (billions) in 1997
to Rs. 43 (billions) in 1998 thus increasing by 18% during the year.
Though the advances to private sector have declined country-wide yet in
case of Allied Bank share of credit to private sector remains unchanged
as compared to previous year.
Investments
Investments have increased from Rs. 20 (billions) to Rs 26 (billions) in
1998. Thus increasing by 27% during the year under review. It is
encouraging to observe that during last two years the priority of the
management has remained to increase investments after, of course,
meeting the genuine credit needs of our customers.
The investment of 90% has been made in Govt. Securities which
mitigates the default risk on statutory liquidity reserves and ensures safe
return to our share holders.
Deposits
The peer banks floated various high cost deposit mobilization schemes
during the year. However, Allied Bank, depending upon its quality of
services and experienced field force successfully mobilized additional
deposit of over Rs. 13 (billions) during the year reflecting a growth of
almost 21% over the previous year.
Equity
Equity has remained one of the main concerns of the management. In
order to increase equity, the bank issued 100% right shares in 1995 and
25% in 1996, also ploughing back profits through bonus shares of 25%
each in 1995 and 1996. In 1998, the management decided to revalue land
and buildings acquired by the bank several years’ back and were being
carried at book value. However, the international properties of the bank
have not been revalued. As a result of revaluation of the domestic land
and buildings of the bank the reserves of the bank have increased by
almost Rs. 1.5 (billions) thereby increasing the equity of the bank almost
100%. Now the total equity stands at 3.002 (billions).
Profitability
Pretax profit of the bank increased from Rs. 29 million in 1997 to Rs. 170
million in 1998. Thereby reflecting a growth rate of almost 490%. The
main reason for this profit increased was rise in yield from 387 million in
1997 to Rs. 769 million in 1998.
Performance Highlights of 1998
HEADS
1997
1998
GROWTH Rs
Capital & reserves
1515
3002
1487
Deposits
63430
76541
13111
Advances
36231
42719
6488
Investments
20193
25605
5412
Income
8397
8984
587
Expenditure
8368
8814
450
Pretax profit
29
170
141
Total assets
72404
89358
16954
The year 1997 had been very difficulty for Pakistan economy. The
commercial banking industry has been reflecting declining trend in the
pre-tax over the last three years due to ever increasing, quantum of nonperforming assets, resent cost of funds and inter-mediation and declining
manufacturing sector.
The beginning of 1998, however, has brought a ray of hope for economic
GRO
%
198%
21%
18%
27%
11%
9%
490%
23.42
revival. The emergence of new government with heavy electoral mandate
has considerably restored the people’s confidence, which is reflected in
the rise in the country’s stock price index after almost two years. The
policies being pursued by the new government are expected to revive all
sectors of the economy.
Operational review
The performance of ABL remained mixed and very improved during the
year, 1998. Total assets (less contra) increased to Rs. 89.358 billion in
1998 indicating a growth of 23.4 % as compared with 1997. Declaration
of 25% right shares together with rising reserves increased the equity of
the Bank by RS. 170 million or 14.0% resulting in improved capital
adequacy ratio of the Bank. Total deposits of the Bank reached to 76.541
billions showing a growth of 21% over last year. Investment and
advances rose to Rs. 25.605 billion registering a growth of 27%. The
growth in total income was only 11% (from Rs. 8.397 billion in 1997 to
Rs. 8.984 billion in 1998). Whereas the growth in total expenditure was
22.5%(from Rs 8.368 billion in 1997 to Rs. 8.814 billion in 1998)
resulting in a relatively lower pre tax profit for the year 1998.
The pre tax profit Rs. 170 million for the year was very much high as
compare to the previous year figure out as 29 million in 1997. This
increase in pre tax profit was due to higher margin by making lower
(even normal) payment of return to depositor and other creditors.
