An Internship Report on Habib Bank

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An Internship Report on

HABIB BANK LIMITED BANK SQUARE BRANCH,MINGORA, SWAT

Submitted By IRFAN ULLAH

Institute of Management Studies University of Peshawar Session 2004-05

Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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HABIB BANK LIMITED BANK SQUARE BRANCH,MINGORA

Internship report submitted to the Institute of Management Studies, University of Peshawar, in partial fulfillment of the requirements for the degree of

“ Master Of Business Administration.” Session 2004-2005 INSTITUTE OF MANAGEMENT STUDIES Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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UNIVERSITY OF PESHAWAR RESEARCH AND DEVELOPMENT DIVISION INSTITUTE OF MANAGEMENT STUDIES UNIVERSITY OF PESHAWAR

HABIB BANK LIMITED BANK SQUARE BRANCH, MINGORA

Supervisor: Signature :

___________________

Name:

MR.Mehboob-ur- Rashid

Designation:

Lecturer

Coordinator Research & Development Division: Signature:

______________________

Name:

Mr. ZIAUDDIN

Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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Designation:

Lecturer

Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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PREFACE After studying so much about accounting, management and banking theoretically, one always develops a desire to work in a bank. After completion of my coursework at the Institute of Management Studies I had a chance to work as an internee at Habib Bank, Bank Square branch, Mingora Swat. Banking is both a sacred and sophisticated profession. In Pakistan Habib Bank has always been in the forefront of this profession. During my stay at Habib Bank I tried my best to acquaint myself with the operations of the bank and as a result learned a lot. What I have learned during my stay at the bank is being presented here for the reader. Banking industry has always played a vital role in the success of economies. The practice is carried out since primitive ages. Multinational banks are now dealing in money and are laying the foundations for countries to stand on their own feet. The internship proved to be extremely helpful in learning about the functions and operations of a bank and how different kind of procedures at bank are carried out. Although and eight weeks internship is not enough time to know delicately about every aspect, but somehow it had the initial touch of being in a practical world. I owe very much to so many people whose help and support at different stages of my work enabled me to write this report.First of all I would like to thank Mr. Latif who’s help made it possible for me to have an internship in HBL Bank Square Branch,Mingora. I would also express my gratitude to my uncle, Mr. Aman Ullah who’s kind words are always guidelines for me. I feel proud also to mention my father, Nadir Khan who is accountant in HBL & his endless support and encouragement was a major reason that enabled me to do my internship. I would also like to mention my younger uncle Nasir, support in this report.

IRFAN ULLAH (JAN-2006) Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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TABLE OF CONTENTS Preface i List of Tables

v

List of Graphs

vi

List of Charts

vii

List of Acronyms

viii

Executive Summary

ix

SECTION I Chapter 1:

INTRODUCTION OF REPORT Introduction of the Study 1.1

Background of the study

1.2

Purpose of study

1.3

Scope of work

1.4

Methodology of the report

1.5

Scheme of the report

1 .6

Merits of the study

SECTION II Chapter 2:

Chapter 3:

REVIEW Introduction of HABIB BANK LIMITED (HBL) 2.1

History of banking

2.2

Banking in Pakistan

2.3

History of HBL

2.4

Mission statement of HBL

Overview of HABIB BANK LIMITED 3.1

Organizational Structure

3.2

Marketing policies

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3.3

Management policies

3.4

HR Techniques used in HBL

3.5

Organizational Units of HBL & their products

3.6

Technological Framework & equipments used in HBL

Chapter 4:

Different Departments of HBL 4.1

Deposits department

4.2

Advances department

4.3

Remittance department

4.4

Bills department

4.5

Clearing department

4.6

Safe deposit-lockers department

4.7

Sales Department.

4.8

Cash Department.

4.9

Data Centers.

SECTION III Chapter 5:

ANALYSIS Critical Analysis 5.1

Financial Analysis

5.2

SWOT Analysis

SECTION IV Chapter 6:

RECOMMENDATIONS Recommendations

SECTION V Chapter 7:

IMPLEMENTATION PLAN Implementation Plan

Persons Interviewed Bibliography Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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LIST OF TABLES Title

Page No.

1.

Balance Requirements for different accounts

2.

Financial Ratios LIST OF GRAPHS Title

Page No

1.

Gross profit margin

2.

Return on Assets (Before Taxes)

3.

Return on Assets (After Assets)

4.

Net Interest Income to Assets

5.

Assets turnover Ratio

6.

Fixed Assets Turnover

7.

Operation Cost to Assets

8.

Debt to Equity Ratio

9.

Operation Cost to Deposits

10.

Total Expenditures to Deposits

LIST OF CHARTS

1.

Organization Structure of

HABIB BANK LIMITED.

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LIST OF ACRONYMS

A/C

Account

ATM

Automated Teller Machine

DD

Demand Draft

DFIs

Developmental Financial Institutes

DSC

Defense Saving Certificate

FCY

Foreign Currency

FTS

Funds Transfer System

HBL

Habib Bank Limited

HMT

Home Mail Transfer

IBTS

Inter Branch Transaction services

LCY

Local Currency

L/C

Letter of Credit

MDI

Management Development Institutes

MT

Mail Transfer

OBC

Outward Bills for Collection

ODBC

Outward documentary Bills for Collection

RF

Running Finance

SSC

Special Savings Certificate

SBP

State Bank of Pakistan

SVP

Senior Vice President

SME

Small & Medium Enterprise

TC

Travelers Cheque

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TT

Telephonic Transfer

US $

United States Dollar

WAPDA

Water & Power Development Authority

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EXECUTIVE SUMMARY Habib Bank is the largest and oldest bank among Pakistani Banks. Founded in 1941 it emerged as a Muslim Bank in undivided India. In 1947, when Pakistan came into being Habib Bank shifted its operations from India to Pakistan. Since then it is carrying on its operations with more than 1424 local and 52 foreign branches. 1. The purpose of this report is to evaluate the performance of HABIB BANK LIMITED (HBL), Bank Square Branch,Mingora. The internship experience of the students of Institute of Management Studies is a partial requirement for the fulfillment of their MBA Program. The internship experience in the form of an internship report also carries an attempt to explain domestic as well as international banking operations of Habib Bank.

2.

The report aims at appraising the working of HABIB BANK LIMITED, its functions and operation and also attempts to asses its performance. Certain recommendations are presented for the potential areas of improvement. An implementation plan of the recommended steps is given at the end of the report.

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HABIB BANK LIMITED is the oldest & the first bank in Pakistan. Its name is generally considered for quality and reputation. It offers a broad range of products to target different market segments.

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Main problems indentified during the course of internship are as following a) b)

Absence of proper information technology tools Lack of efficiency of employees.

c)

Presentation styles of bank specially at retail level is not good.

d)

Management style is centralized.

The recommendations are as follow: a) Establishment of Data bank at Zonal office, so that information can be obtained in time. b) Proper designing of the jobs should be performed similarly clearcut division of work to increase efficiency. c) Special attention should be given to exterior/interior layouts, cleanliness and office furnitures. d) Decentralization of authority at different level to fasten the decision making process.

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CHAPTER 1 INTRODUCTION OF STUDY 1.1

BACKGROUND OF THE STUDY

It is a common practice at universities during the completion of the masters and bachelors program to attain practical experience in different fields. Institute of Management Studies, University of Peshawar requires students to undergo a eight weeks internship program. The selection of the firm is based on the choice of the student. The institute requires an internship report based on the theoretical and practical learning of the student. The concern of this report is to study and analyze the performance of HABIB BANK LIMITED (HBL) in the banking industry of Pakistan. HABIB BANK LIMITED is considered to be one of the most prominent and outstanding bank as far its reputation and progress is been concerned. It was established in 1941 and since then, it has expended its network, becoming the largest commercial Bank of the country. It offers different products of services to its customers.

1.2

PURPOSE OF STUDY

The purpose of the report is to review and analyze the functions performed by HBL in Pakistan. The report also explores the strengths and weaknesses of the HBL and also gives recommendation where any improvement can be possible.

1.3

SCOPE OF WORK

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This report is concerned with the performance of the HBL Bank Square Branch,Mingora. It enlightens the consumer banking functions at the Bank Square Branch,Mingora however the financial analysis is based on the national operations of the bank.

1.4

METHODOLOGY OF THE REPORT

The biggest source of information is my personal observation while working with staff and having discussion with them. Formally arranged interviews and discussions also helped me in this regards. Another methodology used for the collection of information and data was based on the two primary modes of data. Sources of Primary data: Personal Observation. Interviews of Personnel. Sources of Secondary data: Previous internship Reports & HBL Annual Reports. Brochures. Books & Magazines. Web sites.

1.5

SCHEME OF THE REPORT

The report is arranged in the following sequence. SECTION

I

This section has one chapter. Chapter 1:

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This is an introductory chapter which describes the background, purpose, scope, methodology, scheme of the report & merits of the study.

SECTION

II

This section includes the review of HABIB BANK LIMITED. This section is comprised of three chapters. Chapter 2: These chapters encompasses a brief history of banking, and over all banking sector in Pakistan. It also tells about the history of HBL, its mission statement and its role in the economy of Pakistan. Chapter 3: This chapter goes in detail study about the organizational structure, an overview of Management policies, Marketing policies, HR techniques applied and the different banking groups of tells about

the

HBL and the products it offers, additionally it

Technological Framework i.e the equipments

used and

services offered at HBL Bank Square Branch,Mingora. Chapter 4: This chapter is the lengthiest chapter of the report. It precisely tells about the several departments working at HBL Bank Square Branch,Mingora and their functions. The departments discussed are Deposits Department, Advances Department, Remittance Department, Bills Department, Clearing Department, Safe Deposit-lockers Department, Sales Department, Cash Department and Data Centers. SECTION

III

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This section also have one chapter and it is about the analysis of HBL.

Chapter 5: This chapter makes the critical analysis of HBL. Financial analysis is made on the National performance of the bank, followed by a SWOT analysis of the HBL Bank Square Branch,Mingora.

SECTION

IV

This section also contains one chapter. Chapter 6: This chapter gives the recommendations based on the critical analysis of the organization.

SECTION

V

This section contains the conclusive chapter of the report. Chapter 7: This chapter is about the implementation plan that has been devised for HBL Bank Square Branch,Mingora on the basis of the room of improvements.

1.6

MERITS OF THE STUDY

The study done will benefit the finance students in particular and all type of Management students in general, because the financial analysis section of this report comprehensively encompasses all respects of financial analysis.

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Furthermore, HBL Bank Square Mingora, may also benefit from the recommendations made at the end of the report.

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CHAPTER 2 INTRODUCTION OF HABIB BANK LIMITED 2.1 HISTORY OF BANKING Banking in primitive societies also existed in some form. The greatest invention of all times is considered to be the invention of wheel which made transportation easy and transportation opened a gateway to business and exchange of goods flourished. The initial business was done on “barter” which meant an exchange of “commodity for commodity”. There is a myth also about the invention of money, which tells that king Midas of Libya invented money in 800 B.C. Another statement states that the king of Babylonian empire named as King Hummorabi in 1700 B.C. made all the rules and regulations of lending and borrowing and interest etc. He wrote them on an eight feet stone in the center of the city. Two famous temples are also remembered for the lending and borrowing in different transactions. One was the temple of Ephesus and the second was known as the temple of Delphi. It is said that the first bank was established in Barcelona in Spain. Another statement tells that “Venice” and “Genoa” were the hub of financial transactions and the first bank was founded there in 14th century. The first public bank that was formed was in Germany in later part of the time.

