intrnshp report on kashf micro-finance bank ltd
TRANSCRIPT
Internship Report on
Kashf Micro-finance Bank Limited
Tayyaba Kanwal
University Of Gujrat
April 2010
Department of Management Sciences
Kashf Micro-finance Bank Limited Page 1
Kashf Micro-finance Bank
Limited
Internship report submitted to the department of the
administrative sciences in partial
Fulfillment
Of the requirement for the degree of Masters of
Business Administration.
April 2010
Faculty of Management and Administrative
Sciences
Kashf Micro-finance Bank Limited Page 2
University Of Gujrat, HH- Campus
Kashf Micro-finance Bank Limited
Supervisors:
Signature:
Name:
Designation:
Chairman:
Signature:
Name:
Kashf Micro-finance Bank Limited Page 3
Letter from the organization:
Kashf Micro-finance Bank Limited Page 4
Preface:
Internship training program provide a chance to students to
make them familiar with the actual business environment. It
also provides an opportunity to study the theories of books in
practice. This is the reason why the student of University of
Gujrat (UOG) required completing the internship program at
any reputable institution/organization. After completing
internship it is required to write an internship report, covering
all the aspects of that organization. This is report written on
Kashf Micro-finance Bank Ltd, which is divided in to six parts
covering all the aspect, working and behavior of organization.
Kashf Micro-finance Bank Limited Page 5
Executive summary:
Pakistan after getting its independence, did not inherit a
strong banking industry and since then saw a number of
events in the industry, like the nationalization of banks in the
1970’s. However today, the banking industry of Pakistan has
been growing over the past few years, mainly because of the
consistent policies implemented by the Government of
Pakistan, including the privatization of banks in Pakistan. Also
the State Bank of Pakistan’s, monetary policy has been very
friendly toward the banking industry. There are a number of
different banks established in Pakistan, including local
incorporated commercial banks, foreign incorporated
commercial banks, development financial institutions,
investment banks, housing finance companies, micro finance
banks and Islamic banksKashf Micro-finance Bank Limited
(KMBL) started its operations in December 2009, as a micro-finance bank of
Pakistan. institution. The majority share holding of Faysal Bank Limited is
held by Ihtmaar Bank B.S.C an investment bank listed in Bahrain, while it has
one subsidiary i.e. Faysal Management Services (Pvt.) Limited (FMSL). The
company is committed to its clients' best interests as well as preserving
a good relationship by defining realistic objectives. Faysal Bank is
continuously innovating, delivery creative and high-quality solutions which fit
best its clients’ needs.It maintains a high ethical standards and unconditional
compliance with regulations and laws. It values its integrity and actively
promotes the “know your customer” policy amongst Kashf employees to
ensure that the company is not involved in any money laundry operation.
Hiring and retaining the best people while respecting diversity,
Kashf Micro-finance Bank Limited Page 6
encouraging self improvement, recognizing and rewarding merit are the key
values of Faysal Bank.
ACKNOWLEDGEMENTS
All praises for Almighty Allah whose uniqueness, Oneness and
wholeness is not challengeable. It is due to HIS unending
mercy that this work moved towards success. All respect for
his Holy Prophet Hazrat Muhammad (P.B.U.H) who enabled us
to recognize our creator.
I am very much obliged to my ever caring and loving parents
whose prayers have enabled to reach this stage.
I would like to thank to my lovely sister and brother for always
being there for me when I need them.
I am highly indebted to my instructor Mr. Adnan Bashir for
providing me an opportunity to learn about the Banking
system of “" which is vital ingredient of MBA program. I am
very great full to Mr. Khalil Tahir (CSO of KMBL) for helping me
to complete this report. I feel great pride and pleasure on the
accomplishment of this report.
Kashf Micro-finance Bank Limited Page 7
Chapter one:
1.1. Introduction of internship report:
It is the requirement of the MBA course, University Of Gujrat.
that all students of MBA have to spend six weeks in any
organization to get practical exposure and to get familiarized
with the ways to live in the organizational environment which
is dramatically different from the educational environment.
That two months period called “Internship Period “, if spent
properly and sincerely, enables the students to be more
confident, more knowledgeable, more responsible and above
all, more committed to their work in the practical field. I have
also been assigned to do internship of eight weeks period in
Kashf Micro-finance Bank Limited, Faisal Gate circular road
Gujrat branch. It has enabled me to understand the practical
scenario and sharpen my decision making power and utilizing
the resources in an effective and efficient manner, so that our
resources generate maximum output.
In preparing this report, I have put all of my best efforts and
tried my level best to gain maximum knowledge about
Kashf Micro-finance Bank Limited Page 8
practical work of bank. Despite of my all the coherent efforts, I
do believe that there will always be a room for improvement
in the efforts of learner like me.
1.2. Background of study:
The practical training is an essential exercise that all the
students are required to undergo during a specified period of
compulsory training in private or public organizations during
their studies.
The student performance during the training is assessed and
considered as partial fulfillment of the requirements for award
of MBA Degree at UOG. However, industrial training is a
complement to the knowledge acquired in the four years of
classroom lessons. The training lasted for a period of eight
weeks from 30th July to 30th to November, 2009.
I have done two months internship in Kashf Micro-finance
Bank Limited Faisal Gate branch Gujrat because of feasibility
as this branch is situated at a walk in distance from my home
and there is not any inspirational factor to join this bank for
Kashf Micro-finance Bank Limited Page 9
internship because at that time there was lack of vacancies in
other banks like Habib Bank Limited, Bank Of Punjab and as
KMBL is newly established bank, so that is why vacancies
were available in that bank and I am the first internee in the
branch.
1.3. Purpose:
The purpose of my internship is the implementation and
application of theoretical knowledge into practice. There is a
great difference in theoretical knowledge and its
implementation in practical field of life. During the period of
my internship, I have learnt a lot of things like dealing with
customers, satisfying their queries, fulfillment of official
documents, account opening, completion of files, which have
build a lot of confidence.
1.4. Scope:
An internship is a full time work experience, closely aligned
with the student’s major and arranged with an employer who
believes it is desirable to aid in the training and education of
the student. It is of a short duration, typically of three to four
months or one semester. The employer agrees to provide the
internee with a progressive educational experience, through
direct personal contact hours or through a training program,
and to aid the internee in developing a summary report of
his/her experience.
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1.5. Objectives of Practical Training:
The primary purpose of this study is to fulfillment of the
requirements for the degree of MBA (Finance).For this
connection each student of this particular course is
required to undertake training in a relevant organization
selected by them, for a period of 8 weeks.
The secondary purpose of this internship is to
understand how the theoretical knowledge can be
applied to the practical situations and examine an
organization’s financial issues and identify its
opportunities/ problems and also suggest corrective
measures. This internship is also very necessary to gain
confidence and become aware of the mechanism of an
organization. As an internee I want to achieve following
objectives during my internship and organization study:
Internships will provide students the opportunity to
test their interest in a particular career before
permanent commitments are made.
Internship students will develop skills in the
application of theory to practical work situations.
Internships will provide students the opportunity to
test their aptitude for a particular career before
permanent commitments are made.
Internship students will develop skills and techniques
Kashf Micro-finance Bank LimitedPage 11
directly applicable to their careers.
Internships will aid students in adjusting from college
to full-time employment.
Internships will provide students the opportunity to
develop attitudes conducive to effective interpersonal
relationships.
Internships will increase a student's sense of
responsibility.
Internship students will be prepared to enter into full-
time employment in their area of specialization upon
graduation.
Internship students will acquire good work habits.
Internships will provide students with the opportunity
to earn a salary while pursuing educational goals.
Internship students will develop employment
records/references that will enhance employment
opportunities.
Internships will provide students with an in-depth
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knowledge of the formal functional activities of a
participating organization.
Internships will provide students the opportunity to
understand informal organizational interrelationships.
Internship programs will enhance advancement
possibilities of graduates.
