INTERNSHIP REPORT

ZARAI TARAQIATI BANK LTD.

Submitted to: Mr.Imran Khan Submitted by: Fahad Saif MBA (04) Specialization in Finance MBA finance 2010-2014

Department of Management Sciences. ISlamia University of Bahawalpur Bahawalnagar Campus

In the name of ALLAH the Most beneficent, the most Merciful

Acknowledgement
I have great sense of gratitude for the most Beneficent and Merciful Allah who has always helped me in all matters of life. I tried but He rewarded me more than the tried. I have deep feelings for whole of my family, in general, and for my Father, my Mother and my y0unger brother, in particular .They have always soothed me, eminent me and their words and dua has floated me in the deep seas of troubles. All of my successes are due to the prayers of my family. I am thankful to all of my teachers and my class fellows and friends whom cheerfulness and guidance is an asset for me .I am especially thankful to the bank staff who has given me opportunity to get precious practical knowledge and also for their guidance during my internship. Without the help of all these I was not able to complete this report.

Preface
3

This Internship report is the compulsion put in by Islamia University of Bahawalpur (Bahawalnagar Campus) for the award of master degree in business administration. In order to achieve the task of completion of the degree, I select the renowned and reputed organization that is the Zari Taraqiati BankLtd. I went through 6 weeks internship training in the bank in order to perceive the true art and the practical picture of banks working and to go through the process by which the organization is making very well out of its limited resources. The report is based on the introduction of the bank, products offered, financial analysis and assignments I handled during my internship. The report is divided into two main parts; the first part includes the introduction of bank, its products and financial analysis while the second part is based on the assignments I handled during my internship. I am positive that the college will obligate me by giving its recommendation and consent for the approval of the degree and the purpose for which I have gone through training and report writing procedure will be served positively.

Table of Contents
Part One___________________________________________________________________8 4

Ch. 1: ____________________________ Introduction of Zarai Tarqiati Bank Ltd. Chapter 1__________________________________________________________________9 History___________________________________________________________________ 9 Credit Rating__________________________________________________________11 Corporate Vision_______________________________________________________12 Corporate Mission______________________________________________________12 Corporate Objectives__________________________________________________13 Transformation of ZTBL to R.F.I of the country and road to excellence._14 Branch Network_______________________________________________________16 Management Hierarchy_______________________________________________17 Board of Directors_____________________________________________________19 A Brief Resume of President____________________________________________20 Kissan Support Services Ltd._________________________________________23 KSS Aim_______________________________________________________________23 KSS Operation_________________________________________________________23 Objectives_____________________________________________________________23 Services/Activities so far undertaken by KSS___________________________24 Chapter 2________________________________________________________________25 Products and Services________________________________________________25 ZTBL Locker Facility___________________________________________________25 Products offered to Meet Finance Need of Farmers________________26 Types of Loans Advanced______________________________________________26 Loan Schemes_________________________________________________________27 Supervised agriculture scheme:________________________________________27 Zarkhaiz (one window operation)______________________________________27 Sada Bahar Scheme___________________________________________________27 Tea financingscheme__________________________________________________28 Crop maximization project_____________________________________________28 PER ACRE CREDIT LIMITS_____________________________________________30 MajorCrops____________________________________________________________30 MinorCrops____________________________________________________________30 Growing Agro Forest Trees_____________________________________________31 Growing Orchards_____________________________________________________31

Mature Orchard/Fruits crops___________________________________________32 Types of Security______________________________________________________33

Immovable Property___________________________________________________33 Moveable Property and Guarantees____________________________________33 Personal Surety________________________________________________________34 Debt Equity Ratio______________________________________________________35 Repayment Periods___________________________________________________36 Recovery Procedure___________________________________________________36 A) Recovery Schedule__________________________________________________36b) Issuance of Notices_________________________________________________36c) B) Legal Action_________________________________________________________36d ) Rescheduling of Loan Repayment Facility___________________________37d) C) Down Payment for Rescheduling of Loans___________________________37 Chapter 3________________________________________________________________38 Horizontal Analysis of Balance Sheet________________________________38 Vertical Analysis of Balance Sheet___________________________________39 Horizontal Analysis of Profit & Loss__________________________________40 Vertical Analysis of Profit & Loss_____________________________________42 Interpetation of Horizontal and Vertical Analysis___________________44 Interpetation of Horizontal and Vertical Analysis of Balance Sheet_________________________________________________________________49 Cash and Balance with Treasury Banks______________________________49 Ratios__________________________________________________________________52 Key Financial Trends of 2009_________________________________________55 Credit Risk_____________________________________________________________57 Market Risk____________________________________________________________58 Liquidity_______________________________________________________________5 Profitability____________________________________________________________60 Capitalization__________________________________________________________61 Chapter 4________________________________________________________________65 SWOT Analysis_________________________________________________________65 Strengths______________________________________________________________65 Weaknesses___________________________________________________________66 Opportunities__________________________________________________________67 Threats________________________________________________________________68 Part Two_________________________________________________________________69 Ch. 5:_____________________ Assignments I handled during my Internship.69Chapter 5________________________________________________________________70 Organogram of Mian Channu Branch________________________________70 Redemption of loan___________________________________________________71 Opening of Current Account__________________________________________74 6

1: Acquiring Original CNIC______________________________________________742: Filling Current Account Form________________________________________743: Filling of Know Your Customer Form_________________________________754: Current Account Specimen Card_____________________________________765: Registering name in the Current Account Register (Issuance of A/CNo.)___________________________________________________________76 6: Filling of Deposit Slip of starting amount_____________________________77 7: Signing by AMO and Manager_______________________________________77 8: Issuance of Cheque book____________________________________________78 9: Opening account in the ledger of bank______________________________78 ZTBL Flood Relief Fund 2010___________________________________________81 Writing of Vouchers___________________________________________________83 1. Debit Voucher_______________________________________________________83 2. Credit Voucher______________________________________________________83 3. Transfer Voucher____________________________________________________83 Sample of Debit/Credit Voucher______________________________________84 Sample of Transfer Voucher__________________________________________89 Daily Transaction Scroll_______________________________________________90 Making Entries in the Ledgers________________________________________92 Disbursement and Recovery Entries_________________________________92 Revolving SBS Loan___________________________________________________94 Opening and Closing Cash____________________________________________97 Key Register___________________________________________________________97 Safe Register:_________________________________________________________97 Dispatch and Diary____________________________________________________98 Recommendations_____________________________________________________98 Conclusion____________________________________________________________100 Conclusion 7

Part One
Ch. 1: Introduction of Zarai Tarqiati Bank Ltd. Ch. 2: Products Offered Ch. 3: Financial Analysis Ch. 4: SWOT Analysis

The Zarai Tarqiati Bank Limited (ZTBL) (formerly known as Agriculture Development Bank of Pakistan) is the largest public sector financial development institution with a wide network of 27 Zonal Offices, 9 Audit Zones and 352 branches in Pakistan. The bank serves around half a million clients annually and has over one million accumulated account holders.

History
Pakistan is an agricultural country and more than 60% of its populations working related to agriculture. A development in the agricultural sector will no doubt result in the development of the whole country. To keep With a view to meet this basic need the Agricultural Development Finance Corporation was set-up in 1951, and was entrusted with the t a s k o f p r o v i d i n g f i n a n c i a l c o n v e n i e n c e s f o r t h e d e v e l o p m e n t a n d upgrading of agricultu re, including: Forestry, Fishery, Ani mal Husbandry, Poultry, Dairy Farming. L a t e r o n t h e A g r i c u l t u r a l D e v e l o p m e n t B a n k o f P a k i s t a n w a s a l s o recognized in September 1957, under the Agricultural Development Bank Act. The Bank is to provide credit in cash or in kind, ware housing and storage facilities to agriculturists, cooperative societies and other bodies, of which the majority of members are agriculturists.

