HBL Internship Report

Internship Report on HBL F-8 Branch, Islamabad. 3/11/2010

Submitted in partial fulfillment of the requirements For the degree of Master of Business

Submitted To :

Col. Imtiaz A. Mohar

Submitted By :

Khurram Jehanzeb

Program :

MBA

Enroll # :

01-122081-048

BAHRIA UNIVERSITY, ISLAMABAD CAMPUS

Contents Contents..................................................................................................................... 2

................................................................................................................................... 4 ACKNOWLEDGEMENT..............................................................................................4 ACKNOWLEDGEMENT ................................................................................................ 4 About HBL................................................................................................................... 6 ORIGIN OF TERM “BANK”............................................................................................7 HISTORY OF BANKING IN PAKISTAN............................................................................7 History of HBL............................................................................................................. 8 Mission & Objectives...................................................................................................9 Mission........................................................................................................................ 9 Vision.......................................................................................................................... 9 Our Brand...................................................................................................................9 Values......................................................................................................................... 9 Board of Directors.....................................................................................................10 Management Forum.................................................................................................11 A Bird’s Eye View......................................................................................................12 HBL at A Glance........................................................................................................13 Organizational Hierarchy..........................................................................................14 Chain of command....................................................................................................15 Chain of command in Bank Branch...........................................................................16 Human Resource Management.................................................................................17 Recruitment and Selection.......................................................................................17 Entry level programs................................................................................................18 Experienced Professionals........................................................................................18 Selection Process......................................................................................................19 Services Offered by HBL...........................................................................................19 Technology .............................................................................................................. 20 Software used by HBL ..............................................................................................20 MISYS........................................................................................................................ 20 INNOVATION.............................................................................................................22 2

House Finance.......................................................................................................... 22 Auto Finance.............................................................................................................22 HBL Flexi Loan..........................................................................................................22 Life Style...................................................................................................................23 HBL Rescue............................................................................................................... 23 For Personal Loans...................................................................................................23 For Credit Card Payments.........................................................................................24 Auto Cash (Debit/ ATM Card)....................................................................................24 Habib Bank icard as your Debit Card........................................................................24 HBL iCard as your ATM Card.....................................................................................24 HBL Fast Transfer.....................................................................................................24 HBL E-Bank............................................................................................................... 25 HBL F-8 Markaz Branch.............................................................................................25 Departments I worked in..........................................................................................25 Operations ............................................................................................................... 25 Foreign Currency Department..................................................................................25 Advances Department..............................................................................................25 Account Opening Department..................................................................................26 Requirement for Account Opening .........................................................................26 Current Account OR Demand Deposit:.....................................................................26 SAVING ACCOUNT.....................................................................................................27 Basic Banking Account.............................................................................................27 Opening of an Account.............................................................................................27 Allotment of Account Number...................................................................................27 Specialty of Account Number...................................................................................28 Cheque Receipts Department...................................................................................28 Fixed Deposits Department......................................................................................29 Remittance Department...........................................................................................29 Intra Bank Transfers.................................................................................................29 Interbank Transfer....................................................................................................29 Local Fund Transfers................................................................................................29 Issuance of Banker’s Cheque....................................................................................29 Clearing Department................................................................................................30 3

Inward Clearing .......................................................................................................30 Outward Clearing......................................................................................................30 Main problems in HBL...............................................................................................32 SWOT ANALYSIS OF HBL...........................................................................................32 Strengths.................................................................................................................. 32 Weaknesses..............................................................................................................33 Opportunities............................................................................................................ 34 Threats..................................................................................................................... 35 CONCLUSION & RECOMMENDATIONS.......................................................................36 CONCLUSION............................................................................................................36 RECOMMENDATIONS.............................................................................................36

ACKNOWLEDGEMENT

ACKNOWLEDGEMENT 4

First of all I am thankful to “ALMIGHTY ALLAH”. Who gave me the strength, patience, courage and enthusiasm needed to write and complete this report, then to my friends who assisted me in this effort and we worked daylong to accomplish this assignment and to my parents who supported me financially and encouraged me morally. I have a debt of gratitude to all my teachers who taught me throughout my academic career. It was pleasure for me to be sent to The HBL, F-8 Markaz Branch. I am very thankful to the honorable internship incharge. I learnt a lot from this training program and this would guide me a lot while selecting my career. I also know how to face the problems and how to find out the ways for their solutions. The preparation of this report was a massive undertaking but the highly competent and experienced bankers of HBL F-8 Markaz Branch, Islamabad. Provided me with all assistance, information, advice and suggestions that I needed which contributed importantly to this report.

