Professional Documents
Culture Documents
Jul
REPORT ON HABIB BANK LIMITED
by Commerce Solutions in Internship Report
THE BANK
The term "BANK" is derived from an Italian word "BANKO"
which means "Bench" that is where people were meet and solve
their financial matters.
The term bank is being used for a long time yet it has no precise
definition. The basic reason is that the banks perform not just
one but many types of functions originally the banks were
supposed to make short term loans to the traders only. The banks
now not only make short term loans to the formers, traders ,
industrialist etc. But also invest in a wide variety of long term
earning assets.
The commercial banks also undertake and execute trust, deal in
stock, shares and debentures, issue guaranties and indemnities
underwrite and sell new securities, and deal in foreign exchange
etc.
However some of the definitions of bank from different authors
are as follows.
According to Dr. Hart
"Banker or bank is a person or company carrying on business of receiving money
and collecting drafts for the customers subject to the obligation of honouring
cheques drawn upon them from time to time by customers to the extends of the
amounts available on their currents accounts"
In the words of G W Gilbert
"A banker is a dealer in capital or more properly a dealer in money. He is an
intermediate party between the borrower and lender. He borrows one party and
lends to the another"
TYPES OF BANKS
1. Central bank or state bank.
2. Commercial bank.
3. Exchange bank.
4. Industrial bank.
5. Agriculture bank.
6. Investment bank.
7. Saving bank.
CENTRAL BANK
Every country has its central bank or state bank. Its major function is to carry out a
country's monetary policy with an aim to safeguard its financial and economic
stability. It has the monopoly of note issue. It is also the custodian of money
market. State bank is the Banks bank and lender to the government.
COMMERCIAL BANK
Commercial banks are profit earning concerns. They receive deposits and advance
loans to the borrows. They greatly help in financing for internal and external trade
of the country.
EXCHANGE BANK
The main function of the exchange bank is to finance the foreign trade by the
purchase and sale of foreign currencies in the form of drafts, bills of exchange,
telegraphic transfers. They also perform the function of commercial bank.
Receiving deposits and advancing loans.
INDUSTRIAL BANKS
Commercial bank cannot afford to block their funds in long term investments. The
industrial banks receive long term deposits and finance the industries by providing
them long term credits. In Pakistan the Industrial bank named as Industrial
Development Bank of Pakistan (I.D.B.P) was established in 1961 for this purpose.
AGRICULTURAL BANK
Agricultural bank provides short and long period loans for financing agriculture.
The agriculturists need short and long term loans for meeting their day to day and
long term requirements for making permanent improvement in the land. In
Pakistan Agricultural Bank is named as Agricultural Development bank of Pakistan
(A.D.B.P) and it was established in 1961
INVESTMENT BANK
The main function of investment bank the merchandising of shares and other
securities, managing and distributing the issue of shares and other securities.
SAVING BANKS
These are the institutions which are sponsored by the government for having
facilities to the people and small means. These bank collect small saving of people
and allow them to withdraw in small amounts. Also another institution i.e. National
Savings is working in the same capacity.
HABIB BANK LIMITED
The working of the Habib Bank Limited was commenced on 25 thAugust 1941 in
Bombay and in 1948 it was established in Pakistan. It was the first Muslim Bank in
the Subcontinent,
Now there are 1773 branches inside the Pakistan and about 66 Branches
overseas providing financial services to its worthy customers.
Habib Bank is working for the last 50 years and become the largest commercial
bank in the country. It has the Authorized capital of RS 5000 Million with a paid
up capital and reserves of RS 858 Million and its deposits are more than RS 213
billion in approximately 10.7 Million accounts. It has the advances of 131 Million.
Habib Bank has innovated a numbers of financial schemes like term deposits,
Special notice term deposits, A.T.M. etc. As governments are hoping to be liberal
and their policies are innovative and liberal the scope of banking is increasing and
Habib Bank is on step ahead if the growth and participating very much in the
economic growth of Pakistan.
Habib bank HEAD QUARTER is situated in KARACHI that building has highest
number of stories in Pakistan.
Habib bank has basically 9 Regions all over the country those control the entire
activity of Habib bank operation is countrywide.
8 Balochistan Region 02 46
MISSION OF H.B.L.
To inherence the corporate culture in business society through quality oriented
banking services.
To increase the profitability of our shareholders through investing in financially
sound and profit earning projects.
To maintain and increase the reliability and quality services to our accounts
holders.
To strengthen the status economy through financing the export under control of
state bank of pakistan.
Lahore Region
1. Lahore Zone
2. Sheikhupura zone
3. Gujranwala zone
4. Gujrat zone
8. Finance division
Divisional Head
Vice President.
