Introduction

The function of commercial banking and application of the fundamental principles of the depositor
bank relationship have remained essentially the same since about 500 B.C. Bank operation
methods and procedures, on the other hand, have undergone a constant process of evolution
because of economic growth, the mounting volume of transactions and greater use of banking
facilities.

As a result of these contributing factors, methods and practices necessary to handle the
increased volume of detail work have been developed while an other and quicker methods have
been adopted in order to cope with the increased volume, much of which has been accomplished
without unduly increasing the cost of doing business.

During the last twenty years we have experienced a constant transition from the old to the new -
from manual to mechanical methods and procedures - from old established practices to current
techniques and to a more scientific approach to the solution of problems brought about by day to
day changes in business practices.

OUR BANKING SYSTEM TODAY:

The Banking Business as we know it today is composed of three separate and distinct principal
functions.

1- The acquiring of funds to invest and loan.

2- The investing of such funds in loans and bonds.

3- The servicing of such funds, such as providing of checking/saving facilities, and the collection
of draft, notes and checks.

These functions, while differing in detail of operation, follow the same principles established
hundreds of years go by money-lenders and exchangers.

Bank Definition

"Banks are institution that enjoys the public money doing nothing for the public".

According the banking ordinance 1962 sec (6),

"Banks mean the acceptance of deposit for the purpose the lending or the investment of deposit
of money from the public repayable on demand or otherwise withdraw able by cheques, drafts,
orders, and otherwise"
Banker

Banker includes a body of persons whether incorporated or not who carry on business of
banking.

Customer

Customer is defined as one who has account with the bank, the word customer signifies a
relationship in which duration is not of the essence. A person whose money has been accepted
by the Bank on the footing that they undertake to honour cheques up to the amount standing to
this credit is a customer of the Bank in the sense of the statute, irrespective of whether his
connection is of short or long standing. All the city branches accounts are computerized.

Types of banks:

Today the principal banking and financial facilities available to serve commercial are provided,
and made available to them through five types of banks.

1. Commercial Banks

2. Trust companies

3. Saving Banks

4. Saving and Loans association

5. Finance companies

Commercial Banks:

Commercial banks may be defined as "moneyed" corporations, authorized by law to receive

deposits and pay such funds to others on order discount and negotiate promissory notes, drafts,
bills of exchange, and other evidences of debt; to lend money on real or personal security; to
make collectives; and conduct such other moneyed transactions as are not inconsistent with its
charter or the law under which it operates.

INTRODUCTION TO ALLIED BANK LIMITED

At the time of independence in 1947 the banks services were very badly affected and by June 30,
1948, the number of offices of scheduled banks came down to only 81 in the territories
comprising Pakistan; but by December 31, 1973 there were following 14 scheduled Pakistani
commercial banks with 3323 offices all over the Pakistan and 74 offices in foreign countries.

1. National Bank of Pakistan

2. Habib Bank Limited.

3. Habib bank (Overseas) Limited.

4. United Bank Limited.

5. Muslim Commercial Bank Limited.

6. Commerce bank limited.

7. Standard bank Limited.

8. Australasia bank limited.

9. Bank of Bahawalpur Limited.

10. Premier bank limited

11. Pak bank limited.

12. Sarhad Bank limited

13. Lahore commercial banks limited.

14. Punjab Provincial Cooperative bank limited.

The facts show that commercial banking has made tremendous progress and achieved a
phenomenal growth since independence and that the commercial banks have duly played a vital
role as a mobilizer of people's saving to constitute the most important source of financing in
country economy. However it was felt that these bank failed to ensure that the resources so
mobilized by them flow in those sectors of economy where they would produce the goods and
services needed badly by a very large number of people in Pakistan.

HISTORY OF ALLIED BANK LTD

ABL is the first Muslim Bank established on territory that later on became Pakistan. It was
established on December 3, 1942 as Australasia Bank at Lahore with capital of 0.12 million. At
that time the chairman was Kh.Bashir Baksh. ABL’s story was one of the dedication, commitment
to professionalism and adaptation to changing environmental changes.