Internship students will have higher levels of
academic performance.
Internship programs will increase student earning
potential upon graduation.
Internship programs motivate students to continue
their education.
1.6. Methodology:
The report is based on my 8 weeks internship program in
Kashf Micro-finance Bank Limited. The methodology reported
for collection of data is primary as well as secondary data. The
biggest source of information is my personal observation while
working with staff and having discussion with them. Formally
arranged interviews and discussions also helped me in this
regards. Following are the sources of data collection:
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1.6.1. Primary data:
Personal observation
Interviews of staff
1.6.2. Secondary data:
Manuals
Profiles
Annual reports
Internet
Summary:
In this chapter, I concluded that internship is a best way of
analyzing and understanding the market before the entrance
in market, during internship we see practically
implementations of our knowledge so we can say that
internship program is a good fortune for all of the students
during their studies, because it is an initial plate-form during
our study to analyze the market situations. Although there
were some restrictions during but I tried my best to full fill the
purpose and objective of the study.
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Chapter 2:
2.1. Introduction of the Organization:
Following a decade of success by Kashf Foundation, Kashf
Microfinance Bank Limited (KMBL) was established in June
2008 with a vision to become Pakistan’s leading microfinance
bank serving all to become a prosperous, equitable and
poverty free Pakistan. KMBL will offer a diversified range of
financial products and services to low income wage earners as
well as the self-employed of Pakistan. It will leverage and build
on its associated company’s outreach and experience, as well
as charter new paths as a regulated, deposit taking entity,
maintaining the group’s commitment to financial services for
all.
KMBL has initiated its lending operations from 1st November
2008 and is now geared to commence liability operations with
18 branches. Initially, our presence is in 13 cities of Pakistan
and an additional 14 branches will be opened this year taking
the network to 32 branches by end of the year. In 5 years, we
plan to open 100 branches across 31 cities reaching out to
more than 1 million clients.
2.2. Products:
2.2.1. Lending Products
Kamyab Karobari Karza KMBL’s first product was piloted earlier by Kashf
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Foundation in 2005 to cater to the financial needs of micro and small
enterprises. The product mainly targets small businesses that have a fast
turnover through a unique loan appraisal methodology. It focuses on
experienced entrepreneurs. The maximum loan size limit is of Rs. 150,000,
with only 20% of loans with balances between Rs. 100,000 and Rs. 150,000
as per requirement of SBP’s prudential regulations:
Purpose of Loan:To meet working capital or fixed assets requirements
only.
Loan Amounts
First Loan Cycle: Second Loan Cycle: Third Loan Cycle:
Rs. 25,000-Rs.100,000 Rs. 25,000-Rs.100,000 Rs. 25,000-Rs.150,000
Tenure
First Loan Cycle Second Loan Cycle and beyond:
6 months – 12 months 6 months – 18 months
Age of the
clients:
For the first loan cycle: 25-58 (at the time of sanction of
the loan)
For the second loan cycle: 25-60 (at the time of sanction
of the loan)
Age of the
Guarantor:
Age of the guarantor: 25-65 (at the time of sanction of
the loan)
Business: It should be an operational business owned by the client.
Type of Activity: Trade, production, services or livestock raising
Experience: At least 2 years of experience in the same business.
Business
Location:
Business operating in the same location for at least 1
year.
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2.2.2. Deposit Products:
Kashf Ahtimad Bachat account, a checking, basic low balance savings
instrument. This product represents KMBL’s standard savings product,
primarily targeted at the KMBL’s borrowers and the general public. While
there will be no minimum balance requirements, profit will only be payable on
minimum balances greater than Rs. 25,000.
At the same time, Kashf Microfinance Bank Limited plans to market this
product more aggressively to the general public, increasing general outreach
amongst the communities in which the Microfinance Bank operates. The
average balance for such accounts is projected to be approximately Rs. 4,000.
Features:
Initial deposit to open account is Rs.100/-
No account opening charges
No minimum balance required
Profit bearing checking account
2.2.3. Kashf Sahulat account:
Kashf Sahulat account, a basic non interest-bearing, karobari current checking
account. A standard checking account, this product is expected to be a
prerequisite requirement for all the lending products. As such, it is assumed
that by the end of the first year, all such clients will have Sahulat Account. As
with the Kashf Aitmad Bachat account, this product will be aggressively
marketed to the general public.
Features:
Initial deposit to open account is Rs. 100/-
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No account opening charges
No minimum balance required
2.2.4. Kashf Tahaffuz:
Kashf Tahaffuz, a term deposit account offering three tiers ranging from one
months to thirty six months tenure with profit payable on monthly, quarterly,
bi-annually and yearly basis. Balances will be kept in the three tiers of Rs. 1 to
Rs. 25,000, Rs. 25,001 to Rs. 50,000 and Rs. 50,001 to Rs. 500,000. In
addition, the general public is targeted for this product, assuming an average
balance of Rs. 2,000.
Features:
Minimum investment of Rs.1,000/-
No account opening and closing charges
No minimum balance required
Reward Program
2.2.5. Kashf Kamaal committee:
Kashf Kamaal committee, a programmed savings goal oriented account. The
purpose of this account is to encourage savings for different occasions and
necessities e.g. marriage, old age benefit, education, transportation, consumer
durables, Hajj, Umara etc. This will serve as a substitute for committee
system. An edge that this product has over the traditional committee system is
that profit will be given on the deposit. Investment limits range from Rs. 500 -
Rs. 5,000 while the tenure for this product is 1,3,5,8 and 10 years.
Features:
Minimum investment of Rs.500/-
No account opening and closing charges
No minimum balance required
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Reward Program
2.2.6. Kashf Winspiration:
Kashf Winspiration Institutional, a term Deposit for institutional depositors.
Term deposits will be targeted at larger investors, including schools, hospitals,
and other NGOs who are seeking attractive returns, yet also seek to support
KMBL’s mission. Balances kept in this account will be divided into three
tiers, Rs. 500,001 to Rs. 2,000,000, Rs.2, 000,001 to Rs. 5,000,000 and the
third tier will be for balances in excess of Rs. 5,000,001. The tenure for this
product ranges from 3 months to 60 months.
Features:
Minimum investment of Rs.500,000/-
No account opening and closing charges
Relationship Manager for each account
Kashf is a pioneer in extending access to financial products to poor customers.
2.3.1. Organization Information:
Board Of Directors:
Ms. Sadia Saeed
Mr. Makhdoom Ali Khan
Ms. Fatimah Afzal
Mr. Salim Nooruddin Jiwani
Mr. David Jacob Oser
Ms. Mary Ellen Iskandrian
Ms. Mariloe Hendriette Gerarda
Elisabeth van Golstein Brouwers
2.3.2. Our Investors:
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Kashf Holdings (Pvt) Limited
International Finance Cooperation (IFC)
Shore Cap International, Limited
WWB Microfinance Equity fund, L.P
Triodes Fair Share Fund and Stitching Triodes- Doen
2.3.3. Executive Committee:
Chief Executive Officer - Ms. Roshaneh Zafar
Chief Operating Officer- Mr. Ghazanfar Azzam
Chief Financial Officer- Mr. Khalid Kabeer
2.3.4. Head Office:
387-E, Johar Town
Lahore, Pakistan
2.4. Overall respective sector 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.
Today there are more than 18 branches of micro-finance banks along with an
established network of supplementary financial institutions. All this
development in the banking sector is the result of constant efforts of the
management team and the founder of Kashf micro-finance bank limited.
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2.5. Role of organization in Pakistan:
Microfinance in Pakistan is relatively a new concept as compared to other
countries in the region. The NGOs and Rural Support Programs has been the
major player in the sector since early 1980s covering about 5% of more than
6.5 million poor households in the country. Recognizing microfinance as an
important poverty alleviation tool, the Federal Government has adopted a
microfinance policy that mainstreams the concept of sustainable microfinance,
recognizes the private sector’s role in poverty reduction and encourages its
entry into banking with the poor.