4. COMPUTER DIVISION:
Divisional Head (AVP)
Divisional Head
SP & VP
Overseas Pakistan
8. FINANCE DIVISON :
Divisional Head
|
Purchase and Insurance security war Housing Deptt.
Control deptt.
Divisional Head
GM GM GM GM GM
ZONE
|
Zonal Chief
|
PRESIDENT
1. To implement the polices chalked out and decision made by the board of
directors
2. To look after the affairs of the whole origination
3. To maintain good relation with the big Clint of bank in the interest of the
origination
4. To promote the business activities of the bank
5. To find new areas for investment
6. To make liaison with the government and state bank
BORD OF DIRECATORS
1. To make the policies in order to promote the business of bank.
2. To declare the profits on deposits.
3. To announce the rate of interest on advances and loans.
4. To make the policies for the welfare of bank employees.
ZONAL CHIEF
1. To make visit at the branches in order to promote the business activities and
make the discussion at the spot under his discriminatory powers.
2. To promote the business activities.
3. To make the relation with the industrialist business man Agriculturist etc. for the
promotion of banking activities.
4. To solve the union problems.
BRANCH MANAGER
1. To look after the affairs of the branch.
2. To meet the depositor and borrowers and solve their banking problems.
3. To make try for increasing the profitability of the branch by capturing low
cost/cost free deposits and giving the secured advance to the valued clients.
4. To reduce the expenses of the branch.
5. To make relation with the industrial business man agriculturist, industrialist of
the branch.
6. To sanction small amount of loans and judge whether the client is genuine.
7. To solve the problem of the bankers working under him.
GENERAL BANKING
ACCOUNT OPENING DEPARTMENT
This department is under the supervision of Mr. Mubashir Iqbal an ambitions
young officer. Applications are received here and after the scrutiny of all the
requisites the account is opened. There are mainly two types of accounts.
3-CALL DEPOSITS
Now profit and loss (PL) is divided into four types:
Now Short Notice Term Deposit (SNTD) is further divided into two:
EXPLANATION:
1.CURRENT DEPOSIT:
There accounts are opened by Rs. 500. No profit or interest is given on these
accounts. These types of accounts are mostly maintained by the businessmen who
may draw money at any time. Zakat is also not deducted on these accounts and no
any notice is required for the withdrawal of money.
2. 15-Days notice.
3. 30-Days notice.
These accounts are opened for 7, 15,or 30days. But these can be encashed at any
time. The rate of interest on these accounts is lesser ordinary PLS. Saving account.
If it is encashed before its maturity the rate of profit is further reduced. With
holding tax is also deducted on the profit .
This year the rate of interest on SNTD offered by the Habib bank is
01 month 8.60%
02 month 9.00%
03 month 9.40%
06 month 10.50%
01 year 11.00%
02 year 11.60%
A Golden investment scheme is offered by the Habib Bank which offers you a rate
of 14.50% per annum and the time limit for the said scheme is five years or seven
and a half years or so . This scheme doubles the amount after 5 years and in years
the amount is three times. But if the amount is drawn before its maturity no such
profit is given on this behalf.
CALL DEPOSITS:
These are another type of accounts opened by the Government or companies.
Construction companies/organizations require some percentage of total amount of
the total contract to be deposited by the contractors as a security. Like when
applications for shares are called or when some plots in a housing colony is to be
allotted certain amount is called as a security that the applicant is genuine, these
accounts are called call deposits. These accounts are refundable and no profit or
deduction is made on this account.
As the Pakistani currency accounts are opened the requirements are same for the
foreign currency accounts. All the transactions are made in the foreign currency in
which the account is opened.
REMITTANCEDEPARTMENT:
As it is the function of the bank to remit the money to any place where there is a
bank. It is the most easiest and safest way to send money to any place. Bank
charges menial amount as a commission for the remittance. Here in the Habib bank
Branch there is also remittance department. There are mostly four methods to remit
the money. They are:
3. Telegraphic Transfer.(TT)
It is a good safe and fast method of transferring money from one place to another.
The advice is sent through the telegram and the bank to which the advice is made
reconfirms that whether the advice is made or not. After the confirmation the
money is paid to the payee. Telegraphic Transfer could be made by giving the
name and the telephone number of the payee but account number is considered
good and sage . The amount exceeding Rs.15000 is coded in order to keep security.
Up to 10,000 15 20%
10,001-100,000 20 15%
PAY ORDER ( PO )
Pay order is less expensive method of transfer money. Normally this method is
used to transfer money inside the city. If it is used city wide, it takes a long time.