As the functions of the Agricultural Development Finance Corporation and Agricultural Development Bank were similar and since both were working with capital provided by the Government, they were merged into one organization known as Agricultural Development Bank of Pakistan on February 18. 1961. The Agricultural Development Bank of Pakistan was a banking company for the purpose of the Banking Companies Ordinance and the State Bank of Pakistan Act. Conversion of ADBP into ZTBL 9

On 14 December 2002 the Federal Government has converted the Agricultural Development Bank of Pakistan (ADBP) into Zarai Taraqiati Bank Ltd (ZTBL) and the new venture has started its operation with immediate effect. The new corporate structure redefines the bank statue as a public limited company with an independent Board of Directors promulgated under the presidential ordinance which, aims at ensuring good governance, autonomy, delivering high quality, viable and timely financial services to a greater number of clientele in the agricultural and rural segment of the country with adequate returns to the stake holder. After this incorporation all the assets and liabilities of ADBP became the assets and liabilities of ZTBL. This restructure was carried out with the aim to improve the working and role of bank in the agricultural development. The bank is completely owned by the government and it has head office in Islamabad.

Ownership Type of institution Established President & CEO Equity Head quarters Total deposits Total disbursements Homepage

Government Specialized bank 1961 Islamabad Pakistan www.ztbl.com.pk

ZTBL is providing affordable, rural and agriculture financial services to the rural Pakistan, comprising 68 % of the total population. The Bank through a countrywide network of 352 branches is serving around half a million clients annually and over one million accumulated accountholders with the average loan size of around 89,000.

Credit Rating
10

In August 2010, ZTBL continued to achieve AAA credit rating by JCR-VIS . Year Entity StandAlone 2010 AAA/ B+/ B 0 A-1+ e 2009 AAA/ B+/ B A-1+ e Outlook Stable Stable

The credit rating of the bank is due to the reason that bank enjoys sovereign guarantee of the federal government that covers its debt obligations to State Bank of Pakistan (SBP) and ensures safety of deposits under the Banks (Nationalization) Act 1974. The banks lending book is largely funded through sBPs credit lines while contribution from deposits remains nominal. ZTBL is actively exploring different options for resource mobilization including mutual/multilateral arrangements with financial institutions. In case these efforts become visible; it would diversify the presented funding source of the bank, thereby reducing Rs.89, reliance on the SBP.

Vision and mission

Vision statement. Emerge as a Leader in provision of agriculture credit by promoting and supporting productivity through a market/agribusiness focus. To bridge yield gaps of all agriculture commodities and to ensure that the welfare of farming population is radically improved and the environment is protected from harmful human interventions. 11

Mission Statement To become a leader in guiding entrepreneurs & farmers implement an agribusiness and marketing led approach that brings strong commercial orientation in production catering domestic and international markets. As a specialized agriculture development bank, deliver realistic technology and optimal solutions to farm communities and rural areas across all agro-ecological zones with sensitivity to economic growth and equity. Develop close partnership and linkages with all its clients to significantly transform, restructure and revamp the agriculture scene and enhance its outreach by investing wisely and judiciously in new approaches, ideas and means of mass communication

Corporate Objectives 1. Develop and operate as a financially and operationally sustainable R.F.I of the country. 2. Assist rural community, particularly the small farmers, in raising their productivity and income levels through timely delivery of credit, advisory and ancillary services.

12

3. Build ZTBL's image as a proactive, client friendly, financially & operationally sustainable with indigenous product deployment. 4. Establish and provide backward and forward linkages to strengthen agri. value added commodity chains. 5. Engage in public - private and wholesale - retail partnership to deepen outreach and reduce operating cost. 6. To function as a rural commercial bank to mobilize rural capital formation and to commercialize the agriculture sector by delivering the true value of credit to the client. 7. Provide a wide range of risk insurance products to its clients. 8. Open up its venues of operation to Domestic & International Banking Industry to avail comparative advantages

Transformation of ZTBL to R.F.I of the country and road excellence. The conversion of ADBP into ZTBL had a conditionality of the Asian Development Bank (ADB) loan framework as per which a restructuring exercise was initiated. The restructuring process entailed ADBs Rural Finance Sector Development Program (RFSDP) with the objective to transform ZTBL into a sustainable Rural Finance Institution. It also included the up-gradation of Information technology (IT) infrastructure for which funds from ADBs loan were to be utilized. Healthy and well-functioning rural finance markets are directly related to achieving the two key national policy objectives of accelerating rural/agriculture growth and reducing poverty. The realization of these objectives depends on the simultaneity of developments in rural finance and nonfinancial markets to foster the creation of diverse sources of rural finance to build sustainable financial institutions, and stimulate products and capital flows in the rural 13

sector. For this, rural finance must be seen as an integral part of equitable development within a framework of macroeconomic stability .For the majority, access to affordable rural finance services is also important to enable them to compete in the post-World Trade Organization scenario. Inability to compete because of high financial costs could reduce income of the majority of farmers and rural clients, particularly the small and subsistence clients. Lack of access to affordable rural finance services will also prevent the clients from switching to non-farm activities. The ZTBL restructuring plan covering the following; Governance: establish an environment that facilitates good governance and accountability; Systems: modernize operations through use of technology, networking, and communication tools; Business processes: streamline products and delivery systems so as to reduce transaction costs, simplify operations, and increase outreach; Products and services: introduce products and services that are financially economically viable; Human resource development: improve standards and skills of management and staff and strengthen training capacity; and Information Technology: establish new hardware and software platform to support MIS, accounting system including forensic accounting, and risk management functions. The reforms shall establish ZTBL as a key R.F.I of the country. By expanding its private sector role, the bank aims to establish network of high tech rural and agri. financial services through intermediations under public private participation and whole-sale -retail lending mechanism

14

15

Management Hierarchy The general direction and superintendence of the affairs of the bank are entrusted to a 12 members Board of Directors consisting of a chairman appointed by the Federal Government, the Federal Government officers from the Ministries of Finance and Food and Agriculture, four officers of the four Provincial Governments and one non official nominated by each province. One member on this board represents the State Bank of Pakistan also. However, at present the bank has 7 directors including chairman. The bank also has a president appointed by the federal government and a company secretary. In ZTBL, the president supervises and directs the Chief Executive Officer who supervises and directs the Head of Department, who then supervise and direct the officers under them. The management hierarchy of bank is as follows;

16

Earlier the bank was functioning like a pure government institution and permission has to be sought on every step for moving forward. Now the bank management board will be fully empowered to run the affairs of the ZTBL. More than 2,000 employees of the bank have opted for Voluntary Golden Hand Shake Scheme, offered by the bank to its employees. Bank has established a task force for improving the operational performance of the staff and it was monitoring the disbursement, recovery operations and performance of field functionaries. The taskforce comprised 10-15 officers and each officer will head a desk exclusively to monitor 3-4 regions. This task force will be responsible to evaluate performance of each MCO, Manager and Regional Manager on the achievement of banks policies regarding credit and recovery periodically.