2.2 BANKING IN PAKISTAN Before the partition of India and Pakistan in 1947, branches of British banks dominated banking in Pakistan. The first domestic banking institutions emerged in the 1940s, immediately after Pakistan's independence.These institutions include

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the Australasia Bank (today, Allied Bank Limited) , Habib Bank Limited, Muslim Commercial Bank, and the National Bank of Pakistan (NBP). The NBP was wholly government owned but prominent merchant families established the other three. In 1948, the SBP was formed. It assumed the supervisory and monetary policy powers of the State Bank of India. From 1960 to 1970, a number of specialized development finance institutions (DFIs) such as Industrial Development Bank of Pakistan and the Agricultural Bank emerged. These DFIs were either controlled directly by the state or through the SBP, and were intended to concentrate on lending to long-term projects in specific priority sectors. Banking and Financial services sector in Pakistan comprises the commercial banks and the non-banking financial institutions, including the development finance institutions (DFIs), leasing companies, modarabas (Islamic Mutual Funds) and investment banks. These are controlled and regulated by the State Bank of Pakistan (SBP). Pakistan is in the process of adopting an Islamic (Shariah) financial system, under which interest-based banking is not allowed. However, this has not been made into a law as yet, and exists only on paper, and most banks provide an anticipated profit rate in advance. Since 1990 the Government of Pakistan has introduced various reforms in the financial services sector enhancing the level of autonomy enjoyed by the SBP. The number of banks operating in Pakistan has increased, which in turn has resulted in increased competition. The banking sector, in general, has shown good progress during the last few years. During previous five years, the combined total assets of domestic banks, showed an average annual increase of 22 percent, while combined deposits have recorded an increase of 27 percent per annum. A total of forty-six commercial banks, including twenty-one foreign banks, are operating in Pakistan.

Additionally,

sixteen Investment Banks, twenty-nine Leasing Companies and fifty-three Modarabas Companies provide a mix of financial services. Opportunities for new foreign banks exist in consumer banking, corporate bonds, investment banking, leasing and housing finance sectors.

Good reputation

enjoyed by the existing foreign banks will be helpful for new entrants. Some Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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challenges, however, do exist in the form of weak economic conditions in Pakistan and the turnaround possibilities in shape of privatization.

2.3 HISTORY OF HABIB BANK LIMITED Habib Bank has a long and very rich history of deeds and sacrifices. All this has been possible on account of sustained efforts. In 1841, a family business company was established in the name of Khoja Mithabhai Nathoo in Bombay which was dealing in steel within and outside the Indian Sub-Continent. In 1891, a young Muslim lad Habib Ismail got employment, in this company. By dint of his ability and sincerity to duty, at the age of just 18, he not only became share-holder of the company but President of the Steel Market. His four children namely Ahmed Habib, Daud Habib, Muhammad Ali Habib and Ghulam Ali Habib, after having educated and grown up, were inducted in the business of the company and there-after the name of the company was changed as "Habib & Sons". Habib Ismail died in 1928 at the age of 53. After the death of their father, the business was run by all the four brothers. Muhammad Ali Habib was younger and ranked third in age but was the most intelligent among his brothers and a successful businessman. Under his able guidance, the business made progress and expanded in size. At that time there was no Muslim Bank in the Sub-continent. The Muslims were a poverty-stricken and weaker nation. When Pakistan Resolution was passed at Lahore, on 23rd March, 1940, the Quaid seriously felt the need of a Muslim bank. As a result of the desire of Quaid-e-Azam, Habib Family established the first Financial Institution of the Muslims with the name of "Habib Bank Limited" on 25th August, 1941. The establishment of a financial institution by a weak and subjugated Muslim nation in the un-divided Hindu-dominated Sub-Continent was, in itself, a very great achievement having far-reaching consequences.

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The first branch of Habib Bank started functioning on 30 th August, 1941 at Muhammad Ali Road Bombay. The first account holder of Habib Bank was no less than Quaid-e-Azam Muhammad Ali Jinnah. In those times in India, branch banking was non existent, so like other sub-continental banks Habib Bank also has to carryout unit banking i.e. in which a bank has only one location (branch) to carry out its operations. Since Habib Bank Ltd was founded at the advice of Muhammad Ali Jinnah, so it was seen as a Muslim Bank by all other banks and financial institutions in undivided India. And they tried their utmost to make it a failed project. For that purpose they conjoined various stories about Habib Bank but the owners of Habib Bank handled all the adverse situations professionally and proved their business acumen. After a few years of unit banking operations it was Habib Bank which started branch banking with 34 branches at Bombay and outside it. In 1947 on the desire of Quaide-Azam, Habib family migrated to Pakistan and later on shifted the Bank's Head Office from Bombay to Karachi on 7th August 1947, a week prior to independence to play its role in the development of this newly born country. During the migration process in 1947 many of its Muslim account holders put all their monetary assets into it to be remitted to them in Pakistan. But due to the unfortunate incidents during the course of migration in which hundreds of thousands of Muslims were killed, many of the remitter and account holders could not claim back their amounts. And even now so many accounts and other valuables in the from of gold, and silver etc are lying at the bank's head office Karachi awaiting for claims to be lodged. Habib Bank is the pioneer of Banking Industry in Pakistan. It has helped in the rebuilding of our country since its inception. Since its inception in August, 1941, Habib Bank has played a memorable role in the commercial and industrial life of Muslims of the Sub-Continent. It was the first

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Muslim financial institution that made its entry in the field of banking thereby breaking the Hindu-British monopoly in this crucial sector. After the inception of Pakistan on August 14, 1947 there were only two Muslim Banks namely Habib Bank and Australasia Bank. The rest of banks were either Hindu or foreign banks. Since State Bank of Pakistan was not founded so for the first few months after the birth of Pakistan Habib Bank had to work as the banker to the government and paid for its debts and liabilities. A few years later when a need was felt to have a Muslim bank to help assist in international trade. Habib Bank came to the fore and opened its branches in foreign countries with its first branch at Colombo, Sri Lanka. On January 1, 1974 Habib Bank was nationalized by the Bhutto government along with other banks. After nationalization its branch network increased rapidly and so its assets and liabilities. At present Habib Bank has a very large domestic branch net work, with 65 branches in all the continents of the world making it a truly transnational company. Habib Bank is the bank of many firsts in all the areas of banking. Habib Bank has always introduced new vistas, be it the deposits side, the advances side, the remittances side or social services to the community. Recently Habib Bank was the first bank to offer a golden handshake scheme to its employees making the other commercial banks to follow suit. Habib Bank has been a pioneer in providing innovative banking services. These have included the installation of the first mainframe computer in Pakistan followed by the first ATM and more recently, internet

banking

facilities

in

all

the

domestic

branches.

Habib Bank has today 1424 branches, 48 zones, 9 regional general manager head quarters and 2 subsidiaries. A part form these the bank’s overseas operations are in 25 countries include 65 branches, 2 subsidiaries, 2 joint ventures and 2 representative offices.

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2.4 MISSION STATEMENT OF HABIB BANK LIMITED. 

MISSION STATEMENT of HABIB BANK LIMITED

“To be recognized as the leading financial institution of Pakistan and a dynamic international bank in the emerging markets, providing our customers with a premium set of innovative products and services, and granting superior value to our stakeholders, customers and employees. ”

 OBJECTIVES OF HBL Objectives are the ends towards which activity is aimed. These are the result to be achieved. As a commercial bank the primary objectives of HBL is to earn profit and maximize it as far as possible, keeping in view the society. The Habib Bank Ltd has following main objectives. 

To take measure to promote business in the country.



To procure beforehand self-employment schemes to the people.



To supply or provide employment opportunities to the people.



To help in development and industrialization of the country.



To earn profit for the bank itself and for its shareholders.

 VALUES & POLICIES OF HBL Policies & Values are general statements, procedures or

the understanding that

guide or channel thinking in decision making. It provides direction for action and regularizes the decision making in certain circumstances. .A policy defines area within which a decision is to be made, and ensure that the decision will be consistent with, and contribute to , and objective.

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The HBL defines & practice its policies / values as : 

Humility We encourage a culture of mutual respect and treat both our team members and customers with humility and care.



Integrity For us, integrity means a synergic approach towards abiding our core values. United with the force of shared values and integrity, we form a network of a well-integrated team.



Meritocracy At every level, from selection to advancement, we have designed a consistent system of human resource practices, based on objective criteria throughout all the layers of the organization. We are, therefore, able to achieve a specific level of performance at every layer of the organization.



Team Work Our team strives to become a cohesive and unified force, to offer you, the customer, a level of service beyond your expectations. This force is derived from participative and collective endeavors, a common set of goals and a spirit to share the glory and the strength to face failures together.



Culture of Innovation We aim to be proactively responsive to new ideas, and to respect and reward the agents, leaders and creators of change.

References: 1.

Asrar H. Siddiqui. Practce and Law of Banking in Pakistan 5th Edition Karachi: Royal Book Company. 1993

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2.

An internship Report on HBL by Mohd. Salman MPA, 1997-99, pp-4

3.

Mushtaq A Khan, Success Story of Habib Bank Ltd. And Presentation Volume, 1991, pp 142-143

4.

An Internship Report on HBL by Amir Nadeem, MPA, 1998-99, pp5

5.

HBL, Presentation Volume Karachi 1993, pp 47

6.

Annual Report 2004, HBL. Pp 32-39

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CHAPTER 3 OVERVIEW OF HABIB BANK LIMITED, BANK SQUARE BRANCH,MINGORA,SWAT The HBL Bank Square Branch,Mingora is headed by the manager. He is the responsible person for any activity that is happening inside the premises of the bank. He looks over different issues in the bank. There are also sub managers heading each department. The manager of the bank heads the front office and the back office is headed by another senior member of staff. However detailed description about the organization is presented here below & overall organizational structure is focused rather than the branch`s structure. 3.1 ORGANIZATIONAL STRUCTURE Organizing is a function of management. Organization is end result of organizing. So organizing is a part of management that involves establishing intentional structure of roles for the people to fill an enterprise. It is a process of breaking down the overall tasks of the enterprise into individual assignments/ activities and then getting them put together in units or department or groups along with the delegation of authority to a manager of a unit/ department/ group. Organizational structure implies a formalized intestinal structure of Roles/ position. This is not the end in its self, rather mean which help achieve certain objectives.

A well-developed and properly coordinated structure is an extremely important requirement for the successful operation of any organization. It provides the basis framework with in which functions and procedures are performed. The organization structure of Habib Bank is described on the next page.

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ORGANIZATIONAL STRUCTURE of HABIB BANK LIMITED

PRESIDENT  Board of Directors  Director

Director

Director

Director

Director

Director

Member

Member

SEVP

SEVP

Clerical Staf

N.C.S.

 CHAIRMAN

Member

Member

SEVP

SEVP

OGI

 Executive Committee  Member Member SEVP

OGII

SEVP E.V.P.  S.V.P  V.P.  A.V.P  OGIII

3.2 MARKETING POLICIES: Marketing is the process of playing

and executing the conception, pricing,

promotion and distribution of ideas, good and services to create exchanges that satisfy individual and organizational objectives.

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HBL also adopts certain marketing techniques to enhance the image of the bank. Most of the marketing takes place through various deposits mobilization schemes through advertising in news paper and other media and there is more emphasis on customer services to have more satisfied client who can recommend to their associates and friends. The HBL has recently launched a strong marketing campaign through the electronic media(net, television etc) which encompasses the different products offered to different segments.