International Business
The import business of the Bank leaped to Rs. 31.239 billion registering
an unprecedented growth of Rs. 8.727 billion or 38.8% over last year’s
imports. The export business, too, rose from Rs. 15,393 billion to Rs.
17,892 billion indicating a growth of 16.2%. The Bank has also recorded
a growth of 3.3% during 1998 in home remittances, which stands at Rs.
2.705 billion.
Network
The branch network continued to expand in 1998 and additional 29
branches were opened in the country. Total domestic and foreign outlets
aggregate to 951 at the end of 1998.
Computerization & Automation
Computerization and Automation remained one of the top priority areas
of the management. During the year 1998, additional seven ATMs were
installed. Now a total of 28 ATMs are available in almost all major cities
of Pakistan.
By the end of December 1996, computerized on-line branches were 48
while work on 20 branches to be computerized off-line whereas work on
99 branches to be computerized off-line was underway. But now in 1998
and 1999, many other branches have also been computerized in the
country’s major cities. They aim to computerize all branches within 7
years.
In addition Allied Tele-banking Service was made available in Finance &
Trade Center Branch, Karachi and Blue Area Branch, Islamabad.
Human Resource Development
The development of human resource continued to receive utmost
attention of the Management. Towards this end the Bank inducted
qualified personnel, such as MBAs & M.Coms who were also required to
undergo vigorous extended training of the existing personnel training
programs continued with main thrust on computer appreciation to
encourage computer usage in the Bank.
NINE Years Progress 1990-98
1990
418
19,82
5
11,11
5
1991
451
25,04
1
11,87
1
1992 1993 1994 1995
Capital & Reserves
566
645
733
1,219
33,75 37,12 41,44 51,12
Deposits
7
1
5
4
15,73 18,03 19,90 29,55
Advances
4
7
1
2
14,58 14,94 16,54 15,61
Investment
7,268 9,981
6
8
9
0
Income
2,044 2,349 3,435 4,453 5,010 6,102
Expenditure
1,983 2,249 3,080 4,038 4,665 5,571
Pre-tax Profit
61
100
355
415
345
531
Total Assets
23,31 28,34 37,97 41,75 47,39 58,48
(Less contra Account)
9
2
3
9
0
0
If we see the above table, we can well imagine the growth trends in the
pretax profit. Why is it so that previous year it was 29 million but in 1998
it is 170. One thing is that its assets have increased from 72404 to 89358
millions in 1998. All this happened due to the increase in deposits and
double figure of the capital and reserves in 1998 as compared to the 1997.
And the capital expenditure remained almost the same for the 1998 and
1997. So we can say the in 1998 the financial strength is more as
compared to the previous years due to less expenditures and more
deposits and advances to earn profits.
Following graphs show the real trends of the Allied Bank growth in
different aspects.
1996
1,389
55,89
7
32,43
6
15,57
4
7,056
6,822
234
63,43
9
1997
1515
6343
3623
2019
8397
8368
29
7240
STRENGTHS
Allied Bank Limited has certain strengths which are different from the
other Banks.
· ABL is the first Muslim Bank of the world, which is owned and
managed by its own employs. This is the biggest strength of the Bank. A
feeling of ownership is present in every employ, which not only helps in
increasing the productivity of employs but also creates sincerity with the
Bank in them.
· Another strength is the high motivation of employees to their work
because they know that what so ever they do, it will be in their own
benefit. They know that the profit, which they will earn, will be
distributed among all the employees. So they work with high motivation
and concentration.
· Salaries are very reasonable, so the employees are not financially
disturbed and they devote their selves fully to their work.
· They have wide area network in all over the Pakistan, so that they cover
a lot of portion of cash transactions and make customer satisfied.
· The Bank has very strict rules and regulations about the customer’s
complaints. The customers are treated as very special persons in the
Bank.
WEAKNESSES
· No entertainment facilities are available in the Bank when customer
goes to the Bank and wait for a longer time. These facilities can be the
newspaper, magazines, etc.