The bank charge Rs.10 which is flat foe the pay order and an excise duty of Rs.1
per leaf. With holding tax of 20% on the sum is also taken from the party.
Now if the pay order is to be canceled or duplicate of the pay order is to be needed
is case of misplacement Rs.20 is to be paid.
Lockers are also available at Habib bank limited NOSHERA VIRKAN. The
procedure to get a locker is same as of account opening and RS 600 is to be
deposited as a security fee which is refundable. There are three types of lockers
available i.e. small, medium, and large. The bank charges Rs.300 per annum for the
small locker, RS 500 the medium and Rs.800 per annum for the large size locker.
People get the lockers for the security of precious items which include jewelry,
bonds, documents etc. To ensure safety and security two key system is used. Firstly
the lock holder is verified and then in the presence of banker the locker is opened
with the help of the key which is in the custody of lock holder and is closed with
the banker's key. Without these two keys it couldn't be opened or closed.
Bills here doesn't mean the utility bills like electricity bills or gas bills, but in the
bills section those cheque are presented that are for the outstation or in station of
any branch of any bank.
Now the procedure of collection is different for in both the cases, the outstation
cheques are called the OBC cheque. Which stands for outward bills for collection
or these are the collections inside the country or city wide and the in station cheque
are those which belongs to the Lahore, may be from the Habib bank or any other
bank.
Of the cheque is of Habib Bank, the cheque is sent to the HBL main branch
GUJRANWALA the HBL GUJRANWALA branch sent those cheque to the branch
where the cheque belongs. And after confirmation, in return, sent the IBCO inter
Branch Credit Order. After the reception of the IBCO the HBL NOSHERA
VIRKAN branch credit the account of the customer.
Now if the cheque belongs to the GUJRANWALA but the bank is other than
the Habib Bank i.e. UBL, MCB, NBP, etc, those cheque are sent to the
HBL main branch GUJRANWALA and from GUJRANWALA the banker will go
to
the collection cell which is located at main branch GUJRANWALA.
Here all the representative from all the banks met and settled their inter
bank transaction after the confirmation from the respective bank. The
amount will be credited in the account of the Habib Bank at State Bank
and from their IBCO will be issued in the name of GUJRANWALA main
branch and further main branch will issue the IBCO to the NOSHERA VIRKAN
branch.
Now for the outstation cheque the procedure is different. These cheque are sent to
the Habib Bank main branch of that city where the cheque belongs. That main
branch collects the money and sends a document which is name as IBCO which
stands for inter branch credit order to the Habib bank NOSHERA VIRKAN
Branch. Bank after the reception of the IBCO credits the account of the person who
presented these cheques for collection. Now there are two types of outstation bills
for collection,s . These are as under.
CLEAN
Clean OBC includes those instrument,s which do not need any documentation to
be attached with it for the purpose of collection. This includes cheque draft etc.
The bank charge commission on the clean OBC as .20% of the amount of the
cheque or a minimum of Rs, 10. An additional amount of Rs, 30 for the Courier or
Rs, 12 for the postage as instructed by the customer credit order to the Habib Bank
Chowk Azam Branch and bank after the reception of the IBCO credits the account
of the person who presented those cheques for collection. Now there are two types
of Outstation Bills for Collection. These are as under.
CLEAN
Clean OBC includes those instruments which do not any documentation.To be
attached with it for the purpose of collections. This includes cheque Drafts etc.
DOCUMENTARY
Documentary includes those instruments which includes an additional
documentation attached with that instruments for the collection. The
bank charge commission on documentary OBC as 35% of the amount of
that instrument or a minimum amount of Rs 25 an additional Amount of
Rs 30 for the courier or Rs 12 for the postage as instructed by the
customer .
If the instrument is dishonored or returned handling charges of Rs. 25/= per cheque
or any instrument will be charged by the bank.
CASH SECION
Like all the banks there is cash counter is the Habib bank branch working two or
three bankers. They pay the cash to the cheque, which are properly verified from
the CD & PLS, Department. People cashier returns a counterfoil of the
deposit slip by stamping it with cash receipt stamp.
Cashier also maintained a register in which all the transactions at the cash counter
is maintained. At the end of the day cash in hand must tally with the balance in the
register.
TOKEN DEPARTMENT
All the cheque holders go to this department. They present the cheque to the person
at the department. He checks that whether the cheque belongs to the same branch,
the amount in words and figures is same, cheques is not outdated, there signatures
are there etc. Then he allots a number to the cheques and a token is given to the
cheque holder and the cheque is sent to the CD & PLS Department. After the
proper verification the cash is paid to the cheque holder from the cash counter after
taking token from him.