Khurram Jehanzeb

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About HBL HBL is the prime Bank in country, established in 1941, having its registered head office in Karachi. It was nationalized in 1974, but on 26th February 2004 it was privatized by Government of Pakistan and taken over by Aga Khan Fund for Economic Development (AKFED). They acquired 51 percent of shares of HBL. It is one of the largest Banks of Pakistan with 1466 branches inside country and 112 overseas offices (presence in 25 countries) at different destinations around the world covering 5 continents. It internationally operates in countries including USA (New York), United Kingdom (London, Manchester, Birmingham), Scotland (Glasgow), Belgium (Brussels), France (Paris), Lebanon (Beirut), Netherlands (Rotterdam), Turkey (Istanbul), Kenya, Mauritius, Seychelles, Nigeria, Afghanistan, Bahrain, Oman, UAE, Iran, Sri Lanka, Sudan, Kuwait, Bangladesh, Egypt, Hong Kong, Singapore, Maldives, Indonesia and Australia. Currently HBL is having customer base of over 6 million

Pakistan

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International

ORIGIN OF TERM “BANK” It has not so far been decided as to how the word ‘Bank’ originated. Some authors opine that this word is derived from the words ‘Bancus’ or Banque’ which mean a bench. Other authorities hold the opinion that the word ‘Bank’ is derived from the German word ‘Back’, which means ‘joint stock fund’. It is therefore, not possible to decide as to which of the opinion is correct, for no record is available to ascertain the validity of any of the opinions

"A financial institution, deals with money and credit. It accepts Deposits from individuals, firms and companies at a lower rate of Interest and gives at higher rate of interest to those who need them.” “A financial establishment which uses money deposited by customers for investment, pays it out when required, makes loan at interest, exchanges currency, etc.”

HISTORY OF BANKING IN PAKISTAN The partition plan was announced on June 3, 1947 and August 15, 1949 was fixed as the date on which independence was to take effect. It was decided that the Reserve bank of India should continue to function in the dominion of Pakistan until September 30, 1948 due to administrative and technical difficulties involved in immediately establishing and operating a Central Bank. At the time of partition, total number of banks in Pakistan were 38 out of these the commercial banks in Pakistan were 2, which were Habib Bank Limited and Australia Bank of India. The total deposits in Pakistani banks stood at Rs.880 million whereas the advances were Rs.198 million. The Governor General of Pakistan, Muhammad Ali Jinnah issued the order for the establishment of State Bank of Pakistan on 1st of July 1948. In 1949, National Bank of Pakistan was established. It started with six offices in former East Pakistan. There were 14 Pakistani scheduled commercial banks operating in the country on December 1973. The Pakistan Banking Council prepared banks amalgamation schemes in 1974 for amalgamation of smaller banks with the five bigger banks of the country. These five banks are as under:

1.

National Bank of Pakistan

2.

Habib Bank Limited

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3.

United Bank Limited

4.

Muslim Commercial Bank Limited

5.

Allied Bank Limited

In early 90’s after the failure of nationalization policy, Government went for privatization of financial institution. In last ten to fifteen years banking sector in Pakistan has shown tremendous growth. Due to its remarkable growth, banking sector of Pakistan has become very attractive for foreign investors. Many investors have already invested and still many more to come.