It has enacted a legal framework, the MFIs Ordinance 2001, for establishing
Microfinance Banks in private sector with twin objective of substantially
increasing outreach of microfinance services in the medium term and giving a
model institution to the private sector to follow.
The MFIs Ordinance 2001 inter alia stipulates the functions, capital
requirements, ownership structure, terms and conditions for establishing
Microfinance Banks/Institutions in the country, audit and disclosure
requirements and winding up procedures. The provisions of the ordinance are
applicable on microfinance banks mobilizing savings from public to finance
their operations. The operations of NGOs and other programs providing
microcredit and allied services through sources other than public
deposits/savings are not covered under the ordinance.
2.6. Overall organization and functions of
organization in Pakistan:
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The target market of microfinance sector is estimated to be 25 to 30 million
borrowers and government has set the outreach goal posts to at least 3 million
by 2010 and moved it further to 10 million by 2015. To increase outreach the
sector adopted extensive growth strategy and the overall growth rate of
outreach varied from 100 percent in 2004 to a low level of 36 percent during
2005-06 and later to 52 percent in 2007. Outreach in terms of number of active
borrowers increased from a low base of 240000 in 2003 to 1.27 million in
2007. Gross loan portfolio increased from Rs. 2.3 billion in 2004 to 12.7
billion in 2007, loan size also increased from Rs. 6,629 in 2004 to Rs. 10,000
in 2006 and 2007. The number of savers increased from 888000 to 1.14
million in 2007 and investment in the sector is as high as $ 400 million
between 1999-2005 (Pakistan Microfinance Network, 2007).
Despite progress made over the past few years, outreach of the sector is just
40% of the target outreach of 3 million poor. Growth of the sector is largely
led by a few unsustainable institutions that lack operational and financial
sustainability. The financial self-sufficiency of the sector is as low as 76
percent and the average return on assets(AROA)of the sector remain negative.
Instead of laying emphasis on intensive growth strategy of utilizing the
existing capacity to improve productivity and efficiency and reliance on
mobile offices, the sector focused on extensive expansion in terms of fixed
branches and offices which led to high operating and financial costs of
majority of the institutions.
As a result the sector remains dependent on external support, subsidized credit
and tax exemptions etc. Besides paid up capital financially majority of the
institutions rely on donor funds and subsidized debt as the major source of
funding. This implies future growth of the sector is conditional upon the
availability of donor funds or subsidized credit, otherwise growth of the sector
may slow down.
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Moreover, besides the issues of outreach and sustainability, the recent slow
growth of GDP and high inflation may also impact the progress of the sector.
2.7. Organization office in which you are
working:
Branch Name Faisal Gate Branch
Branch Code 20311
Address Faisal Gate, circular Road, Gujrat
Phone 053-3523467
Province PUNJAB
Email www.kmfbanh.com
The branch in which I have done internship was inaugurated
on 9 March, 2008. It is playing an important role in the
development of Gujrat city because it is providing loans to the
needy people to expand their business, to purchase fixed
assets, and many more other products which are beneficial for
the bank itself and also for the customers to meet their needs.
Kashf Micro-finance bank is also playing an important role in
the improvement of living standard of the society by providing
funds and many other services as its competitors do.
People prefer this bank to obtain loans because it impose less
restrictions as compare to its competitors Tameer Bank, KASB
Bank because it does not require any collateral for lending
funds, it just takes guarantee of a businessman who has an
existing business for minimum three years and twelve Post
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Dated Cheques (PDCs) for each month installment which is an
evidence against the amount taken by the customer as loan
and if the customer does not pay installments, the bank files a
case against that customer and the evidence of PDCs is
presented in court.
2.8. Summary:
Chapter Three: Organization
3.1. Introduction:
3.2. Brief History of the organization:
The Kashf (“miracle” or “revelation”) Foundation commenced
operations in 1996 as an action research program aimed at
demonstrating the credibility and economic competence of
impoverished women residing in the district of Lahore. Fifteen
women utilised Kashf first round of micro credit to start small
income generating activities. Since 1996 client of Kashf base
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has rapidly expanded to encompass over 60 000 members.
The Foundation addresses social needs of women through a
creative and interactive economic empowerment strategy
including non-financial and financial services, which are
delivered in a financially and operationally sustainable
manner.
Kashf is now considered one of the leading microfinance
providers in Pakistan, increasing rapidly its outreach and
sustainability while maintaining a very low risk on its loan
portfolio and constantly improving its services through
innovation.
KMBL has been established with a paid-up capital of Rs. 750m,
enabling the bank to operate on a nation-wide basis. The
capital of KMBL has been contributed by a diverse group of
investors. The bank has projected rapid growth in resource
base over the next 5 years, with deposits to act as primary
catalyst for funding operations. The deposit mobilization
strategy of the bank is centered on the concept of leveraging
on the existing clientele of Kashf Foundation (KF), an associate
concern.
The ability of the bank to garner micro-savings will pave the
way for future business growth. Alternatively, greater reliance
may need to be placed on commercial sources of funding
which may have an adverse affect on the projected bottom
line profitability. Realization of growth targets would also
Kashf Micro-finance Bank LimitedPage 25
require additional capital injection over the medium to long
term.
Purchase of loan portfolio from KF has provided the bank with
a revenue stream from the on-set of operations. At year end,
marginal infection was noted in the portfolio. The bank has
taken adequate measures to keep portfolio infection at
sustainable levels. The bank is currently operating with a
network of 18 branches. Roll out of an integrated banking
application both at the Head Office and the branches have
already been achieved, allowing for real time connectivity.
Figure 1.0
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Board of Directors
President
Chief Executive Officer (CEO)
Internal Audit DeptInternal Audit Manager
Finance DeptChief Financial Officer
Board Internal Audit Committee
Operations DepartmentManager Operations
Information Technology Department Head
HR Manager
Research Development Unit
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Operations Structure
Figure 2
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Manager OperationsData Analyst
Poverty Lending Programme
Assistant ManagerAssociate
Associate
Area ManagersBranches (6-8)
Branch ManagersBusiness Sarmaya
ProgrammeAssistant Manager
Associate
Associate
BranchesBranch Manager
Growth ManagementTeam
DelinquencyManagemetTeam
3.3. Our Vision:
KMBL’s vision is to be Pakistan’s leading Microfinance bank serving all to
build a prosperous, equitable and poverty-free Pakistan.
3.4. Our Mission:
KMBL will become the provider of choice by offering a full range of financial
services to micro and small entrepreneurs, especially women, to equitably
expand economic opportunities and to maximize value for all stakeholders.
3.5. Relationship of the head office to the branch
offices:
There is a good relationship between branch and head offices
because the communication system is smooth and evidence
based because of using email as a mode of communication.
3.6. Number of departments:
There are three numbers of departments:
Cash department
Operations department
Sales department
3.6.1. Cash department:
3.6.1.1. Functions of Teller:
Handles the cash management system within the branch to take payments
from the customers and to make payments to the customers. Cancellation of
cheques and other instruments after proper scrutiny. Reconcile all cash
transactions at the end of the day. Ensure transactions and activity reports are
Kashf Micro-finance Bank LimitedPage 29
accurate and complete. Ensure loyalty to all regulatory guidelines while
making/receiving payments.
Handles all customers’ requests in timely manner. Looks for ways to improve
efficiency and reduce turnaround time. Ensure that the instrument for payment
is in order/valid and carry no defect. Maintain and balance petty cash vouchers
on monthly basis balancing the cash books before leaving the seat temporarily
during the day and at the day end. Lodgment of outward clearing instruments
and scrutiny of inward clearing instrument. Ensure establishment and
maintenance of the strong rapport with the client. Ensure post sale service to
the client.
