arslan hbl report

February 21, 2011 [HABIB BANK LIMITED:]

Report on

Internship AT HABIB BANK limited

FromARSLAN AHMED BHUTTO

IQRA UNIVERSITY

ACKNOWLEDGEMENT1


No one can say that I am perfect, everyone should admit that without the help

of ALLAH and His people a man can’t get anything so I bow my head before Almighty

Allah with gratitude. I am also very much thankful and presents salute to many

individuals who have helped me in shaping this report. I am also very much thankful

to lot of former fellows and contemporary colleagues who took the time and trouble

during the last few days to speak to me about the way this text could be further

improved. I have no words to express my gratitude to my advisor Mr. Kashif Ullah

Khan for his intellectual guidance without which it could have been rather difficult

for me to complete this report.

I am also very thankful to the staff Habib Bank Limited KHEKASHAN branch

especially to Mr. Akbar Ali (Branch Manager) who provided me an opportunity to

work in friendly environment.

It was an honor for me to work with:

Mr. Kashif ullah Khan (Operations Manager)

Mr. Syed Muhammad Hafeez Ullah (Assitant Manager)

Mr. Noman Ashraf (Retail Banking Officer)

Mr. Imran Hamdani (Head cash Department)

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Table of Contents

No. Description Page No.

01 Executive Summary 05 to 06

02 Evolution of Banking 07

03 Commercial Banking in Pakistan 08 to 10

History of Banking in Pakistan

04 About HBL Pakistan 10 to 19

History and Background

Privatization

HBL’s Mission, Vision and values

Board of Directors

Management

Corporate information

05 SWOT Analysis 20

06 Operations of HBL 25 to 57

Banking Departments in HBL

Products and services of HBL

07 Learning and Duties as an Intern 58 to 64

Foreign Exchange Department

Bills clearing Department

Credit Department

Account, lockers, ATM Department

Assignments

Impact on my Career

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08 Award and Financial performance in 2008 63 to 73

09 Recommendations 74

10 Glossary, Bibliography, Index 76 to 80

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executive summaryEvery student of Bachelors in Business Administration at IQRA UNIVERSITY has an essential

requirement to do internship in any of the well reputed organization. The purpose of this

program is to acquaint the students with practical applications of theoretical concepts

taught to them during conduct of their BBA program. The internship in Habib Bank was a

nice opportunity to have a close comparison of theoretical concept in practical field,

involving the use of primary and secondary data. All the efforts on the way are summarized

in shape of this Internship Report.

Report starts with the topic evolution of banking. The word 'Bank' is said to have been

derived from the words Bancus or Banque or Bank. This history of banking is traced to as

early as 2000 B.C. Talking about commercial banking in Pakistan It was very difficult for

Pakistan to build up its own Banking system immediately after independence without

sufficient resources. By 30th June 1948 the number of schedule banks in Pakistan declined

from mere scratch. Today there are more than 7000 branches of commercial banks along

with an established network of supplementary financial institutions. All this development in

the banking sector is the result of untiring efforts of six decades. HBL was the first

commercial bank to be established in Pakistan in 1947. Over the years, HBL has grown its

branch network and become the largest private sector bank with over 1,450 branches across

the country and a customer base exceeding five million relationships.

On December 29, 2003 Pakistan's Privatization Commission announced that the Government

of Pakistan had formally granted the Aga Khan Fund for Economic Development (AKFED)

rights to 51% of the shareholding in HBL, against an investment of PKR 22.409 billion (USD

389 million). This report contains information about HBL’s board of directors, management,

mission, vision and values. HBL’s operations are discussed in light of its working department

in the branches like cash, clearing, foreign exchange and accounts department and also in

light of its services and products which it is offering to customers’ whether they are

individual, business, corporate or agriculture field related customers. HBL is currently

offering phone banking, internet banking and various cash management services for the

facilitation of its customers. HBL’s car to car loan has its own uniqueness in Pakistan’s

banking sector. HBL’s branch network is extended all over the Pakistan which has its

competitive edge over all other private sector banks in Pakistan.

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During the time of my internship in Habib Bank Khekashan Branch Karachi, I got the chance

to work in all the departments of HBL working there. Duties and learning in each department

is given in this report. Talking about financial performance of the bank in 2010 all the

financial indicators are showing positive results when the financial performance of the bank

in 2010 is compared with financial performance of 2009. During 2010 HBL also won some

awards. At the end of this report I have given my suggestion for the improvement of the

bank.

I had been assigned to several departments to learn and experience the working of branch

banking and on the basis of grasped knowledge and experience, this report is being

presented to the management of Habib Bank Limited.

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Evolution of bankingThe word 'Bank' is said to have been derived from the words Bancus or Banque or Bank. This

history of banking is traced to as early as 2000 B.C. The priests in Greece used to keep

money and valuables of the people in temples. These priests thus acted as financial agents.

The origin of banking is also traced to early goldsmiths. They used to keep strong safes for

storing the money and valuables of the people. The persons who had surplus money found

it safe and convenient of deposit their valuables with them. The first stage in the

development of modern banking, thus, was the accepting of deposits of cash from those

persons who had surplus money with them.

The goldsmiths used to issue receipts for the money deposited with them. These receipts

began to pass from hand to hand in settlement of transactions because people had

confidence in the integrity and solvency of goldsmiths. When it was found that these

receipts were fully accepted in payment of debts; then the receipts were drawn in such a

way that it entitled any holder to claim the specified amount of money from goldsmiths. A

depositor who is to make the payments may now get the money in cash from goldsmiths or

pay over the receipt to the creditor. These receipts were the earlier bank notes. The second

stage in the development of banking thus was the issue of bank notes.

The goldsmiths soon discovered that all the people who had deposited money with them do

not come to withdraw their funds in cash. They found that only a few persons presented the

receipts for encashment during a given period of time. They also found that most of the

money deposited with them was lying idle. At the same time; they found that they were

being constantly requested for loan on good security. They thought it profitable to lend at

least some of the money deposited with them to the needy persons. This proved quite a

profitable business for the_ goldsmiths. They instead of charging safe keeping charges from

the depositors began to give them interest on the money deposited with them. This was the

third stage in the development of banking.

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COMMERCIAL BANKING IN PAKISTAN

It was very difficult for Pakistan to build up its own Banking system immediately after

independence without sufficient resources. Following the announcement of the partition

plan in June 1947 there was a haste movement on the parts of banks to transfer their funds

and accounts across the borders. The banks having their registered offices in Pakistan were

transferred to India. In an effort to bring about the collapse of the new state by the

persecuting an international policy of withdrawal, the Indian bank offices closed quickly.

Those banks, which stayed, were considering the winding up of their business. By 30th June

1948 the number of schedule banks in Pakistan declined from mere scratch.

Today there are more than 7000 branches of commercial banks along with an established

network of supplementary financial institutions. All this development in the banking sector

is the result of untiring efforts of four decades.

History of Banking In Pakistan The interesting point which I observed during the span of mine internship was the historical

background of Banking & Financial sector which is the one in which great improvement and

growth is observed since the formation of Pakistan. For studying the growth of this sector

we can divide it into three stages, which are as follows:

a) Pre-Nationalization Era

b) Nationalization Era

c) Post Nationalization Era

A) PRE NATIONALIZATION ERA:

There were only two Muslim banks in Indo Pak before partition; they were .Habib Bank Ltd.

(est. in 1941 at Bombay) & Australia Bank Ltd. (est. In 1944 at Lahore). All other banks, at

that time, were either owned by Hindus or Foreigners.

At the time of partition there were 631 bank branches in area which came under Pakistani

control. But due to blood shed and violence at large scale, mostly branches were closed and

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the disparity can be assessed from the fact that on July 1948 there were 195 branches with

deposits of Rs.88 million only.

Also a factor lagging in Pakistani industry was a central bank of its own, by that time Reserve

Bank of India was acting as central bank for both countries and same currency notes were

used in both territories. But Reserve Bank of India was biased and Set down Pakistan on

many occasions such as the issue of funds transfer etc.

1) Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.

2) Setting up of National Bank of Pakistan in November, 1949 to control the 'jute' export in East Pakistan and to act as agent of SBP.

3) Larger powers were given to SBP through SBP Act (1956) for controlling purposes.

4) Banking Companies Ordinance 1962 for protection and guidance to banks.