Pics of board of directors,

17

Kissan Support Services Ltd. Subsidiary to ZTBL

18

Kissan Support Services Ltd. Is a subsidiary of ZTBL which is established with a capital investment of 100 Million to help ZTBL in the achievement of its objective and also to make availability of trained human capital to the bank. KSS Aim To provide support staff to ZTBL & under takes its non core activities. KSS Operation Kissan support services operate under its Memorandum & Articles of Association. Objectives The main objective of KSS is following: To provide to the Bank all kinds of support staff and ancillary services To plan, organize and establish training facilities to impart training to the banks staff Drip Irrigation System to assist the bank clients in marketing of their product and provide storage facilities To assist the bank clients in marketing of their product and provide storage facilities To provide welfare services to the employees of the Bank including education, vocational training, sports and recreation facilities To invest any surplus money of the company not immediately required To carry on any business, which may seem to the company capable of being conveniently carried on? To liaison & establish contracts with agricultural research organizations for development of efficient, effective and appropriate technologies To carry on business of providing consultancy, advisory and other agency services and support services to Zarai Taraqiati Bank Limited To provide to the Banks clients quality products and services for efficient and improved farming Etc

Services/Activities so far undertaken by KSS Security Services to ZTBL Recruitment/provision of staff janitorial Services provided to: a.ZTBL Head office buildings b.Ztbl Farms c.Staff college d.Printing stationery office e.AV Unit f.Old record office g.Sports club. Ware house h.ware house Management of Sports Activities 19

Management of Sports Activities photocopy Services Day to day minor repair and maintenance of ZTBL HQ Buildings

Products and Services ZTBL Locker Facility Zarai Taraqiati Bank Ltd. apart from its core functional activity marked with country based agri-business, has started to serve its valued customers by offering lockers facility. Initially, this facility is being offered at following 11 branches:Sr.no Name of Branch 1 Islamabad Branch 2 Mian branch Lahore 3 Peshawar branch 4 Gujranwala Branch 5 Faislabad Branch 6 Multan Branch 7 Sahiwal Branch 20

8 9 10 11

Sargodha branch Khan pur Branch Shafi Court branch Mian Branch Gulshan-e- johar

Following are the approved rates for rent of lockers and key deposits against which lockers will be allocated: Type Specification Rent Per Annum rent after grace period Key Deposit Small 6-1/2*4Rs.1200/Rs.1500/Rs.5000/*23 Medium 13-1/2.4Rs.1800/Rs.23000/Rs.10000/*23 Large 13-1/2*8 Rs.2700/Rs.3,125/Rs.16000/*23 Life Time Locker Facility On lump-sum payment of locker rent for ten years entitle the lessee avail the facility for lifetime ,without key deposit.

Product offered to Meet Finance Needof Farmers. Zarai Taraqiati Bank Limited (ZTBL) is a specialized bank providing agricultural credit in rural areas of the country. Pakistan is an agricultural country and near about 60% of its population is working directly or indirectly related to agriculture industry. But instead of being an agricultural country Pakistan is still not gaining benefits from this sector which it can gain. Some time we even does not able to fulfill our food requirement and sometime we have bumper crop but does not have facilities to store them properly, in this way we are wasting our resources. To gain benefit from agriculture sector it is required to be modernized to increase the per acre production and also to build warehouses to store. The main hindrance in the modernization of agriculture is the unavailability of finance. The other financial institutions feel reluctant in giving finance to farmers due to high level of risk in the production of this field. To facilitate farmers and to help in modernization of agriculture sector the government has established this bank which is contributing its part in achieving government objective from many decades. ZTBL is offering a blend of products to fulfill the need of different types of customers. Types of Loans Advanced 21

1. Short Term Loans Short term loans are loans for shorter period of less than a year. It includes, crop production working capital loans recoverable in lump sum commencing after the harvest/marketing of respective crops and within maximum period of 12 months. 2. Medium Term Loans Medium term loans are for a period of more than a year but less than 5 years. In includes, dairy farming and livestock etc. The installments of these loans are usually paid able in quarterly or half yearly basis. 3. Long Term Loans Long term loans are for a period of more than 5 years. These are development loans which require large amount and also need some time to show its result in the shape of better production. It includes loans for tractor, agricultural machinery, poultry farming, godowns and orchard in yearly/half yearly installments within maximum period of 8years.

Loan Schemes ZTBL is offering the following loan schemes to the farmers. Supervised agriculture scheme: Under this scheme agriculture loans are given for short, medium and long term loans up to Rs. 1.00 million per borrower/per case. The loans are sancti oned for In Fats, livestock , orchard, tra ctor, agr icultural machinery, tube well and irrigation facilities etc. under the scheme besides provision of credit, information are provided to the farmers for planning the farm, production, guidance for im plemen tation of the scheme, marketing and repayment of loans. Zarkhaiz (one window operation) For timely and conveniently provision of credit to purchase inputs, loans are provided to the borrowers under One Window Operation being conducted twice a week during Rabi and Kharif seasons Applications processed on the same day whereas sanction payments are made within three days at Branch. For Rabi Crops one window operation from October to January and for Kharif Crops from April to September each year which is extendable as per requirement of particular area. Sada Bahar Scheme

22

For providing timely input loans for crops and working capital for poultry and fishery etc, the Bank has launched a Sada Bahar Scheme. Assessment for inputs requirements for the whole year is made at the time of first application. The amount so assessed is treated as Revolving Limit provided it is within the security limit. The Managers are authorized to sanction such loan limits up to Rs.O.500 million. Schemes main features are as under: Revolving Credit Limit is fixed to cater production credit and ancillary requirements of the farmers during one year period. The documentation once completed remains applicable for three years with yearly cleanup/renewal without any further documents. The borrowers can draw the credit in lump sum or in installments according to his requirement. Like-wise he can repay in lump sum or in installments during the year when his cash position allows him. Pass Book containing transactions in his SBS Account is supplied to every borrower free of cost.

Tea financing scheme In order to increase the tea cultivation in District Mansehra, Swat,Mutta, Shangla par and Dir in Malakand Division, tea financing schemeh as been introduced which would not only save the hard earned foreign exchange but would also help improve the socioeconomic condition of the inhabitants of the area. The salient futures of the scheme are given as under: Maximum Credit Ceiling of Rs.60, 000/- per acre has been fixed. Farmers owing land up to five acres are eligible to avail loans. Credit will be given in 3 installments: first year Rs.30, 000/-, 2nd year Rs.15,000/- 3rd year Rs.15,000/- provided the disbursed loan is used properly. The credit would be repayable within 1 year with 6 years grace period with prescribed markup of 9% per annum. Rebate of 1 % will be allowed in mark-up on timely repayment and proper utilization of the loan. Crop maximization project Ministry of Food, Agriculture and Livestock (MINF AL), Government of Pakistan has launched Crop Maximization Project in 109 villages in various districts throughout the country to increase the productivity/yield of crops. Under the project MINFAL has to provide funds of Rs, 299.893 million to ZTBL for disbursing loans to the project farmers for purchase of inputs. Till the time funds of Rs.468 Million have since been received by the Bank for the purpose. These funds are to be revolved for meeting input credit needs in the project villages till30th June, 2014 after which Bank will return the principal amount 23

to MINFAL. Accordingly Credit needs of the project farmers are being met by respective ZTBL branches through Village Organizations formed for the purpose. Duly the currency of the project Bank is authorized to charge 4% per annum mark-up on loans to project growers to meet its operational cost, however in case of default Banks normal rate of return i.e. 9% p will be applicable.