3.3 MANAGEMENT POLICIES: Managerial policies, are those, which deals with the management issues and formulation of strategies. HBL is headed by a president, then there are 5 banking groups, each one headed by a group executive. Each group executive has the client responsibilities for his group. Similarly these group are also

responsible for developments in their

respective fields. This new structure was developed 1997, prior to which bank was working on geographical basis . According to this structure affairs of Habib Bank are controlled though President and Members Executive Committee who are normally Senior Executive Vice Presidents of the Bank based at head office. Each province has a provincial head quarter headed by provincial Chief and assisted by regional general managers. Each provincial headquarter control branches in their area of jurisdiction through circle offices. Each circle office supervises various zones headed by zonal chief comprising 25 to 40 branches in each zone. .

3.4 HUMAN RESOURCE MANAGEMENT / POLICIES:

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Human Resource Management has always been the key factor in an organization’s achievements. The employees of an organization forever determine the route of success for the business. The primary concern of HRM has been on the subject to mould the personality of employees in a manner which formulates the individual goal of the staff into the organizational objective. HBL has devised its own policies for the recruitment, training and motivation of employees.

3.4.a RECRUITMENT OF STAFF Recruitment is the development of a pool of applicants for a job. The selected one’s serve the organization with their skill and qualification. The requisites of HBL recruitment policy are as follows: Qualification requisite is Masters in Business or Public Administration, Management Sciences, and Honors/first degree from International Universities. 3rd Division or D- Grade in any examination after Matriculation onwards of is unacceptable. 26 years is the age requirement. Method of Recruitment HBL has started a banking course in association with Institute of Business Administration (IBA), Karachi. When the graduates of IBA completes their degree program, they find a number of vacancies at HBL waiting for them. The interested candidates apply against the seats. A few steps are involved in the recruitment process of IBA Graduates. The interested candidates are called of for an interview at the Head Office in the initial process of recruitment.

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The committee including the Manager of Retail Banking services and Treasury manager evaluates the candidates on the basis of personality, communication skill and educational qualifications. Short listing restricts a small group of candidates selected for the final interview. The committee including Chief Manager Administration seeks the potential candidates, evaluating their subject knowledge, analytical experience, general know how and particular information about the job. The successful candidates are enlisted for the job. The selected candidates go through a medical check up as well. After that they are engaged in a 3 months service training program. This enables them to get acquainted with all the functions in the bank. Their appointment as Grade 7, Sub Managers is made eventually.

3.4.b TRAINING AND DEVELOPMENT Training enables the employees to explore their potential; development polishes that talent and skill, as well as it seeks the opportunities to use their expertise professionally. HBL exercise many kind of training and development programs for the employees. There are three staff training centres of Habib Bank in Pakistan located at Karachi, Lahore and Islamabad. These centres are called Management Development Institutes (MDI). Every MDI has a faculty of staff with the principal as its head. The teaching staff are called directing officers. The principal is always a person of the level of Vice-President, with sound knowledge of all aspects of banking. The directing officers are well versed in their fields of specialty. The various training programmes available at Habib Bank Management Development Institutes.



Basic Banking Training.

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

Training Course In International Banking.



Short Courses Offered.

Basic banking training This is the most important training programme available, with a duration of six months. This training is imparted to the newly recruited officers in Grade III & II. Apart from them the newly promoted officers from clerical cadre also get this basic training. In this programme the entire operations of domestic banking are explained to the trainees, in detail. The various subjects/courses taught in this program are, (1) Deposits (2) Advances (3) clearing (4) Bills (5) Remittances (6) General administration and staff matters (7) Business communication (8) Accounting The main theme of this training course is that about 30 trainee officers are selected for a class. All the above mentioned subjects are not taught at a time but are taught one after another. For a week or two a subject is taught theoretically in the class room and then all the trainee officers are sent to various branches of the bank where they get a practical touch of all those taught in class-room. And the same method is repeated for all the subjects. At the return of trainees from branches, they are put to test by taking their examination. Question papers are mostly objective type, having one hour time duration to solve. All the papers carry a maximum of 100 marks. Marking of the papers is done not by a single person but every directing staff is responsible to mark his own section of the paper, which is normally having 25 marks. This is done to keep the examination system transparent. Then the marks of papers are totalled and result declared. Answer sheets are handed-over to the trainees to look into the mistakes they have made and they are allowed to raise objections if they do not agree with the marking of their papers.

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Those students who get failed in three subjects are sent back to their places of posting and are not considered fit for training. If they are fresh recruits they are sent back home during their probation period. Pass percentage in examination is 60%. Those trainees who secure 70% or above marks are awarded one grade increment. Trainees getting first and second position in the group are awarded three and two grade increments respectively. At the end of six months training there is a passing out ceremony; and then all the trainees report back to their zonal offices for further placement in various offices and branches.

Training course in international banking This is a three months training course in foreign exchange and International Banking. The first five trainees from various groups of basic training are selected for this course. In this programme only the dynamics of international banking and international trade are touched upon. The main topics of this course are (1) Imports (2) Exports (3) Inward remittances (4) Outward remittances (5) Foreign currency deposits. These trainees after getting theoretical knowledge of the subject for a week or two are sent to foreign exchange dealing branches to get practical training of whatever they have learnt in the institute. After completion of the said course trainees are posted in various foreign exchange dealing branches.

Short courses Apart from the above, various short and refresher courses on various topics/subjects are arranged by MDIs throughout the year. Their time duration varies from three to 15 days. These course can be Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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-

Short/refresher course on advances for officers dealing in advances.

-

Short/refresher course in foreign exchange for the personnel working in foreign exchange department.

-

Short/refresher course on audit, for internal auditors of the bank, in which various ways and means are taught to the auditors, how to carry out a successful audit of a branch.

-

Short/refresher course for managers of branches to refresh their memories about the modus-operandi of how to better manage a branch.

-

Short/refresher course for staff-officers and admin. officers, on how to manage human resources of the bank in a better way.

-

Short/refresher course on business communication and presentation skills.

-

Seminars on various new developments in banking industry, like new currency exchange rate system.

-

Seminars on the introduction and process-flow of various new products of Habib Bank like Carore-Pati Deposit Certificates, Muhafiz traveller cheques, Visa Cards,ATM etc.

-

Seminars on customer service, and complaint handling.

-

Seminar on cash management.

These short-courses and seminars are held by Management Development Institutes in a continuous manner, and officers from various branches/offices are constantly coming to and going form MDIs. Besides this the MDIs arrange training courses for clerical and non-clerical staff in which various functions of the clerical and non-clerical staff are taught; how to deal bank's customers in a better way. The non-clerical staff are trained how to give

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courteous service to staff members and customers and how to take care of security of branch premises. Apart from MDIs, zonal and regional offices also arrange short training courses at local levels, on various topics/subjects, according to the needs and requirements of the zone and region concerned.

3.4.c TECHNIQUES OF TRAINING All the known and recognized techniques of pedagogy are used while imparting training to the trainees at Habib Bank Management Development Institutes. -

Lectures - The directing staff deliver lectures to the trainees in class rooms, on daily basis. Time duration of a lecture is 1 ½ hour. There are four lectures a day.

-

Question/Answer - Trainees are encouraged to put questions at the end of each lecture.

-

Presentations - Trainees are called upon to present various topics/subjects before the class. -

Projectors - Projectors are used to explain intricate problems like exchange rates.

-

On job training - Trainees are sent to branches to practice what has been taught to them in class room.

3.4.d MOTIVATION Motivation refers to forces that energize, direct, and sustain a person’s efforts. A highly motivated person will work hard towards achieving performance goals. With adequate ability and understanding of the job, such a person will be highly productive. Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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Diverse techniques are exploited at HBL for the motivation and performance appraisal of employees. The procedures are as follows:



Audit Report

These reports are prepared by auditors and are sent to the Head Office for performance appraisal. 

Salaries

There is no preset pay scale in HBL Many people obtain dissimilar salaries even though they had been chosen for the same batch under similar conditions with identical qualification. 

House Rent Allowance

House Rent allowance is paid to all categories of staff This allowance is not payable to those who are provided with accommodation by the bank. 

Sanctions

Punishment may be conferred in case of misconduct by halting promotion and bonus. It’s an efficient means for improving the performance of the employees. 

Inspections

Inspection teams are sent from time to time from the Head Office to check the performance of various employees and identify any irregularities to take steps accordingly. 

Medical Allowance

The Bank compensate the expenses of medical advice and medicines, claimed by the employees for themselves and their dependants up to a maximum amount of

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Rs,2500. On production of medical certificates by employees indicating payment made by him the bank compensate the charges. 

Promotion

Promotion is chiefly on the base of capability, aptitude, talent and performance of the employees.

3.5 THE DIFFERENT BUSINESS UNITS OF HBL 3.5.1 Retail Banking Group: 1.a Consumer Financing Consumer financing is relatively new phenomena & is still in infancy.This area of financing is currently enjoying the high priority among the financial institutions in the country.The expansion of consumer financing in the past two years has been an important factor in driving the overall economy forward. The overall demand of durables, housing, automobiles units etc has increased & as a result the production level has increased which has led to the creation of greater employment opportunities.

HBL has taken a lead role in this segment as it continues to capture additional market shares. In this endeavor HBL has developed a complete range of products to meet the requirements of all the segments.

This segment of HBL include the following products



Auto Financing.



House Financing.

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

Consumer Loans. (Flexi-Loans,Top-Up-Facility,Running Finance etc)



Consumer Durable Finance. (Life Styles, Fast Transfer etc )



Balance Transfer Facility.



Internet Banking.



Online Banking.



ATM/Debit Cards. (Visa Cards,Value Cards,Auto Cash, iCards)

1.b Agriculture Financing In this sector HBL has disbursed over Rs 13 billion during the year & has proved the largest contributer to agriculture financing in Pakistan. Through the bank`s wide network of branches of which 52% are located in rural areas, the bank enhanced its products offering to retain its lead position in the market. The bank offers products to support all facets of this industry. Specially it provides facility for a period of 3 years instead of financing being confined just to harvest season, in this way farmers find convenient to this condition & this has a wide acceptability in the market. HBL intervention has enabled the industry to develop, by bringing within the reach of thousand of farmers access to modern farming technology, which was not previously available to them.

This unit of the HBL offers the following products 

3 year Revolving Finance



Tractor Lease Finance



Livestock Finance



Fish Farming Finance

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

Combined Harvester Finance

1.c Commercial Banking The Commercial Banking division serves clients mainly comprising of mid sized businesses that consist of manufacturers, traders , importers & exporters of engineering products, sports goods, & textile made ups. Commercial Banking operates through 18 branches which are spread throughout the country. Over 1500 middle market customers have benefited from banks dedicated support. Overall HBL remains a market leader in this sector & has a total disbursements of over Rs 19 billion. HBL stands side by side with the Govt to promote this sector.

This unit of the HBL offers the following products



SME Financing



Long Term Fix Assets Finance



Trade & Working Capital Finance



Import & Export Finance ( Receivables, Pre & Post Shipments)

3.5.2. Corporate & Investment Banking HBL has an integral development partner for corporates in Pakistan since 1947. The Bank has remained at the forefront of financial support by assisting in the development of the country industrial sector & the fuel and energy sector. In the early days of WAPDA, HBL provided support by establishing Letters of Credits and providing capital of millions for its several projects such as Warsak Dam, Mangla Dam, Tarbela Dam. The bank has continues this tradition & today is a key

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partner not only in Govt sponsored projects but also in rapidly developing private projects such as telecommunication, power, oil & gas & construction. The Corporate division operates in 10 branches & it serves over 500 client.