5) Establishment of specialized banks, such as ADBP (1952);

a) HBFC (Nov, 1952);

b) P1CIC (Oct, 1957)

c) IDBP (Aug. 1961);

d) NDFC (Jan, 1973).

These were the steps, which built a strong banking sector in Pakistan. This is also obvious

from the facts that by 1973 there were almost 10 foreign banks were working in Pakistan

and all over deposit position was around Rs.2300 crore (23,000 million). A bird eye view of 5

top banks was as given below:

BANK POSITION IN 1973

BANK NO. OF BRANCHES DEPOSITS

(Rs in Million)

HBL 667 6,160

NBP 579 5,660

UBL 497 5,670

MCB 506 1,640

ABL 145 570

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B) NATIONALIZATION ERAOn January 01, 1974 all Pakistani banks were nationalized through Nationalization

Act 1974. Under this law all Pakistani banks became a public property. All small banks were

merged in bigger banks to create 5 major Pakistani banks Pakistani banks. These banks were

to control by Pakistan Banking Council. There are still controversies about this act of

government as whether it contributed in success of failure of banks. However the major

changes after nationalization were as follows:

Working of banks was extended to under developed areas.

Market expansion for credit and deposits.

Decrease in service level of bank officers.

Decrease in profitability as well.

However the effect of expansion was enormous and it can also be depicted with the help of

table 2 which shows the deposit & branch positions of different nationalized banks.

BANK POSITION IN 1992

Bank No. of Branches Deposits (Rs. In Millions)

HBL 1926 153,431

NBP 1448 128,679

UBL 1684 87,482

MCB 1288 50,013

ABL 750 33,757

TOTAL 7096 453,362

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C) POST NATIONALIZATION ERA In 1990 the government decided to denationalize all the nationalized institutes.

Some was also suggested in banking sector. For this purpose, amendments were made to

Nationalization Act 1974 and two nationalized banks were privatized. Along with this a

permission to open banks in private sector was also granted. The rules regarding

establishment of new banks and for incoming foreign banks were also relaxed.

The- privatized banks are;

a) MCB taken up by a private group in April, 1991

b) ABL taken up by its own employees in September, 1991.

c) UBL taken up by UAE party in 2002.

d) December 29, 2003 HBL was taken by AKFED

After these changes a large number of private and foreign banks started their

operations in Pakistan and the present status can be seen from the following figure:

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About Habib Bank Limited

HBL was the first commercial bank to be established in Pakistan in 1947. Over the years, HBL

has grown its branch network and become the largest private sector bank with over 1,450

branches across the country and a customer base exceeding five million relationships. With

a presence in 25 countries, subsidiaries in Hong Kong and the UK, affiliates in Nepal, Nigeria,

Kenya and Kyrgyztan and representative offices in Iran and China, HBL is also the largest

domestic multinational. The Bank is expanding its presence in principal international

markets including the UK, UAE, South and Central Asia, Africa and the Far East. Key areas of

operations encompass product offerings and services in Retail Banking. HBL has the largest

Corporate Banking portfolio in Pakistan with an active Investment Banking arm. SME and

Agriculture lending programmes and banking services are offered in urban and rural centers.

In the UK and GCC, HBL focuses on trade finance and remittances for the South Asian

Diaspora in addition to basic banking facilities. HBL has always been a bank and a brand for

the masses, with a history that is inextricably linked with the history of Pakistan itself. As it

continues to grow, both locally and abroad, it strives to embody its brand personality:

honest, approachable, and inclusive. HBL is currently rated AA+ (Long term) and A1+ (Short

term)*. It is the first Pakistani bank to raise Tier II Capital from external sources.

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*Rating given by JCR-VIS

HISTORY AND BACKGROUND

Habib Bank Limited was established by Mr. Ismail Habib (Late) on August 25, 1942 at

Bombay. It was the first Muslim Bank of the sub-continent. It was established with a paid

up capital of Rs. 2.5 million. At an early stage, the number of its branches was only 12.

HBL established operations in Pakistan in 1947 and moved its head office to Karachi. Our

first international branch was established in Colombo, Sri Lanka in 1951 and Habib Bank

Plaza was built in 1972 to commemorate the bank’s 25th Anniversary. With a domestic

market share of over 40%, HBL was nationalized in 1974 and it continued to dominate the

commercial banking sector with a major market share in inward foreign remittances (55%)

and loans to small industries, traders and farmers. International operations were expanded

to include the USA, Singapore, Oman, Belgium, Seychelles and Maldives and the

Netherlands.

PRIVATIZATION OF HABIB BANK

On December 29, 2003 Pakistan's Privatization Commission announced that the

Government of Pakistan had formally granted the Aga Khan Fund for Economic

Development (AKFED) rights to 51% of the shareholding in HBL, against an investment of

PKR 22.409 billion (USD 389 million). On February 26, 2004, management control was

handed over to AKFED. The Board of Directors was reconstituted to have four AKFED

nominees, including the Chairman and the President/CEO and three Government of

Pakistan nominees.

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VISION, MISSION AND VALUES

VisionEnabling people to advance with confidence and success.

Mission

To make our customers prosper, our staff excel and create value for shareholders.

ValuesOur values are the fundamental principles that define our culture and are brought to life in

our attitude and behaviors. It is these values that make us unique and unmistakable. Our

values are defined below:

ExcellenceThis is at the core of everything we do. The markets in which we operate are becoming

increasingly competitive, giving our customers an abundance of choice. Only through being

the very best – in terms of the service we offer, our products and premises - can we hope to

be successful and grow.

IntegrityWe are the leading bank in Pakistan and our success depends upon trust. Our customers -

and society in general – expect us to possess and steadfastly adhere to high moral principles

and professional standards.

Customer FocusWe understand fully the needs of our customers and adapt our products and services to

meet these. We always strive to put the satisfaction of our customers first.

Meritocracy

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We believe in giving opportunities and advantages to our employees on the basis of their

ability. We believe in rewarding achievement and in providing first-class career

opportunities for all.

ProgressivenessWe believe in the advancement of society through the adoption of enlightened working

practices, innovative new products and processes and a spirit of enterprise.

Board of Directors

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NAME DESIGNATION

Sultan Ali Allana CHAIRMAN

R. Zakir Mahmood PRESIDENT & C.E.O

Mushtaq Malik DIRECTOR

Ahmed Jawad DIRECTOR

Yasin Malik DIRECTOR

Moez Jamal DIRECTOR


Head Office

HBL PlazaI. I. Chundrigar RoadKarachi-75650, Pakistan.Tel : +92 (21) 2418000 [50 lines]Fax : +92 (21) 9217511

Registered Office4th Floor, Habib Bank TowerJinnah AvenueIslamabad, Pakistan.Tel: +92 (51) 2872203 Fax: +92 (51) 2872205

RegistrarsTHK Associates (Pvt.) Ltd. Ground Floor, State Life Bldg No. 3Dr. Ziauddin Ahmed RoadKarachi, Pakistan.Tel: +92 (21) 111-000-322

WebsitesCorporate website:www.hbl.comTreasury website:www.hblgtr.com.pkEbank (internet banking):www.hblebank.com

AuditorsKPMG Taseer Hadi & Co.Chartered Accountants

GLOBAL LOCATION

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http://www.hblebank.com/


SWOT ANALYSIS

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Strengths

Strength can be defined as an area where a company is best at doing something or a

feature that puts the company at an advantage in comparison to its competitors. HBL enjoys

the following strengths:

HABIB BANK is a well established bank enjoying long history of over 65 years of

experience and profitable operation.

HBL is the largest private bank in Pakistan now and people trust is very high.

It has the largest branch network among private banks of Pakistan.

HBL has been very effective in controlling costs as it successfully restructured itself after

its privatization. During this process more than 1,600 employees were relieved under a

golden handshake scheme and 110 branches were closed.

Excellent branches appearance gives an edge to HBL over other banks. The branches are

well furnished even in less developed areas where other banks’ branches give a poor

view.

HBL has the ability to bring innovative products and services like personalized service,

electronic funds Transfer, sophisticated financial products such as electronic banking,

auto-teller machines and evening banking.

The Bank’s Rupee Traveler Cheques have been market leaders for the past six years.

HBL’s car to car financing scheme is unique in auto loan segment.

Habib bank is an internationally recognized name in banking services and products.

HBL has forged strategic alliances with international banks for expanding its network

further, both locally and internationally.

Weaknesses

A weakness is defined as an area in an organization where the organization is not as good at

doing something as its competitors or a thing which an organization lacks thus putting the

organization at disadvantage in comparison to its competitors. Based on the above

definition, HBL has the following weaknesses.