History of HBL Habib Bank Limited was established by Mr. Ismail Habib on August 25, 1942 on the desire of Quaid-e-Azam Muhammad Ali Jinnah, father of the nation. It was established with paid up capital of Rs. 2.5 million. It was the first Muslim bank of sub continent. Quaid-e-Azam first of all opened his personal account. The first branch of HBL started functioning on 30th August, 1942 at Muhammad Ali Road Bombay, In 1942, on the desire of Quaid-e-Azam, Habib family migrated to Pakistan and later on shifted the Bank's Head Office from Bombay to Karachi on 7th August, 1947 just one week prior to independence, to play its pivotal role in the development of this newly born country. At the time of independence, the areas which now constitute Pakistan were producing only agricultural products raw material for indo-Pak subcontinent. Partially no industries were there to process the raw material; therefore the raw material was exported from Pakistan. There were 19 non-Indian foreign Banks which were engaged in the export of crops from Pakistan with only two Pakistani Banks i.e. HBL and the Australia Bank. The circumstances were completely uncertain. The confidence of the people had been shaken by the un-friendly environment and till the time peace had not been restored, people would naturally have been interested in other things. The nation was quite young with extreme scarcity of resources and these definitely added to the difficulties of the govt., to run its own Banking system immediately. Following the announcement of the independence plan in June, 1947, the Hindus residing in the territories now comprising Pakistan started transferring their assets to India and vice versa. The Banks included those having their registered offices in Pakistan, transferred them to India in order to bring a total collapse of the new state. It had been decided that the Reserve Bank of India would continue to function in Pakistan so that the problem of demand and time liabilities, coinage, currencies, exchange rate etc be settled between India and Pakistan and the Indian 8

Notes would continue to be legal tender in Pakistan till 30th September, 1948. Again due to certain differences between Indian Pakistan, the India government withheld Pakistan's share of Rs.75 core in forward and subscribed heavily to the government of Pakistan to the tide over the crises. At a time when this newly born country was at whirlwind of crises, it was HBL which fulfilled generously the financial needs of all its sectors, paid salaries to the employees of all Govt. departments, helped in the establishment of State Bank of Pakistan which the Quaid-e-Azam inaugurated on July 1st, 1948. HBL after partition opened its branches throughout Pakistan to provide finance and other facilities to the business community. In association with HBL, the Govt. sponsored Pakistan Finance Corporation Limited for financing of cotton. The Bank helped handsomely in the construction of WARSAK DAM PROJECT, WAPDA, & K.D.A. by provided finance and other facilities.

Mission & Objectives Mission “To make our customers prosper, our staff excel and create value for shareholders”

Vision “Enabling people to advance with confidence and success”

Our Brand Our brand identity is the outward expression of what we stand for as an organization. This is summarized in our vision, mission and is supported by our values.

Values Our values are the fundamental principles that define our culture and are brought to life in our attitudes and behavior. It is our values that make us unique and unmistakable. Our values are defined below: A. Excellence B. Integrity C. Progressiveness D. Customer Focus E. Meritocracy 9

Board of Directors

10

Management Forum

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A Bird’s Eye View

Year

Important Event

1941

Commenced operation.

1942

Deposits reached 20 million rupees.

1943

Moved operations from Bombay to Karachi on the Quaid’s Request.

1946

First Banking Scheme Started for the Muslim Youth.

1947

HBL head office transferred to Pakistan.

1966

Silver Jubilee.

1974

Bank was Nationalized.

1991

Golden Jubilee

1997

HBL was Reorganized.

2004

HBL was Privatized.

2006

Largest Private Commercial Bank in Pakistan with branch network of 1477 branches within Pakistan and 65 international branches in 26 Countries. Declared best Bank.

2008 2009

 Pakistan’s Largest Banking Network .  The Best Emerging Market Bank in Pakistan  HBL among Top 500 Global Financial Brands

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HBL at A Glance Operational & Financial Aspects Yea r

DEPOSIT ADVANCE PROFIT (PRE-TAX) Rs. S (in millions)

Rs.

ASSETS

Rs.

Rs.