3.6.2. Operations department:
3.6.2.1. Functions of Operation Manager:
Managing cash requirement of the Branch in liaison with HO. Responsible for
supervision of all operations functions like account opening documentation, /
Loan documentation, cash receipt/payments, clearing/remittance, branch
security and cleanliness/general maintenance etc, Ensuring correct and timely
implementation of HO circulars.
Supervise custody and record keeping of Cheque Books / Security stationary /
Loan documentation. Ensure that all the processes are completed successfully
before the end of the day. Supervise branch administration related work.
Ensure service delivery within the agreed turnaround time. Ensure secure
maintenance and restricted access of all customers’ account/signature
documentation. Ensure all operations staff is aware of internal and external
regulatory framework and it complied with Monitoring of all outstanding
suspense accounts. Immediate reporting and follow-up of fraud / forgery,
litigation and AML, KYC, policy deviation with RO/HO. Ensure timely
reporting of different periodical statements/returns to RO/HO or any other
Kashf Micro-finance Bank LimitedPage 30
information asked for time to time. Ensuring resolution of compliance
observation / audit reports.
3.6.2.2. Functions of Branch Manager:
Enhance the branch’s business by increasing the number of profitable
accounts/relationships and increase revenue & profit. Along with the Regional
Executive, plan, manage and execute a strategy to achieve target financial
results and a quality of service superior to competitors which is in line with
KMBs service quality benchmarks. Ensure adherence to KYC and Anti
Money Laundering guidelines while initiating and reviewing customer
relationships. Act as mentor to all staff in the Customer Services by answering
queries in relation to procedures, policy etc. Maintain high level of staff
morale through support, direction and coaching. Ensure a high level of
customer service. Ensure compliance to internal policies and procedures.
Achieve an overall favorable audit/compliance rating. Discuss and set
Specific, Measurable, Attainable, and Realistic & Time based goals for staff
working under him and monitor their performance in line with their set
objectives. Discuss and undertake the annual appraisals of all reporting staff.
Retain and grow share of existing customer base to sustain and increase
profitable business by:
Retaining profitable existing set customers by consistently meeting or
exceeding customer expectations.
Pro-actively developing and maintaining a detailed understanding of
customers business and financial service needs.
3.6.2.3. Functions of Customer Service Officer:
Retaining profitable existing set customers by consistently meeting or
exceeding customer expectations. Pro-actively developing and maintaining a
Kashf Micro-finance Bank LimitedPage 31
detailed understanding of customers business and financial service needs.
Responsible to guide customers about different products, Bank policies and
requirements regarding different types of accounts. Replying to customers
queries regarding Account opening Form.
Account Opening Form, receipt of initial deposit, input into the system,
generation of Account number. To make sure that KYC should be properly
filled in. To make sure that the entire specimen signature cards should be
scanned properly. Issuance of different types of certificates. Responsible to
process and check that all cheque books are delivered on time without any
printing error. Responsible for all account closing and to make sure that the
charges should be deducted and profit (if any) paid before closure. Ensure
establishment and maintenance of the strong rapport with the client. Ensure
post sale service to the client
3.6.3. Sales Department:
3.6.3. 1. Functions of Loan Officer:
Find potential clients individuals or businesses in need of loans. Establish
strong rapport with the clients. Act as salesperson, persuading clients to obtain
loans. Help clients apply for loans. Analyze and verify the application to
determine the client's worthiness. To complete documentation as per banks
policy. To get the approval before disbursement from the BCC. Disbursement
of loan after complete satisfaction of related formalities. Help client
understand loan repayment schedule. Manage the repayment schedules of
customers for timely recovery of their monthly installments. Follow up on
delayed installments. Initiate collateral liquidation if a client defaults on a
loan.
3.6.3. 2.Functions of Saving Officer:
Kashf Micro-finance Bank LimitedPage 32
To arrange for appointments and visit existing and new potential clients. To
sell the liability products to the existing and potential clients. To resolve
customer queries and present acceptable solutions. To provide marketing and
promotional material to prospective clients. To achieve all business targets
within allocated time. To search for references from existing clients.
To maintain call memo file on daily basis and to provide deposit mobilization
progress sheet on weekly basis. To actively participate in all the Bank’s
promotional activities. Ensure establishment and maintenance of the strong
rapport with the client. Ensure post sale service to the client.
3.7. Offices or field offices:
3.7.1. Nature of Business:
Kashf Microfinance Bank Limited (the Bank) was incorporated
on June 26, 2008 as a public limited company under the
Companies Ordinance, 1984. The Bank is a subsidiary of Kashf
Holdings (Private) Limited. The Bank received the license to
operate the company for banking business from the State
Bank of Pakistan (SBP) on August 12, 2008 under the
provisions of Microfinance Institutions Ordinance, 2001 and
certificate of commencement of business on September 4,
2008 from Securities and Exchange Commission of Pakistan.
On October 27, 2008 the Bank received the certificate of
commencement of business from the State Bank of Pakistan.
The Bank’s principal business is to provide microfinance
services to the poor and under-served segment of the society
as envisaged under the Microfinance Institutions Ordinance,
2001.
The registered office of the Bank is situated at 87 - Tariq
Block, New Garden Town, Lahore, Pakistan. The Bank is
licensed to operate nationwide. As at December 31, 2008, the
Kashf Micro-finance Bank LimitedPage 33
Bank had 18 Branches operating in the province of the Punjab
and Sindh. Kashf Microfinance Bank Limited signed a
Memorandum of Oral Assignment with Kashf Foundation to
acquire outstanding Business Sarmaya Loan Portfolio for an
amount of Rs.534, 105,899, the book value of the portfolio, as
at October 31, 2008. Terms of the transaction were approved
in the board of directors meeting held on November 28, 2008
and an extraordinary general meeting of members held on
December 22, 2008. The State Bank of Pakistan has granted
its approval for the purchase transaction.
3.7.2. Branches:
KMBL has now geared to commence liability operations with
18 branches. Initially, our presence is in 13 cities of Pakistan
and an additional 14 branches will be opened this year taking
the network to 32 branches by end of the year. In 5 years, we
plan to open 100 branches across 31 cities reaching out to
more than 1 million clients. Following are its branches
currently performing its operations in Pakistan.
FEROZPUR ROAD, LAHORE
343 Main Ferozpur Road, Near Babra Market Stop,
Lahore.
GUJRANWALA I
1208 GT Road, Opposite WASA office, Near Sheikh Younas Shell
Petrol Pump,
Gujranwala.
MULTAN ROAD, LAHORE
44-A, Urdu Nagar Road, Gulshan-e-Ravi,
Near Akbar-e-Azam Shadi Hall,
Kashf Micro-finance Bank LimitedPage 34
Lahore.
GUJRANWALA II
Shop No. 45, 34A, 34B, 34C, Trust (GDA) Plaza,
GT Road,
Gujranwala.
DHARAMPURA, LAHORE
242 Kamal Plaza, Allama Iqbal Road Mustafabad, Opposite Police
Station, Dharampura,
Lahore.
Church Road, Near Qayyum Hospital,
Sahiwal.
RAVI ROAD, LAHORE
48 Ravi Road, Lahore.
MULTAN I
Ali Arcade, Near Nadra Office, LMQ Road,
Chowk Kecheri, Multan.
TOWNSHIP, LAHORE
284 B-II, Barkat Chowk, Township,
Lahore.
MULTAN II
Sheerin Commercial Center, Jail Morr, Vehari Road, Near Ghalla
Mandi, Multan
ICHRA, LAHORE
G - 2, Nazir Centre, Ichra Morr,
146 Ferozpur Road, Lahore.
FAISALABAD I
Ward No 2, Block 3, Chak No 212/RB, Circular Road, Faisalabad.
Kashf Micro-finance Bank LimitedPage 35
KASUR
Chandni Chowk, Dosehra Ground, Kasur.
FAISALABAD II
Near MCB Bank, Abdullapur, Faisalabad.