· Advertisement of ABL is not such goods as of other banks.
· Out look of the ABL branches is not attractive to the people.
OPPORTUNITIES
· The policies of the new government to uplift the economy and pursue
financial sector reforms are expected to yield positive results in the
banking industry of the country. The ABL is very well praised to avail
promising opportunities.
· As a result of the different steps taken by the Government regarding the
betterment of the economy, small borrowers are attracted to get the
financing and start small businesses. So, the ABL has an opportunity to
attract the customers by giving them attractive schemes.
THREATS
· First threat is that of political influence. Three boards of directors are of
government. So that they can influence on the decisions of the ABL.
· The biggest threat in the banking sector is the continuous downfall of
the country economy since the last few years. If this downfall remains for
more few years then it may be the great hindrance in achieving the
Bank’s objectives.
· The privatization of other banks is also a threat for the Bank. Due to the
privatization of the different bank e.g. MCB, the competition has
increased a lot. Furthermore many private banks have come in the sector
due to which it is becoming more difficult day by day to attract the
customers.
FUTURE PLANS
Some future plans of ABL are as follows:
· Installation of ATMs in every major city of the country.
· Computerization of all the branches through out the country. In the first
instance a target of 250 branches has been set. Among them about all the
branches of Lahore and Karachi have been computerized. In addition to
this main branches of Bahawalpur and Rahim Yar Khan has also been
computerized. Now the next target is Multan Circle
· Shares Investment Scheme i.e. Bank will trade in shares of different
renown companies to earn profit.
· Purchase of Sick Units, rebuild them and make them profit earning
institutions.
SUGGESTIONS
Following are some observations and suggestions during the internship.
· When giving the loan, the Bank must carefully analyze the past six
months transaction history of the borrower. This will help in judging the
dealing behavior and financial status of the client. In most cases, this
thing is not properly done and it is the major reason of default of many
clients.
· The Bank should keep the proper cheque on stock which is
hypothecated. A textile owner may ret the loan on same 10,00 bales of
cotton from checking system of the Bank.
· The Bank should have the moving cameras in their branches for security
purposes.
· The Bank should try to give more loans to the small borrowers as the
past history shows that most of the loans given to the corporate borrowers
have converted into bad debts.
· The Bank has a lot of financing schemes but there is very little
advertisement of these schemes. So Bank should increase its
advertisement.
· When any one comes to operate the lockers, then the things which he
keeps in locker should be checked through metal detector for security
purposes.
· Staff turnover particularly of trained staff results in financial and other
losses. The amount spent by the bank on employment, induction and
training of outgoing officers constitutes to beat till another officer should
ready prove his work. The exodus of bank officers in the past has
worsened the situation.
· Most of the bank employees are sticking to one seat only, with the result
that they become master of one particular job and loose their grip on
other banking operations. In my opinion all the employees should have
regular job experience all outÄlook towards banking. The promotion
policy should be adjusted.
· Refresher courses for the staff are most important in any international
organization. All the employees should have these courses according to
their requirements. Foreign experts can also be called for this purpose.
· Every year some of the employees should be sent for training to other
countries and employees from other branches should be brought here.
More reading material should be brought / provided in the reference
Room, it should be relevant and its purpose should be to educate the
employees with the advance studies in their field. The employees should
be provided the opportunities to attend and participate in seminars and
lectures on banking.
· With the internship letter should also be requested to provide us the
financial reports. Because when we demanded the financial reports they
said that this is confidential. And they are not allowed to provide these
statements to any trainee.
1. ACCEPTANCE.
The action of the drawee signifying his intention to pay the bill on its
maturity is called acceptance. The bill may be accepted by the drawee
without addition of any word but it is customary to add the words
accepted across its face indicating the date under the signature.