( in millions)

( in millions)

BRANCHES

( in millions) 194 24.0 1-42

10.3

0.4

27.0

2

194 7

266.0

63.7

1.5

321.2

21

197 3

7579.8

4005.1

113.0

11679

749

197 4

8592.8

6212.4

211.8

15,531

1084

199 0

120680.2

81140.9

731.0

228,799

1904

200 1

283,445

167,225

2224

333,751

1516

200 2

328,182

167,523

4088

403,013

1473

200 3

360,648

183,654

5469

434,932

1470

200 4

404,629

258,306

7146

486,982

1469

200 5

432,545

316,681

13833

528,893

1425

200 6

459,140

349,432

20532

590,291

1425

200 7

517,481

354,980

10199

654,652

1477

74,622

16254

696,712

1464

13 200 8

437,098

Organizational Hierarchy

Chairman

President

Board of Directors

SEVP

SEVP Finance, Audit & Administration

International Operations

SEVP Corporate Banking & Treasury

SEVP Asset Remedial Management

SEVP Retail Banking & Information Technology

SEVP Credit Policy

SEVP Corporate Banking, financial institute & Project Finance

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Chain of command Chairman President Board of Director

Member Executive Board

Regional Chief

Zonal Chief

Branch Manager

Operations Manager

Bank Staff

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Chain of command in Bank Branch

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Human Resource Management HBL is an organization that provides opportunities for its staff to have a challenging and rewarding long-term career. To this end the Human Resource Group (HRG) encourages and motivates its employees to excel in the responsibility that they have in the organization .It believes that creativity and innovation comes from talent, knowledge and experience and it is HBL’s endeavor to provide and maintain an environment which not only nourishes these strengths but also provides opportunities for the staff to have a career which has multidimensional growth opportunities. In doing so, HRG has been restructuring and redesigning the overall structure of the organization, which includes rationalization, cutting down the decision layers, improvement in staff training and hiring professionals and MBAs at entry-level management. The overall direction of HRG has been towards nurturing the strengths of the human capital to its maximum with a defining principal to help create a progressive environment and sustain a thorough commitment of our staff towards focused customer service. HRG therefore recognizes the need to proactively invest in staff training and develop courses on a regular basis. Under the umbrella of its Management and Organization Development Division (MODD) its Management Development Institute (MDI) with its three fully equipped chapters at Karachi, Lahore & Islamabad regularly conducts and outsource technical and personal development courses for its all level of staff enabling them to meet the challenges of the everchanging business requirements and customer needs. During 2008, 529 courses, workshops, skill development clinics and seminars in the disciplines of Service & Attitude, Market Research & Selling, Management & Communication, Credit & Finance, I.T. & e-Banking, Treasury & Trade Finance, Global/ Domestic Banking Operations and on other diverse subjects were conducted by In / Ex-House professionally skilled, qualified and certified faculty and industry experts for 10233 people of senior / middle line management & staff carving 1334 days training days. There is no budget limit for Training and Education at Habib Bank. HR Group aims to maintain and further improve the service-oriented culture and to make employment not only satisfying but also enjoyable.

Recruitment and Selection Our Recruitment

Meritocracy is an integral part of HBL’s recruitment policy. Our merit-based recruitment process incorporates the principles of equal opportunity and leads to the appointment of the most capable candidate. This ensures openness and transparency, allowing greater confidence in the outcome of the selection process. 17

The merit principle at HBL aims to identify the most suitable person for the job assessed on the basis of the following parameters: •Educational Background •Skills and Competencies •Abilities and Attitude •Experience •Interpersonal / Communication skills

• Entry level programs It includes •

Management Trainee

•

Cash Officer

•

Management Associates

•

Internship

Experienced Professionals We recruit experienced professionals in all areas of the bank and encourage the creation and pursuit of innovative ideas. Our dynamic work environment offers diverse opportunities to stimulate ongoing employee needs and supports career enhancement opportunities.

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Selection Process The diagram below represents the process on which we base our selection. This gives an overview to potential candidates as to the steps involved in becoming a part of the HBL team.

Services Offered by HBL Habib Bank offers the following services to the customers:  Commercial Banking  Corporate Banking  Investment Banking  Global Treasury

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 Islamic Banking (referred to Modaraba)  Cash Management  Asset Management  Zarai Banking

Technology Software used by HBL HBL is enjoying the competitive advantage of vast operational area. There are two types of branches come under HBL network. One type is the online branches whereas other type is batch branches (offline branches). So obviously HBL uses two types of different software. All batch branches use SIMEX software whereas online branches use MYSIS.