SARGODHA
Azad Road, Block No 15, Sargodha
JHANG
Session Road, Near Sheikh Iron Store, Old Punjab Bank Building,
Jhang Sadar.
SIALKOT I
Shahab Pura Road, Near MCB Shahabpura, City Tower, Sialkot.
SIALKOT II
Circular Road, Islamabad Chowk, Near Royal Baker, Sialkot.
GUJRAT
Faisal Gate, Circular Road, Gujrat.
WAZIRABAD
GT Road, Opposite Fire Brigade & Rescue 15, Wazirabad.
RAWALPINDI
134-B, Satellite Town, Rawalpindi.
HARIPUR
Rehana Plaza, G.T.Road, Haripur
CHAKWAL
B-IV-86, Near Alliance Travel Services, Adjacent UBL,
Kashf Micro-finance Bank LimitedPage 36
Talagang Road, Chakwal.
MANSEHRA
Abbottabad Road, Mansehra.
KARACHI I
A-76, Indus Mehran Society, Soudabad, Malir,
Karachi.
KARACHI II
18/1, Sector 5-E, New Karachi,
KHANEWAL
Block No 8, Opposite GPO, Khanewal.
3.8. Current Staff according to designation and grade:
Current staff:
Name Designation Grade
Arsal Mehmood Branch
manager
C3
Shehzada
Muhammad Adil
Operation
manager
D1
Khalil Tahir
Sandhu
Customer
service officer
D2
Shamaila Khan Customer
service officer
D3
Adeel Ahmad Teller D3
Sana Saleem Teller D3
Muhammad
Shehbaz
Loan Officer D3
Muhammad Asif Loan Officer D3
Umar Farooq Loan Officer D3
Kashf Micro-finance Bank LimitedPage 37
Zeeshan Ahmad Loan Officer D3
Salman Azam Saving Officer D3
Usman Umar Saving Officer D3
Sidra Sayed Saving Officer D3
3.9. Current staff of branch according to qualification
and experience:
Current staff:
Name Designation Experience
Arsal Mehmood Branch
manager
8 months
Shehzada
Muhammad Adil
Operation
manager
10 months
Khalil Tahir
Sandhu
Customer
service officer
1 year
Shalala Khan Customer
service officer
1 year, 4 months
Adeel Ahmad Teller
Sana Saleem Teller
Muhammad Loan Officer 1 year,
Kashf Micro-finance Bank LimitedPage 38
Shehbaz
Muhammad Asif Loan Officer
Umar Farooq Loan Officer
Zeeshan Ahmad Loan Officer
Salman Azam Saving Officer
Usman Umar Saving Officer
Sidra Sayed Saving Officer
Note:
The above mentioned experience of employees is just in
KMBL, some employees have experience in other banks as
well.
Kashf Micro-finance Bank LimitedPage 39
Kashf Micro-finance Bank LimitedPage 40
Learning:
The learning team conducted internal trainings for employees and 33 staff
were sent for external trainings
New modules for trainings of Branch Managers i.e. team building &
communication skills, winning attitude, motivations skills were developed
In-house and on-job training plans of Area Controller, Regional Manager and
head office level Manager positions were designed
Identification of Training branches was completed
Trainings sessions were organized in all the new districts to facilitate the
field teams
3.10. Training received by number of people or number of
employees:
Activity # of Training
Orientation
LO 3
CO 3
BM 1
Teller 2
GAD workshopLO, CO, Teller 4LO 8BM 2
LO, CO 1
1
Report Writing 2
Accounts/ Finance Session 2
BM 1
3.11. Workload (it is based on number of hours
worked)
The banking hours for customers are from 9 am to 5 pm, so
the employees working times are from customers timing as
well as until the completion of pending work of account
opening and other operations and until the closing of branch,
the working hours are heavy for employees to perform their
duties, so there are high work-load for the employees of the
bank because of more working hours as compared to
employees working in other service industries.
3.12. Salary structure:
Current staff:
Name Designation
Basic Salary + Mobile
Allowance
Arsal Me mood Branch
manager
45,000
Shehzada
Muhammad Adil
Operation
manager
28,000
Khalil Tahir
Sandhu
Customer
service officer
14,500+1,500
Shamaila Khan Customer
service officer
12,300+800
Adeel Ahmad Teller 10,300+800
Sana Saleem Teller 10,300+800
Muhammad
Shehbaz
Loan Officer 10,300+800
Muhammad Asif Loan Officer 10,300+800
Kashf Micro-finance Bank LimitedPage 41
Umar Farooq Loan Officer 12,300+800
Zeeshan Ahmad Loan Officer 10,300+800
Salman Azam Saving Officer 12,300+800
Usman Umar Saving Officer 10,300+800
Sidra Sayed Saving Officer 12,300+800
3.13. Promotion system:
Promotion system of the employees based upon the
performance and experience but performance is mainly
considered according to the amount of deposit taken by the
employees by their personal references rather than the duties
assigned to the employees in their job description.
3.14. Incentives & motivation:
If the employees take deposit for the bank, they will be given
incentives in the percentage of amount taken as deposit. For
instance, if Saving Officers or any other employees bring
deposit, they are given incentives of 1% of the total amount
which is given to them with monthly income; these are the
motivational factors for the employees as well as incentive. If
loan officers perform well their duties means that screening of
clients in well and efficient manner, they are appreciated by
the Branch Manager and by completion of screening,
employees get 200 Rs. per screening which is added in their
monthly salary, so these are also the motivational factors for
the employees working in KMBL.
Kashf Micro-finance Bank LimitedPage 42
3.15. Provident Fund and Gratuity:
Provident Fund:
Employee contribution: 10% of monthly basic salary
Employer contribution: equal amount
Gratuity:
< Then 5 years service: no gratuity will be payable
>then 5 years service: Gratuity equals to last month’s basic
salary * number of years
3.16. Compensation & Benefits
Online Salary Transfer was introduced through MCB Cash Management system, in
order to reduce the transit time of salaries
Relocation benefit was introduced for those employees who have been transferred
outstation
Employee loan scheme for Assistant Managers and above tiers was introduced
Vehicle policy reviewed and buy back option was provided to employees
Laptop policy was reviewed and laptops were provided to additional tiers with a
focus on increasing the efficiency of the Kashf team.
Note: The above mention compensation and benefit are not
being implemented except online salary transfer. Other
Kashf Micro-finance Bank LimitedPage 43
compensation and benefits are just commitment of the
organization, as my observation and discussion with
employees about these benefits during the period of my
internship.
3.17. Responsibilities / duties performed
Current staff:
Name Designation Duties
Arsal Mehmood Branch manager Final screening of
customer for lending,
maintenance of overall
performance
Shehzada Operation
Kashf Micro-finance Bank LimitedPage 44
Muhammad Adil manager
Khalil Tahir
Sandhu
Customer
service officer
Opening and
maintenance of
accounts, dealing with
customers, issuance of
cheque book etc
Shamaila Khan Customer
service officer
Completion of files,
dealing with customers
and fulfillment of all
related documents
Adeel Ahmad Teller Payment and receipt of
cash and inward and
outward clearing of
cheques
Sana Saleem Teller Payment and receipt of
cash and inward and
outward clearing of
cheques
Muhammad
Shehbaz
Loan Officer Screening and visiting
of customers at their
home and business for
lending purpose
Muhammad Asif Loan Officer Screening and visiting
of customers at their
home and business for
lending purpose
Umar Farooq Loan Officer Screening and visiting
of customers at their
home and business for
lending purpose
Zeeshan Ahmad Loan Officer Screening and visiting
of customers at their
Kashf Micro-finance Bank LimitedPage 45
home and business for
lending purpose
Salman Azam Saving Officer Taking deposit for the
bank to meet their
target and fulfillment of
account opening forms
Usman Umar Saving Officer Taking deposit for the
bank to meet their
target and fulfillment of
account opening forms
Sidra Sayed Saving Officer Taking deposit for the
bank to meet their
target and fulfillment of
account opening forms
3.18. Critical analysis of branch:
By critically analyzing the branch, there is biasness in
providing jobs to the employees because qualification is not
given priority but experience matters within the branch, just
take the example of Branch Manger and Operation Manger,
Mr. Adil is the operation manager of the branch, and taking
basic salary of 28,000 Rs, but at the same time the employees
who have done MBA from Bahria, Numul, khazara, Islamic
University, and specialized in finance, they are working at
lower posts that are CSO(Mr. Khalil Tahir Sindhu),SO(Mr.