PER ACRE CREDIT LIMITS

Major Crops Wheat Paddy(rice) Sugarcane Maize Cotton Minor Crops Overall credit limit per borrower Sada bahar scheme under one window operation or otherwise. Potato 36000 Bajra 24 Rs.1.000 Million Rs.0.500 Milliom 11000 16,000 19,000 30,000 20,000 21,000

Tobacco Mustard mung Tomato Mash Lentil Groundnut Sunflower Canola Sugar beet

29000 11000 19000 3000 11000 14000 15000 13000 12000

Jawar Gram Guara Caster oil Barly Berceme Soyabean Turmeric Ginger

11000 12000 3000 6000 9000 4900 12000 25000 30000

Growing Agro Forest Trees. Sr.no 1 Trees Bamboo 1st year 36,000 2nd year 9,000 3rd year 4,000

Mature Orchards/Fruits Crops Peer Loquat Apple Guava Bnana 26000 24000 38000 26000 16000 dates Strawberry Tea Citrus Mango 31000 24000 62000 28000 34000

25

Types of Security Immovable Property Agricultural Land Under Pass Book System 80% Outside Pass Book System 70% Under Alienability Certificate 66% Commercial/Industrial Land under Pass Book 80% Outside Passbook System Urban Residential/Commercial Plots in all localities outside Pass Book 75% Alienability Certificate 66% Residential/Commercial Buildings 70% Lease holds rights of a leased land of CDA/KDA with 99 years lease70% Moveable Property and Guarantees 1. Unconditional Bank guarantee from scheduled Banks Up to max imum amount of an un- conditional Bank guarantee after keeping sufficient margin for un-paid mark-up, cost, charges and expenses. 2. Guarantee issued by Central or Provincial Government Full amount of loan plus return and other charges. 3. Government securities 85% of face value or market values whichever is less. 4. Defense Savings & FEB Certificates 75% of value of certificates presented as security. 5. Fix Term Deposits Receipts 85% of face value of deposits receipts. 26

6. NIT Units 80% of the face value or market value whichever is less. 7. Life Insurance policies 85% of surrender value 8. Pledge of Potatoes/Seed Potatoes price or market value which ever is less Up to 75% of Govt. support. Personal Surety Against a bond with two sureties under General Credit and one surety in Special Schemes up to Rs.25,000/- or Up to 50% of appraised value of properties of sureties.

Debt Equity Ratio For Tube well/Tractors/Implements/Attachments/Equipments. All kinds of Tubewells/Turbi nes New Tractor 25% No equity but 10% of the loan is needed in pLS account -doWithin 5 years annual/biannual installments commencing one year after first disbursement. Within 8 years in monthly/quarterly on half yearly installments to be decided by manager in consultation with borrower. Within 5 years in monthly/quarterly or half yearly installments to be determined by the Manager in consultation with borrower

Used tractor, Equipments Attachtmens,imp lements and used tractor.

Except Tubewell/Tractors/Implements/ Attachments/Equipments Production Loan upto Rs.0.100 Million Land holding up to 25 acres/loan amount upto Rs.0.2Million Land holding further than 25 acres to 50 acres/loan amount beyond Rs.0.2 Million upto Rs.0.5 Million Land holding further than 50 acres/loan amount beyond 27 NILL 15% 25% 0.530%

Million upto Rs.1 Million.

Sr.no Types of loans 1 Short term loans

2 3

Medium term loans Long term loans

Repayment Periods Recovery period Crop production working capital loans recoverable in lump sum commencing after the harvest/marketing of respective crops and within maximum period of 12 months Dairy farming and livestock etc. In yearly/half yearly/monthly installments and within maximum period of 5 years. Tractor, agricultural machinery, poultry farming, godowns and orchard in yearly/half yearly installments within maximum period of 8 years and. Above Recovery Procedure

A) Recovery Schedule Recovery schedule in each loan case as per terms of sanction of loan is fixed and communicated to the borrowers after disbursement of loan. In case of default or failure in repayment of any installment on due date the mark-up shall continue to be charged and last installment due to this may differ from the amount of installments fixed at the time of disbursement. b) Issuance of Notices Demand notice is issued before the due date of every installment. A Legal Notice is issued one month after the due date informing the borrower that if the amount is not repaid within next one month, further legal action will be taken to recover the dues. c) Legal Action Legal action can be initiated against the defaulter if loan is not repaid even after expiry of legal Notice period. Where the court in bank's favor has decreed a case, account is to be settled by recovery of amount from the auction of the mortgaged property. The bank may purchase the mortgaged property if considered feasible to dispose it off later on through auction or in any manner deemed fit for getting the best price.

28

 The bank may dispose off the mortgaged properties of defaulters for satisfaction of its dues with out intervention of courts under Financial Institutions (Recovery of Finances) Ordinance2001.Rescheduling of Loan Repayment Facility. d) Rescheduling of Loan Repayment Facility ZTBL allows rescheduling of repayment of installments to its borrowers in order to maintain credit discipline and to moderate their genuine problems in real hardship cases and in areas declared as calamity hit by the respective Provincial Governments The Rescheduling facility is to be considered by bank on case to-case basis and is to be allowed on borrower's request only. The relaxation in recovery period shall not be allowed beyond one year in any case. The borrowers shall have to execute a supplementary loan agreement on Non Judicial Stamp Paper of appropriate value to give legal over to extended period. The borrowers shall have to pay the return for the extended period. is issued before the due date of every installment. A Legal Notice is issued one month after the due date informing the borrower that if the amount is not repaid within next one month, further legal action will be taken to recover the dues

29

SWOT Analysis Strengths ZTBL has brand name in agricultural loaning. It is first and large financial institution established in Pakistan to encourage agricultural financing. The bank has more than 350 branches throughout Pakistan and has presence in all the provinces of the country which enables it to capture and facilitate a large number of customers. The bank enjoys sovereign guaranty of Federal Government that covers its debt requirement to State Bank of Pakistan. The Bank has the most experienced and the least experienced staff, which is a good combination of experienced heads and exuberance of youth. The bank has ability to launch successful products for agricultural industry due to know how of the agricultural system of the country. Mobile Credit Officer is the unique concept which is helping in remaining more near to its customers and also helps in recovery. Concept like these helps bank in safeguarding itself in the risky adventure of financing to small farmers. Weaknesses ZTBL has not introduced any Islamic product in financing. Islamic banking is becoming popular in these days and to sustain and increase the number of customers every bank is felling need to start offering Islamic Products. This ZTBL requires noticing this changing trend. In spite of the presence of technology many jobs are done manually. Almost all other banks operations have been computerized but ZTBL is still working on manually written ledgers etc. Like other Government institutes the red tap dilemma also exists in ZTBL. The staff is not motivated because the promotion mechanism is based on experience rather than on the performance of the employees. This is the reason that usually employees stop giving their full efforts after knowing the reality that their performance pays a less role in their success. The average loan disbursement amount is 85,000 to single person which is not a big amount. Usually the loan obtained by the loanee can be used to meet working capital requirement only it cannot be used to fulfill the dream of modernizing of agriculture sector. There is a lack between the planning of head office and the reality of environment because the staff at high level have little know how of the real situation on the ground.

30

 The infrastructure of the bank is also based on old style; the bank is not refurnishing its branches like the other banks have done in this decade. The situation at branch level is not good, there is lack of even furniture, fans etc. Opportunities The bank started computerizing its operation which if completed will result in increase of the bank performance. The impact of computerization can be seen from the result of recovery of 2009which is 89%. The computerized system helps bank in reducing fraud. Due to increase in the government attention toward the agriculture sector it is expected to see the role of the bank increasing in the near future. As a result of different steps taken by the government regarding the betterment of the agriculture, small borrowers are attracted to get the financing and to start business. So, the ZTBL has an opportunity to attract the customers by giving them more attracted schemes. They have wide area network in all over the Pakistan, so ZTBL can make it possible the fast delivery of funds to rural areas. The flood of 2010 is challenge for the whole country. Because the most effected people are farmers so the bank has a chance to increase its reputation by utilizing its full resources to help them .It is also expected that the relief which the government may provide to them will also be delivered through the bank in the form of relaxation to the loanees. Threats The biggest threat in the banking sector is the continuous downfall of the country economy since the last few years. Sudden rise and fall in the trade and industry conditions and stock exchange business of the country also adversely affect the growth of banking sector. The default ratio of customers who are availing the credit facilities from the ZTBL can rise due to the economic recession in the country. Government type of working style is also a threat to the bank which requires to be changed to keep the banking growing. Many commercial banks also started agriculture loaning scheme so it is expected that in the future the farmers will have more choices to have finance from which will definitely affect the customer base of the bank. Political unrest is also a threat for the bank because it is a government owned bank and the change in government can result a change in the strategy of the government which can affect the plan made by the bank. Natural Calamities is also a problem, the bigger part of the bank customers relies on the environmental condition. Almost whole of the agriculture industry have threat from the changing environment conditions. The example of 2010 flood is still in front of us those who are affected are unable to pay their loans back. 31