MISYS MISYS (online) perform two type of system

• Cashier system This system use only cash transaction like cash withdraw, deposited, Remittance, Accounts opening, LFT etc.

• Equation system Clearing inward or out ward, special or intercity clearing, supervision

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INNOVATION House Finance HBL provides the facility of house finance. The Financing available for:  Purchase of house  Home improvement and renovation  Self Construction

Auto Finance Habib Bank Auto Finance, a lease product, designed to offer you an economical way for owing the car of your choice. Some characteristics are:  Lowest Down Payment  Lowest monthly rentals  Fixed repayment tenures of 36,48and 60 months.  Lowest Processing charges  Insurance premium rates as low as 3%  Worldwide personal accidental insurance coverage of up to Rs. 200,000.  All locally assembled new cars can be financed through this scheme.

HBL Flexi Loan HBL had introduced a unique loan system for the middle income serving people in various public sectors. It is basically meant for those in service people who earn more than Rs. 5,000 per month. This loan meets the petty requirements of the salaried class. Since the introduction of this scheme Rs. 6 billion is advanced throughout the country. The maximum limit of this loan is Rs. 3,000,000.

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Life Style Habib Bank Lifestyle is an economical financing scheme for Household Appliances and consumer Electronics. Salient features of HBL LIFESTYLES:  Loans for salaried/ self Employed individuals or business persons  Low Mark-ups leading to affordable monthly installments.  Financing from Rs.10,000 to Rs.500,000  Fixed tenures of 6,12,18,24 and 36 months  Low Processing charges  Full credit Life Insurance  Free Doorstep Delivery of items  Available throughout Pakistan from over 330 designated Habib Bank Branches

HBL Rescue (Balance Transfer Facility) HBL provides the facility to transfer your personal loan and credit card liabilities, at the lowest rates ever.

For Personal Loans The salient features of HBL Personal Loan are  Maximum loan up to Rs. 1,000,000  Choice of 12,24,36,48 and 60 months for payback  Lowest Mark- up  Quick processing  Full Credit Life insurance  Available from over 400 designated branches throughout Pakistan

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For Credit Card Payments  Maximum loan up to Rs.1,000,000  Lowest mark-up-compared to any credit card  Choice of 12,24,36,48 and 60 months for payback  Quick processing  Full Credit Life insurance  Available from over 400 designated branches throughout Pakistan

Auto Cash (Debit/ ATM Card) Habib BANK icard is used for dual purposes-a debit card and an ATM card and provides you the direct access to cash in your account.

Habib Bank icard as your Debit Card When payment is made at any merchant location using the card , exact purchase amount is deducted from your account.  Convenient, secure, quick and easy payment option  Nationwide acceptability at various merchant locations displaying ORIX Network logo  Free of charge debit card transactions

HBL iCard as your ATM Card  Offer a number of facilities such as cash withdrawal, Funds transfer between accounts, Balance Inquiry, Mini Statement, PIN Change etc.  Accepted at all 1LINK and MNET ATMs across the Country.

HBL Fast Transfer This service provides a unique solution for overseas Pakistanis to send money back home in a swift and convenient manner.

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HBL E-Bank It provides services via a dedicated communication link on the internet. The EBanking services provide “anytime, anywhere” banking to all 6 million customers. This service, designed to be user friendly, assures secured access and confidentiality.

HBL F-8 Markaz Branch It was an honor for me to get training in HBL CDA Civic Centre. It is the largest retail banking branch in Pakistan with deposits of 22 billion rupees. It is also the main branch of Habib Bank in Islamabad. It also serves as credit hub as well as cash bank for Islamabad region. It was an opportunity as well as honor for me because it not only gives me a lot of practical exposure to real field work but also clear understanding that how large institutions are run and controlled.