Usman Umar),Teller ( Mr. Adeel Ahmad), Senior LO( Mr.
Shahid). So, there is a discrimination in hiring the employees
and there is also reference based employees working in the
branch, Miss. Sidra Sayed who is working as Saving Officer is
Kashf Micro-finance Bank LimitedPage 46
totally reference based, her organizational behavior is not
favorable even then she is working in the branch.
The Branch Manager (Mr. Arsal Mehmood) did B.Com and
could not do ACMA which was in process at the time of his
hiring, means that he has got the designation of Branch
Manger on B.Com degree, he is the most flirtiest person in the
whole branch and pass certain flirty comments on female staff
members. Such person should not be in the branch from the
presence of whom, female staff employees do not feel secure.
3.19. Communication system:
There is smooth upward and downward communication
between branch and head office, if there in any conflict
regarding to the performance of employees, they do
communicate through telephone and if there is any change in
policy or in case of sending any notification or using official
documents, communication is done by email, because
evidence is required from the branch in terms of email to
change the official documents which is required by the
internal and external audit to avoid from objections.
3.20. Hiring system:
The hiring system of employees is two ways process; firstly,
the employee is interviewed by the branch manager and then
his/ her CV is transferred to the head office and he is again
interviewed and give test to the Human Resource Manager of
KMBL named as Abdul Rafay and after fulfilling the whole
requirements of policies given by the Head Office, the
employee is hired and he is given three days training in which
Kashf Micro-finance Bank LimitedPage 47
he is learnt how to perform his duties and overall view of the
organization’s norms and values.
3.21. Morale of staff:
There is a good morale in staff of the whole branch, the staff
deal with one another in a good manner and there is no
concept of leg pulling among all the staff of the branch. They
all behave with me in a good manner during the period of my
internship and there is just like a family environment in the
branch.
3.22. Physical facilities (this will be included facilities
like room sizes, ventilation, furniture, separate rooms
for offices:
The branch of KMBL is not well established, no air conditioning
facility is available in the whole branch and there are no
separate rooms for offices even for the branch manager. Loan
officers do not have Computer system on their tables, there is
also shortage of office equipment on their tables, and even
they are not provided calculators for the purpose of
calculations for the fulfillment of Loan Application Forms (LAF),
they are using calculators of CSO’s.
3.23. Performances:
3.23.1. In terms of quality (through customer
satisfaction)
Kashf Micro-finance Bank LimitedPage 48
3.23.2. In terms of quality (through number of accounts
and budgets):
Kashf Micro-finance Bank LimitedPage 49
3.24. Latest budget review:
The working capital of Kashf micro-finance bank limited is
711,752,967 as per balance sheet as on 31 December,2009,
its numbers of borrowers are 48,770 and the amount of loan
that has been disbursed to the customers is 299,215,549, the
number of depositors is 48,770 and the amount deposited to
3.25. Summary:
Kashf Micro-finance Bank LimitedPage 50
Chapter 4: Work done by me
4.1. Account Opening:
Firstly, from the date of joining I have learnt how to open
current account. Before starting opening an account, the
client is shortly interviewed that which type of account he or
she is wanted to open, then a sample of their signature is
taken in order to decide whether he or she is eligible for
opening photo or non- photo account. If the customer’s
signature is shaky, photo account is opened and if the
customer has original sign which means some symbol which is
not easily copied by others, non- photo account is opened.
The things required to open an account in case of photo
account are three passport size photos, CNIC and the CNIC of
Next Of Kin which means that if the customer dies, he or she
will maintain the account on behalf of the client. In case of
non-photo account, other things remain same just passport
size photos are not required. After providing the required
documents, a person is eligible to open an account.
Account opening form consists of following documents:
Check Book Requisition
Two Specimen Signature Cards
Account opening form
Kashf Micro-finance Bank LimitedPage 51
KYC (Know Your Customer)
Indemnity for Urdu or shaky Sign (if required)
Indemnity for sign changing Sign (if required)
NADRA Verysis (if required)
Student Identity Card (if required)
4.1.1. Check Book Requisition:
The purpose of cheque book requisition is to fulfill official
requirements on the time of issuance of cheque book to the
customer. It consists of two options whether the cheque book
is issued to the customer itself or to any other person or blood
relations, but they mainly focus on issuance of cheque book to
the customer itself because it involve less risk.
4.1.2. Specimen Signature Cards:
It is used to admit the customer’s signature for the purpose of
opening account, if the signature of customer is in Urdu or
shaky, two passport size photos are paste on Specimen
Signature cards, but if the signature of the customer is original
which means it is not easily copied by others, non- photo
account is opened and customer signature is taken two times
on SS cards, and put the stamp of Signature Admitted on the
centre of SS cards.
4.1.3. Account opening form:
Kashf Micro-finance Bank LimitedPage 52
Account opening form consist of the necessary information
about the customers like residential address, permanent
address, contact numbers, account number, name and NIC
number of the customer and name of customer parents and
the name and address of Next Of Kin which means if the
customer dies or becomes insolvent, he or she will pay the
amount of loan taken by the customer, or in case of any fraud,
he will be responsible to pay that amount.
4.1.4. KYC (Know Your Customer):
Basically this document is filled by the CSO through a short
interview about personal and financial information, name of
spouse, and then asked the purpose and nature of opening
the account and source of income. If he is running his own
business, it comes in the category of self-employed in which
customer tells about its monthly income approximately and
average saving and expenses and then yearly income is
calculated. If the customers source of income is service
sector, it comes in the category of salaried person, and its
monthly salary, the name of employer, job title, job duration is
mentioned and then customer is required to give an evidence
that he or she is working in that particular organization for
which they have to submit the photo copy of their employee
card or employer gives in black and white the name of
employee, salary, job duration and do signature after writing
all above requirements on business pad.
4.1.5. Indemnity for Urdu or shaky Sign:
If customer’s signature is in Urdu or shaky sign, which can be
easily copied, he or she has to sign the indemnity of Urdu
signature, in which he or she indemnifies that all the
transactions will be done in front of bank officers even if he or
Kashf Micro-finance Bank LimitedPage 53
she wants to withdraw or deposit cash in his or her account,
the basic purpose of this indemnity is to minimize the risk of
cash with-drawl on behalf of that customer without his
consent, it is to secure the customer from fraud or any fake
transaction on behalf of him or her.
4.1.6. Indemnity for sign changing Sign:
If the customer’s signature differs from National Identity Card
on account opening, this indemnity is required to dispatch
with account opening form, in which the customer certifies
that he or she want to change his or her signature and the
changed signature will be acceptable for all transactions
related to his account. This indemnity is basically an evidence
for changing the signature from his original signature.
4.1.7. NADRA Verysis:
It is an online verification of customers National Identity Card,
but it is done only for those customers who take loans from
Kashf Micro-finance Bank Ltd, basically the purpose of NADRA
Verysis is to clarify the ambiguity of fake National Identity
Cards of the customers, because some customers take loans
on fake National Identity Card so that they can refuse to pay-
back loans and proof that they have not taken any loan.
4.1.7.1. Note: After opening an account, Letter of Thanks
(LOT) is sent to the customers through mail in order to verify
the residential address of the customer.