This unit of the HBL offers the following products



Industrial & Project Finance



Structured Trade Finance



Capital Market Investments



Cash Management Services



PC Banking

3.5.3. International Banking HBL has the largest international branch network with presence in 25 countries. HBL is synonymous with Pakistan in the international banking arena. The international banking division of HBL is known as active trade finance facilitator for Pakistan`s trade partners. Over the year HBL has provided a one window financing facility to meet local & foreign currency requirements for corporates in Pakistan. In the year 1990 HBL was the first Pakistani bank to start dollar financing for the needed imports, its was such an era where there was a shortage of foreign exchange in the country. Home remittances form an integral part of the country`s foreign exchange reserves & the bank has devoted considerable efforts to enhance the inflows in a secure manner. In this regard the bank has introduced the IBTS(inter branch transaction services) at the dedicated branches that ensures timely credits to the beneficiary accounts. In the year 2004 ,out of $ 3.9 billion, ,$ 799 million

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remittances was through HBL branches. In this way HBL has proves a true global relationship to its corporate, institutional and individual clients.

This unit of the HBL offers the following products



Trade Finance



Retail / Consumer Banking



Multi-currency Payments & Clearing Service



Home Remittances



Treasury & Investment Services

3.5.4. Technology HBL remains committed to service its clients with banking system based on state of art technology. Over the past years the bank has taken strategic decision to concentrate on upgrading the domestic & international operations. More than US$ 15 million have been spended on sourcing and implementing the MISYS system throughout the HBL network. The system helps to centralize data from HBL`s 1424 domestic branches to the head office. This struggle also have benefited the clients to access their funds through the 119 ATMs which are located at the different branches of HBL across Pakistan. HBL is also the member of the “1 Link” ATM switch network that ensures the customers to access 508 locations throughout the country.

This unit of the HBL offers the following products



Centralized Data Processing

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

VPN Connectivity of the 1424 domestic branches



State Of The Art Banking (-trade finance –treasury – branch automation – CRM)

3.5.5. Corporate & Social Responsibility HBL is a responsible corporate citizen and is conscious of the role it needs to play in the field of social development, such as health, education & sports etc. HBL actively supported the recently victims of the earthquake. It has been an active sponsor of sporting event since its inception. In 1969 the bank formed its own Hockey team. In 1975 the bank established its separate sports division with the specific aim of participating in the sporting events at domestic and international level. Over the years HBL has actively supported sports such as Cricket, Hockey, Table Tennis, Football, Badminton & Golf.

The contribution of this unit are in the fields of



Education



Health & Medical



Environment



Sports

3.6 TECHNOLOGICAL FRAMEWORK AT HBL HBL has been trying to cope up with competitors like Citibank, Bank Alfalah, Faysal Bank and ABN Amro Bank in the technological field since a long time.

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New banks are emerging and with modern day equipments the atmosphere is getting more competitive than ever. HBL has also become online, which means that all the branches of HBL access one central database and customers can retrieve information of other branches from the local one’s. The overall computerization system at HBL comprise of the following equipments.

3.6.1 Equipments Used At HBL A diverse variety of useful machinery is brought into practice at HBL to help the employees of different departments in handling varied tasks. Some of the equipments provided to the staff are as follows:

POS Machines POS stands for “Point Of Sale”. This machine is used for the credit cards. Whenever sales are made on credit cards, it is used to record the sales. Validator This is a small sized electronic device used for checking the dollar currency whether genuine or fake The Bank is mostly in the business of currency. Validator makes the job easier for the cashier, because he is always involved in money payments and receipts. FAX Machine Fax machine is used to communicate the messages from one Bank to another, for sending important letters or any other, documents for correspondence.

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Auto Telex This machine has increased the efficiency of service. In 42 hours message or telex reaches the required destination. But this arrangement is only within the HBL Branches not with other banks. Scanner Bank makes the use of scanner for verification of the customers signatures in the computers. The customers’ signatures are scanned with the help of this appliance, so that signature can be confirmed every time customer makes transactions in his account. ATM – Automated Teller Machine This machine is used by the customers to make transactions in their accounts even after banking hours.

Signature Card This instrument is used to keep a record of the customer’s signature. This card is filled by the customer at the time of account opening. It consists of the customer’s name, account number, amount, and specimen signature. All the signature cards are kept in the stationary in the order of account numbers. So whenever the card is needed for any purpose, it can be easily found.

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References

1.

Hienz Weihrich and Harold Koontz. Management, 10th Edition , New York: Mc. Graw – Hill Inc. 1994: pp-122

2.

Ibid, pp-123

3.

HBL Annual Report 2004, pp.21--30

4.

Joel R. Evans and Barry Borman. Marketing, 4th Edition , New York; Mac Millan Publishing Company, 1990, pp-8.

5.

Naz, Nadia, “Internship Report on HABIB BANK LIMITED”, Department of Public Administration, IMS, Section 1999, p.30

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CHAPTER 4 DIFFERENT DEPARTMENTS OF HBL Every organization is divided into definite departments. Each department perform different kind of job and requires staff with specialized skill to handle the particular job. This increases the efficiency of workers and makes the job of the employees easier. There are several aspects on which departmentalization in an organization can be based. The division can be done on the basis of functions, product, customers or geographical location. The Bank Square Branch,Mingora of HBL is comprised of several departments. The division is made on the basis of functions and job they perform. Hence it can be

concluded

that

HBL

has

adopted

to

the

policy

of

functional

departmentalization. The main departments at the HBL are mentioned below. Also included is the detailed study at the specific function these departments perform. 1) Deposits Dept. 2) Advances Dept. 3) Remittances Dept. 4) Bills Dept. 5) Clearing Dept. 6) Safe-deposit lockers etc Dept. 7) Sales Dept. 8) Cash Dept. 9)

DataCentre

.

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4.1 DEPOSITS: Accepting deposits is one of the two basic functions of a bank. The other being advances. So the mainstay of Habib Bank as like other banks is deposits. Because with out deposits any bank can not even think of its existence. Deposits is a trust reposed in a banker by the deposit holders who are commonly the people at large. With the initial deposit of money by a person with a banker the Banker-customer relationship comes into being. To establish this relationship one has to open an account with a bank.

Opening of an Account This is the most important and basic contract between a customer and a banker. A customer offers money to the banker to be kept as a deposit and the banker accepts that offer and a contractual relationship develops. To open an account with Habib Bank one has to deposit Rs 5000/- as initial deposit. Below this one can not open an account in HBL. Previously even Rs. 100/- were enough to open and maintain an account with Habib Bank but the new management after assessing the book keeping cost has come to the conclusion that it is not economical to open and keep an account with a balance less than Rs. 5000/-. To keep an account alive and earn profit on it one has to retain an average balance of Rs. 5000/-. If the average balance is less than it, Rs. 150/- will be deducted as incidental charges after every six months. To be able to open an account with Habib Bank one should be sane, major (18 or more years of age), solvent and not debarred by law from opening a bank account. The account opening form is a very simple document wherein one has to put in his signature, and has to arrange for his introduction to the banker through an old customer of the bank.

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After depositing money and signing the account opening form a cheque book is issued to the account holder through which he can withdraw his money from the bank as and when he requires. The form for ATM is also filled by the customer, but it is optional. An account holder can use this advantage any time with a Rs 200 charge per year. Accounts can be of three categories.

a b c

Current account Saving account Fixed deposit account

a) Current account is zero profit account and is mostly opened by businesses. There is no limit/bar on withdrawal of money from a current account. Deposits in current account are considered demand liabilities of a bank, because such deposits can be withdrawn at any time, without any prior notice to the banker. b) Saving account is a profit bearing account. Profit, as certain percentage is given to saving account holders, after every six months. Saving deposits of a bank have both the characteristics of current and fixed deposits, i.e. some portion of these deposits is demand and other portion is time liabilities . An account holder can draw cheque on his saving account freely but not like a current account. A major chunk of the deposits of Habib Bank are saving deposits. The current profit rate on saving accounts is 7% per annum, which can increase or decrease with profitability of the bank's operations. Saving accounts are called Profit- Loss Sharing (PLS) account, meaning that the account holder will take the profits and incur/bear the losses if the bank earns profits or makes losses, respectively. Uptill now Habib Bank have never declared loss and is continuously giving profits to its account holders. Term deposit accounts as the name indicates are fixed for a certain period of time. They are considered as the time liabilities of a bank as the banker knows as to when a certain deposit is going to be withdrawn. Fixed deposits can be of various types depending upon the nature and time duration of deposits. Time duration of fixed

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deposits at Habib Bank ranges from one week to five years. Fixed deposits with time duration and profit rates are shown here under. 1.

Short Notice Time Deposit (SNTD-7): Time duration 7 days profit rate 6%

2.

Short Notice Time Deposit, (SNTD-30) 30 days, 7 %

3.

TDR (Term Deposit Receipt) (3 months) profit rate 8%

4.

TDR (6 months) P.rate 9%

5.

TDR (12 months) P.rate 10 %

6.

TDR (18-24 months) P.rate 10.50 %

7.

TDR (30-36 months) P.rate 11 %

8.

TDR (42-48 months) P.rate 11.50 %

9.

TDR (60 months & above) P.rate 12.50%

Profit on these deposits is paid out on six monthly basis, while the principal amount is paid at maturity.

Khas term deposit receipt (KTDR) It is like a term deposit receipt but profit is paid at the time of encashement, and not on six monthly basis. The rates of profit are as like TDR.

Golden investment scheme (GIS) The life period of these deposit certificates is three years. The main feature of this scheme is that profit is paid on monthly basis, and hence the effective rate of profit is increased.

Monthly income scheme (MIS) Life period of these deposit certificates is three and five years. As its name indicates, profit is paid on monthly basis, and with this the effective rate of profit is increased from the actual rate i.e. 14.5%. Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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Carore Pati Deposit Certificate The new craze in deposit market is the recently introduced product, the Carore Pati Deposit certificates. This product has set new standards of popularity and success. It is one of the many firsts by Habib Bank Ltd in the deposit sector of banking. It is a highly innovative product, no one has ever thought of it before. The name of the product "Carore Pati" is at the same time highly expressive and attractive. This product has driven the depositors and savers' market crazy. And everyone is trying to become "Ratoon Raat Karore Pati". Habib Bank is carrying on a very aggressive and effective advertising strategy using electronic and print media at the same time. This product is so heavily advertised that almost all the people having bank accounts anywhere in Pakistan in any bank are aware of its attractive features. The target market for this product is the middle and upper classes of society. People who can afford to part-away with Rs. 50,000/- of their savings for at least 3 months can avail of this product. The salient features of this product are -

Face value of Carore Pati deposit certificate is Rs. 50,000/-

-

Time duration is 3, 6 and 12 months.

-

Rate of profit is 6, 7, 8% respectively.

-

Lucky draw is held on every 15th day of each calendar month.

-

A certificate purchased on or before last of preceding month is eligible to be included in the up coming draw.

-

Bumper prize is Rs.10,000,000/- grand prize is Rs.500,000/- and a number of other small prizes which total comes to 67 prizes.

Habib Bank has received deposits of Rs. 20 billion under this scheme. Seeing the amazing results of this product other banks have also started similar schemes, like UBL Caramad, UBL Zaramad and MCB Malaamal.

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Due to these schemes national savings have increased and liquidity problem of commercial banks solved resulting in easy availability of credit to the traders and businessmen.

4.2 ADVANCES To advance loans and to finance businesses and in return to earn mark-up is the main operational activity of Habib Bank. Deposits are a liability on which a bank has to pay profit to its account holders. Unless and until these deposits are advanced in the form of loans to traders, these are a burden for a bank. Advances / finances can be of two types. 

Fund-based financing



Non fund based financing

 Fund-based Financing In this case funds of a bank or financial institution are involved or in other words we can say that there is an actual outflow of cash from the bank. It has various types. (i) Running finance (ii) Demand finance (iii) Over draft (iv) Purchase and discounting of bills

Running Finance This is the most common type of finance availed by businessman to meet their working capital requirements. It is extended for a period of one year. Securities against such finance are normally hypothecation of stock, mortgage of property etc. The rate of mark-up is 50 paisa per 1000 per day which comes to 18.25% per annum. A certain limit is sanctioned by the bank upto which the trader can withdraw funds from his finance account, for which a cheque book is issued to him.