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Lack of communication between bank and customers about terms and condition of

products and services. Like centralization of cheque book issuing process.

Employees at branch level are not properly motivated to work by heart. They take the all

routine activities as a boring job.

Most of the employees lack managerial training as they are not properly educated. Due

to seniority, they have moved up on the hierarchy line to Grade-I, II or III positions

having hardly bachelor degrees. This type of senior staff cannot apply the modern and

innovative techniques of management in decision making.

Mission of HBL is not well defined.

Though HBL is second largest bank in Pakistan, yet the fact remains that it is not market

leader as NBP. Its total assets are always less than NBP total assets.

Now as it is a privatize bank that is why GOVERNAMENT support to HBL decreased as it

was in past

Opportunities

An opportunity can be defined as a change in external environment which if properly

exploited with the organizational strengths will result in enhanced sales, market share, or

income. Using its strengths, HBL can avail the following opportunities. Opportunities require

explanation therefore I have used headings instead of arrows

E-BankingGenerally speaking, three factors, quickness, easiness and cheapness have become the

catchwords for the competitiveness and usefulness of all the business operations.

Particularly it is commonplace today to say that banking is undergoing a radical

transformation. The symptoms are new products, new players, new channels etc. This

transformation is taking place across all sectors of the banking industry. That is why Habib

bank urgently needs to improve their ability, to think strategically about IT investments.

Only those banks that use their technology resources effectively have the opportunity to

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secure real competitive advantage in this fast-changing industry through real product or

service differentiation.

High mark up ratesOf late markup rates have increased considerably. Present rates are 4% above KIBOR i.e.

16% appx. High markup rate has decreased the interest of people in loaning from from

banks. Habib bank can increase its income by offering loan at lower interest rate than other

banks.

ONLINE BANKINGIt is doing banking transactions through our home P.C. The banks that do business through

net have Websites. The customer clicks into the Website and gets the history of the bank.

Then he can demand the necessary application form through the net. He fills in the form

and passes it on to the bank. The Online banking is fast gaining ground in Pakistan. Some

software companies are also offering network-banking facilities. So Habib bank should focus

heavily on providing online banking faculties to its customers. Currently it is doing the same.

CORPORATE BANKING TERMINAL (CBT)

Large corporate customers can log into the bank's database and have access to their

accounts/transactions from their business houses. This facility has still not been started for

customers in Pakistan. So Habib can focus on that.

AUTOMATIC TELLER MACHINE (ATM)

This system is known as "Any Time Money" because it allows customers who have an ATM

card to withdraw money at any time from the bank without interacting with human teller.

Since the ATM machine can be installed anywhere like petrol bunks, markets, railway

stations etc, and can well be linked to the main computer. It allows customers to transact

with the bank 24 hours a day and 365 days a year. They allow the customers to transfer

money to and from accounts to view account information, to receive cash. It can also be

used to deposit cheques and cash into the accounts. No bank in Pakistan is offering this

service currently. So an opportunity exists for Habib bank to differentiate.

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Rate of return

The range and choice of products available & offered by the commercial banks is limited.

Rates of Return / Profits on Deposits are so low and unattractive that very limited options

are available to the depositors. They do not match the current rate of inflation. HBL

differentiate and increase it’s deposit by offering attractive rate of return on deposits.

Threats

Threat can be defined as a change in external environment which if not met with proper

strategies will result in loss of revenues, market share, or income. In the context of HBL’s

external environment, the following potential threats exist:

Other private commercial bank with sound profitability is also a threat to HBL e.g. UBL,

Alfalah, MCB etc

The Rupee Travelers Cheque (RTC) sales volumes may be affected on account of

regulatory restriction imposed by SBP on issuance of large value denominations.

For the last of 2 to 3 years, Pakistan is facing economic and political instability which is a

big threat.

Foreign banks are flourishing in field of consumer financing.

Afghan war and Iraq war has a deep effect on the economy of Pakistan, which has

affected HBL.

Increased regulations from State Bank of Pakistan may affect its business.

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BANKING DEPARTMENTS of HABIB BANK

Various departments are working in all the branches of Habib bank to facilitate the

customers. Following are the banking departments functioning in HBL Jinnah Chowk branch

Sahiwal.

1. ACCOUNT OPENING DEPARTMENT.

2. CASH DEPARTMENT.

3. CREDIT DEPARTMENT.

4. LOCKERS DEPARTMENT.

5. BILL CLEARING DEPARTMENT.

6. FOREIGN EXCHANGE DEPARTMENT.

7. I.T DEPARTMENT.

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Accounts opening departmentBasic function of the accounts department is to open new account and facilitate the

customer for the account opening purpose. There are certain formalities which are to be

observed for opening of an account with a Bank. These formalities in brief are as under:

FORMAL APPLICATION:

The customer is to fill "Account Opening Form. It is a formal request by a customer to the

bank to allow him to have and operate the account.

Documents require for opening an account:

Copy of CNIC

Service certificate or student card.

Utility bill

Provisional receipt

KYC (Know Your Customer)

SPECIMEN SIGNATURE:

When the Banker is satisfied about the integrity of the customer, he agrees to open the

account. The Banker obtains the specimen signatures of the customer on the signature book

or on card.

Posting the account on the system:

After that officer has to post the new account on computer system for further processing.

During the process customer id and account number is generated. New account remains

active for one day after that it is blocked by the head office until CNIC of the customer is

verified from NADRA.

Cheque book issuing:

After the CNIC verification account opening officer has to issue a cheque book to customer

so that he can be able to make withdrawal from his account. Now a day in Habib bank

cheque book issuing process is centralized that take 06 days to complete.

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SECRECY:

The secrecy of depositor’s account is the. Responsibility of every official engaged in the Bank

service.

Types of accounts:Individual accounts:

Individual accounts are the most common personal investment accounts. Open by single

person.

Join Account:

A joint account occurs when two or more than two customers have one account. The parties

to a joint account are considered in law as they are one person.

Business accounts:

Business accounts can be opened by institutions, companies, partnerships, trusts and non-

profit organizations. Following documents are required.

BOOKS RELATING TO CUSTOMERS:

Pay-in-Slip

When money is to be deposited in the bank the pay in slip is to be filled. The object of this

book is to provide the customer with the bank’s acknowledgement for receipt of money to

be credited his account.

Cheque Book

A chequebook contains a number of cheques, which is given to a customer upon written

request and after marking the payment for the chequebook. It enables a customer to make

withdrawal from his account or make payment to various parties by issue of cheques.

GROUNDS FOR CLOSING THE CUSTOMER’S ACCOUNT:

The banker may close the account of the customer due to following reasons:

i. Notice by a Customer

ii. Death of a Customer

iii. Customer’s Insanity

iv. By order of court

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I) NOTICE BY CUSTOMER

The banker closes the account of the customer on the application of the customer for

closing his account.

II) DEATH OF CUSTOMER

On death of his customer, the bank must stop payment on cheques drawn on him by the

deceased customer because the death revokes his authority to pay such cheque. The heirs

or the executors of the deceased customer are not authorized to operate on the account; it

can act only in accordance with provisions mentioned in the letter of probate issued by a

competent courts.

III) CUSTOMER’S INSANITY

If the customer becomes insane or mental it terminates the banker’s authority to act as his

customer’s agent. Since the banker customer relationship comes to end, in such as situation,

it is usually considered that the banker’s authority to pay his customer’s cheques is revoked

by notice of insanity. However, the bankers treat their customers as it unless a fairly

inclusive evidence of the customer’s insanity is available to them.

IV) ORDER OF COURT

A court of law may serve a banker with an order in garnish proceeding in execution of a

decree prohibiting him from honoring a customer’s cheques.

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Cash Department

ash Department is very sensitive and risky part of the bank. Very causations and

competent personnel are needed for the Job. HBL has really such a diligent staff

with appreciable competencies and will to do work. Main function of cash

department is to deal with cash payment and cash receipts.

CCash deposit procedure:

The customer fills the pay slip. The cashier receives the pay slip and cash. He counts the cash

and makes the detail of the notes at the back of the pay slip. Then he compares the detail

with amount written on slip and signs the pay Slip. Then he credits the entries in the

computer by serial No, account type, Account number and amount. Puts the stamp of the

“Cash Received” on the payment slip. The first portion is for bank record while other one is

given to the customer.