4.2. Dealing with customers:
Kashf Micro-finance Bank LimitedPage 54
During the period of my internship, I have also learnt how to
deal with customers regarding different perspectives. The first
perspective is to make customers aware about the products
and their benefits in order to meet customer’s needs. Most of
the customers belong to backward and under-developed areas
and they are mostly illiterate so they are not eligible to
understand brushers, or if we deal them in Urdu, so we use
the same communication mode to aware customers about the
products and services of the branch. Following are the
instructions that are given to the customers by me (internee)
but basically Customer Service Officer provides this
information to the customers for the purpose of applying loan.
The te3rms and conditions are clearly communicated with the
customer at the time of loan application that if he or she will
not be able to repay the loan, the bank will file a case against
him and if he delays the amount of installment, he has to pay
50 Rupees fine per day after due date, and when customer
does not pay two consecutive installments, the bank takes
legal action against that customer and recover its bad debts in
court.
4.2.1. Process of taking loan from KMBL:
When a customer wants to take loan from KMBL first he visits
the branch and takes the whole information from CSO also by
me, in which the requirements for loan application is
Kashf Micro-finance Bank LimitedPage 55
communicated with him. Following are the requirements by
the customer in order to apply for the loan:
Two recently paid Utility Bills of customer’s home
Two recently paid Utility Bills of customer’s business
(shop)
Two recently paid Utility Bills of guarantor’s home
Two recently paid Utility Bills of guarantor’s business
(shop)
One passport size photo of customer
One passport size photo of guarantor
CNIC of customer
CNIC of guarantor
4.3. Completion of Files:
I have also learnt how to fill the official documents of the
branch that are concerned with relevant documents that are
required to apply for loan till from application of loan to
disbursement. Following are the documents that are
dispatched in fill to fulfill all the formalities.
Check-list (Branch Manger)
Check-list (operation Manger)
Repayment Schedule
Branch Manager Screening Sheet
Indemnity of PDC’S
Disbursement sheet
Utility Bills
LAF(Loan Application Forms)
Legal Papers
12 Post Dated Cheques (PDC’s)
Three promissory Notes
Kashf Micro-finance Bank LimitedPage 56
Note: On each and every document of file, the guarantor and
the customer signs, except BM screening sheet
4.3.1. Check-list (Branch Manger):
This check list is signed by BM (Mr. Arsal Mehmood), he takes
an overview that all the relevant documents are filled
according to pro-forma that is given by the HO, the file
completion is the responsibility of CSO (Shamaila Khan) but
during my internship period I have done this task and learn
practical knowledge.
4.3.2. Check-list (operation Manger):
This check list is signed by OM (Mr. Adil), he also takes an
overview and rectify the errors in because he is responsible to
follow the entire prescribed format and accountable for
objections at the time of external and internal audit.
Repayment Schedule:
This schedule contains all the details of the total and
installment amount, date of each installment and the number
of installments. One copy of this Repayment Schedule is given
to the guarantor because he is responsible to pay for the
installments if actual customer disables to pay.
Branch Manager Screening Sheet:
When a customer applies for loan, first he is screened by Loan
officer, in the screening of LO, the repayment behavior of the
customer is observed from discussion about that customer to
its surrounding people of its business and residences. If the
Kashf Micro-finance Bank LimitedPage 57
people witness that he is good in repayment, his application is
accepted for lending purpose, otherwise his case is declined
which means he is rejected to take loan from KMBL.
Indemnity of PDC’S:
If customer’s signature is in Urdu or shaky, he will sign for this
indemnity. The basic purpose of this indemnity is that he is
going to open current account and he is liable to signature in
bank officer’s presence in case of any transaction regarding to
his account.
Disbursement sheet:
The disbursement sheet contains all the details of the amount
of loan taken by the customer, in this sheet, the date of
amount taken, interest percentage of loan, interest amount,
principal amount, total amount including interest amount and
the installment amount including interest amount is
mentioned.
Utility Bills:
Eight utility bills are dispatched with the file; the basic
purpose of taking these utility bills is just to evaluate the
repayment behavior of the customer and the guarantor as
well that if they are paying utility bills on time, they will pay
installment amount on due date.
LAF (Loan Application Forms):
LAF are the most important documents which contains all the
necessary information of the customer about his
Kashf Micro-finance Bank LimitedPage 58
Chapter 5:
Half page introduction:
Kashf Micro-finance Bank LimitedPage 59
This chapter mainly emphasize on the policies and strategies
of the bank,
Policies:
The policies of KMBL mainly focused on the prudential
regulation of Micro-finance which was passed in the period of
Pervaiz Musharaf government according to micro-finance
ordinance 2001.
Note: They have not communicated with me the policies of
branch and keep it as confidential because of certain
restrictions and rules and regulations imposed by the Head
Office even they have not tell me how to use the packaging
software of bank named as H-Plus and they have not allow
me to do any work on computer.
Strategies /functions (in that branch):
There are mainly two types of functions working which are as
follows:
Short-term Strategies/functions:
In short-term strategies, they are mainly focused upon
increase in disbursements and deposits because the
operations of banks are mainly focused on these two factors
and they are generating a lot of revenue because of lending
funds to the customers as and by taking surplus funds from
the customers as deposits. They invest these funds in
different companies to purchase shares and generate high
revenue by the fluctuation of prices.
Kashf Micro-finance Bank LimitedPage 60
Long-term Strategies/functions:
Five Years Plan:
Year
0
Year
1
Year
2
Year 3 Year
4
Year
5
No of
branches
22 28 38 60 87 101
No. of
credit
clients
15,334 48,090 110,486 171,858 276,284 375,740
Total loan
portfolio
337 M 1,690 M 4,162 M 6,870 M 11,349
M
15,537
M
No of
saving
Clients
0 98,472 373,410 640,090 868,759 1,085,2
08
Total saving
Deposits
0 345M 2,545 M 4,897 M 6,951 M 9,507 M
The long-term functions involved that operations of the
organization should be improved in which revenue is not
Kashf Micro-finance Bank LimitedPage 61
generated up to the set standards, or if there is any deficiency
in the performance of branches, or the management decides
in which area, new branch is to be established, or setting of
strategies in order to get organizational long- term goals.
Note: They have not clearly communicated their strategies,
but these are by my personal observation and informal
discussion with the employees of the branch. The above
Successes (it will be based on the impact of the
strategies):
Kashf’s success and best practices were
recognized by the Government of Pakistan and the
President and Founder of Kashf Roshaneh Zafar
was awarded the Tamgha-i-imtiaz by President
General Pervez Musharraf.
Kashf Micro-finance Bank LimitedPage 62
Kashf Foundation was awarded the AGFUND
International Prize for Microcredit 2005 by HRH
Prince Turki of Saudi Arabia in a ceremony held in
Cape Town.
The programme’s outreach now extends to 76,170
clients and the outstanding portfolio is Rs.778
million with a portfolio at risk of 0.32%.
The total work force has increased from 275 to
331 over the one year with the greatest relative
increase in the field staff. Gender ratio is 56%
males to 44% females.
The President of Kashf participated in the World
Economic Forum 2005 along with heads of state
and leaders of major international organizations
and also represented the organization at the India
World Economic Forum.
In the aftermath of the devastating earthquake
that hit the northern areas of Pakistan, Kashf
actively coordinated and implemented relief
efforts for the victims by disbursing over Rs 5.5
million in funds.
A cash management system was implemented in
order to integrate Kashf with the formal financial
system and to bring more transparency in the flow
of information on a daily basis, while an
accelerated pilot was continued for automating all
Kashf branches.
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The Holding Company structure will enable the group to
further its vision for financial inclusion for low-income
communities by tapping into 'patient capital' investors who are
motivated to create long-lasting models serving low-income
markets, particular women, to access a range of financial
services.