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Upon sanctioning of the loan the borrower withdraws funds from the Running finance (RF) account according to his daily requirement and is free to deposit the funds back when he is no more in need of these, thus bringing back the outstanding balance in the account to the minimum possible. Mark-up is applied on the resultant balance of each day. The advantage of such finance for a trader is that he can use funds of the bank upto his need level and can deposit surplus funds thus saving himself from the extra mark-up. Mark-up on R/F account is applied on monthly basis and recovered on quarterly basis. Demand Finance This finance is also sanctioned for a period of one year. In this case the entire amount of finance is credited to party's personal account by debiting finance account, and mark-up is applied on the entire amount of finance. Installments are fixed to be recovered on monthly basis, along with mark-up. Temporary Running Finance This is also a common form of bank lending when a borrower requires temporary accommodation, he is allowed to withdraw on his account in excess of the balance which the borrowing customer has in credit and an overdraft occurs. This accommodation is generally against collateral securities, when such securities are present it is called secured overdraft and when no securities are there, it is called clean overdraft. The borrowing customer is in advantageous position because he has to pay mark-up only on the balance outstanding against him. Purchase & Discounting of Bills Habib Bank purchases outstation cheques from its reliable customers. These cheques can be in the form of clean bills drawn on an account or trade-bills accompanied by documents of title to good called documentary bills. Clean bills and documentary bills of exchange are paid to the customer in full or discounted (as per arrangement)

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and mark-up is applied on the amount disbursed upto the day when these cheques or bills are realized. Non-fund-based Finances In this case funds of the bank are not involved rather the bank undertakes to pay upto a certain amount at the happening of an event. In other words it is a contingent liability of the bank. Letter of Credit Documentary letter of credit is a bank's written undertaking given to the exporters for payment of certain sum of money on behalf of the importer provided the exporter tenders to the Bank or its overseas agents the specified documents within a specified period in accordance with terms of L.C. The L.C. may be Inland as well as well as Import at sight or usance basis. L.C. will be called restricted if specific Negotiating Bank is mentioned therein, otherwise it will be considered as unrestricted and freely negotiable in country of beneficiary. Sight L .C In this form of credit, the exporter draws a sight or demand draft payable at the counter of advising Bank or the Bank specified in teh letter of credit. The draft is paid on presentation provided that all the other terms and conditions of L.C. have been complied with. In this case the negotiating Bank can either reimburse itself or demand reimbursement from opening Bank depending upon terms of L.C. D.A. Or Usance L .C Where L.C. stipulates payment to the exporter upon maturity of bills of Exchange, it is called usance credit. In this form of credit, exporter draws draft for particular usance i.e. 30, 60, 90 or even longer period payable upon either the correspondent Bank or opening Bank. However, the exporter can get the bill discounted at fine

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rates of presentation of shipping documents at counter/or after acceptance of draft by opener as per terms of Letter of Credit. SECURITIES Sight LCS

1.

Cash Margin

2.

L.C. application

3.

Personal guarantee of third party of from directors in case of limited companies.

USANCE L/C

1.

Cash Margin

2.

L.C. application

3.

Accepted Bills of Exchange

4.

Collateral acceptable to Bank

5.

Personal guarantee of third party or directors in case of limited companies.

LETTER OF GUARANTEE A Bank Guarantee is a legal document which may be defined as an irrevocable undertaking of a bank to pay to the beneficiary of the guarantee a certain amount of money if the expected result of a transaction does not occur or in the event of nonperformance of a contractual obligation of a third party by specific time. However, with a bank guarantee, the bank does not guarantee the success of the transaction itself. guarantees are as a rule, subject to the laws of the country in which the issuing bank is located. Salient Features It is a non fund based remunerative facility. Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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The parties involved are: (1) The beneficiary (2) The principal (3) The guarantor (Bank) LG's categorized as i. Demand Guarantees ii. Conditional Guarantees

Securities for Advances Habib Bank obtains following types of securities from the borrowers while advancing loans. (1) Hypothecation (2) Pledge (3) Mortgage (4) Guarantee (5) Charges (6) Lien Hypothecation In hypothecation the property in goods is charged as security for a loan, from the bank but the ownership and possession of goods remain with borrower. It is a weaker security and is mostly accepted for running finances, as a certain percentage of loan amount. To create this charge a letter of hypothecation on a stamped paper is signed by the borrower. Pledge Section 172 of the contract Act 1872, defines a pledge thus"The bailment of goods as security for payment of a debt or performance of a promise is called pledge". In case of pledge the ownership remains with the pledger, but the pledgee has the exclusive possession of property until the advance is repaid in full, while in case of default the pledgee has the power of sale after giving due notice. Mortgage Section 58(a) of the transfer of property Act, 1882 defines that, "A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, and existing or future debt, or the performance of an engagement which may arise to a pecuniary Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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liability". In Habib Bank Ltd., Peshawar two types of mortgages are in practice. Legal mortgage and equitable mortgage. The main difference between the two is that the prior one is to be registered with the registrar of properties even if the amount is less than Rs.100/- and this requires a handsome amount of fees to be paid to the registerer office while in equitable mortgage the mortgagor deposits title deeds of properties with the banker, with the specific purpose of creating a mortgage. Here no fees are to be paid to the government. In Habib Bank, for the facility of borrowers, certain portion of property is mortgaged by way of legal mortgage and the rest by equitable mortgage thus saving the borrower from paying extra fees to the registrar of properties. Guarantee Section 126 of the contract Act 1872, defines guarantee , "A contract to perform the promise or discharge the lability of a third person, in case of his default" when an applicant for an advance can not offer any tangible security he is asked to provide a guarantee, which can be personal or third party, to protect the bank against any loss. Charge It is a right of payment out of certain property. The charge is created by the act of parties i.e. the borrower and the bank. Charge on property is created when extending loans to private or public limited companies, on company's assets. Such a charge is registered with registrar of companies with in 21 days of creation of charge. Lien Lien is a right of the banker to retain the property of the borrower until the claim on the property is paid. Banker's lien is applicable to all documents or properties which come into the banker's hands in the course of his normal business as the banker to his customer. Lien is marked on financial instruments pertaining to the borrower at the time of advancing a finance facility.

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4.3

REMITTANCES

It denotes transfer of money from one place to another. Banks are the most important players of money market, and one of the characteristics of a developed money market is that transfer of funds from one place to another should be cheap and speedy. Habib Bank has a very wide network of branches throughout the length and breadth of country, that is why it has got an edge over other commercial bankes in Pakistan in the field of remittances. Several modes of remitting funds are available at Habib Bank which are explained below: Demand Draft (DD) It is a bill of exchange in which a branch of the bank orders another branch of the bank to pay a certain sum of money to the order of a person. Demand draft is the classical way of remitting funds from one place to another. For this purpose remitter comes to a branch and fills up a request from for the purchase of DD, in which he mentions the amount of money, name of the beneficiary and place of beneficiary and puts his signatures. The branch officials after charging bank commission, withholding tax and excise duty, hand over a printed demand draft with the particular of beneficiary given in and signed by two attorneys of the branch. The remitter after receiving the same, sends it to the beneficiary through mail or if he himself is a beneficiary takes it with him to the city where he is going and after presenting it at the counter of the drawee branch receives payment. The drawer branch after handing over the draft to the purchaser prepares an advice and mail it to the drawee branch, giving particulars of the beneficiary therein. In case of a draft of Rs.25000/- or more, test is applied and written down on the advice which is a coded message and testifies the bonafides of the instrument. In case of a draft of Rs. 50000/- or more instead of sending advice through mail coded telegraphic message is conveyed to the drawee branch.

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Telegraphic Transfer (TT) It is a much more faster way of transferring funds from one place to another. In this case all the other formalities are just like a demand draft, but in the application form the purchaser specifies that he wants a telegraphic transfer. No demand draft is issued but a TT message is prepared in coded form and transmitted to the drawee branch through telegraph office. A TT message is invariably tested and coded. For a TT an extra Rs. 50/- are charged by the bank, being cost of the telegraphic message.

Mail Transfer (MT) It is almost same like the other two modes of remittance. The only difference is that the bill of exchange issued by the bank is not handed over to the purchaser but sent through mail by the banker himself. MT's are normally issued for the customers who has given standing instructions to remit funds to a beneficiary on regular basis. Muhafiz rupee traveller's cheques It is yet another innovative product of Habib Bank Ltd, in the field of remittances. The name Muhafiz indicates the safety in carrying these travellers cheques instead of cash. These cheques can be purchased free of cost and is the easiest and cheapest way to transfer funds. These cheques can not be purchased by firms, companies and other legal bodies. Only individuals can enjoy this facility. The strategy behind such decision is to attract individual and walk-in customers towards the bank. Although Habib Bank do not charge any commission but due to this product it is getting several other benefits, which are: -

Cash inflow to due sales of Muhafiz.

-

Contact of the bank with the people who are not regular customers

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-

a positive image build-up.

This product was for the first time introduced by Habib Bank Ltd. So other commercial banks are following suit. To increase its market share Habib bank has introduced a new scheme of prizes for the purchasers of Muhafiz Travellers' Cheques. A total of 1000 prizes are available ranging from tape-recorder to 1600 CC car. The sale and purchase of Muhafiz Travellers' Cheques is very easy and consumer friendly. One has just to sign an application form and hand over cash to the banker, and the banker will issue a Muhafiz T.C. These cheques are available in denomination of 100, 500, 1000, 5000, 10000, 25000, 50000, 100000). The purchaser had just to sign in the cage given on the face of cheque. When Muhafiz Travellers' Cheque is to be encashed at another branch counter, the purchaser has to countersign in the other cage given on the face of the cheque and he gets cash from branch counter. Muhafiz Travellers' Cheque can be purchased from 700 branches and can be encashed at 1700 branches of Habib Bank throughout Pakistan. Muhafiz Travellors' Cheque has given immense relief to traders from the tension of carrying cash with themselves from one city to another.

4.4

BILLS DEPARTMENT

A banker acts as an agent to its customers. In this agency arrangement the banker is the agent and the customer is the principal. Habib Bank also carries out the same function, by acting as a collecting agent for its customers when various customers of the bank deposit outstation cheques in their accounts the branch collects the proceeds of the same on behalf of its customers. Cheques or other documents deposited by the customers are called bills. Cheques or drafts are called clean bills while bills of exchange accompanied by documents of title to goods are called documentary bills. This function of collecting bills is done by the branches for a commission and it is done on behalf of the customers at his risk and responsibility. Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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Bills are deposited by customers. On receipt of a bill, the customer is issued a receipt and the bill is lodged in books as outward bill for collection (OBC) in case of clean cheques and outward documentary bill for collection (ODBC) in case of documentary bill. Bills are a contingent liability for a bank. Every bill received is specially crossed by a special crossing stamp of the branch which denotes that the bill in now a property of the bank branch. Then a discharge is given at the back of the instrument by putting a stamp which says that payee's account will be credited on realization. The bills are then sent to the drawee branch which sends back a credit advice to the sending branch upon realization of the bill.