Cash payments procedure:

When a customer comes to withdraw a certain amount from his account, he brings a

Cheque along with him. In this case the following steps are taken.

The cashier receives the cheque and checks it whether it is post dated or predated. Cheque

can be cashed within six months. A predated cheque cannot be cashed. He takes two

signatures at the back of the cheque from the bearer. He gives the cheque for posting at the

computer. The computer checks out whether there is balance in the account or not. Other

instructions are also received e.g. blocked, frozen, Etc. the posting is done in the computer

and the cheque is stamped posted with the serial number and date. He gives the cash to

bearer and the respected account is debited.

Online fund transfer:

Another function of the cash department is of online transfer of funds.

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Customer has give filled remittances form with cash or without cash (from account transfer)

to the cashier in cash department who will then credits the beneficiary account.

Balancing cash at the end and transferring excess cash:

At the day end cash department is responsible for balancing the cash. Physical cash should

be balanced with the amount in the computer. Jinnah Chowk branch’s limit for cash is 40

million which it can keep within the branch over the night excess cash is transferred to NBP.

Credit Department1. Introduction

2. Securities.

3. Types of credits

INTRODUCTION

The function of credit department is to lend money in the form of clean advances, against

promissory notes, as well as secured advances against tangible and marketable securities.

The bankers prefer such securities that do not run the risk of general depreciation due to

market fluctuations.

Common Securities for the banker’s advances are as under:-

SECURITIES

1. Guarantees

When an application for advance cannot offer any tangible security, the banker may rely on

personal guarantees to protect himself against loss on advances or overdraft to the

applicant.

2. Mortgage

A mortgage is the transfer of an interest in specific immovable property for the purpose of

security 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 rise to a pecuniary liability.

The transfer is called a mortgagor, the transferee a mortgage.

3. Hypothecation

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When property in the shape of goods is charged as security for a loan form the bank the

ownership and possession is left with the borrower, the goods are said to be Hypothecated

The essence of hypothecation is that neither the property in the goods not the possession of

them are possession is left with the borrower, the goods are said to be Hypothecated the

essence of hypothecation is that neither the property in the goods not the possession of

them are possessed by the lender, but the security is granted by means of letter of

hypothecation, which usually provides for a banker’s charge on the hypothecation goods.

4. Pledge

In a pledge the ownership remains with pledge, but the pledge has the exclusive possession

of property until the advance is repaid in full. While in case of the default the pledge has the

power of sale after giving the due notice.

5. Promissory Note

Sometimes promissory note is also accepted as a security, "A promissory note is an

instruments in writing containing an unconditional undertaking signed by the maker, to pay

on demand or at a fixed or determinable future time a certain sum of money only, to or to

the order of certain persons, or to the bearer or the instrument." A promissory note is

incomplete until has been delivered to payee or the bearer. Moreover, the sum promised in

a promissory note may be made by two or more makers who may be liable there on jointly

and severally.

TYPES OF ADVANCESThe advances which are given by Habib Bank Limited are as under:-

1. DEMAND FINANCE (Ordinary Loan)

Demand Finances are those advances which are allowed in lump sum for a fixed period and

are repayable lump sum or gradually in installments.

TYPES OF ADVANCES

a. Demand Finance (Packing Credit)

Scheme introduced by State Bank of Pakistan for exporter of carpet, surgical instruments, at zero percent rate of interest. While banks provides at concessional rate of interest.

b. Loan ordinary (Demand Finance to Students)

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Qarz-e-Hasana Scheme Loans are allowed to the students, teachers without any interest or mark up with the recommendations of the MPA or MNA.

c. Demand Finance (Staff)

Loans are offered to the staff of the following four categories.

i. House Building Loans against mortgage of property.

ii. Loan for purchasing vehicles.

iii. Loan equivalent to month’s salary.

2. RUNNING FINANCE (Overdraft)

Running finance (old name overdrafts) are advances, which are generally, given to meet

temporary requirements of the customers. A good customer use the banks running finance

limit as a mean of protecting his credit in the market and as a line of security defense to

meet his commitments.

TYPES OF RUNNING FINANCE

I. Unsecured

Under such type of overdraft the bank pay upon the personal security of the

customer’s mentioned on the customer’s account.

II. Secured

Under this type of overdraft the bank allows his customer to withdraw more than his

deposits after giving security against the amount overdrawn.

The securities against which they given are:

i. Share certificate, Saving certificate

ii. Deposits

iii. Mortgage of property

iv. Guarantee of person

SMALL LOANS

Loan is allowed to contractors clearing and forwarding agents.

3. FINANCE AGAINST THE FOREIGN BILLS (FAFB)

The advance facility is allowed both to local foreign bills and is classified as under:-

i. FAFB (Local) advance against Railway receipts and truck receipt, a company with bills of exchange and invoices, are given under this head.

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ii. FAFB (Foreign) advances against foreign bill, covering bills of exchange bills of lading airway bills of exchange bills of lading airways bills etc.

4. AGRICULTURE LOANS

Loans to the farmers with holding up to 25 acres for meeting their short terms, medium and

long terms Agricultural production requirements, such as:

i. Agricultural inputs ii. Tube wells iii. Live Stock Framing iv. Land improvement

5. INDUSTRIAL LOANS

Besides the short-term loans which play a part in working capital medium and long-term

loans are also given to industrial sector for purchase of machinery and other capital nature

goods.

Bills Clearing Department

INTRODUCTION

Every bank acts in two way i.e.

i. Paying Bank

ii. Collecting Bank

Here in theory no legal obligation on a banker to collect cheques, drawn up to other

banks for a customer. It is, however, an important function of crossed cheques. A large part

of this work is carried out through the N.I.F.T.

NIFT- National Institutional Facilitation Technologies (Pvt.) Limited:

NIFT is a joint venture between a consortium of six major banks and private sector. It is

responsible for the establishment and management of automated clearinghouse facilities in

Pakistan. NIFT is proactively involved in the modernization of payment systems in Pakistan.

FUNCTION OF CLEARING DEPARTMENT

The following are the main functions of clearing department.

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1. To accept transfer deliveries and clearing cheques from the customer of the branch and

to arrange for their collection.

2. To arrange the payment of cheque drawn on the branch and given for collection to any

other branch of Habib Bank of Pakistan or any other members, or sub-members of the

local clearing area..

3. To collect amounts of cheques drawn on members, sub-members of the local clearing

house, sent for collection by those Habib Bank Limited, branches which are not

represented a the local clearing area.

PROCEDURE OF DEPOSITING CHEQUES IN CLEARING DEPARTMENT

Whenever a customer wants to deposit cheque, etc, he fills a pay in slip and hands it over

the counter along with the instruments he wants to deposit with bank. As far as possible,

the customer desire that on of the staff member fill in a slip for him, he should be obliged

promptly.

One portion of the perforated pay in slip is handed over to the depositor and the portion

becomes the regular portion of a credit voucher

TYPES OF CHEQUES COLLECTED BY CLEARING DEPARTMENT

a. Transfer Cheques

Transfer cheques are those cheques, which are collected and paid by the same

branch of bank.

b. Transfer Delivery Cheques

Transfer Deliver cheques are those cheques, which are collected and paid by two

different branches of a bank, situated in the same city.

c. Clearing Cheques

Clearing cheques are those cheques in which the payee (Person who deposit

cheques for collection) and the drawer of a cheque maintain the account with different

banks.

These clearing instruments are handed over to NIFT after posting necessary stamps and

checking them for any errors. Then further process of clearing is carried on the behalf of

NIFT.

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Forex Department

International trade is growing and with the development of international trade it has

become more imperative. For countries to devote more and more attention to the

complicated mechanism of Foreign Exchange. It is more important in case of developing

countries. It is need of time, that a country should conserve its foreign exchange resources.

MEANING OF FOREIGN EXCHANGE

The foreign exchange term refers to the principles that determine the rate of

exchange. It covers following three senses:

i. The mechanism or system by which international obligations or indebtedness are

fulfilled.

ii. The currency of one country is exchanged for that of another.

iii. The principles on which the people of world settle their debts to one another.

Letter of Credit:

It is a negotiable instrument through which the bank of the exporter deals with bank of the

importer through the guarantee of a bank. There are different parties involved in the L/C, e-

g importer, exporter, importer bank, exporter bank, and advisory bank. LC involves banking

channels in foreign trade to mitigate risk.