Departments I worked in During the six week internship as I had to work in different department. The day I reported in branch (27th July), manager operations had introduced me with Mr. Illyas Ahmed experienced bank employee and told me that he would act as internship coordinator. Mr. Illyas with mutual consultation assigned me seven departments which are as follow

Operations  Cheque Receipts Dept.  Account Opening Dept.  Fixed Deposits Dept.  Remittances Dept.  Clearing Dept.

Foreign Currency Department Advances Department In upcoming lines I will discuss departments one by one in detail.

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Account Opening Department Account opening department is one of the most important departments of a bank. It is known as Gateway to the bank as anyone (any individual, partnership firm or JSC) who wants to initiate relations or to avail the services of bank has to open an account. This is why it is known as gateway to the bank. For opening of account a form is given which includes all necessary requirements needed for further process. This form also includes term and conditions of account holders and all details of bank and customer relationship. (Annexure)Before opening an account there are certain requirements.

Requirement for Account Opening

There are different accounts that can be opened with a bank. These are  Current Account  Savings Account  Basic Banking Account 

Current Account OR Demand Deposit: Current Account of Habib Bank is open with 20,000/-, any Amount less than 20,000/the bank will charge 5% on the remaining balance, the current is mainly open for the business man. Who can draw money any time from the bank this is the main 26

function of this account. With minimum balance of Rs. 5,000 in this account, account holder can enjoy unlimited transaction facility. There is no interest paid by the bank on this sort of account.

SAVING ACCOUNT Saving accounts are opposite of current account. These sorts of accounts are provided to encourage savings habits. There are different classifications of saving accounts, usually termed as short, medium and long term saving plans. Each set has its own unique characteristics. The saving Account of Habib Bank is started from 20,000/-, any Amount less than bank will make charges of 55 per month against the balance. The function of the saving accounts is to save the surplus money of the people by giving them good interest rate. (Annexure 1)

Basic Banking Account This account is basically introduced to cater needs of student and salaried persons. We can say that it is an aspect of corporate social responsibility of bank. It is similar to current account as no interest is paid. There will not be any deduction or penalties in case of minimum balance. The only precaution to operate this account to make sure that balance should not be zero or negative.

Opening of an Account When all requirements are fulfilled by the applicant, the procedure of account opening starts. To open an account of any type, bank officer has to go through five different windows of MYSIS than the account holder information is sent for verification. 1) ANC stands for Add New Customer 2) CIM stands for Customer Additional Information Maintenance 3) CAA stands for Customer Account Address 4) OCA stands for Open Customer New Account 5) ZYC stands for Know Your Customer

Allotment of Account Number After going through the procedure above mentioned an account number is given to the customer. One thing is very important for understanding that even going through the above mentioned procedure successfully, it does guarantee the opening of account. After allotment of account number it remains block for two days

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as the verification process is in process in these two days. This is why account is inactive for its first two days.

Specialty of Account Number Fourteen digits account number is allotted to the HBL account holder. The first four digits are code of HBL branch where account is going to be opened, afterward eight digits are customer account serial number and last two digits indicates type of account. For example

1416

Branch Code

75000254

Account Serial #

03

Type of account

Cheque Receipts Department It is a helping department for clearing as well as Remittance department. When any customer brings any sort of negotiable instrument it has to be deposited in cheque Receipt Dept. These receivables are than further classified as under  Interbank transfers  Intra bank transfers  Online transfers  Travelers cheques All those cheques which are of same branch or bank (e.g. HBL) are termed as online transfer provided that both concern branches are online. Cross stamps are engraved in front of instrument received to make it ownership of bank. As this department acts as facilitator and there is also enough idle time, so more than often different responsibilities are also assigned to this department. These include  ATM Forms issued and Received (Annexure)  Draft cancellation(Annexure)  Complaint forms 28

 Phone banking (Annexure)

Fixed Deposits Department Fixed deposits are those which can be withdrawn only after the maturity period. In this type of deposits the Bank allows high rates of interest depending on the time period of deposits. The shorter the period of deposits, the less will be the interest and vice versa. (Annexure)

Remittance Department As it is clearly depicts from its name, this department is used to remit amount from one place to another. This department performs following functions  Intra bank transfer  Interbank transfers  Local fund transfers  Issuance of bankers Cheque

Intra Bank Transfers When an account holder presents a cheque of another party who is also the account holder of same branch, funds are transferred immediate by using online system and available for usage. This is known as intra Bank transfer.