32

33

Redemption of loan On the payment of all the dues by the loanee (principal + interest), he can free his land (or any other security provided) from any charge created by bank for the purpose of loan. For this purpose he will have to present the following documents: 1.Application for redemption 2.Stamp Paper of rupee 20 3.Last receipt of amount paid 4.Cheque book (if issued) When the loanee provides these documents to assistant officer (Or any officer appointed for these sort of work), the assistant officer asks the peon to bring the Loan Case File of the borrower. After the file is received by the assistant officer, he checks the documents that whether all the documents are there in the file. Then he makes required entries in the Passbook. These entries usually made on the page 28 and 30. The example of entries is given below. The following entries are made on page 28 See page number 16and The entire loan including block number 3for detail. 34

interest has been paid by the (Here page number loanee. 16shows the number and date of last charge created against the land of loanee in the favor of bank) The following entries are made on page 30. See page number 18 and block number 8 ZTBL Chishtian Branch for detail. (Page number 18 is usually the page where the detail of land mortgaged has been given, it include the area of land, khatoni number etc) After these entries the officer then sends the file to Manager for signature. On approval from the Manager for the Redemption Application the assistant officer attaches all afore said documents within the file and record in the File Movement Register that file has been moved from the record room for the redemption purpose. Than the file is send to AMO (Assistant Manager Operation) for further process. The loanee is given the date of next week to collect his Passbook. During this period AMO checks the record of the loanee to confirm that the entire due amount with respect to that particular loan has been paid and then he signs to give approval to assistant officer to issue Passbook to the loanee. The AMD (Assistant Manager) and Manger both also sign the notice issued in the name of Patwari and Tehsildar that the land can be transferred to the loanee as the loan has been fully paid by him. Then file again comes to the assistant officer, he checks the signature both in the notice and Passbook and then stamped both. Now the Passbook is ready to issue. Before issuing Passbook the officer record that passbook is issued to the loanee in the Dispatched Register. On the issuance of Passbook to the loanee, the officer verifies that theperson receiving the documents is the original owner of the land which is mortgaged with the bank. After getting the Passbook, the loanee goes to Patwari and Tehsildar for the change of record back to his name. The one thing which is interesting here is obtaining Stamp Paper from the borrower. This is not a requirement but bank has made it practice so that if in the near future, it finds that some amount is still due by the borrower than it can write on the stamp paper whatever it wants and then can claim the due amount from the borrower.

35

Opening of Current Account In the ZTBL, the current account usually opened only when the person comes there for a loan. On the approval of loan, his sanctioned amount is usually credited to his current account. The procedure of opening of Current Account is not very complicated. The following are the main point in the opening of a new account: 1. Acquiring original CNIC 2. Filling the Current Account Form 3. Filling of Know Your Customer 4. Filling of Current Account Card 5. Registering name in the Current Account Register, (Issuance of A/C No.) 6. Filling of deposit slip of starting amount 7. Signing by AMO and Manager 8. Issuance of Cheque book 9. Opening account in the ledger of bank 1: Acquiring Original CNIC 36

It is mandatory to check the original CNIC of the person before opening of current account. In the ZTBL it is routine to open account when manager sanctioned and signed the amount of loan. Because at that stage it becomes essential to have an account in the bank otherwise the amount of loan will not be paid. The other documents required to attach with the forms are: 2 recent pictures Copy of CNIC. 2: Filling Current Account Form After obtaining original CNIC the form for current account is filled with the information written on the CNIC. The form includes the following information: Type of account Branch Name Branch Code Name Father Name CNIC Number Address Occupation Nationality Contact number Date of birth Marital status Mother name Name, CNIC, Contact of MCO who knows the person personally Next of Kin (The person who will have right to operate the account in the event of the account holders death or any other mishap) Starting amount 3: Filling of Know Your Customer Form The Know Your Customer form is also attached with the currentaccount opening form and contains the following information: Name Account number CNIC number Address Purpose of opening of account Monthly income Source of income Type of customer (i.e. Walk in) 37

Public figure Usual mode of transaction (i.e. in cash, cheque) Etc. 4: Current Account Specimen Card Name Adress: Name of account holder This side is used to write the name of account holder both in Urdu and English.

Account No. Type of Account: Name of account holder This side is used to obtain the signatures of the account holder for verification of cheques in the future if required

Signing Authority: One side is used to obtain the signature of account holder; I usually take 3 signature of him in the right side of card. While the left side of card is used to write the account holder name in both Urdu and English.

5: Registering name in the Current Account Register (Issuance of A/C No.) After filling the required forms the name of the new account holder is registered in the Current Account Register. This register requires writing down the name of account holder, his father name, Address and the starting amount. These are the following blocks made in the register requires to fill. Account Date of Number: It is opening of account number account: issued to holder. It is a serial number, so I used to write the next number when I have to open an account. Opening balance of account: Name: Father name : Adress:

Fahad saif chauhdary S/O Saif.Ul.Haq 38

Example:1014

Safee.

When the account number is issued, it is also written in the AccountOpening Form and Know Your Customer Form. 6: Filling of Deposit Slip of starting amount To open an account in the ledgers of bank the account holder requires depositing an initial amount. This amount in ZTBL is usually 1000; however it depends on the amount of loan sanctioned like some loans required depositing a larger amount with the bank before issuance of loan from the bank. The example of such loan is of Tractor because I have not be given chance to stay with an MCO, so I dont know what exact amount is required to deposit with the bank for any particular loan. The Deposit Slip which I used to fill during my internship consist the following information: ZARAI TARQIATI BANK LIMITED. Depositor copy Branch Name: Branch Code: Date: Name : Account number: ZARAI TARQIATI BANK LIMITED. Bank copy Branch Name: Branch Code: Date: Name : Account number:

Particulars Total amount Rupees in words: Depositors Signatures: Signing Authority:

Amount

Particulars Total amount Rupees in words Depositors Signatures: Signing Authority:

Amount

7: Signing by AMO and Manager

39

Then the forms and deposit slip is signed by AMO (Assistant Manager Operation) and Manger to verify that all the requirements of opening an account is met by the account holder. 8: Issuance of Cheque book Than on depositing of a nominal fee of rupee 30 the account holder has been issued a cheque book. In the bank where I have completed my internship, the cheque book is issued by the cashier when the person deposits his starting amount of account and the amount of issuing of cheque book. 9: Opening account in the ledger of bank Unlike other banks, ZTBL is still working on manually written ledger books. However, the bank is also gradually computerizing its records. These ledger books are large books with a number on front of it which helps in finding the record of any particular person. The ZTBL Chishtian branch where I have completed my internship has 52 ledger sat that time with the current account holder of 11595 at the date of 15September 2010. There will absolutely many accounts which will not be alive. When the depositor deposited the amount his name and other particulars is written down in the ledger so that he can transact with the bank in the future. The ledger of current account contains the following information. ZARAI TARQIATI BANK LIMITED Page no.177 Branch name: Chishtian branch Branch Code: 22305 Name of the borrower: Signature: Father: Address: Account no:

Cheque book: Date 17 particulars Debit Credit Balance Signing Authority

The above given table is the example of information usually written in the current account of a customer. There are also many other column available in the ledger books but they all are not used in the bank. There are some options which are not printed there but it is a practice to write that information, like there is no column of signature but 40

without a signature no one can check the validity of a cheque. So, I have observed that the signature and thumb impression is used to take in the right side of ledger book where a lot of space is available. The other option which I have mentioned here but not included in the ledger book is the cheque book number. It is also practice to write down serial of cheque book in the space available. It makes it possible to confirm that the cheque book which the customer is using to transact with the bank is associated with that particular bank account or not. Here I have also made few entries which show how a transaction is recorded in the ledger book. Absolutely, the date is the first option than the particulars which shows what exactly happen on that day. Like in the first entry the bank account has been opened with an amount of 1000. So, I have written by cash in the particulars which represents that the person has transacted in cash. Then I credited the amount which shows that this money is given by the customer and in the balance column it has increased the balance with the same amount of 1000. The next column is used by the signing authority (AMO in my case) to confirm the transaction. As I have written before that in ZTBL current account is usually opened only when the bank has to disburse any loan to the customer. When I have joined the bank that was the slack time for the bank because all the customers of bank are farmers that is why they come to bank to get or give loan when they have to plant or harvest any crop. That is why a number of bank customers are seasonal. They are usually a great rush from April to June and then from November to December .Awami Zari Scheme was the only scheme available to new borrower at the time I was there. In this scheme a part of sanctioned amount is given to borrower to meet the wage and water expenses and the rest amount is paid by supply order of fertilizer and pesticides. The amount which has to pay in the form of cash is credited to the current account of customer from where he can withdraw it. The 2nd entry in the sketch of ledger above shows the disbursement of any of such loan, which has increased the balance to 51000.When the customer draws a cheque on the bank the entry in the ledger will be like I have shown above with the date of 16-09-2010. The account of the customer will be debited and the balance will be reduced with the same amount .A large number of ZTBL customers are illiterate so they can not fill their cheque by themselves and due to this reason almost all the cheques are filled in the accounts by a clerk. Before filling the cheque of anyone he assures the balance in the account and in the same time he records entries so he will not have to reopen the ledger to make entry after the deposit or withdrawal of amount by the customer. So there are some things which I have learned from the seniors which they have developed to facilitate themselves when the customer will come again in the future, these guidelines are following: Write the ledger name and its page number on the front of new cheque book Write the account number on every cheque of new cheque book Take the Thumb Impression of every customer on the cheque For the man take left thumb impression and for women take right or both No cheque will be paid to anyone else than account holder if it is a loan account Fill the cheque in Urdu if the customer signs in Urdu or gives Thumb Impression only Also fill the memorandum attached with in cheque book with each cheque to record all the transaction for future reference of client and to the bank also.

41

All the cheques are required to be signed by respected authority before payment of cash, like AMO (Assistant Manager Operation).Before his sign no cheques can be passed, he also cheques the entries made by clerk in the ledgers before passing cheques. In this way the entries originated by any person is double checked which reduce the chances of any mistake. Whenever a cheque of more than 25000 is come to cash it is required to write a voucher of With Holding Tax with it so that the amount of tax can be deducted from the payment. The vouching will be discussed later on.

Writing of Vouchers
Vouchers are the important evidence of all the transactions takes place in the bank. In the accounts department of ZTBL it is the back bone, every transaction of bank with reference to cash required a voucher to be drawn against it. The vouchers are of three types: 1. Debit Voucher (Receipt of Amount) 2. Credit Voucher (Payment) 3. Transfer Voucher 1. Debit Voucher 42

Debit Voucher is used when bank received any amount from anyone. The example is of deposited amount by the depositors, the payment of loan by the loanee etc. 2. Credit Voucher It is used for the payment of any amount by the bank to anyone. Like the cheque drawn on bank, the expenses of bank itself etc. 3. Transfer Voucher As the name shows it is used when the amount is required to transfer from one head to another. The example is the transfer of utilities bills accepted by the bank to the respected utilities provided company(Mepco, PTCL etc.). The transfer of return to the income account of bank, it is also used when the loan is sanctioned so it is required to transfer amount of loan to the loanee account .Another use of transfer account is to correct mistakes in the ledger, for example if an account is mistakenly debited in place of another account. So the transfer voucher can be written to credit the first account and debit the second one to correct the mistake. In the end of day all the vouchers written during the day is required to be write down in the daily Scroll (which will be discussed later on) and then all the vouchers of day is sewed and then sealed so that no new voucher can be placed or removed from the record. These vouchers used to store in record room and they keep piling up there. Every voucher has at least two copies, one for the customer and one for the bank record. For easy recognition the vouchers are made of different colors. Debit Voucher (Have three copies and in white color) Credit Voucher (Have two copies and in blue color) Transfer Voucher (Have two copies and in yellow color

Sample of debit credit voucher

43

The debit voucher for the deduction of With Holding Tax from the cash withdrawal of more than 25,000 will be filled in the following way. First the name or branch, its code and the date is required to write. Than the information from whom this tax is collected, his name, father name, his village and city name will be written. After that in the particulars it will be written A/O of With Holding Tax and in the GL Head (General Ledger Head) the head number of With Holding Tax(which is 3056 in the ZTBL) will be written. The amount will be written after calculating .3% of withdrawal amount. In the total the same amount will be written again and then this amount will be written down in words. In the last the signing authority will sign in .In this voucher of W.H Tax only a few columns of the voucher is used, the other columns can be used for other types of transactions. The explanation of each column is given below: 44

1: Particular: In particulars the reason of the transaction is written down. For example, Amount of Recovery etc. 2: Loan Case no./ Account no./ Advice no. If the voucher is of recovery than in this column the loan case number of the loanee who has come to pay loan will be written. This column has 6 blocks to write, due to shortage of space these block cant be shown in the above sample of voucher. Loan case no./Account number./Advise no. 3: G.L Head (General Ledger Head) It is the General Ledger Head which is required to debit. These are standard heads used in the entire branches of ZTBL. Like 3056 is the G.L Head for W.H Tax, it will be same when any branch of ZTBL will collect this tax from his customer. 4: T.R Code This code is rarely used for debit and that is why I dont have complete information about it. In the recovery voucher this column is used, when MCO collects the cash than I used to write 14 and when loanee himself comes to pay loan I used to write 15 in that place. So, it helps when the voucher is recorded in the computer room to understand the type of transaction. Like, in the credit voucher I was asked to write 01 code for all the expenses of the branch and 02 for the expenses of the Zonal Branch. So, it helps computer to understand the type of transaction. These codes can be different in different banks. 5: R.O Code Originated/Respond code is used to show that whether a transaction is originated or responded. For example in the W.H Tax example the word O will be written in this column which will show that this debit voucher is originating this transaction. And when this amount will be transferred to the respected head in that voucher the word R will be written which will show that this voucher is responding to any transaction.