As stated above, acceptance is the act of accepting the term or usance bill
of exchange by drawee, but the word is more commonly used to refer the
accepted bill of exchange, though on behalf of his customer, as such bill
accepted by the bank is known as bank acceptance. This item appears on
the liability side of the bank’s balance sheet with contra on assets side for
the bills (liability) accepted on behalf of the customers (importers) for
whom documentary letters of credit have been issued.
2. ACCOMMODATION BILL.
A bill is called an accommodation bill when it is drawn, accepted or
endorsed by a party with the object to oblige or accommodate another
party without receiving any consideration for the same. The person
putting his signatures lends his credit (without consideration) for
enhancing the credit worthiness of the bill for the purpose of
accommodating the other person, who may raise the funds by discounting
the bill and is expected to meet the bill at maturity from his own source.
But it should be clearly noted that in case of dishonour of the bill, the
accommodation party (who has lent his credit) is liable to holder for
value. By discounting an accommodation bill the bank becomes holder
for value.
3. ADMINISTRATORS.
Administrator is a person, who is appointed by a competent court to
administrate the estate of the deceased person who has left a will without
naming any executor, or, the person named in will has died before the
testation, or the person named in the will has refused to act as executor.
4. ADVICE.
An official intimation issued by a banker during the course of his
business to the customer, other branches including overseas branches,
banks and correspondents and his head office, is generally called an
advice, such as credit advice (which is sent to the customer when a credit
in his account has been received), debit advice (which is sent to the
customer when his account has been debited for charges, mark up and
debit raised in compliance of his instructions/standing orders), draft
advice (when a draft has been issued), pak account advices (credit or
debit) when branches accounts have been credited or debited.
5. AGENT.
As per contract act 1872, section 182, and agent is a person employed to
do any act for another or to represent another in dealing with third
persons. The person for whom such act is done, or who is so represented,
is called the principal. Thus an agent has powers to bind his principal
according to the terms of the authority. Before dealing with an agent, may
have limited authority to act for some particular or special duty such as
authority to purchase house only or to collect rent of a particular building
or buildings. The authority given to a person may be for performance of
multifarious duties, in that case the is regarded as general agent. Where
un-limited powers are given to a person, he is called a universal agent and
he can bind his principal by all his acts provided these are in accordance
with the law of land.
6. ALLONGE.
A slip or a sheet of paper attached to a bill of exchange (or cheque) for
the purpose of writing endorsements when the place on the back of the
bill (or cheque) has been filled up with the endorsements of the parties
through which the bill (cheque) has passed. In order to prevent fraudulent
use of the allonge, the first endorsement on the allonge is recorded in
such a way at the junction of the two documents that half of the
endorsement is on the bill while other half is on the allonge. Since it is
permissible to use copy (photo copy) of the bill in place of allonge, in
certain countries, in view of which bill of exchange act 1882, section
32(i), provides that in a country where such a copy is recognized the
endorsement written on the copy shall be deemed to have been written on
the bill itself.
7. ALTERNATE PAYEE.
One of the two parties or one or some of the several parties to whom a
negotiable instrument or an account is payable, is an alternate payee.
8. AMBIGUOUS INSTRUMENT.
Ambiguous means doubtful or of uncertain nature-difficult to distinguish
or classify – obscure. Thus an ambiguous instrument is that which has
been drawn in such a manner that it is doubtful to classify it as a bill of
exchange or a promissory note. The holder may treat it either as a
promissory note or bill of exchange and when option of the holder is in
favour of any one of them ,in future , the instrument shall be treated
accordingly . In the following cases the instrument is ambiguous where:
(a) in the bill the drawer and drawee are the same person (b) the drawee
mentioned in the bill is a fictitious person (c) Drawee mentioned in the
bill is incapable of contracting (d) the instrument in the form of bill of
exchange is not addressed to any person.