The procedure of opening of an L/C is as follow

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The first thing is the Performa invoice. The Performa invoice is a document (say a

clip), which is, sends by the exporter to the importer and includes the information

like. Descriptions of goods, what type of goods you are needed and what are the

quality, rate and originating country etc.

Before to open a L/C the bank also consider that the goods which the importer is

importing is allowed by govt. of Pakistan or not. Because the importer is not allowed

to import that goods which are prohibited by the Govt. of Pakistan.

The importer is asked to show the membership certificate of any chamber of

commerce and industry affiliated with the Pakistan federation of chamber of

commerce and industry.

Fill the import form of the govt. of Pakistan, which is the proof of this that there is no

objection on the goods, which the customer is importing.

What type of goods you are needed and what are the quality, rate and originating

country etc.

Necessary Documents required for L/C:

NTN

Tax Authority registration certificate

Chamber of Association’s trade certificate

Type of Business

NIC

Margin

Registration No.

Application for L/C

On providing these documents the importer will be given the L/C form named as

IB-8.

Contents of IB 8

1. Request for LC

2. Rate

3. Importer and Exporter’s particulars

4. Amount

5. Terms

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6. Partial Shipment (Allowed, not allowed)

7. Transshipment (Allowed, Not Allowed)

8. Port of Loading and destination

9. Payment Mode

I. Sight

On seeing the documents the importer has to pay.

II. At Sight and Negotiation:

It means that exporter will submit his documents with the bank and immediately asks for

payment.

III. Acceptance:

On showing the documents to the importer, the bank asks him to accept that he will pay

within 30, 60, 90, 120, 180 etc days.

10. Documents Required:

Certificate of Origin.

Commercial Invoice

Bill of Lading / Air way bill.

Charges:

For L/C following charges are applicable;

Commission

Postage

L/C Advising commission

L/C amendment Commission

L/C confirmation Commission

L/C Negotiation Commission

Payment Mode:

In foreign trade payment modes are

1) Advance Payment: Importer makes payment before delivery of goods.

2) Open A/C: Importer makes payment after receiving the goods.

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Issuing foreign exchange accounts cheques books

Another function of foreign exchange department in Jinnah Chowk branch is to issue foreign

exchange accounts cheques books to customers on request. This process is not yet

centralized. Cheque book is issued within 15 minute of receiving request from customers

after making necessary register entries and posting stamps on it.

Deposit Accounts

Current AccountsMake unlimited transactions while maintaining a low minimum balance every month. HBL is

currently offering three types of accounts in current account category. Their detail and

name is as under.

1. HBL BusinessValueAccount

2. Current Account

3. Basic Banking Account (BBA)

HBL Business Value Account

Unique transactional account for Businessmen

Up to 5.35%* profit per annum

Profit calculated daily, paid every quarter

Minimum balance of Rs. 20,000

HBL DebitCard and Inter Branch Transaction System (IBTS) facilities

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Up to 10 Bankers Cheques free (at minimum balance of Rs. 500,000)

Funds transfer to any bank through HBL PhoneBanking

Current Account


Unlimited transactions

Non-profit bearing



Basic Banking Account (BBA)

Can be opened with only Rs. 1,000

No minimum balance requirement

Upto 2 withdrawal and 2 deposit transactions free every month

Unlimited withdrawals through HBL DebitCard

Non-profit bearing

Savings AccountsAvail the flexibility of making transactions while earning profit on daily/monthly basis. HBL is

currently offering five types of accounts in savings account category. Their detail and name

is as under.

1. HBL Value Account

2. PLS-Savings Account

3. Remittance Munafa Plus Savings Account

4. Daily Munafa Account

5. Daily Progressive Account

HBL Value Account

7.19%* profit per annum

Profit calculated monthly, paid every quarter

Deposit ranges from Rs. 10,000 to Rs. 1,000,000

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Two withdrawals free every month

PLS-Savings Account

5.06% profit per annum*

Profit paid bi-annually




Unlimited transactions

Remittance Munafa Plus Savings Account

Special account for receiving foreign remittances

5.12%* profit per annum

Profit paid every month


Daily Munafa Account

Profit calculated daily, paid every month

Up to 8.84% profit per annum*




Daily Progressive Account

Unique transactional account for Institutions

Profit calculated daily, paid every month

Up to 11.57% profit per annum*

Inter Branch Transaction System (IBTS) facility


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Terms AccountsInvest your savings in HBL term deposits for a fixed duration and earn profit while keeping

your savings secure. HBL is currently offering one type of account in terms account category.

Their detail and name is as under.

1. HBL Advantage Account

Multiple options for tenure and profit payout

Loan facility up to 90% of investment

Minimum investment of Rs. 25,000

Withdrawal at end of fixed term

Foreign Currency Accounts HBL offers Foreign Currency Accounts in multiple currencies as savings and term accounts.

Their detail is as under.

FC-SB

Savings Account offered in 3 currencies, USD (US dollar), EUR (Euros) and GBP (UK

pound)

Tiered product, with rates depending on choice of currency

To earn profit, minimum balance in USD, EUR and GBP is 1,000

Interest is payable on a quarterly basis

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Tenure Profit at maturity

3 MONTHS 7.50%*

6MONTHS 8.00%*

1 YEARS 11.00%*

3 YEARS 13.00&*

5 YEARS 14.00%*

10 YEARS 17.00%*


HYFFD (High Yield Foreign Currency Fixed Deposit)

Available in 1 month, 2 month, 3 month, 6 month and 12 Month in USD, EUR and

GBP

Tiered product, with rates depending on choice of currency and term

Profit paid on maturity only. No interim interest is payable.

*NOTE: All the rate and terms and condition are revised by HBL after every six months

periods. These rates are only applicable for period 01.07.09 to 31.12.09. Further detail

of terms and conditions about profit and rates is given in annex “B”.

HBL Car Loan

HBL Car Loan helps customers to get their preferred car through a simple and hassle-

free process, backed by superior service and support. Now customer can drive a car he

always wanted.

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Features

Choice of used, new local/imported and reconditioned imported car.

Repayment options ranging Upto 7 years.

Upto 85% of financing for the car of your choice.

Insurance at all times for complete peace of mind and security.

Round the clock support available through HBL PhoneBanking; you can place your

requests and queries, track the status of your repayment/loan account and avail

other value-added services through HBL PhoneBanking.

Eligibility Criteria

How to apply

Just visit any HBL branch or Habib Bank Auto Finance Centre for details and

application.

Submit complete set of application without any charges to the branch or the Auto

Center.

Sign the necessary documents on approval of the application

Payment is released within 24 hours of the submission of post-dated cheques and

initial payment after approval of the request.

Documentation

Salaried Individuals

Complete Application Form

Salary Certificate / Most recent Salary Slip

Bank Statement for past one year

Two Copies of NIC

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Employment Certificate with date of joining

Two passport size photographs

Copy of the last paid utility bill (residence)

Self-Employed Business persons/Professionals


Two Copies of NIC


Letter of proprietorship / Registered Partnership Deed

Certified latest Form A and Form 29, where applicable, along with articles and

Memorandum of Association

Copy of last paid utility bill (residence)

Bank Statement for the last 1 year

HBL Car to Car

HBL CarToCar is a revolutionary car financing offer. It makes the car of customer choice

affordable and practical with a buy back guarantee. HBL CarToCar offers matchless features

and unique options at the end of the lease. Now customer can drive a new car at the end of

every two years.

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Features

Pay only for what you useWhen customer lease a car under HBL CarToCar, he only pay for that part of the car’s value

that he use during the lease term. The car’s residual value (forecasted for the end of the

specific lease term) is agreed with him at the start of the lease term. This amount is

deducted from the car price thus lowering the finance amount. This finance amount is based

only on a part of the car’s value and not the full value of the car. Therefore, HBL CarToCar

offers very low installments as compared to any conventional financing.

Upgrade of lifestyle

HBL gives customer the guarantee that if he wishes to return the car to HBL at the end of

the lease term, he will not have to pay off the car’s residual value. Instead, HBL will directly

settle this outstanding liability for customer under the buy back guarantee. Hence, he can

upgrade to a new car as frequently as two years without any complication and hassle.

Affordability

With HBL CarToCar, customer only has to pay the difference between the car price and the

pre-agreed residual value to the bank. As a result, the monthly installment may even be 40%

to 50% less than that of conventional financing.