Interbank Transfer When an account holder (may be of same branch but should be of HBL) presents a cheque of another party (account holder of HBL any other branch), funds are transferred immediate by using online system and available for usage. This is known as interbank transfer.

Local Fund Transfers If any HBL account holder wants to credit his account without being physically going to the parent branch, he can transfer funds by LFT. Remittance department also performs the services of LFT.

Issuance of Banker’s Cheque Bankers Cheque is recently introduced by HBL to replace old concept of pay order and demand. This step was undertaken to make banking operations more customer 29

friendly as well as brought simplicity in banks operations. Earlier Pay Order (PO) was made for local funds movement whereas Demand Draft (DD) to make payments in outside region. But now for all customers, banker’s cheque is issued. The issuance procedure is same as earlier. Customer has to fill Remittance form which includes all relevant information. (Annexure)

Clearing Department Every bank performs both as a paying as well as collecting functions on behalf of its customer. It is however an important function of crossed cheques. A large part of this work is carried out through the bankers clearing house. A clearing house is a place where representatives of all the banks of a city get together and settle the receipts and payments of cheques drawn on each other bank. As the collecting banker runs the certain risks in receipt of their ownership, the law has provided certain protections to the banks. The basic function of clearing dept. arises when HBL account holder deposits cheque of another back to collect its payment on his behalf or HBL account holder gives a cheque to any other party concerning to any other bank. Usually a cheque is sent through clearing is credited to the depositor account day after tomorrow. In this regard there are two types of clearings  Inward Clearing  Outward Clearing

Inward Clearing Inward clearing means all those cheques which are issued by account holders to other parties and now these cheques are presented for payment (in term of amount of cheque credit to presenter account).

Outward Clearing Similarly when outside parties issue some cheque to our account holders, they deposit these cheques in Cheque Receipts Department. Afterward these cheques, as relating to other banks operating in country, are sent to clearing department or further process. Clearing dept. sends these cheques to respective banks and after realization of cheque, funds are credited to the account of respective customer. In this regard there are two types of clearing a. Intra city clearing b. Intercity clearing

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These cheques are sent through NIFT. Time for realization may differ in case of remote areas.

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Main problems in HBL During my internship I found some major problems in HBL overall management.  There is noticeable communication gap between upper level management and operational staff.  There is also over staffing in HBL moreover inefficient individuals are in credit card department.  There is huge difference in approaches of experienced staff & young staff  Imported upper level management  Experienced staff is frustrated mainly because of two reasons 

Salaries have not been revised from last 10 years



Experienced Habibians are neither satisfied by the privatization of bank nor they were taken into confidence at that times

SWOT ANALYSIS OF HBL HBL is considered to be a very sound bank in the financial circles. This is the bank where customers can safely keep their money as long as they want. In SWOT analysis the best strategies accomplish in organization’s mission by: 

Exploiting opportunities and strengths.



Neutralizing its threats and



Avoiding its weaknesses.

Following is a list of SWOT of HBL

Strengths  A skill or capability that enables HBL to conceive and implement its strategies.  The officers of HBL are considered as one of the most able professionals in the banking world.

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 I observed that HBL employees (except annoyed ones) interact with their clients as if they are their personal friends and discuss about their problems as their own.  HBL has got a reliable and easy to use internal computer system. HBL maintained its data properly.  HBL has very good security system.  HBL is the larger commercial bank in Pakistan with the network of over 1466 domestic and international branches.  Being the pioneer of banking in Pakistan, HBL is the oldest and is the richest in experience.  HBL focuses on consumer banking by lucrative schemes, products and services suiting best to the wants and demands of the customers.  HBL has opened all its branches at commercial areas so that the customers or clients face no problems in reaching to the bank.  The band is always on the look to improve its services both to the domestic as well as overseas customers.  Human resources development and introduction of new technology towards modern banking.  24 hours cash access and safe payment products for high value transaction.  Having potential to encounter the competitive environment in the market.  Veteran and experience private management group also involved in other interests like, textile and cement industry.  Customer enjoys the services at the residential localities.  HBL enjoys deep relations with all most all industries in Pakistan