5. SAFE-DEPOSIT LOCKERS It is also a very important facility provided by Habib Bank, since bankers are the custodians of public wealth so they provide safe deposit vaults to the people to put in their valuables. For this purpose three types of lockers are available at Habib Bank branches, viz, small size, medium size and large size. A person who wants to get a bank's locker has to sign a form which is a sort of a contract between the banker who is licensor and the customer who is licensee. The licensee gets a license to use bank's locker after signing the contract. He has to deposit a certain sum of money as a security which is called key deposit and has to pay an annual rent. The licensee is allotted a locker and a key is handed over to him both carrying specific numbers. The master key remains with the banker. The customer is allowed to operate the locker during bank's counter hours. When a customer wants to operate a locker he comes to the banker and signs in a an attendance register. Then the banker applies his master key to the locker and then the customer applies his own key and the locker opens. After putting in his valuables the customer closes the locker with his own key. When the customer wants to end this relationship he surrenders his key and the key deposit which was kept with the banker as a security is returned back to him.

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4.5 SALES DEPARTMENT The job of sales department is to identify possible customers and then attract them towards the bank so that they open account with the bank. Sales Department in Bank Square Branch,Mingora, HBL is headed by Mr. Wasim Jan. Including him the sales force is comprised of 3 personnel. Two of these people looks for possible clients and visits different people from varied professions, which include doctors, engineers, architects, businessmen, forces personnel and store owners. The job of the remaining person is to attend customers when they make a visit to the bank and to convince them for the banks varied product.1 MARKETTING STRATEGIES The foremost job of the sales force is to bring new customers to the bank. The marketing strategies devised by the sales personnel’s include a few steps. Market Segmentation The market is divided into three parts. The upper class, the middle class and the lower class. The upper class and the middle class are targeted directly as they can have the possible customers of the bank. The lower class is targeted indirectly as these people are exploited to reach the likely customers of the above classes. Information collected from the lower class which comprise news hawkers, shopkeepers, and other clerical staff proves very handy in distinguishing customers.

4.6 CASH DEPARTMENT Cash Department deals in receiving cash and giving cash. At the cash counter, Foreign Currency (FCY) and Local Currency (LCY) receipts and payments are

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managed. Cheques are received and presented for transfer or collection purpose. The employees at cash department also handle credit Card payments. The money is kept in the vault which is built along with the cash department. Cash counter is also termed as teller counter. Department is supervised by a Chief Teller. Every Cashier is provided with a specific amount of money in the morning from the vault. The cashier makes payments to the customers from that money At the end of the day the cashiers check their balances and the remaining amounts is placed back in the vault. Cash handling is sensitive work. Every body at the bank is not allowed to enter the cash department premises. The names of the authorized personnel who are allowed in cash department are mentioned on the entrance door of the cash department. Internees are not allowed to enter the cash department. 4.7 DATA CENTRE Data Centre is the place where the computer section of the bank is located. This is a very sensitive section of the Bank and only authorized personnel are allowed to enter this section. It has an automatically locking system at the entrance door and the authorized personnel are provided with a specific code. When they punch the specific code, only then the door gets unlocked and they can enter. Internees are not allowed to enter the data center. The data centre consists of very sophisticated computer involving all the data of the bank assets and customer deposits and lending. In other words this section regulates every information that is fed by employees into their computers.

Back-up for all the computer systems is

maintained in this section. Every employee is given their personal code which they feed into the system when they work. This code is the identification of an employee. This code is recorded at the data centre and it records every transaction made by any code at any time. Other than recording every transaction the data centre also performs the following functions. Hardware and Software trouble shooting. Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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Installation of new hardware and software. Start of day procedure and end of day procedure i.e. downloading all the data from Karachi Head Office in the morning and, sending all the data back at the end of the day Keeping inventory of all the hardware installed Contacting dealers for maintenance of computers. Taking back-ups on daily basis. Training computer users.

The setup of data centre includes the following functions. Setting file servers. Satellite communication equipment. Handling the printer setup in front office as well as back office. Maintaining the back – up tape devices. In other words maintaining every technical aspect of the bank comes in the responsibilities of the data canter. A well trained personnel is employed to look after the operations in data centre. The HBL Bank Square Branch,Mingora is also assisted by the HBL Mardan Branch in the data center department. Highly qualified recruits from HBL Mardan Branch makes their visits to the HBL Bank Square Branch,Mingora for assistance.

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References 1. Interview with “Mr. Wasim Jan”, Officer Sales Department, HBL Bank Square Branch,Mingora, April 30 2002. 2. (On-line) Available www.habibbank.com 3. Ibid. 4. Ibid. 5. HABIB BANK LIMITED, (2040). Brochure – Account Terms & Conditions. Bank Square Branch,Mingora. 6. Prof. Nasir, M. Saeed. (1998). Banking Currency and Finance”, Lahore: Pakistan Kitab Markaz. p.26 7. Interview with “ Mr Shah Jehan ”, Officer Remittance Department, HBL Bank Square Branch,Mingora, April 30 2002 8. Interview with “ Mr Mumtaz ”, Officer Autoloans Department, HBL Bank Square Branch,Mingora, April 30 2002 9. HABIB BANK LIMITED (2000). Brochure – Autoloans. Bank Square Branch,Mingora. 10. Ibid. 11. Ibid.

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CHAPTER 5 CRITICAL ANALYSIS Analysis is the most important part of the report, because it depends on the personal observation of the author, only a good, keen and comprehensive analysis leads to good recommendations & helps for the improvement of the existing conditions.Critical Analysis of an organization discovers its potential areas of improvement and evaluates its performance of the past period. It identifies the possible solutions to problems faced inside the bank and gives an insight of the opportunities, which can be exploited to reap benefits. The critical analysis of HBL Bank Square Branch, Mingora is divided in two parts. 1.

Financial Analysis.

2.

SWOT Analysis.

The financial analysis is based on the national performance of HBL. The different Ratios calculations are taken from the annual balance sheet for the year ended December 31, 2004.

5.1

FINANCIAL ANALYSIS

Financial analysis of an organization expresses the performance of the bank for over a period of time. Different ratios analyze the bank’s capabilities. Varied relations are drawn on the basis of this analysis. Financial ratios have their own importance in analyzing the firm’s performance. An increase or decrease in one ratio does not mean anything good or bad. It is always linked to another one, that is more important. Considering the example of higher interest, if the bank want to have most of the deposits of the market, it has to offer higher interest rates. This would bring the deposits, thus deposits will Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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increase, but on the other hand it will have to pay higher interest as well, thus decreasing the profit ratio. Relativity is the prime factor in evaluation of ratios. The financial ratios of the HBL reflects its stronger position in the market. The banks deposits have increased it has also increased the profits. Advances have been made which have resulted in the fall of cash. The overall financial position shows that the bank is growing and is on upward direction in profitability as well. The financial Analysis is as follows. Different values comes out from the calculations for year 2003 and year 2004.

Ratios

2003

2004

Gross profit margin

31.97%

40.91%

Return on Assets (Before Taxes)

2.81%

2.56%

Return on Assets (After Assets)

1.18%

0.98%

Net Interest Income to Assets

3.91%

3.99%

Assets turnover Ratio

0.12

0.10

Fixed Assets Turnover

21.87

17.04

Operation Cost to Assets

2.97%

3.82%

Debt to Equity Ratio

25

43

Operation Cost to Deposits

4.25%

4.86%

Total Expenditures to Deposits

16.15%

12.20%

The graphical representation of these ratios is given separately.

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5.2

SWOT ANALYSIS

The SWOT analysis comprise of the strengths it has, the weaknesses that are a part of it, the opportunities that it can exploit and the threats it faces from competitors. However its also encompass generally the Bank Square Branch, Mingora. Certain factors are already attached with the name of HBL, whose benefit or loss is automatically the part of HBL Bank Square Branch, Mingora. HBL has some unique factors like being the oldest bank of the region, which adds to its value. Its background and role in the economy of the country creates attraction for people. The formal SWOT analysis constitutes of four different solid parts.

5.2.1 STRENGTHS HBL benefit from a few points which ultimately makes its backing strengthened. Some of these points are as follows:



REPUTATION

HBL is a renowned bank all over the world. Its branches are spread across all the continents. It is the oldest & first bank in Pakistan as well. In Pakistan it has a 1424 branches network. This has enabled customers to make transaction more easily throughout the country. It also has agency arrangements in areas where it does not have any branch. This old presence of HBL in the region makes its reliability and its name is generally considered a name of quality and trust.



ECONOMIES OF SCALE

The merger with SCB has alleviated the financial position of the bank. It has increased the operational efficiency and has resulted in reduced risk. The better financial position has opened the way for access to capital markets. As the bank has expanded, the bank is now enjoying economies of scale.

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

OUTLOOK

The outlook of an organization plays important role in portraying its image to customers. The HBL Bank Square Branch,Mingora has a well built and decked building. The interior of the bank gives a neat look. The atmosphere is professional. It is centrally heated and air conditioned, so as to provide customer and staff with better working condition in every climate. More over the main hall and departments are all announced as no smoking zones. Staff members or customers who want to smoke may go out of the bank’s vicinity.



HUMAN RESOURCE MANAGEMENT

HBL believes in hiring active and inspired candidate. Experience is not an important requirement for recruitment. The qualification, criteria for selection of employee are MBA,MPA or any other related degree from reputed universities. At HBL Bank

Square

Branch,Mingora,

most

of

the

management

have

communication skills in local as well as foreign languages. The HBL attracts qualified pool of applicants by offering a superior salary to their staff. Most of the applicants want to join HBL because of the rewarding salary structure of the Bank. The HBL pays satisfying salaries to its employees with many other incentives like house loans, medical facilities etc. The performance appraisal of the employees is a regular feature of the HBL. The performance appraisal report is sent to the Karachi Head Office regularly. This performance appraisal report determines their promotions and endorsements. The timings of the bank are strictly observed by the staff. All the staff members are supposed to reach the bank at the specified time. Being punctual is a normal practice at HBL.

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

SERIES OF PRODUCTS

HBL practice the introduction of new products for its customers to suit their needs. The bank emphasis on consumer banking by providing them with innovative savings scheme, products and services suiting best to their life style.It offers various kinds of accounts with varying features and interest rates. From small accounts to large accounts the profit increases gradually. Its Master card and VISA card also give privileges to its customers. With more than 10,000 outlets in Pakistan and over 18 million VISA establishments around the world HBL VISA can be a handy card in buying anything. HBL ATM is also a valuable service. It allows customers to withdraw money from their accounts round the clock for 24 hours. Maintain the foreign currency accounts is another factor that attracts customers who wants to make transactions in dollars or pounds or deutschemark, etc. Recently the launch of Auto Loans department has attracted a number of customers, who want to buy new cars. The Auto Loans section of the bank provide loans for buying different kind of cars.



NEW TECHNOLOGY

The bank has attention and sensitively to competition prevailing in the country. Therefore, It has made all the branches of the HBL online which means that they are interconnected with each other and in full coordination. The bank has been provided with new branded DELL computers lately. All the work is done by the employees on computers. In order to get benefit of being in touch with the latest technologies. In Pakistan, where banking is still done on archaic methods, HBL has tried its best to introduce new technologies for the betterment of its customer services.



HANDSOME STIPEND

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performance. It motivates the internees to work efficiently because they know that they would be appreciated and paid for their efforts. The stipend is regularly given to the internees on every weekend.

5.2.2 WEAKNESSES Weaknesses, like strengths are a part of almost every organization. These weaknesses points out the potential areas of improvements and make the organizational behavior intelligent. A cumulative effort to overcome these flaws makes success possible. During the internship period the weaknesses that generally surfaced and were visible at HBL Bank Square Branch, Mingora are as described below in detail.



UNDERSTAFFED DEPARTMENTS

The root problem at HBL Bank Square Branch, Mingora which is normally ignored is that it is understaffed. Thus several departments are over loaded with extra work. This overburdens the employees which leads to frustration and anger, provoking several other problems. This problem is explained in detail in the later part of the report.