Transfer book is a book in which all the transactions of the day is written and the
balance is tally with the cash book. The translator book is also maintained by the
said department.
These are following types of advances those are given by the BANK.
3. Machinery Loan.
5. Transport Loan.
6. Staff Loan.
1. CASH FINANCE (CF)
Cash Finance is the biggest loan given to the businessmen, industrialists, its limit is
in crores and bank do require security for this purpose. After the proper
investigation and documentation these finances are given and genuine property is
pledged as a matter of security.
These loans are taken for the purchase of stocks etc. The bank appoints its staff of
two or three persons at the place where that stock is lying. Bank also keeps the
record of the stock and current position too. A notice is also written at the place
that the stocks are pledged with the bank. To get these types of loans prior
permission from the zonal office of the Habib bank is also required. The bank gets
back its principal amount and also markup for the loan. The rate of markup is
Rs.0.52/1000 per day and to calculate the markup for finance period as per formula
is:
Amount of Amount of
Mo. of Period of
2. RUNNING FINANCE:
Running Finances are also given for the purchase of stock etc. But its limit is not
too much. Normally upto RS 15,00,000 is given as a Running Finance and no staff
is appointed. This is termed as Hypothecation, which means that party is wholly
liable for the stock and payment of the principal amount and markup. The
procedure is almost same as for the cash finance and the loan is given to
thoseparties which are able to prove its genuineness and satisfies the bank. The
bank also pledges the genuine security of the party which normally more valuable
then the amount of loan. To get this type of loan prior permission of the zonal
office is necessary.
The rate of mark up is RS 0.52/1000 per day and to calculate the mark up for the
finance period as per formula is:
Amount of Amount of
Finance + one installment
No. of Period of
After the approval of the loan the party writes this letter that such amount is in the
account of the party.
3. MACHINERY LOAN
Certain loans are given for the purchase of machinery. These loans are called Local
Machinery Manufacturing Loan (LMM LOAN). The bank finances for the
machinery, which is manufactured in Pakistan. Like other loans after the proper
verification and proper documentation and
With the prior approval from the zonal office, these loans are given. The bank
pledges some genuine property as a security. Personal security is also required in
the getting of this loan. The loan is to repay in certain installments which includes
the mark-up also. Normally these loans are for the period of five years and first six
or three months are exempted from the installments as the ease or as the terms and
conditions may be. The rate of the interest to be paid by the party is 8% per annum.
DOCUMENTS REQUIRED FOR THE
MACHINERY LOAN:
1.Demand Promissory Note(DP Note)
These documents filled in by the party that they promise to pay the amount
whenever it is demanded.
2.Facility Letter.
This is the requisition of the finance facilities to the bank by the party.
3.Balance Confirmation.
After the approval of the loan the party writes this letter that such amount is in the
account of the party.
4.Letter Of Pledge.(IB26)
For the getting of the machinery loan a letter of Pledge is to be given to the bank
that such property is to be pledged with the bank as a security.
5.Letter of Guarantee (IB29)
A letter for the personal guarantee is also required, in which the guarantee from a
sound person to the party is attached with the
Application
6. Agreement For Financing(IB6)
This agreement for the short term medium term/long term on the
Mark up basis. at most these are the documents required in attaining of the loan.
a. Sole Proprietorship
c. Limited Company.
MODERN BANKING
1- A.T.M.
2- MASTER CARD
WITHDRAWL OF CASH
a- On daily bases RS 2000/-
b- On weekly bases Rs.9000/- can be drawn.
c- Normally on deposit of 25000/- the limit of with drawl on deposit and RS 3000/-
per 30 days
d- It is limited on the city only card of some city can't be used in other city.
e- There are total 20 A.T.M machines working in Pakistan,
Karachi 8
Lahore 4
Islamabad 3
Multan 1
Faisalabad 1
PESHAWAR 1
QUETTA 1
A.j.k. 1
MASTER CARD
Master Card is another modern facility, which is given by H.B.L. Master Card is
having following benefits & privileges
1) H.B.L. master card is accepted at over 123 Million establishment's word wide.
2) Free air travel accident insurance is provided.
3) This is the card having a photograph & signature of the cardholder, which
gives the security against misused.
4) On this card cash withdrawal are available over 29000 outlets all over the world.
5) H.B.L. give an essay to manage monthly statement to keep track of your
transaction.
CURRENT ISSUE
World trend has been changing very rapidly and competition is becoming more
& more stiff. Our country is the tendency towards the privatization now a
days.