Weaknesses  There is week communication system in overall

HBL as well as inside

branches.  Highest number of branches effecting the proper maintenance and difficulty in providing same working environment at the each branch  Poorer system of recovery of the system is a threat to bankruptcy.  Lack of customer feedback. 33

 Low job satisfaction.  Poor ATM’s Service  Inconsistency in efficiency and working atmosphere due to the largest of branches.  Sense of insecurity in the employees serving at low profitable branches due to the downsizing.  Females feel uneasy in an environment among the male workers.  Victim of political, legal and socio-cultural pressures  .Lack of professionalism in the branch employees mostly.

Opportunities  Huge untapped market potential in consumer banking as well as Islamic Banking  Opportunity for developing value added services combined with corporate banking relationships, cash management services to large and medium sized corporate clients.  Growing policies of government on business and commerce sector provide HBL opportunities to take advantages of these policies to meet efficiently with the business people to solve their problems with the instant cash and financing facilities.

 Government is supporting very bold steps of bringing and promoting IT in Pakistan. HBL has an opportunity to improve in technology.  Large international network which principally focuses on trade finance with Pakistan can be utilized to tap trade activities in other markets. In addition, services such as cross border / offshore financing for corporate customers can be enhanced.  Customer feedback on different products and accounts has really improved the bank performance and encourage the atmosphere for other future policies.  HBL also has an opportunity to expand its new technological advancement more effectively like; phone-banking and internet banking facilities in order to serve the customer more efficiently, specially 34

 E-banking facility is also a new opportunity which is a flourishing business in foreign countries and can also be here, if HBL takes the initiatives.  Further

reduction

in

intermediation

costs

possible,

with

improving

technology.  Due to efficient and veteran management group, HBL can also improve and expand its foreign operation successfully.  Habib Bank Limited provides opportunity to utilize its skills and efficiencies in leasing business.

Threats  Prevailing

circumstances

increases

the

difficulties

the

organization’s

achieving high performance.  Consolidation in the banking sector resulting in increased competition.  Shortage of trained and specialized staff at lower executive and officer levels  The threat of inconsistency and government policy regarding to business and economics sectors, specially political and regional situation which makes the environment uncertain.  Growing global technological advancement.  Strict regulation by government over credit facilities to the customers as well as to meet the prudential.  Loss of confidence of overseas customers due to freezing of accounts.  Facing more competition by foreign banks in the market.

 Foreign banks are flourishing in field of consumer financing.  Also the increasing operation of private banks.  Highly attractive and advance services by foreign banks to their customers.

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CONCLUSION & RECOMMENDATIONS CONCLUSION HBL is clearly the first choice of everyone who believes in qualitative approach of banking an environment of highly responsible people. Bank is enjoying a healthy market share and taste of good status in terms of its operative features and customer support. HBL is clearly the best bank operating in Pakistan. Corporate and commercial functions are distinguished features of HBL experiencing a good reputation and reasonable mark up with respect to prevailing market mark up with assurance of satisfaction and support. HBL has more customers as compare to other banks, if they given proper attention to every customer then in few years it will be the leading bank of the country (asset point of view)

RECOMMENDATIONS  There should be authority in every region which ensures efficient flow of communication and its understanding.  HBL should immediately take brave steps towards the welfare of experienced Habibians. In this regard NBP has set best example.  The management should try to decrease

job insecurity among the

employees.  Training program should be started for internees and newly appointed employees.  The bank charges high service charges as compared to the other banks, so these should be lowered down.  Surveys must be conducted regarding customer satisfaction level and all employees of this dept. should look forward to getting feedback whenever possible.  Adding of value added features that offer competitive advantage is also a means of avoiding customer dissatisfaction.

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