Chapter 5: Organization Analysis
5.1. SWOT analysis:
5.1.1. Strengths
Diversified products (KKKK, KS)
Unique branch location
Very attractive salary packages to employees
Heavy internal financing i.e. from heavily growing
deposits
Qualified staff
Unique deposit products & saving products rates
Capacity Building for Women Entrepreneurs
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5.1.2. Weaknesses
High lending rate as compared to its competitors
Less banking experience
High rate of staff turnover
5.1.3. Opportunities
Open new branches in NWFP
Mobile Banking
Setting up an insurance branch and a fund for
educational projects
It can offer a wider range of services, such as savings
and insurance products
5.1.4. Threats
Lost of its customer because of its high lending rates
Profitability can decrease due to high rate of staff
turnover
5.2. Pest Analysis:
5.2.1. Societal Environment:
Following are the forces which are currently affecting
Kashf Micro-finance Bank and the Banking Industry:
5.2.2. Economic:
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The main things affecting Kashf Micro-finance Bank and
the banking industry are increase interest rates, and the
rising inflation rate in the economy, for example,
currently KIBOR which is benchmark for industry lending is
at highest ever point.
5.2.3. Technological Developments:
Like introduction of oracle financial systems, symbols, and
different application are increasing productivity of the Kashf
Micro-finance Bank as well as the banking industry, but on
the other its initial implementation costs are causing
increased administrative cost to KMBL.
5.2.4. Socio cultural:
Socio cultural forces like values, demographic characteristics,
etc are also affecting KMBL as well as the banking sector.
Because of these values some professionals do not want to
join banking sector, and some people do not keep their money
in the banks, because of religious believes. But on the other
hand such believes are also helping banks to introduce
Islamic products. KMBL has lost various customers because of
shifting from Islamic Banking to conventional banking.
5.2.5. Political-legal
These include the forces like political conditions in
country, SBP regulations, etc are also affecting KMBL as
well as banking sector. For example, SBP is increasing
discount rates, Minimum Capital Requirement (MCR), cash
reserve ratio, etc which is causing liquidity problems for
KMBL as well as banking sector. Due to MCR, various mergers
took placed in the banking sector.
5.2.6. Task Environment (Industry)
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Many forces in the industry are causing competition,
these include, technology i.e. communication system like
Symbols, Sun, Oracle, etc, larger branch network, ATM
locations, unique products, etc.
5.3. Porter Model:
Task environment of KMBL can be discussed through
following Porter Model:
5.3.1. Threat of new entrants:
Opening of branches by Barclays (which in
international reputable bank), threat of entering of
Bank of China (BOC) by acquiring SME Bank, and
Industrial Development Bank of Pakistan (IDBP), while
BOC is also planning to acquire 26% stakes in
National Bank of Pakistan.
5.3.2. Bargaining power:
Bargaining power of buyers due to increase in interest
rates, small firms are not in a position to take loan
from banks, while number of corporations in Pakistan, is
limited. Therefore, key customers/buyers (corporate
customers) of banks have gained substantial power
and now they can bargain the spread with the
relationship managers due of availability of the large
number of the banks.
5.3.3. Threat of Substitute products or Service:
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As such there is no significant threat of substitute
products or service, but few services like investment
related services are offered by various Mutual Funds,
and Security Dealers, but these services are limited to
big cities. While, on deposits side, National Saving
Organization, and is providing substitute products to the
depositors of the banks through attractive packages, at
very attractive rates.
5.3.4. Bargaining power of suppliers:
Currently this is big problem for KMBL as well as
industry, because of liquidity crisis and Pakistan’s poor
international financial rating, all fund suppliers are
avoiding to supply credit to Pakistani industry,
moreover depositors bargaining power has also been
increase due to high mark up rate offered by various
banks, and due to dearth of deposits with bank) Rivalry
among competing firms Banking sector is facing severe
competition, due to availability of many national and
international banks in the industry. Currently HBL
bank, is leading with 40% market share, while MCB with
highest profits and National Bank of Pakistan with
largest deposits.
7.4 SWOT Analysis
Strengths
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Based on financial strength and superior performance•
•.•Attracted big corporations like SNGPL, Attock Group
of Companies, Zaver Petroleum, etc.Weaknesses•Weak
branch network across the country.•High employee
turnover.•Low number of ATMs.•Attracting only upper
and middle class customers.•Market share is declining
from new competition.•Employees’ frustration due to
excessive work burden.Opportunities•It can capture
agriculture market by offering innovative agri
finance products. •Impressive print and electronic
media campaign highlighting FBL’s role in the
development of rural economy of Pakistan can give it
competitive edge over its competitors.•Through re-
branching, FBL can capture lot of new
customers.•Merger with Barclays or Bank of China
to become part of larger international banking
network and to increase the profit.Threats•Declining
trend in banking sector, which can affect it to large
extent because of its big corporate customers which are
few in number.•Arrival of Barclays and Bank of China in
Pakistan, which can increase the competition in banking
sector.•Decreasing trend in Earning per share and stock
prices.•Moving of key employees, e.g. Corporate
Relationship Managers, which means moving of
corporate clients to other banks.
Performance
5.4.Ratio Analysis:
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As Kashf micro-finance bank limited is a newly established
bank, its first branch was inaugurated in December 2008 at
Lahore, so that is why just one year annual report is prepared
by the bank yet, for the purpose of ratios interpretation and
calculation, at least two years data is required, which is not
available, so I cannot calculate its ratios and interpret it by
comparing at least two years data.
5.5.Summary:
5.6.Recommendations with their feasibility (economic,
political, financial etc)
Interest rate of lending funds should be reduced, so that it can be easily
affordable for all customers.
They should not be any biasness in customers dealing, because they
treat reference base
customers, regular customers and especially with those customers who
bring lump-sum deposit for the branch in a very well manner, but the
customers of Kashf Foundation are not treated in a good manner.
There should be flexible environment, so that employee’s turnover can
be reduced.
Development of strategic, business and operational plans
Market research techniques should be improved
Risk-assessment tools should be identified
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Client selection strategy
Monitoring systems that measure and forecast risks should develop
Communication strategy with relevant stakeholders should inroduce
References:
www.kmfbank.com
http://www.google.com.pk/
#hl=en&q=annual+ratio+anaylysis+of+kashf+micro+financ
e+bank+ltd+for+the+year+ended+2009&meta=&aq=f&aqi
=&aql=&oq=&gs_rfai=&fp=982714dd5b6c0abf
Kashf Micro-finance Bank LimitedPage 71
http://www.google.com.pk/
#hl=en&source=hp&q=what+is+the+overall+respective+se
ctor+of+kashf+micro-
finance+bank+ltd+in+pakistan&btnG=Google+Search&meta
=&aq=f&aqi=&aql=&oq=&gs_rfai=&fp=982714dd5b6c0abf
Appendices:
Account opening form
Letter from the organization
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Brushers
List of tables:
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List of abbreviations:
KMBL: Kashf Micro-finance Bank Limited
MCR: Minimum Capital Requirement
SBP: State Bank of Pakistan
LO: Loan Officer
CO: Customer Officer
BM: Branch Manger
The Challenge:
A 2005 study of 99 countries by the World Bank concluded that
greater levels of financial outreach are tied to higher levels in standard
economic development indicators.
According to a 2007 report by the Asian Development Bank, no more
than 10% of the low income market in Pakistan has access to financial
services.
Traditionally, commercial banks are not interested in serving lower
income populations because transaction costs for smaller loan sizes are
too high and conventional collateral requirements cannot be met.
The Innovation
Kashf Holdings Private Ltd. will establish a group of companies
providing a suite of specialized financial services - micro-savings,
micro-insurance, housing finance - to different segments of low
income households.
Kashf Foundation has scaled from 10,000 clients in 2002 to over
300,000 clients at the end of 2008. It is well positioned to reach over 1
million clients with a national branch network offering a range of
financial services.
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Kashf is diversifying into new product areas and is well positioned to
develop and distribute new financial products to the base of the
pyramid on a scalable basis.
As a result, over 5-7 years, more than 1 million families will have
access to a suite of financial services tailored to meet their needs.
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