9. ARTICLES OF ASSOCIATION
In a document, which contain various regulations for the internal
management of a company and terms and conditions regarding issues of
shares, transfer of shares , alternation of capital , borrowing powers ,
general meeting , voting rights , appointment of directors and their
powers, dividends, accounts, audit of accounts , winding up and others .
10. BANKER AND CUSTOMER.
The relationship of banker and his customer in primarily that of a debtor
and creditor and not of a trustee and beneficiary. Customer on depositing
money to the credit of his account with the banker banker becomes the
creditor the banker becomes the debtor. On obtaining finance/loan, the
position is reversed and the customer is then, the debtor and the banker
the creditor. This relationship confers certain rights and duties to each
others. One of the fundamental duty which sprung out of it, unless
revoked, is honouring of customer’s cheques is technically in order and
there is no legal bar on it. However, it is entirely in the banker’s
discretion to allow overdraft (finance) to his customer.
11. BANKER’S BOOKS
It has been defined in S. 2(3) of the banker’s book evidence act, 1891 as
under:“banker’s books include ledgers, day books, cash books, account books
and all other books used in the ordinary business of bank”.
12. BANKER’S DRAFT.
Draft is an order cheque drawn by one branch of a bank upon itself i.e. on
another branch of the same bank. It is a negotiable instrument and cannot
be made payable to bearer.
13. BANKER’S LIEN.
Lien is a right in one man to retain the property held by him legitimately
belonging to another against present and accrued claims (debt) till such
claims (liability) are satisfied. Property ownership remains with the
debtor (borrower) while the creditor (lender) keeps its possession.
14 BANKER’S RIGHT OF SET-OFF.
It is statutory right of bankers to combine two or more accounts enjoying
same rights of the same customer, in order to arrive at the net balance due
between them. Where a customer has more than one account at the same
branch of a bank or at two or more branches of the same bank, the bank
has a right to combine these accounts of the same customer to work out
the amount due to him or from him. In order to exercise such right
without notice a letter of set-off duly signed by the customer is obtained
confirming the right of set-off without notice and to return cheques,
which would overdue the combined balances.
15 BANKER’S REFERENCES.
It is a well-established practice amongst banks to exchange information
regarding their customer’s mean, standing and credit worthiness. A bank
usually collects such status opinion from another bank at the request of
the customer or conversely other banks may refer for such an opinion
about his customer.
It is also in practice that banks call such opinion for their own
information respect of their new customers, special, when any financing
is likely to be approved in their (customer) favour. The reference so made
is called Banker’s Reference or Status Enquiry or Status Opinion.
16 CHEQUE-STATE AND POST-DATED.
As per practice, a cheque antedated by six months or more i.e. presented
after six months which it was drawn is regarded as a stale cheque in
Pakistan. On presentation such a cheque is returned unpaid with the
remarks that the cheque is out of data. A post-dated cheque is one, which
bears the date after the day of issue i.e. the date given on the cheque has
yet to arrive. The bank has no authority to pay a post-dated cheque until
the due date. Post-dating of a cheque convert it from Demand Instrument
to time instrument. On presentation such a cheque will be returned with
cheque post-dated, it may be paid on or after the date mentioned on it.
17 CONTRIBUTORY NEGLIGENCE.
Where a banker has been found negligent in case and his customer
(plaintiff) has also been negligent, he (customer) is said to have
contributed to such a loss as well. The courts according to his
contribution reduce the claim of the customer. Examples are: customer
recklessly issuing blank signed cheques or by failing to exercise proper
check over his clerk or agent, handling or writing his cheques books.
18 GARNISHEE AND GARNISHEE ORDER
Garnishee means a person who is Garnished and warned through a
garnishee order. Garnishee order is process of law, which warns a
garnishee (bank) to attach a debt (deposit) owing or accruing due at the
time of service of order of his customer to paid to the person who has
secured final orders against such customer.