Flexibility

HBL CarToCar offers customers several choices at the end of the lease term:

• Upgrade - Simply return the car to HBL and drive a new one home

• Walk away - Return the car to HBL and end the lease

• Buy - Keep the same car. Just make a one-time settlement of the car’s residual value to

HBL or pay the same in easy installments over a specified extended period of time

• Sell - Enjoy the gain from selling off the car at a higher price in the market than what you

ay HBL as the residual value

Eligibility Criteria

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Documentation

Salaried Individuals


Salary Certificate / Most recent Salary Slip

Bank Statement for past one year

Two Copies of NIC

Employment Certificate with date of joining


Copy of the last paid utility bill (residence)

Self-Employed Business persons/Professionals


Two Copies of NIC


Letter of proprietorship / Registered Partnership Deed

Certified latest Form A and Form 29, where applicable, along with articles and

Memorandum of Association

Copy of last paid utility bill (residence)

Bank Statement for the last 1 year

HBL Credit Card

By the help of HBL credit card customer enters into the world of convenience and flexibility.

Accepted at over 29 million merchants worldwide, HBL Credit Card makes shopping fun and

paying simple. So that a customer can make the most of his shopping experience.

44


Benefits

Buy now, pay laterBuy what customer want, when he want and pay for it later. A credit card statement will be

sent to him every month with details of all his purchases. He will have 21 credit free days to

make the payment from the statement date. Customer should pay at least 3 days in advance

if he makes your payment by cheques to allow enough time for clearance.

Pay as much as customer wants

A customer can pay the entire or as little as 5% of the outstanding balance in his statement.

The unpaid amount will be transferred to his next month’s statement along with applicable

services charges.

45


Cash advance

Customer can go to any specified HBL branch and withdraw cash at the counter. He can also

go to any 1Link ATM in Pakistan and more than 1,000,000 ATMs worldwide displaying the

Visa/Plus logo. Withdraw cash up to the available cash advance limit on his HBL Credit Card

for a charge applicable from the withdrawal date.

Balance transfer facility

Card holder can pay off balances he owes to other banks through his HBL Credit Card at a

lower service charge.

Security

Card holder cannot lose cash if he doesn’t carry it! In the event that his card gets stolen/lost,

he should call HBL PhoneBanking to have his card blocked immediately.

Hbl debit card

HBL Visa Debit Card allows a card holder to pay for his purchases directly from his bank

account. He doesn’t have to carry cash and his monthly statement provides him with a

complete record of all his transactions so he can manage his expenses with ease.

Features

No Interest

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HBL Visa Debit Card is the perfect way of paying for purchases as it gives access to the exact

amount of money a customer needed, as and when he needs it. There is no interest or

credit on payments because he spends from the money available in his personal HBL

Account.

Ease & Security

HBL Visa Debit Card offers ease and convenience because card holder doesn’t have to visit

an ATM to withdraw cash. Paying with the HBL Debit card is safe because it eliminates the

need to carry cash. A single swipe automatically debits the exact purchase amount from his

personal HBL account.

Spending Limits

The daily spending limit at shops and outlets on HBL Visa Debit Card is Rs. 100,000. (These

figures are subject to the balance available in account).

Free Account Statement

HBL cardholders receive a free monthly account statement for their Debit Card and ATM

transactions to help them keep track of their spending.

International Recognition & Acceptability

HBL Visa Debit Card is accepted at over 20 million Visa merchants worldwide, including over

10,000 merchants in Pakistan. As an ATM card it is accepted at more than 1,000 1-Link & M-

Net ATMs in Pakistan and 864,000 Visa ATMs worldwide. No matter where card holder is,

with the HBL Visa Debit Card, HBL is always with him.

No Liability

In case of a lost or stolen card, card holders are protected against fraudulent transactions

made on their card after they report the incident.

47


HBL Personal Loans

With the rising cost of living, it is becoming increasingly difficult to make expensive

purchases or meet unexpected expenses. HBL is helping customer finance them with Habib

Bank personal Loans (old name flexi loan). Customer may avail a personal loan of up to SIX

TIMES of his net take-home salary subject to a maximum of Rs.300,000/- provided he work

for an organization approved by HBL.

Features

Flexible tenure: 12, 24, 36,48 or 60 months

No processing fee

Repayment through easy and affordable monthly installments from salary.

Credit Life & Disability Insurance

Repayment through easy and affordable monthly installments

You determine the need, we help you finance

Option of add up replacement for existing customer.

Minimum salary Rs. 12000

No salary limit for existing customers.

23% or 21% rate for existing users instead of 25%

HBL Phone Banking

Now the bank is just call away. Customer can now call HBL PhoneBanking and save a trip to

the branch. His query will be resolved in a single telephone call from anywhere and at

anytime.

T-PIN Generation

Customer’s TPIN (Telephone Personal Identification Number) is generated the first time he

calls and he can use it as your password for verification purposes, self-service banking

48


through IVR and additional services through HBL’s PhoneBanking Officers. Customer can

change his TPIN anytime he like.

HBL PhoneBanking services for Deposit Account customers

Customers can use the Interactive Voice Response (IVR) system or talk to HBL PhoneBanking

Officers to:

Get his account balance

Get information about the last 5-10 transactions carried out on his account

Request bank statement, either through fax or email (as supplied in his subscription

form)

Get details of transactions from the last 6 months on each of the accounts listed on

his subscription form

Change and/or modify his contact details

Transfer funds between his own accounts (as listed in the subscription form) or from

his account to a third party account (as listed in the Third Party Authorization Form)

Transfer funds from his own account to an account in another bank under the 1-Link

network (Inter Bank Funds Transfer)

Generate his own choice of ATM Pin without filling a request at your branch

Inquire about HBL’s product offerings

Lodge a complaint in case of any inconvenience

Inquire about the daily accounts related profit rates and currency exchange rates

Request a number of physical instruments and/or branch banking related services

that he might require, including:

Pay Order

Demand Draft

Statement

Balance Certificate

Cheque Book

HBL PhoneBanking services for HBL CarToCar and Car Loan customers

HBL CarToCar and HBL CarLoan customers can enjoy the following services through HBL

PhoneBanking:

49


Balance Inquiry Last 5-10 Transactions Statement Generation (Email and Fax) Account Maintenance Assistance in case of Car Theft/Damage

Hbl Bank Assurance

HBL and New Jubilee Life Insurance Company Limited (NJLI) introduce Amaan (Retirement

Plan) and Tabeer (Child Education & Marriage). These products have been designed keeping

HBL’s customer base as the focus and will provide life insurance along with an investment

option.

Amaan (Retirement plan)

Amaan is a pension plan that provides an opportunity for growth through investment in a

balanced portfolio with post-retirement income benefits. The plan covers life insurance and

gives attractive returns on investment to its customers.

Tabeer (Child Education and marriage plan)

Tabeer is a plan that provides parents with a means to accumulate a fund over a period of

time which can then be used to pay for a child’s education or marriage. Plans are available

for both under and over 45 years of age.

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Lockers

Lockers are available in many of the HBL branches in different sizes like small, medium and

large; some branches also have extra large and cubical lockers. Except rural areas because of

security reasons.

Eligibility for using lockers

Only the account holders can avail the facility of lockers. The annual rent will be directly

debited from their respected accounts at the start of the year.

Charges

Size Key deposit (refundable)Annual rent

Rs.

SMALL 2500 2750

MEDIUM 3000 3850

LARGE 4000 6050

Key deposit is refundable at the time handing over the locker to bank. For the staff of HBL

key deposit is not required and also the annual rent is very low for them.

51


HBL CORPORATE BANKING

HBL Corporate Banking Group comprises a seasoned team of Relationship Managers (RMs)

to meet the demanding service standards of large corporations. A long history of financing

and nurturing relationships in Pakistan has given HBL a unique insight, enabling it to provide

timely and effective financial solutions for their customers to meet the growing challenges

of a global economy. For a corporate customer, with a turnover of at least PKR 300 million,

HBL has a range of solutions designed to help him with his banking needs. Their RMs have

the expertise customer need to create tailored financial solutions catering to the specific

requirements of his business. Whether establishing a new venture or expanding an existing

business, HBL’s team understands customer’s banking needs and works closely with him to

realize his goals.

Services

HBL provides the following services to meet customers funding requirements:

Working Capital Finance, including Overdraft, FE Loans, etc.

Pre and Post Shipment Export Financing (PKR and USD based)

Import Financing (PKR and USD based)

LMM Funding

Receivable Discounting

Islamic Banking facilities

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Cash Management Services

Trade Services including Letter of Credit, Letter of Guarantee and Standby Letter of

Credit, etc.