The bank's history is divided into many phases. During 25 years of united Pakistan the bank
advanced forward in all areas of its activities. 1970’s were a difficult decade for all Banks of
Pakistan. In 1971 East Pakistan was separated and Australasia Bank lost its 50 branches and a
lot of capital as well. Nevertheless the growth remained steady.
In 1974 all the Banks were nationalized including Australasia Bank. The small provincial Banks
were merged into Australasia Bank. On 1st July 1974 the new entity was renamed as ABL of
Pakistan Limited. Then it started its operations as Public sector financial institution.

Different Phases of the Bank Are as Follows:

THE PRE INDEPENDENCE PERIOD (1942-47)

Australasia Bank had the unique distinction of being closely identified with some of the country’s
most Prominent leaders of the freedom moment. Such as Mian Mumtaz Daultana (Board of
directors), Mian Iftikhar Hussain and Maulana Zafar Ali Khan.

The bank originally started its operation in the garage of Khawaja Bashir Baksh’s bungalow (who
was the chairman) near the Lahore Railway Station. But the success of Bank enforced the
directors to open its another branch in Anarkali on 1st March 1944. Kh. Bashir was first chief
executive. He was the person who was really working in its development. His sincerity of purpose
can be judged from his great moments.

Another branch was opened at Amaratsar in 1945. In June 1946, the bank earned the status of
scheduled bank.During 1946-47 many other branches were opened at Mcleod Road Lahore,
Jallandhar, Ludhiana, Agra and Delhi.

At independence the industrial and commercial sectors were underdeveloped but ABL
contributed a lot in the development of these sectors.

AUSTRALASIA BANK IN PRIVATE SECTOR (1947-74)

It was the only full functional Muslim Bank on the land of Pakistan. On August 14, 1947 bank was
identified with Pakistan moment. Many of its Board of Directors were prominent Muslim League
leaders. Jallandhar and Ludhiana branches were attacked by rioters because of Muslim staff
appointed in these branches of bank. But when the Pakistan flags wee hoisted on the branches
then all the banks in India were closed down. With this, the bank lost a lot of capital and its
deposits and almost 6 branches. During 1948 new branches were opened at Karachi, Rawalpindi,
Peshawar, Sialkot, Sargodha, Jhang, Gujranwala and Kasur. But later on its branches were
spread to Multan and Quetta. At that time, the bank financed trade in cloth and food grains and
thus maintained consumer’s supplies during the riot effected early months of 1948. Australasia
Bank made a profit of

50,000/= in 1947-48.

In August 1948, Australasia Bank became the first Pakistani Bank to successfully negotiate and
open L/C for a Sialkot based importer of books. So it also made correspondence relations with
Midland (UK), Chase Manhattan (USA) and Lloyds (India).
During the treasury functions of Federal Govt. of Pakistan and it also acted as Banker to several
local Govt. Bodies and to the Punjab University during this period. Treasury functions were taken
by National Bank of Pakistan in 1949. In 1950-51, Chairman was replaced with his own brother
Kh. Sharif Baksh.

During 1955-56, Mr. Naseer A. Sh. became the Chairman of Board and close working
relationship was forged between the new Chairman and Managing Director. This partnership
proved in modernizing its operations and consolidating its financial position.

In 1963, Bank had 29 branches in various cities. And deposits were 89 million and advances
were 66 million. Bank was mainly concerned with general banking and trade financing (including
foreign exchange transactions). It helped a lot in development of small and medium sized
business houses. These were Nishat, Crescent, Pak Cement, Haroon traders, Takht Bhai Sugar,
Insaf, Punjab soap, Pak fruit and Saboor Oil Mills etc.

In 1964, 13 new branches were opened including 3 in East Pakistan. In 1965, 17 new branches
were opened and over 83 % of gross profit for the year was earmarked for development
expenditure in connection with opening of new branches.

In 1966 bank opened 26 new branches and doubled its reserved funds. For the first time in
history, its advances were increased to Rs. 160 million and deposits raised by almost 58 %
exceeding Rs. 232 million mark. In 1966, Central Office was built in Karachi but Head Office
remaining at Shah Chiragh Building, Lahore.