A garnishee order “nisi” is issued first by the court, which means that this
order will become final on a particular date unless set aside or invalidated
by certain specified contingencies. Thus the bankers on service of such
notice is required to attach all the debts due by him to the judgment
debtor for payment to the judgment creditor as directed by the court. The
banker has to attend the court for paying the debt or to show cause why it
cannot be paid. On hearing the concerned parties the court issues
garnishee order or set aside the earlier order i.e. garnishee order “nisi”.
By issuing garnishee order absolute the garnishee is ordered to pay the
debt due or accruing in satisfaction or part satisfaction or part satisfaction
of the judgment debt.
On receipt of garnishee order “nisi” it should be carefully examined
which account(s) of the customer has/have been attached and upto what
extent? The amount earn\marked should be in the same mane or names of
the customer as per garnishee order. The funds marked should be those,
which are repayable on demand including those term deposits, for which
notice for payments has been received before receipt of the order.
19. HOLDER
As applicable to bill of exchange, promissory note or cheque, means the
payee or indorsee or bearer of an instrument who is entitled in his own
name, to its possession and to receive or recover the amount from the
parties thereto. Mere possession f the instrument would not entitle a
person to recover its amount from the parties thereto, as in case of person
finding a bearer instrument or a thief or forged indorsee. Even the payee
of an instrument will not be entitled to receive the amount who has been
restrained by the court orders. But where the instrument has been lost or
destroyed its holder would be the person who was entitled to its
possession at the time of its loss or destruction.
20. HOLDER IN DUE COURSE
Holder in due course is a person who fulfills the following four
conditions.
(i) That he is holding negotiable instrument for value either as bearer,
payee or indorsee.
(ii) That he got the possession of the instrument before the maturity i.e.
before the amount mentioned therein became due.
(iii) That he took the negotiable instrument in good faith.
(iv) That he became the holder with due care or without notice of any
defect in the title of the person (indorser/transferor) from whom he
derived his title.
21. IMPERSONAL PAYEE.
Cheques drawn payable to “Cash or Order” or “Wages or order” etc., are
instruments, which are payable to impersonal payee as these are not
payable to any specified persons, these are paid to the drawer or his
known agent only against an indorsement. Similarly cheques drawn in
favour of “Income Tax or ordre or water rates or order” are payable to
impersonal payee. In such cases, indorsement of concerned official is
obtained before payment i.e. in the first case from the income Tax officer
and in the second case from the revenue officer or director revenue, water
and sanitation agency, LDA, Lahore.
22. INCHOATE INSTRUMENT
Inchoate means begun but not completed or nt perfected. Inchoate
instrument is an instrument, which is incomplete in some respect, e.g. a
cheque issued with no payee stated thereon or bill form signed by a
person and handed to another person to fill up and make into a complete
bill.
23. INDORSEMENT
It is also spelt as endorsement. In its literal sense, it means to write at the
back of an instrument. Technically it is to inscribe one’s signature on the
back or face of a negotiable instrument i.e. cheque, bill, note etc., with the
intention of transferring the instrument and the property therein. This act
is, to indorse and the person signing it is called indorsement. The person
specified in the instrument is called indorsee. The indorsement can be
made by the holder of the instrument and its maker (when it is drawn o
the maker’s order). A strange to the instument can not indorse it. It may
be noted that no specific form has been prescribed by law for an
indorsement, any form of words over the signature of the indorser, which
imports intention to transfer the instrument, is sufficient.
24. INDORSEMENT - TYPES
(i) Indorsement in blank or blank indorsement or general
indorsement.
An indorsement is described as indorsement in blank or blank
indorsement when theindorser simply signs on the instrument without
mentioning an indorsee. The effect of such an indorsement is tht
instrument becomes bearer one unless it is converted into special
indorsement or indorsement in full by writing over the signature of the
indorser.
Example; “Muhammad Naeem-ud-Din.”
(ii) Special or full indorsement.
The indorser under his signature also states the name of person (indorsee)
to whom such instrument is desired to be paid as per his order.