HBL CORPORATE CENTERS

1.Corporate Centre, Karachi 6.Export Processing Zone, Karachi

2.PIA Branch, Karachi 7.Steel Mills, Karachi

3.Stock Exchange, Karachi 8.Stock Exchange, Lahore

4.Corporate Centre, Islamabad 9.Morga Branch, Rawalpindi

5.Corporate Centre, Faisalabad 10.Corporate Centre, Multan

11. Karachi Port Trust, Karachi

HBL COMMERCIAL BANKING

HBL’s Commercial Banking Group targets medium sized companies with a turnover of at

least PKR 50 million. Its business units are located in Karachi, Lahore, Faisalabad, Sialkot,

Gujranwala and Peshawar. Each unit is dedicated to service business clusters located within

these cities. They have the ability and the resources to meet the needs of customer’s

business with their pro-active, responsive and experienced Relationship Managers who are

committed to understanding customer’s business.

Services

HBL offers financing for the following:

Working Capital

Procurement of Inventory

Receivables

Procurement of Machinery

Expansion of production facilities

Import of raw materials

Exports

Guarantees

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HBL COMMERCIAL BANKING CENTERS

1.Al-Noor, Karachi 9.Foreign Exchange, Karachi

2.Korangi Industrial Area, Karachi 10.Napier Road, Karachi

3.Saddar, Karachi 11.S.I.T.E. Karachi

4.Tariq Road, Karachi 12.Panorama Centre, Lahore

5.Badami Bagh, Lahore 13Peco Road, Lahore

6.Kashmir Road, Sialkot 14.Paris Road, Sialkot

7.Small Ind. Estate, Sialkot. 15.Circular Road, Faisalabad

8.Peoples Colony, Faisalabad 16.Trust Plaza, Gujranwala

17.Super Market, Peshawar

HBL Zarai Banking

HBL ZaraiBanking facilities are spread across the country and provide financing through

more than 800 of their branches. HBL’s presence in all agriculture belts of the country

ensures easy access to farmers in rural areas. HBL ZaraiBanking provides loans to small-scale

land owning farmers as well as large institutionalized and alliance based finance, enhancing

agricultural harvest and, in turn, economic output of the country.

Products

HBL ZaraiBanking enables farmers to invest in premier quality seeds, fertilizers, pesticides,

agricultural implements and non-farm setups through its various product programs.

Crop Inputs

54


Crop specific finance for purchase of Agriculture inputs such as seed, fertilizer, pesticide and

other related inputs.

Farm Implements

Finance available for purchase of farm implements & machinery like combined harvester,

sprayers, ploughs, tube wells and other crop-related tools/implements.

Tractors/Agricultural Vehicles

Finance available to individual farmers, self-employed tractor operators, providing the

option to select vehicles from a range of different manufacturers.

Livestock

Finance available for feed, medicines, raw material, raising charges and other related

activities.

Poultry

Finance available for all poultry related activities including poultry farm

construction/equipment, hatchery plant & machinery, poultry feed, poultry medicines,

composite feed production, poultry processing and other related activities.

Fish Farming

Finance available for inland fish farms as well as deep-sea fishing. This includes procurement

of boat, fish locating equipment, nets & ropes, ice maker, fish farm water solution, hatchery

construction/equipment, purchase of medicines / feed and other related activities.

Group Lending

Joint finance facility for a group of farmers with small land holdings for working capital

requirement.

NOTE: These finances may be availed under Demand Finance or Running Finance categories.

Demand Finance is usually available for short term financing needs while Running Finance is

available on the basis of revolving limit.

ISLAMIC BANKING

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Islamic Banking is a growing market segment that offers attractive opportunities to potential

and existing customers. At HBL, Islamic Banking offers Shariah compliant products and

services to meet the short and long term requirements of business, trade and industry.

Shariah Compliance

HBL’s Islamic Banking products are in strict compliance with the tenets of Shariah and bear

Shariah Compliance Certification from an independent Shariah Advisor. Their Shariah

Advisor has in depth experience in Shariah rulings (Fatawa) and teachings at different

forums with qualifications of Dars-e-Nizami, M.A and L.L.B. HBL also have a Shariah Scholar,

as member of their Shariah Supervisory Committee to ensure a sound Shariah Compliance

mechanism, giving prompt responses to customer’s needs and access to Shariah knowledge.

Products and Services

Corporate and Commercial customers can choose from Shariah compliant banking solutions

to meet their business needs.

Ijarah (Leasing)

Medium to long term facility for vehicles, plant and machinery leased out to the client on

rental basis.

Diminishing Musharaka

Medium to long term facility for vehicles, plant and machinery on joint ownership basis.

Murabaha

Local and Import facilities for purchase of raw materials, semi finished and finished goods,

stores or spares.

Trade Services

Letter of Credit Facility, Collection of Foreign Bills, Collection of Local Bills, Letter of

Guarantees.

Customers are welcome to visit their Islamic Banking branch for the following services:

Current Account (PKR, USD, EURO, POUND STERLING)

Basic Banking Account

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ATM/Debit Card Facility

Foreign / Inland Remittances

Utility Bills Collection

E-banking / Internet Banking Services

24/7 Phone Banking Services

Personalized customer friendly services

Saving Deposits will be introduced soon

Learning as an intern

As every body knows that "Knowledge without practice is sterile "In order to give vent to

this idea an Internship program of six to eight weeks has been arranged in different

esteemed organizations during M.B.A. In this regard on 15th of June 2009, I was asked by

Mr. Mirza Saeed (HR officer in HBL regional office Sahiwal) to go to Habib Bank Jinnah

Chowk branch to start an internship of seven weeks there. During this period I got a chance

to work and learn in following departments of the bank:

Foreign exchange department

Bills clearing department

Credit department

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I.T department

Cash department

Accounts, ATM and Lockers department

Duties and learning in Foreign exchange departmentFirst of all I started my training in foreign exchange department of the bank under the

supervision of Mr. Asif Iqbal (Manager Forex department). I came to know about the

different functions of foreign exchange department and how to perform these functions

during my work in the department.

My duties in the department were related to the followings:

Foreign currency exchange rates.

Letter of credit (L.C) both opening and negotiation.

Letter of guarantee

Issuing check books for foreign currency accounts

Remittances applications.

Learning

Opening of of L.C., bank starts working on opening process after an application is received

from the buyer (importer). I came to know about the process of opening of L.C, documents

that bank demands from applicant, form used for that purpose, getting A.T (Availance

Ticket) from regional head office and scanning and mailing the documents to head office

Karachi for the purpose of getting approval, and payment on maturity date. Opening and

negotiation both are centralized process in Habib bank therefore approval from head office

is required.

Bank starts negotiation of letter of credit (which would be already opened by importer’s

bank) after the application from seller (exporter). Before sending the documents for

payment to importer bank negotiator bank must ensure that the entire document

mentioned in Claus 46A of the L.C are attached and complete.

During the week I also worked on Remittances application. An applicant who wants to

transfer funds abroad must have a foreign currency account in the bank. State Bank of

Pakistan only allow account to account transfer of funds abroad through banks. And I came

to know about the process and information required to fill the form. I also came know about

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the process of issuing foreign currency account’s cheque book to customers. During the

week I learn many things about the mechanism of foreign trade.

Duties and learning in bill clearing departmentThe second department in which I got a chance to work was bill clearing department. During

the work in clearing department I came to know about the different functions of clearing

department and how to perform them. I came to know the process of receiving cheques by

Dak, how to check cheques for any error like, the cheques should be of the bank which is

the clearing member of area which comes under Jinnah Chowk branch for example if the

cheque is of bank Al-Fallah Lahore then it should go to zonal branch of Lahore region instead

of zonal branch of Sahiwal. Then checking whether the amount of cheque and OBC

(outward bank collections) voucher attached to it is same or not. If no error is found then

making register entries by noting down their OBC number branch code and amount of the

voucher. Then:

Calculating the total amount of vouchers by summing individual amounts.

Calculating the total amount of cheques by summing individual amounts.

Preparing an add list to be attached with clearing instruments (cheques).

Writing vouchers for demand drafts.