6: Effective Date It is the date on which the amount is received. It can be different from the date on which the voucher has been written down. For example, on13 September an MCO is on a tour to the villages which are under his circle; during his visit he collects recovery of 100,000 from some one. He will issue receipt to the loanee as evidence that MCO has collected cash from him and on the next day (14 September) when he will come to the bank that MCO will deposit cash as a recovery in the name of that loanee. Because the cash has been collected by him a day before the voucher of recovery is written down so the effective date on voucher will be 13 September while the date of Voucher in right upper side column will be the date of 14 when the voucher is written. Why the effective date required? The answer of this question can be understood from the above example. The loanee has paid the MCO on13 September, while the amount is deposited by the MCO on 45

14September. So, no interest is required to be charged for the day of 14September because the amount has been already collected a day before. If the effective date will not be written than there will be discrepancy between the amount collected by MCO and the amount calculated in the accounts in the time of writing voucher because the amount calculated in the accounts department will include the interest of one more day than collected by MCO. 7. Amount This column used to write the amount, it is also divided into many blocks so that when write any amount it will be easily readable later on. Like the first block in Rs. Column from right side is for figure of hundred and the next block is of thousands. 8. Contra Voucher/Contra Branch No. This column is used when we are responding to some other voucher or branch. During my internship I have used it once time. One of the customer of a bank has received tractor in the Benzir Tractor Scheme but the company failed to deliver the tractor on the agreed upon date. And it is a contract between the bank and the company that when company will not deliver the tractor on the agreed date, it will be charged with the penalty of 150 rupee per day. So, the bank had a claim on the company of rupee 25,000 due to late delivery to the customer. The company has transferred this amount to the bank account, so definitely the bank has a voucher written against it. Now this penalty is in the bank account which it has to transfer to the customer who has faced difficulty due to late delivery. So, when I transferred the amount from bank account to the customers account I was actually responding to the first voucher created with which the amount was transferred from company to the bank account. So, I was asked to write the voucher number of that first voucher in the column of contra voucher of new voucher with which I am transferring amount to customers account so that in future when any one need to find out that from which reason the account of the customer is credited, he can easily find the contra voucher number from the voucher written to transfer amount to the customer account. And when he will open the contra voucher number, he will find that the amount was transferred by the company as penalty to the bank account. So, in short it is used when we are responding to any other voucher or branch. The Exact view of contra voucher/contra Branch No. and Record no./CA Code are the following. These two head come under the main head of Sundry/Suspense & Central A/C only which is not displayed in the voucher sample due to shortage of space. 9. Record No./CA Code. Record number is the number of the entry in any contra voucher towhich we are responding. A voucher can have many transactions written on it as you can see that there are number of rows available in the voucher to write on. So, giving contra voucher number is not the only thing we need to write to give exact reference, we also need togive reference of Record no. of that particular transaction in that voucher. And CA code is used when we are responding to any Contra Branch No. 10. Rupees in Words Rupees in words are compulsory to fill so that to avoid any mistake in writing amount in numbers and also to avoid any misconception in future. 11. Encl (Enclose)

46

Enclose is number of receipt if any attached with the voucher. Like if I want to write a credit voucher to pay some employee who has bought stationary for the office use so I will attach the receipt of the stationary he has bought from the shop with the voucher and I will write (1) in the enclose so whenever anyone will see the voucher he will know that there is a receipt attached with the voucher. 12. Signatures There are three spaces available to sign in the voucher. These spaces are for the person: One who has prepared it One who has checked it And signing authority who passes this transaction But I have not seen anyone signing the first two places, the only signature place is used is of signing authority because it is compulsory. Both Debit and Credit vouchers have same columns and lines to write on. But the transfer voucher is different from these two, it has the same columns and lines but it is divided into two parts. Upper side is for the debiting an account and in the down side is for crediting an account. Because when we use to transfer amount from one account to another account than there should be one account which is required to debit and the other account should be credited to complete the whole entry. The sample of Transfer Voucher has been given in the next page.

Sample of transfer voucher.

47

Daily Transaction Scroll

Daily transaction scroll is written by operations officer every day in a bank. It is the record of all the cash inflows, outflows and transferred on a particular day. Both cashier and operation officer writes his own scroll at the end of day when they have to close the cash. The closing balance in both these scrolls must be same otherwise there are some transactions which have not been recorded correctly either by the cashier or the operation officer. If I will divide the page of scroll than the following are the important columns and part of it: 48

Zarai Tarqiati Bank Ltd. Daily Transaction Scroll Name of Branch---------------------------

Branch Code Sheet Number:

The above are the sketch of columns used in the upper side of scroll page. Sheet number is used when there are more vouchers to write and they cannot be written on a single sheet so the next sheet is required to use in such situation the number of sheet should be written so that they can be arranged in a proper way. Sr.no Voucher no. G.L Debi Credit Debit Credit Head t 1. 2. 3. 4. Total The above view is of the rest of the page where all the vouchers are recorded. The sheet is divided into two sections the left side part is used to write the debit and credit vouchers and their amounts, while the right side is used to write the debit and credit of transfer vouchers. The above is the example of writing of different vouchers. The first two vouchers are debit vouchers that are why I have written the amount (11,000 and 500) in the debit column. The 2nd voucher name is not written completely which is an ease which can be used if the same serial is going on and only the last number is changing. The third voucher is a credit voucher and its amount (5,000) is written in the credit side in front of it. The fourth voucher is representing a transfer voucher so its effect will be shown in the right side of the sheet. In both Debit and Credit column of the right side of sheet is filled with the same amount because in transfer voucher one account will be going to be debit and the other will be credit so the net effect will be zero. In the end all the amounts of all the vouchers are totaled in their respective columns. Like in this

example the debit vouchers total amount is 11,500 and the total of credit vouchers is 5,000. The debit and credit side of transfer vouchers side will always be the same, which are 4,000 in the example. After getting this total the next step is to calculate and write the closing balance. To calculate the closing balance first step is to write the Opening Balance which is absolutely the Closing Balance of last day. Here in the example I have assumed it 400,000. After it the debit balance will be written in the 2nd row and in the 4th row both 1st and 2nd row will be added to get the total balance. Now the credit balance will be written and to get the closing balance the credit balance is required to deduct from the 49

total balance of 3rd row. To close the cash, this closing balance should match the closing balance in the books of cashier. When comparing with the cash scroll of cashier the Total Balance, Credit Balance and then Closing Balance all should be similar otherwise there will be something which is skipped during writing even by the Officer or by the cashier. When closing cash, in the end of this scroll sheet the number of total debit, credit and transfer vouchers is required to be written so that nothing can be added or erased from the above scroll by any one. Number of Vouchers Debit Credit Transfer Total 2114As you can find that in the above given example of scroll, there are two debits, one credit and one transfer vouchers have been written so the same number is written in the ending column of scroll sheet. Making Entries in the Ledgers In ZTBL the record of current accounts and loans are manually maintained. There are many records which have been computerized but still the hand written ledgers are used. Making entries in the Ledgers requires simple concept of debit and credit. However the understanding of banking practices are required so that to follow the exact way of recording any transaction because usually the column written on the ledger books are not used for the purposes for which they are made. The employee usually has established their own way of writing transactions in the ledgers the way in which they feel easy. I have found many columns unused in the ledgers of Sada Bahar Loan Scheme or they have been used to write other information which is different from the heading of columns. Disbursement and Recovery Entries When a loan is sanctioned and ready to disburse it is recorded in there spected ledgers. I am here taking example of SBS (Sada BaharScheme) which is a revolving finance scheme. Every loanee has a unique Loan Case Number which is the base of all the record of his loan. When a loan of SBS is sanctioned its amount is not transferred tothe current account of the loanee like it is used to transfer in the AZS(Awami Zari Scheme). In SBS the Loan Case Number is used for all types of transactions, when a loan is sanctioned it is recorded in the SBS ledger with the name of loanee and Loan Case Number is used asan account number from which he can operate. The information which is required to write in the ledger sheet when anew loan has been passed and ready to disburse are following:

Loan Case Number Name Parentage Address CNIC Maximum limit Date of maturity Cheque book number After entering the above information the loan can be disbursed to the loanee when he desires. Because almost all the customers of ZTBL are low earning farmers and they require immediate cash to meet their expenses so they draw a cheque on 50

the bank on the same time when their loan is entered in the ledger book. In SBS farmer can with draw the amount till he has reached maximum limit and the return will only be paid on the amount which he has taken out as a loan. The entries of disbursement can be easily explained by taking an example that the loan has be sanctioned and it is recorded in the ledger now loanee want to withdraw the total sanctioned amount of 50,000.