Example; “Muhammad Naeem-ud-Din.”
25. INSTRUMENT
A legal term used in banking and finance to denote cheque, draft,
promissory note, bill of exchange, bond, shares certificates, bill of lading,
trust receipt etc. the term also includes any kind of legal document by
which some right is conferred or contract is expressed such as deed, grant
etc.
26. MANDATE MANDATORY
A mandate is an official order, command or charge, but as applicable to
banking it is a written authority given by a bank customer (the mandator)
to another person (the mandatory) to sign cheques or conduct banking
business on his behalf. Thus a mandatory is a person to whom a mandate
or an authority is given. The person who gives the mandate is called the
mandator. The relationship of banker and customer in this context is that
of mandatory and mandator.
A mandate is terminated by the death, bankruptcy or mental incapacity of
the person or one of the persons in case of joint account, who gave the
authority. It should be noted that the person (the mandatory) who has
authority to sign on behalf of other, has not, as a rule, any power to
delegate that authority.
27. MATERIAL ALTERATION
Section 3(f) of negotiable instrument act, 1881 defines material alteration
as “material alteration’” in relation to a promissory note, bill of exchange
or cheque includes any alteration of the date, the sum payable, the time of
payment, the place of payment, and , where any such instrument has been
accepted generally, the addition of a place of payment without the
accepter’s assent.
The list of material alterations given above is not an exhaustive and there
may be some other alterations which one. As has been stated that “any
alteration is material, which would alter the business effect of the
instrument if used for any purpose for which such an instrument is used.”
28. MATURITY
Maturity as relating to banking and finance means: (a) state of being due
(b) the time when a note or bill of exchange becomes due. Section 22 of
negotiable instrument act, 1881, describes maturity as “the maturity of a
promissory note or bill of exchange is the date at which it falls due. “three
days of grace are allowed to every bill or note which is not payable on
demand, at sight or after a certain event will be at maturity 3 days after
the day on which it is payable.
29. MEMORANDUM OF ASSOCIATION.
Memorandum of association is Magna Charta of company. It detail the
scope and conditions on the basis of which certificate of incorporation is
given by the Registrar of the companies. The clauses and the conditions
recited in the memorandum of association are fundamental and
unalterable. Only certain specified particulars can be changed in
accordance to the provisions of law. Objects of the memorandum can not
go beyond the provision of the companies ordinance, but the articles of
association, which contains bye-laws or regulations to control its internal
management despite being limited to companies ordinance are also
subordinate to memorandum. Since the memorandum is in the nature of a
contract between the company or a persons dealing with the company is
required to know the provisions of memorandum (and articles of
association) of the company especially pertaining to the nature of
business, extent of the powers of the company and directors and those
concerning conduct and operation of banking transactions.
30. NEGOTIATION
Negotiation is a process by means of which an instrument is transferred
from one person to another in such a manner that the transferee becomes
its holder. Where the instrument is payable to the order, it is negotiated
by necessary endorsement and by delivery. In case of a bearer instrument,
negotiation is completed by delivery only.
31. NOT NEGOTIABLE
The phrase “not negotiable” does not restrict the transferability of cheque,
but it destroys its characterity of negotiation and it cannot be negotiated
in an ordinary way. It resembles a bill bearing a “restrictive
indorsement”. As indicated in section 130 of negotiable instrument act
1881, the transferee of such a cheque does not acquire the rights of a
holder by negotiation, he gets no better title than that of transferor.
32. NOT NEGOTIABLE CROSSING
An important feature of negotiable instrument is that bona fide transferee
getting it in good faith and for value will acquire a good title despite any
prior defect in the chain of title.
33. NOT PROVIDED FOR
The answer to the unpaid cheque indicates that the drawer was supposed
to provide funds for payment of the cheque which he has failed to meet
with.