PERFORMANCE APPRAISAL

Performance appraisal is generally considered a motivational as well as evaluative tool. At HBL its use is normally made in an exploiting fashion. Evaluation is made on the basis of the achievements of market targets. Unfortunately the market targets are always unachievable. Thus employees face the condition of being called inefficient at times. This is an annoying factor for some of the employees which leads towards de motivation and anxiety.



HOSTILE EMPLOYEE RELATIONSHIP

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A pleasant operational atmosphere develops the efficiency of the staff and also boost the employees motivation. Unfortunately at HBL Bank Square Branch, Mingora employees are not in good relations with each other. Back biting is a normal and well practiced art. Most of the employees have their pros and cons kind of colleagues in the staff. This factor is generally boosted by the extra load of work that some departments faces. The burden of work escalates the tension of the staff members. This also give rise to bad mood and irrational behavior amongst the employees with each other. Other than this there are several additional prominent grounds for these reduced relationships, which are discussed below. 

Promotion

The employees of the bank consider their future vague due to uncertain promotion forecasts. The organizational structure of the bank has ranked the officers in similar rankings. So whenever there is a chance of promotion, the competitive environment generally ends up giving birth to new hostilities among the employees. The promotion is mainly based on the performance appraisal, which in itself needs a change. The promotion of many officers of Bank Square Branch,Mingora is delayed because of the impractical tasks given to the employees. 

Employee Development

Through employee development, the skills of employees are polished for the future job requirements of the organization. Although there is a firm criteria designed for the employee development program at HBL but sometimes its not carried out soundly. Employees are not completely aware of the kind of activities the bank might expect them to perform in the future. Thus they find themselves in vagueness and uncertainty about job requirements sometimes. Although the employees at the bank are educated, but there are situations where they do not

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understand some terminologies or procedures related to banking. This presents a dire impression in front of the clients.



CARELESS ATTITUDE

Business organizations generally acts on the formula of “customer is always right”. However it appears that HBL Bank Square Branch, Mingora has an action logo of its own. It works on the principle which says, “customer is sometimes right”. Customers at HBL are occasionally neglected. The unprofessional attitude shown by some staff members leaves a number of customers angry. Queries by patrons are not entertained often. This practice is hurting the image of the bank. Secondly, the bank applies the status policies intensely. Clientele with small deposits are not given proper attention and consideration. The upper class clients with large deposits are shown good behavior and courteousness. This discriminatory behavior of employees is surely objectionable. Last but not the least the bank employees show irresponsible behavior while making use of bank resources at times. Stationary, for example is wasted in abundance. Phone lines are kept busy due to personal chats and irregular absence from the seats is experimented.



UNFAIR ALLOCATION OF WORK

Work distribution at HBL Bank Square Branch,Mingora is unbalanced. Some departments like remittance department used to be under extra load of work. On the other hand lending department had comparatively a small amount of work. Over burdening some employees creates resentment in their hearts for their fellow employees with less work.



CASH COUNTER QUEUES

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Long queues at cash counter is a regular sight at HBL Bank Square Branch, Mingora during the first section of banking hours. It is quite a shocking view for a new visitor who enters the bank. This presents and unsophisticated look.



WEAK POLICIES

HBL Bank Square Branch, Mingora several policies which have the capacity of improvements. More refined strategies if adopted will raise the bank’s outlook and will polish its image. Some of them are described below. 

Concealed Expenses

HBL charges its customer for various services provide. The mild tone of some employees at times detracts customers from the charges of services offered and when the customer comes to know about their account being credited, they gets distressed. Most of the VISA Card members who did not had an account in HBL were not aware of the fact that they are charged 100 rupees for each transaction they make. This would normally create confusion between the customers and the staff. Several accounts holders accounts with low balances were closed at the cutover with any prior notice to them. Other than this the bank charges for making drafts were high too. 

Non Participative Decision Making

It was observed that the top management made one-sided decisions. Occasionally the employees were just informed about their new tasks and targets. Often the bank employees use to complain about the inconsiderate nature of the decisions which they considered thoughtless, and termed them an imposition by the upper management. 

Internees Selection Process

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HBL claims to be an organization which offers internships purely on merit basis. Regrettably the original situation is totally different. Firstly, there is no specific merit basis which can be termed as grounds for internship. Secondly, an acknowledged reference is must for an entry into HBL. The bank have its claims that all the Curriculum Vitae (CV’s) of applicants are sent to Karachi Head Office and the decision is made there. This also is a strange claim as Karachi Head Office has no measures to check the credibility of the CV’s. Also noted was the fact that no interviews are conducted from the applicants. All that one needs for obtaining internship in HBL is an accredited reference. This prejudiced practice does not match the reputation of HBL as it leaves competent candidates out of a chance to have an experience of working in a multinational organization.

5.2.2 OPPORTUNITIES “Success, more than anything is all about converting into opportunity what everybody else considers danger”. Opportunities, when exploited properly reap profits and earn success. They are almost always a matter of time. They are to be sought, picked and made use of, before any body else gets up and do so. Its just about being smart and accurate. HBL also have some opportunities it can utilize and obtain good market position. Some of the opportunities HBL can make use of are hinted below.



STABLE ECONOMIC CONDITION

The new Govt have turned fruitful for Pakistan’s economy. The United States of America has provided Pakistan with additional loans without interest, which have boosted Pakistan’s economy. Thus the forthcoming picture seems one with economically more stable Pakistan. In this period Pakistani nationals living in foreign are bringing money back home. Foreign investors are getting encouraged

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to bring money and invest it here in Pakistan. New NGO’s are taking birth. Several countries companies are coming to Pakistan to help the Afghan people. HBL with its reputation can take benefit out of these circumstances. It can mobilize its sales force and can design new marketing policies to attract new customers in a situation when people are bringing money. It can use several steps to attract domestic as well as foreign investors. It can intensify its marketing strategies. It can employ more people to target these firms and individual investors. It can relax its loan strategies, so the investor can be attracted to the flexible policies. It can provide special relaxations to NGO’s and companies of foreign countries working for the betterment of Afghan people. All of such activities are a matter of time. HBL has to seek these opportunities and make use of them before they are no more.

5.2.3 THREATS Threats, are the unseen, futuristic, probable events that can occur and prove dangerous in consequences. Every organization is faced by some category of threats in its operations and functions. Opening new outlets, altering existing policies, designing fresh marketing strategies, bringing change in physical structure, almost every activity that an organization do face some kind of threats, just like the benefits it seeks. HBL also faces some threats which can just prove minor assumed fears; as well as can become events with grave consequences. The prevailing condition indicates the following as the possible threats.



LAW AND ORDER SITUATION

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creates an atmosphere fear amongst the foreigners residing in Pakistan. Incidents like these enormously affect the economies of countries. If the foreign investor won’t feel safe in Pakistan, then how come it is possible that he will invest money here. HBL seems to lose a number of possible foreign clients because of the uncertain law and order situation prevailing inside the country. The government must take appropriate actions in this concern to make sure the safety of all foreigners residing in Pakistan. This will help our economy to boost up as well as it will popularize out country’s name.



COMPETITORS

HBL also faces competitors in the market. CITIBANK and ABN Amro Bank are already online. HBL has become online since 30th June 2000. These two banks also enjoys sound financial backing and comes from a rich background. Also working are other foreign banks like Bank Alfalah, Emirates Bank and Faysal Bank. Bank Alfalah propose serious threats to HBL in its auto loans market. Various domestic banks like MCB and others have also shown improvements. To survive amongst all these competitors, HBL needs to keep in touch with modern technology, keeping flexible and customer oriented policies, and adopting the latest trends of banking.

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References Jain, N.P. (1995). Business Thoughts. ”, New Delhi: Shri Jainendra Press

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CHAPTER 6 RECOMMENDATIONS

“Advice is seldom welcome; and those who want it the most always like it the least”. Recommendations suggest improvements in areas which have room for polishing and progress. Criticizing several factors at HBL Bank Square Branch, Mingora does not mean that these aspects are permanent flaws of the branch. Instead, it is intended that these mistakes be removed. For the confiscation of these errors, certain recommendations are forwarded.

6.1

QUEUING MODELS FOR CASH COUNTERS

The long queues at cash counter gives an awkward look. This problem can be solved by using the Queuing Model concept. These models are proposed to facilitate organizations control waiting lines. Through this approach, the bank can decide the best possible number of checkout stands. The number of checkouts should balance personnel cost and customer waiting time.

6.2

CUSTOMER – ORIENTED ATTITUDE

The bank staff should be properly educated about the customers value. The bank should use the marketing approach and customer satisfaction should be taken into account. There should be no status discrimination between customers. The bank staff should be courteous to all customers. A customer is fascinated and brings other customers also to the bank if the service is efficient and courteous. Being courteous does not cost anything instead it makes one more human. The bank’s staff should be courteous with everyone regardless of the volume of their deposits.

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6.3

PROPER SEATING ARRANGEMENT

Customers, waiting for their turns, should be provided with proper seating arrangements. Often it was visible that during peak banking hours many customers use to stand anywhere they wanted to. This created stress for the employees as well as other customers waiting for their job getting done. A specific place should be reserved for the customers by placing chairs there. The staff should politely tell the customers to be seated till their work is ready. This would ease the job of the employees as well as clients won’t bear the pain of being standing still and waiting.

6.4

EDUCATION

The bank have some senior employees who have a great deal of knowledge of the banking field but there are some staff members who needs to be educated about the delicacy of certain matters. Although the bank provide on – the – job training as well as orientation training to its employees, there are some who still need a good training program, which can directly educate them specifically about the bank policies and operations. They should be presented with focused technical functions and banking knowledge .

6.5

TRAINING AND DEVELOPMENT PROGRAM

The HBL claims of training and educating its employees but practically speaking it should initiate a good employee training and development plan. This would help employees to know more about their specific job and its actual requirements. The employees can be given chance to serve in different departments, hence they can become aware of the mutual requirements and importance of the coordination between the different departments of the bank. Thus they can work in harmony and collaboration with each other. This would develop the proficiency, insight and administrative capabilities of the employees. This also helps in avoiding monotony of performing the same job again and again. This would also be a

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factor of motivation for the employees who works in over loaded departments. The rotation would provide them all with equal chances of serving in same kind of working conditions.

6.6

PERFORMANCE APPRAISAL

The practice of performance appraisal should be made a serious and mature process which can identify an employees potential accurately. Giving unachievable tasks to employees discourages them and they don’t strive for the achievements of those tasks. If targets which are practical are given to employees and any bonus or reward is announced on the achievements, this would greatly influence the performance of employees. It can be possible only then that the employees will take their performance appraisal serious and would yearn for betterment.

6.7

PROMOTION

An established performance appraisal system would automatically open the doors for the promotion of employees. At HBL it was generally observed that some employees used to complain that no promotions are given. The staff remains where they started from. New upper management comes and no one from the bank is promoted to the managers post. Secondly the promotions in the so called performance appraisal system are based on the achievements of impractical targets, which creates frustration and anxiety amongst the employees. Proper system, practical targets and promotions jointly can be used as motivational tools for the employees. This will enhance their working abilities and they will also feel more secured and safe.

6.8

MARKET SEGMENTATION

The general target market of HBL is the upper class of the society. The sales force is often busy in looking at probable clients with large amount of money. It can

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also prove costly when sometimes another potential customers gets deviated because of the less attention paid to him. Also concentration in one market segment bears high risk and can lead to huge losses if a deposit is withdrawn. The bank should also offer some products for potential customers with comparatively low-income level. Most of the potential customers cannot fulfill, the high balance requirements and high service charges. Bank should revise its policies on charges for services it provides. This will result in more satisfied and trustworthy relationship between clients and employees.