As we know H.B.L. is an Govt. organization and one of those organization those
one suffering loses due to heavy operational & management expenses H.B.L.
is bearing of its extra employee those are real cause of heavy management
expenses. These expenses are making H.B.L weaker & weaker day by day.
Now the Govt. has decided to privatize this org also along with other big
organization.
If we technically examine the reason behind the down sizing then we
expenses against the deposit while it 2% all over the world. In down
golden shake hand scheme in which people are inviting to great benefits
main features.
INCENTIVES
1) Three months basic pay for each completed years of
service.
2) An account equivalent to 10 years normal post
retirement medical facility will be paid in lump sum to
retiring employees.
3) Benevolent fund grant equipment to 10 years will also
be paid in lm sum in advance at the time of settlement
dues as a final payment.
4) The residential facilities for six (6) months after
retirement and sale of can if already provided,
furniture shall be allowed as a special case to all
those executives, who accepts this scheme.
1998 1998
ASSETS
Cash 328,672 14,478,010
------------ ----------------
5,803,520 255,645,082
LIABILITIES
Deposits and other accounts 4,800,264 211,451,635
-------------- ---------------
5,616,807 247,420,378
--------------- ---------------
--------------- ---------------
Cash Flow Statement For The Year Ended December 31, 1998
1998 1998
and Exchange
----------- --------------
(101,462) (4,469,416)
------------ --------------
52,383 2,307,496
------------ --------------
(49,079) (2,161,920)
------------ --------------
(98,480) (4,338,009)
---------- ------------
198,056 8,724,356
---------- ------------
50,497 2,224,427
------------ --------------
------------ --------------
----------- -------------
----------- -------------
----------- -------------
------------ ------------
------------ -------------
Cash and cash equivalents at the end of the year
------------ -------------
777,058 34,229,406
------------ -------------
INTERPRETATION
1) Paid up- capital remained same during the last four year no minor change has
been observes.
2) Reserves has remained same in 1996 & 1997 but these are increased as
compared to 1995 & 1996 the purpose may be was to retain more funds in
hand for the planning & development of the bank.
3) In total assets smooth change can be observed the reason may be the increase of
clients of banks because in only 1997 3 million clients bank with H.B.L. within the
country & overseas branches.
4) Total Deposit of the bank has increased in each previous year the main reason of
this increase is Bank's foreign currency deposits in Pakistan have increased.
5) Advances increased through all four years because banl has continued its policy
of supporting the priorities established by Govt. and rendering services to all
sectors of the economy with specific emphasis.
STATUS OF
H.B.L. IN BANKING SECTOR OF PAKISTAN
Total Bank H.B.L.
Acquiring Acquiring
=Domestic Branches
(Billion) (Billion)
(Billion) (Billion)
(Billion) (Billion)
Note:
On the bases of this Analysis H.B.L. is rated among the top 7 banks in
SWOT ANALYSIS
STRENGTH
H.B.L. has very effective Network of branches all over the country. Every
10thPakistani is A/C holder of H.B.L. has made huge investment in almost all the
important economic sectors of Pakistan. H.B.L. not only has made investment in
industry but also in small scale industry as well. H.B.L. has efficient & less
bureaucratic set up H.B.L. has introduced monthly income scheme that provides
almost highest interest rate .A.T.M. Was introduced in Pak. By H. B. L. master
card facilities is also available to the clients.
WEAKNESS
No consumer banking has offered by the H.B.L. to its clients like phone banking
evening banking etc.
- Bed Debt rate is very high no special effort has been made to recover the bed
amounts.
- No marketing set up or structure is there. Most of people do not know how they
have to promote their activities.
OPPORTUNITIES
H.B.L. is oldest bank in the country people do rely on this bank with some
additional efforts bank can attract high deposit from Pakistan and overseas.
Instead of emphasizing on big & long term projects bank should concentrate
on small scale investments heaving small maturity period.
Now-a-days H.B.L. has been investing almost 18% of its total investment on
cotton business, along with investment in cotton it should invest in other cash
crops, i.e. Rice, Sugar Cane, Tobacco, Wheat etc and there related agro based
industry.
THREATS
First threat that bank has to face is the Privatization, down sizing &
restructuring these changes could make drastic effects as well.
New incoming local & specialy foreign banks those are main cause of stiff
competition in the market
DFI's are going very well in financial set up of Pakistan. So, these are also
effecting on the operations of bank. Along with other threats the threat of
corruption has vital importance.
CONCLUSION
Habib Bank limited was rated among first 500 banks of the world but now it is in
among 1000 banks in the world, H.B.L. is not progressing due to political
influence, in efficient management & corruption. If these draw backs have
removed then bank will not only join its previous position rather we hope it will be
rated among world top ten banks.