34. NOT SUFFICIENT
The answer is used when the funds at the credit of customer are
insufficient to clear the cheque presented for payment. This term is also
likely to convey the idea that the customer is maintaining balance lesser
than the amount of cheque as such use of term “not sufficient” should
also be abandoned in favour of “Refer to Drawer”.
35. NOT TRANSFERABLE
The crossing of cheque “Not Transferable” restricts its characteristic of
transferability as well as negotiability. The cheque bearing such crossing
cannot pass from one person to another and no one else, but the payee of
the cheque is entitled to the proceeds.
36. OBLITERATING A CROSSING
Obliterating means to rub of or to erase. So obliterating a crossing is quite
different from opening of a crossing. This method is used by fraudulent
people to deceive the banks to obtain cash payment on the counter. Since
no particular safety rules can be prescribed for such cases but all the
cheques presented for cash payment must be scrutinized carefully at
every stage. More detailed scrutiny should be done of the cheques of big
amounts presented by a stranger. However, protection is available to the
bank under section 89 of negotiable instrument act under the following
circumstances.
(i) the alteration is not apparent and can not be noticed even with minute
scrutiny.
(ii) The payment has been made in good faith and according to the
apparent tenor of the cheque.
37. OPENING OF CROSSING
The act of drawer, canceling crossing of the crossed cheque by writing
upon it “Pay Cash” under his signature is called opening of crossing. By
this action a crossed cheque is converted into an open cheque and its
payment can be obtained at the bank’s counter. It need not be presented
through a bank in case it was crossed generally or to the specified bank in
case it bore special crossing. Although no provisions exists in law for
cancellation of crossing but writing of words “Pay Cash” in this way has
recognition of the custom.
38. PAYMENT IN DUE COURSE
Section 10 of the negotiable instrument act, 1881 has laid down following
conditions for a payment to be a payment in due course.
(a) That the payment should be made in accordance with the apparent
tenor of the instrument.
(b) The person to whom it is made should be in possession of instrument.
(c) The payment should be made in good faith, without negligence and
under circumstances, which do not afford a reasonable ground for
believing that the person to whom it is made, is not entitled to reveive the
amount.
Thus the payment to be in due course, must be according to the directions
appearing on the face of the instrument as per intention of the parties. A
payment cannot be a payment in due course if it is made before due date,
to a person not entitled to it. A payment without good faith and without
care and caution is not a payment in due course. The payment made on a
forged cheque is not a payment in due course.
39. POWER OF ATTORNEY
Power of attorney is a written document by which authority is given by
one person (donor) to another (donor) to act on his behalf either generally
or for some specific transaction. The power of attorney contains, names,
addresses, and descriptions of donor and the done, the reason or the
purpose for giving the authority, and the scope of the authority.
40. REFER TO DRAWER.
The term “Refer to Drawer” is one of the mostly used answers for
returning the cheque for conveying various reasons of dishonour i.e.
“balance insufficient”, “balance under lien” or “service of garnishi
order”. By stating this term the banker indicates to the presenter (payee)
of a cheque, “we are not paying, go back to the drawer and ask why”, or
else “go back to the drawer and ask him to pay”. The use of the term
should always be with due care and would not be is leading to the
presenting party which is to be construed properly by him, a any
misunderstanding can cause damage to the credit of the customer.
41. SIGNATURE
Signature includes a person’s name, sign, cross or mark impressed or
written by him. The signature of a customer (which must conform to the
specimen provided to the bank) on cheque (or on a paper) is an authority
to comply with his instruction; to pay cheque if otherwise in order or to
debit his account.
42. TRAVELLER’S CHEQUES
Also known as international cheques. These are widely used by the
persons traveling within the country or abroad. The instrument is
preprinted in various convenient denominations of the currencies, in
which these are issued. Most popular currencies are U.S. Dollars and
U.K. pound sterling. They are not drawn on a particular bank or banks,
but are encashable at all banks or authorised business houses and
institutions through out the world.