6.9

EQUITY CONCEPT

All the departments should be given with an equivalent load of work This would result in a friendly relation between employees as well as it will boost the coordination between different departments. Another suggestion would be that the staff should be involved in the decision making process. So that they can make arguments about their status of work after accepting the new responsibilities. This would also clarify the issue between staff members and responsibilities and authorities will be properly delegated, resulting in the ending of the confusions about work and responsibilities. It would also give a feeling of own ness and security to the workforce of being very much a part of the bank.

6.10 FRIENDLY UPPER MANAGEMENT The upper management should keep friendly relations with all the staff members. It would result in the feeling of equity amongst members. It was observed at HBL that the upper management favored some staff members and used them for spying purposes against other members. This provoked severe resentment amongst the employees for each other.

6.11 FAIR INTERNEE SELECTION PROGRAM

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A fair internees selection system should be established for selection of internees. Instead of sending CV’s to Karachi Head Office, the applicants should be interviewed locally in the branch on some specific date. Aptitude and competence of the candidates should be considered and there should be merit for selection instead of their references. Bank administration should give proper training to the internees. They should educate them about the purpose of all the functions they perform. HBL also give internship generally for six weeks and for the maximum of eight weeks. This is a problem for HBL itself. Thus during the six or eights weeks duration when an internee gets some know how about the banks operation, his time completes; and when he can be more useful than ever, he is asked to leave. If HBL increases its internship period for a quota of seats, it will help HBL in taking much use of internees it trains for work.

6.13 EDIFICE CONSTRUCTION Some departments like the Auto Loans department was not given enough space in the bank’s vicinity. A room that previously was used for photocopying was given to the Auto Loans personnel. The employees of the specified department grumbled against this. A proper, well-decorated office should be provided to the Auto Loans staff. That would need some building construction on the upper floor. The rest of the officers also spend most of their time at the bank. Those staff members who want to offer their prayers face difficulty in doing so because there is no specific place for the officers to pray. A prayer room should also be constructed on the upper floor along with offices for the staff members who don’t find office for themselves.

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References 1.

Jain, N.P. (1995). Business Thoughts. ”, New Delhi: Shri Jainendra Press

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CHAPTER 7 IMPLEMENTATION PLAN Analyzing the bank’s performance in several departments and evaluating the strengths and weaknesses leads to some proposals. The implications of these suggestions are

more important. HBL Bank Square Branch, Mingora is

generating profits and is targeting the market efficiently with its energetic young sales force. Its location at the centre of business sector in Swat is also adding to its easy accessibility by customers. Thus the outlook requirements of the bank are almost complete. The place for improvement in the bank is inside. The underlying problem of several other problems that was observed during the internship period, was that HBL Bank Square Branch, Mingora is and “understaffed” bank. It has enough vacant room for new employees. This hitch is the root cause of many other problems. The situation that was taking shape of this inability is as follows:

7.1

OVER LOADED STAFF

The under staffing directs to unfair work distribution. Several employees, gets load of work which is beyond their capacity. This leads towards errors and irregularities in their work. It was observed that some employees used to complain openly about the extra load of work. They very clearly wanted assistance in their work, so that their burden can be shared. Some of the tasks would not even complete even still working for 4 hours after the bank working hours had ended.

7.2

POOR CUSTOMER SERVICE

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The understaffed situation at HBL Bank Square Branch, Mingora led the employees to adopt aggressive attitude with clients. Certain queries would not be entertained because the staff would all the times be worried about their own work and would not take time to attend and guide the customers friendly. Customers would not be listened with concentration and modesty. It was visible that often some customers would roam around with deposits, cash or VISA payment slips, they wanted to get filled properly. It was also noticed during the handling of other customers, like filling fresh accounts form, that customer would wait for assistance which they would rarely get. This basic reason behind this was the extra load of work, which did not allow the employees to indulge in un necessary talking. Ultimately it was giving rise to the poor customer service.

7.3

SEVERE TIES BETWEEN EMPLOYEES

The understaffing was also the major reason for the acrimonious relations between the bank employees themselves. As discussed earlier back biting was a very normal practice at HBL Bank Square Branch, Mingora. The whole atmosphere would some time seem of uncertainty and ambiguity. Understaffing was the major reason of this because most of the conflicts that arose would relate to the work of employees. Over burdened employees would always seek chances to avert responsibilities and hold somebody else accountable for any mistake that would have occurred. This was a grave problem that was taking its roots deep inside the bank environment.

7.4

CONCLUSION

Considering the prevailing circumstances at HBL Bank Square Branch, Mingora and taking a broad overview of the possible solution, one would surely come up with the idea of employing fresh energetic workers. This would root out the above-mentioned problems. Additionally an employee in the cash department would lessen the burden of the already working tellers as well as it would help in

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the reduction of long queues at the cash counter. A member at remittance department would surely prove helpful as to share the workload of the already overstrained staff. Although help desk was maintained at HBL Bank Square Branch, Mingora but that normally was an inexperienced internee who, most of the time instead of helping would just direct the questioner to another department. Thus the help desk, instead of providing true help, would waist the time of customer as well as add more to the work of other members of staff. Thus if an experienced and well-educated employee is given the responsibility, that would help both the customers as well as the colleagues.

7.5

IMPLEMENTATION PLAN

Thus now when the basic area of problem is identified, the understaffing, several measures can be taken into account to deal with this problem. There are two plans which are suggested for dealing for this problem. Short Term Plan Long Term Plan The two plans devised will be effective in results and they both match the banks image and perspective of banking. Both are described in detail below. 7.5.1

SHORT TERM PLAN

The short term plan is devised for employees who would be given the chance to serve in the bank for a limited period. This can be done in the following two methods. 

Longer Duration Internship Program

The bank normally offers a 6 weeks internship program. At the maximum this duration stretches to 8 weeks. During this period the employees of the bank helps the internees to understand various procedures regarding different departments.

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After the coaching and teaching of these 6 or 8 weeks the internee is able to comprehend most of the functions of the bank and he or she is able to follow the appropriate procedures which is to be followed for the completion of that function. So at a time when an internee learns most of the jobs and can prove more beneficial to the bank than before, he is supposed to leave. The bank can set a particular quota for a long internship duration. Many graduates after the completion of their degree roam around and wander uselessly. The bank can introduce a long internship program for its own benefit as well as these graduates. To keep the normal internees unaffected, it can reserve a special quota for these kinds of long duration internees. The selection can be made in the local branches. A specific date can be set for interviews and the applicants may be chosen on merit. The bank can offer a six months or a year internship program. The bank can make a promise that at the end of the program it can give a recommendation report about the applicant. To get good recommendation on this kind of a report the applicant will be motivated and will work hard. This will help him in getting experience as well knowledge about the delicacies of practical job. Most of the organization requires earlier experience in the field, thus HBL can be helpful in developing the youth into a positive direction as well. Since the name of HBL already means quality, this will build many people’s career in good organizations. The bank will benefit in the shape of obtaining a motivated and energetic employee and that also at a lesser cost than the normal employees. The cost would be less because since these would be fresh graduates seeking experience and recommendation, hence they can taken as internees. They can be paid the internees stipend and the main purpose of these internees would be to achieve experience and recommendation, not salary. Thus they can prove economical workers for the bank. they would prove useful because after the initial 2 months period the applicant will be aware of the banks policies , he can be of great use to the bank. He will also be more devoted towards the customers, to win their recommendations and sympathies. More customer devoted staff will improve the bank’s image also. If the worker shows extraordinary performance, Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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the bank can also take him as a permanent employee. Since his last one years performance and his attitude towards fellow colleagues and customers will be proofs of his ability or inability, the bank will find it easier to decide about him. 

Contract Workers

The bank can also employ contract workers also. If the bank wants to be careful in choosing a better lot among the pool of candidates for its operations, it can offer contract seats. Contracts seats will be for applicants who will be employed on contract basis. This program will be different than the long internship program as the above program will be just meant for fresh graduates and new applicants who will get recommendation and will be paid the internees stipend. However, full salary will be paid to contract workers. This program will include other banks personnel as well as experienced people. This can be a sort of brain drain technique that the bank can use. This will bring experienced, energetic and capable employees to the bank, who can work hard and share the responsibilities of the other workers. As they will be on contract basis, so if the bank, after the completion of the contract period wants them to leave, it can exercise the liberty to ask them to leave. Or if the bank considers them worthy and wants to take use of their expertise, it can reassign them some job as well. 7.5.2

LONG TERM PLAN

The long term plan would be designed for the permanent employees of the bank, so that they can prove beneficial to the bank in future. This program would include picking up the most competent employee amongst the employee and sending him for further training and higher studies about the bank policies. Now the question arise that how can he be of any use to solve the problem of understaffing. The answer is that a more efficient, able, experienced and motivated employee can handle the job of several persons. The bank can make the selection amongst the employees on the basis of the performance the employees show and on achieving targets. Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)

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When a selection about an employee is made, thus he will be send for a period of time to get training and education. More emphasis is to be given to the sensitivities and delicacies involved in the operations of different functions. He would be taught specifically the policies about the bank, the broader goal the bank want to achieve and the ways of cumulative efforts that are required. His appointment is to be made rotational, thus he would work in other branches too and would understand the inner environment of the branches, and he will work in. This will help him in dealings in future. This kind of training program would enable the employee to understand the whole banking structure precisely. When returned to the branch, he can be of great use as his expertise on many issues will be authentic and accurate. The bank will bear all the expenses that are to be made during the training program. The employee in return is to be made bound to stay with the bank for over a period of time. This practice will create a more motivated, efficient and skillful staff. Also will it produce a competitive and healthy environment. A skilful employee would be more efficient and productive. Hence his expertise would replace any additional employee place. This indirectly will replace the expenses, the bank has endured during the training and development program.

The above plan if implemented can produce better results for the bank. The shortterm plan would save the bank from unnecessary costs. The long internship program is economical as well as beneficial. Similarly the contract workers can be experienced workers, whose expertise will valuable to the bank. The long-term plan would surely cost a little, but the bank can reap its fruitful benefits in the long run.

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PERSONS INTERVIEWED

Name of Organization

Designation

Name of Person

Habib Bank Limited

Officer Autoloans

Mr

Department

Shah Jehan

Officer Remittance

(senior) Mr

Department

Sher Bahader

Officer Sales

Mr

Department

Wasim Jan

Habib Bank Limited

Habib Bank Limited

Date

August 12 2005

August 24 2005

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BIBLIOGRPAHY Bateman, Thomas S. and Snell, Scott A., (1996). Management Building Competitive Advantage. Third Edition. USA: Richard D. Irwin, Times Mirror Higher Education Group, Inc. Gul, Amber, “ANZ – Grindlays Bank, A Case Study Of Peshawar Branch”, Department of Public Administration, IMS, Section 1998. Naz, Nadia, “Internship Report on HABIB BANK LIMITED”, Department of Public Administration, IMS, Section 1999. Prof. Nasir, M. Saeed. (1998). Banking Currency and Finance”, Lahore: Pakistan Kitab Markaz. HABIB BANK LIMITED, (2000). Annual Balance Sheet. BANK SQUARE BRANCH,MINGORA. HABIB BANK LIMITED, (2000). Brochures. BANK SQUARE BRANCH,MINGORA. Van Horne, James C. and Wachowicz, Jr., John M., (1998). Fundamentals of Financial Management. Tenth Edition. USA: Prentice Hall, Inc. (on-line). Available.http://www.grindlays.com. (on-line). Available.http://www.pcglobal.com. (on-line). Available.http://www.standardchareted.com. (on-line). Available.http://www.standardchartedgrindlays.com.

Internship Report on Habib Bank Ltd.(Bank Square Branch, Mingora)