Revolving SBS Loan Now suppose a situation where loanee wants to pay his entire outstanding loan and then wants to withdraw it again. This usually happens when the MCO want to achieve his recovery target or the time period of one year is completed from the date on which the loanee has withdrawn the amount. It is compulsion for every loanee to return his entire loan at least once in a year, if he will not pay his loan within one year, he will be treated as defaulter and he can withdraw only 90% of sanctioned amount from his running SBS finance. But in SBS the default situation is rarely occurs because when the limit of one year is near to end, the loanee can revolve his loan by paying only interest of the loan. This can be explained by continuing the last example, on 01-05-10 the loanee has paid 51

20,000 and his remaining outstanding balance is now 31.480. Now suppose he comes again on01-06-10 and wants to revolve his loan, on that day the following entries will be made in his loan account: Because the loanee wants to pay the total outstanding amount, the first thing to do is to calculate return on the last outstanding principal balance. Because the loanee has already paid some part of principal on01-05-10 due to which the principal has been reduced from 50,000 to31,480. Now the return will be calculated from 01-05-10 to 01-06-10 (31 days) at last outstanding principal balance of 31,840 . (31,480 * 9/100 * 31/365) = 241I have debited this return calculated and it has increased the total outstanding to 31,720. Now the next step is to obtain all the outstanding amount of principal and interest so that the account can be closed and again revolved on that day. In the 2 nd entry on the date01-06-10 I have credited all the principal amount and the balance of principal became Nil and the same I did with the return, I have credited the total balance of return and its balance also became Nil. Because both principal and return balance is now Nil that is why the total outstanding amount of loan is also Nil now and the Account is closed on that situation. Now the loanee wants to revolve his account so he will again draw a cheque on the bank of any amount with in his sanctioned limit, in this example I have assumed he again wants to get the total amount out of it. So, I have again debited the amount which has increased the principal balance and then total outstanding balance to 50,000. These are just entries in the ledgers absolutely the loanee will have to follow some procedures to revolve his account. Usually MCO of the loanee asks to revolve the account and then vouchers are written and entries are made in the ledgers and then these vouchers and entries is passed by the AMO otherwise no payment or recovery is made. The vouchers need to written when revolving an SBS loan accounts are following: A debit recovery voucher of full outstanding amount including Principal and Return. Whenever an account is fully paid it is practice in the bank that write the return collected on this account on the upper right corner of the voucher, it helps the other employees in the end to transfer it to the Income Account of bank and also to prepare weekly report on recovery. Another debit voucher of With Holding Tax will also be filled if the amount loanee wants to again withdraw is more than 25,000 A debit voucher of revolving fee (100 rupee for SBS) 52

A credit voucher will be written in the end of the day against the cheque drawn by the loanee A transfer voucher which is used to transfer the Return recovered on the loan to the Income Account of the bank. Actually in revolving an account the loanee pays only the interest amount, revolving fee and W.H Tax if any. The principal is adjusted against the new disbursement of loan. For example: If 51,000 is total outstanding balance (50,000 principal + 1,000returns) and loanee wants to revolve the account, he will have to pay the total outstanding amount first and then he can withdraw again the principal of 50,000.Amount the loanee will pay-51,000Revolving fee-100Again disbursement 50,000103 of loanW.H Tax on 50,000 -150 Balance -1,250 1250 is the amount which loanee will pay only and his loan will again be revolved to a new maturity of one year. In this way revolve benefits the two parties, one is loanee who has to pay a nominal amount and he obtains a new maturity date. The second one is MCO who can show that he has recovered the loan which helps him in achieving his recovery target.

Opening and Closing Cash In the beginning of every day the cashier opens the cash in time. The cash remains locked in the safe and it requires two keys two open. One key is always remains with the cashier and the other key remains with the manager; however manager can further gives it to someone else. In the branch where I have completed my internship, the AMO has the second key. Key Register: It is a register which have information about the keys of the safe. Whenever a person gives the key to someone else, he writes in the key register the name of person who has received the key and that other person signs it. Usually the keys remain with the cashier 53

and another officer of the bank but when one of them is on leave it is required to give responsibility of keys to someone else because during their absence the cash of bank cant remain closed. If there is any mishap the person who has keys according to key register will be held responsible. Thus the key register has significance matter; no one gives the key to someone else without entering it in this register. When a key is given to someone else the time of giving keys is also written in the register, it is precaution to make it clear that on which time of day the key was with which person. Safe Register: Whenever the cash is placed inside or remove from the safe it is recorded in the safe register. In the morning when cashier brings out cash from the safe he writes the date, amount and denomination in which cash he has obtained. And same information is required to enter when the cash is again placed in the safe in the evening. The person who gets cash from the safe or puts it also signs it. The cash is also written in denomination in which it is exist. Like if bank has 1 million than this information is not enough the denomination in which this one million exist in bank is also written. Like the bank may have this amount of 1 million in the following denominations.

300 notes of 500 150,000400 notes of 100 40,000200 notes of 50 10,000 Total 1,000,000

Dispatch and Diary Dispatching and receiving letter is the routine work in any bank. The letter which the bank sends to others is dispatched while the letter which the bank received is called diary. The bank maintains the proper record of every document which is dispatched or received. Recommendations Implementation of Information Technology The following are the problems which I have felt during my internship which is required to be noticed to increase the pace of growth of the bank. Although the bank is computerizing its operations but it is far behind other commercial banks, it needs to speed 54

up implementation of Information Technology so that to perform its operations efficiently and effectively. Information technology will help bank in finding and stopping practices and other irregularities and this will result in much better performance. Providing computers and software is not the only solution, the bank needs to train its employees so they can use this new technology for the betterment of the organization. The bank has many experienced employees but they have no or very little know how of IT and many of them is not interested in learning it. So, training the new and young employees is a better option because they have will to learn and also they are people who will have to work for a long time with the bank. Investing in young employee is better than training those who are near to their retirement. Motivation of Human Capital Human capital no doubt is a precious asset for any organization, without skilled and motivated employees no organization can survive in this competitive environment. ZTBL has mix of experience and young staffs which provide excellence blend of required skills and enthusiasm for progress. But I have found during my internship that the employee of ZTBL is not as much motivated as other banks employees are. The reason behind this is the mechanism of promotion, many of the permanent employees of the bank has not been promoted since last 10 years and the same case is with the contracted workforce they have no idea that when they will be permanent. The promotion criteria like all other government institutions is based on the experience, the more older the employee is the more he has a chance to be promoted irrespective of this that how his previous performances was. But what I have heard from the employee is that they have no idea that when and how they will be promoted, there are no hard and fast rules made as it is available in other government institutions. The banks Human Resource Department needs to focus on developing more trained and motivated employee, the efforts they are putting in this regard is not satisfactory. However, the bank starts training each and every employee which is a good thing but with training the motivation in terms of promotion, bonuses etc. are also required.

Branch Infrastructure Almost all the banks in Pakistan has refurnished their branches to provide better services to its customers, the branches bank of today is completely different from the branches of 10 years ago. That all is started when City Bank come in Pakistan with a new idea of modernized decorated branches. After it all the banks has adopted this concept and they build and refurnished their entire network of branches. But ZTBL is still working on the old style; the branches have not the furniture, fans, rooms etc. according to their requirements. The concept of air conditioning which has become an essential part in all other banks is a thing about which the bank has not even think, there are even less fans than required. 55

It is true that bank does not have a need to make their branches like all other banks but it is required to provide at least the basic necessities to make the working of the employee comfortable and also to facilitate its customers.

Conclusion ZTBL is a expert institute which provides financing services to the people of rural areas and in this way it is contributing its part for the development of the country. Due to a government owned organization the politicians and other higher powers that be for a time use it to give benefits to their families and friends and this also effects the growth of the bank. However the bank has improved itself a lot, the profit of the year of 2008-9 and turn down in Non Performing Loans are clear signs of improvements. The few things on which the bank has to focus is implementation of information technology with faster 56

pace, improving branch infrastructure and functioning of its human capital to make them motivated.

57