And I also came to know about the different types of stamps and their use in particular

situation like DAK RECEIVED stamp and CLEARING stamp. After attaching add list, clearing

instruments are handed over to NIFT for further processing. These clearing instruments are

delivered to their respective banks for clearance by NIFT. I also learnt in case of Banker’s

Cheques how to verify signature from the book in which all the signatures of authorized

persons of HBL are given with their specific code. And I also worked on OBC (Outward bank

collection) forwarding schedule. I came to know the process of sending cheques or other

clearing instruments for clearance to zonal branch of another region.

Filling vouchers

Assigning OBC numbers

Making entries in OBC register

Duties and learning in credit departmentAfter bill clearing department I started my work and learning in credit department of the

branch. Credit Manager told me about the terms and conditions of the commercial loan,

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types of commercial loan like industrial loan and loan for merchants, how to make proposal

for commercial loan, document required to make a proposal, markup of commercial loan

(18.5 % annually). He also gave me chance to view some old proposals and the proposal on

which he was working.

Different types of consumer financing.

Flexi loan (personal loan)

Auto finance

Lifestyle loan

Only the government servant who has his salary account at least six month old in HBL can

apply. Different markup for different categories like 21%, 23% and 25%.

21% for existing users’ upto 3 year duration

23% for existing users for 4 or 5 years duration.

25% for new customers

I also did work on documentation process for personal loan. I came to know about the

different types of document required to complete a case for sending it to regional head

office for approval, document like branch check list, application form, Copy of CNIC of

customer and two references, CNIC verification report from NADRA, customer’s account

statement, finance agreement form etc.

I also came to know about different types of securities which a bank demands from

customer while issuing loan. e.g. Guarantees, Mortgage, Hypothecation and Pledge.

Duties and learning in Accounts, ATM and Lockers departmentThen I learned about ATM (automatic teller machine). I came to know about the functions

and working process of ATM machine. Loading cash and balancing at the time of loading

again. Next my main concern was to know about all the aspects of ATM card. I came know

about the types, process of issuing ATM card to customers, filling forms, how to activate

ATM card, charges of issuing and using ATM card.

Then I spent my time in lockers department. I took all the information about the terms and

conditions of allotting and operating a locker, types of locker like small, medium and large,

charges of using lockers, key deposit (refundable), filling application forms, insurance

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amount for specific size of locker and etc. I also came to know about the process of

operating locker by the customer, how to open the locker with the help of two keys.

1 key in the hand of bank officer (anticlockwise)

2nd key in the hand of customer (clockwise)

Customer is allowed to operate the locker in full privacy. Only the customer himself or

other person authorized by him can operate the locker. After that bank officer has to take

the signature of the customers on attendance register maintained for this purpose.

Then my duty was in Accounts department. I came to know the procedure for filling the

form to open an account, different types of stamps required and about signature of the

staff. Documents required to be attached with the form.

Copy of CNIC

Utility bill

Provisional receipt

KYC (Know Your Customer)

And how to post an account on system after filling the form. Then I came to know about

Saving accounts and different types of accounts in saving category and terms and conditions

of each type.

1. HBL Value Account

2. PLS-Savings Account

3. Remittance Munafa Plus Savings Account

4. Daily Munafa Account

5. Daily Progressive Account

Then current accounts

6. HBL Business Value Account

7. Current Account

8. Basic Banking Account (BBA)

Term accounts

9. HBL Advantage Account

10. Investment plus Deposit

FC accounts

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11. FC-SB

Savings Account offered in 3 currencies, USD (US dollar), EUR (Euros) and GBP (UK pound)12. HYFFD (High Yield Foreign Currency Fixed Deposit)

Available in 1 month, 2 month, 3 month, 6 month and 12 Month in USD, EUR and GBPAssignments

(1)During my work in accounts department Mr. Khalid Dogar (manager operation) assigned

me the duty of checking the files of previously opened accounts for any type of

discrepancies like utility bill or service certificate of the account holder is attached or not

and checking stamps and signature of the staff etc. It was because an audit of these files in

the coming month is scheduled. Almost above 50% of the application forms were having

discrepancies of different types. This turns out to be very informative experience for me.

Deposits are considered as lifeblood for any bank to survive. I came to know about the

procedure and different types of deposits that customers can maintain in HBL, return rates

that a customer can get and other terms and conditions of each type of account. As far as

checking the old files are concern it seems boring but from my point of view it was very

informative. The learning I got while doing this job would never be easy to get otherwise.

(2) Mr. Khalid Dogar assigned us another task. State bank of Pakistan has instructed all the

banks in Pakistan to make sure availability of computerized national identity cards of all the

account holders. We were given a list of accounts from which CNIC was required and

preprinted letters. Our task was to take the information from accounts like Name, Address

and Account type by entering the account number in the system and then printing that

information on one corner of the letters. This also turns out to be a very informative

experience for me. I learn and get a chance to work on computer software that the HBL is

using, how to view account information, checking balances and updating the information.

(3) Due to my familiarity with their computer software I was given another task of updating

account information on their computer system MISYS. Like account holder’s name, address,

CNIC number etc. In case of any problem I was consulting it with Mr. Asif Iqbal. This task

gave me more chances to learn about the computer system of HBL and also I can proudly

say that I have my own share of working in computerizing HBL’s record.

How this experience will impact my careerWorking for 07 weeks in HBL Jinnah Chowk branch as an intern was very informative

experience for me. During the time I learnt many new things which are surely going to help

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me in my professional career. It was a good experience for me to observe and to be the part

of practical working of an organization like HBL. During the internship I got a chance to

understand general consumer’s behavior and his needs and wants related to banking

services and products.

Recommendations

As we seen from the previous analysis of the financial statements I have realized that that

Habib Bank is performing very well since its inception. It is quite difficult to give suggestion

to improve the banking conditions Habib Bank Limited. As we know that nothing is perfect,

there is always a room for improvement, so I will recommend following suggestions for HBL:

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Employees Training programmes must be introduced on continuous basis so that

Employees have understanding with the latest developments especially with the

customers.

Bank should introduced incentive plans for employees on regular basis so that if

employees may work whole heartedly for the welfare of their organization. While

giving incentives qualification, work, experience, hard work and such other factors

must be considered.

Mismanagement of resources must be avoided as much as possible as it decreases

profit but also discourage hard worker and honest employees.

Fresh graduates must be recruited. As the combination of Experienced and fresh can

produce better results and it will improve the efficiency of management.

Habib Bank is going towards mobile banking but the problem is that a common client

has no idea of its usage due to lack of marketing. I think that a proper marketing

programme must be launched for client’s awareness.

Banks different schemes must be conveyed to the targeted customers so that to have

a reasonable share in market.

Bank should help the society by providing interest free loans to the Talented Students.

Online Banking should be introduced in all the branches.

To motivate the employees their remuneration / salaries should be made at par with

top tier Banks.

Aggressive publicity campaign must be introduced through press and Electronic media

for new products and scheme by initiating vigorous marketing policy.

Bank should adopt such an induction plan that when a customer opens his account

with the bank he should be supplied with a booklet which enables him to know the

procedure of filing the cheques, pay-in-slip etc. It will save a lot of time of the bank

staff afterward during the conduct of the account of that customer.

The attitude of the bankers with all of their customers is not the same; they pay more

attention and good service to some of the customers and neglect a major portion of

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them. Some of the customers approach to the bank officials and get their work done

before others; it is not a good practice. All the customers should be treated equally.

HBL should increase its communication with customers about the terms and

conditions of its different products and services.

BibliographyMaterial on these books, articles and websites has helped me a lot in preparation this report

Books

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HBL Corporate Profile 2008

HBL Annual Reports 2008 and 2009 first Quarter

Articles & Documents

BANKING SECTOR REFORMS IN PAKISTAN:

http://www.ishrathusain.iba.edu.pk/speaches/BANKING_SECTOR_REFORMS.pdf

www.encyclopedia.com/doc/1G1-61864366.html

Websites

www.hbl.com

www.habibbankltd.com

www.hblasset.com

www.investopedia.com/articles/07/banking.asp

wiki.answers.com/Q/Evolution_of_banking

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http://www.investopedia.com/articles/07/banking.asp

http://www.habibbankltd.com/

http://www.hbl.com/

http://www.ishrathusain.iba.edu.pk/articles/BANKING_SECTOR_REFORMS.pdf

http://www.ishrathusain.iba.edu.pk/speeches/BANKING_SECTOR_REFORMS.pdf

arslan hbl report

Documents

pakistan history of

word bank

hbl pakistan history

internet banking

phone banking

banking system

services of hbl

pakistans banking sector