16 new branches were opened in 1967 and 20 in 1968. Respectively their funds were increased
gradually. 21 new branches were opened in 1971. But separation time the 51 branches were lost
by the bank which was a big loss.

ALLIED BANK: PUBLIC SECTOR YEARS (1974-91)

Under the Nationalization Act of 1974, 14 scheduled banks were taken over by the
Government. Australasia Bank’s Board of Directors was dissolved and the bank was renamed as
Allied Bank of Pakistan Limited. Sarhad Bank, Lahore Commercial Bank and Pakistan Bank
Limited were merged into Australasia Bank. At time of merge, ABL was second highest among all
the banks Nationalized in 1974.

Allied Bank’s first Executive Board was constituted of Mr. Iqbal A. Rizvi as President, Mr. Ajmal
Khalil as Joint President and Mr. Khadim Hussain Siddique as member. In 1974 Mr. I.D. Junejo
and Mr. Safdar Abbas Zaidi joined the Board later. 116 new branches were opened in 1974 and it
started participation in commodity Operation program of Government.

In 1970’s Bank played an important part of agricultural area loans and other loans. In 1976 Mr.
Ajmal replaced Mr. Rizvi as Chief Executive and President. During 1974-77, 361 new branches
were opened and 230 of these were located in villages and small towns. It also opened its foreign
branch in London, near the Bank of England. In 1980 the Bank of England granted Allied Bank
recognition as a full fledge Bank under the U.K. Banking Act.

In 1981, President was changed. In 1984, again new president was come to know. He tries to
increase the international business. It also initiated a major counter program. In 1985, mainframe
computer was installed and effective management system was developed. During this period
profitability was increased. New President Mr. Maqbool introduced different schemes in 1987-
88. In 1989, new 13 branches were installed.

Over 1991, 745 branches were there in all over the Pakistan.

A NEW BEGINNING

In November/ December 1990, the Government announced its commitments to the rapid
privatization of the Banking sector. Allied Bank’s management under the leadership of Mr. Khalid
Latif decided to react positively to this challenge. In September 1991, ABL entered in a new era of
its history as world’s first bank to be owned and managed by its employees. The 850 executives
and 7200 staff members spread over 750 branches throughout the Pakistan established a high
degree of cooperation and family feelings

After this, it grows more and more, even at present it has 900 branches throughout the country
and 4 foreign branches in U.K.

Allied bank Objectives:

Allied bank has following objectives:

i) Main objective of Allied bank is to earn profit.

ii) To provide services to their customers and assistance in the development of commerce and
trade.

Allied bank also have another responsibility to give service to their communities. It watches the
growth and development of his community especially the commerce and business of the area.
MANAGEMENT SYSTEM OF ABL
Successful and profitable banking management depends on two principal factors.

a) The manner in which the functions of banking, that is the acquiring of deposits, the investing or
converting such deposits into earning assets, and the servicing of such deposits, are performed.

b) The degree to which officers and employees contribute their talents to the progress and
welfare of the bank in discharging duties and responsibilities.

Allied Bank Management

Banks are managed by board of director or similar group of men who are responsible to the
owners, creditors, and the government for the well being of their institutions. The government
selects all or some of directors of ABL. Management of ABL are given as follows:

Bank’s Information

1. Directors:

Rashid M. Chaudhry is the chairman and Mohammadi Yaqoob is secretary of ABL, are also the
board of directors.ABL’s other directors are M. Saleem Shaikh, S. Jauhar Husain, I.A. Usmaini,
Raja Raza Arshad, Mohammad Saleem Sethi, Athar Mahmood Khan. Stockholders elect the
directors for a term of one year and they are eligible for re-election. Voting is cumulative, that is,
each shareholder has the right to vote the member of shares owned by him. The boards may
format major policies and select officers to execute them. They may supervise these officers,
review their act.

2. Executive Committee

Executive Committee consists of Rashid M. Chaudary (president), M. Salim Shaikh, S. Jauhar

Husain, I. A. Usmain, Naveed Masud, Bilal Mustafa, M. Saleem Khan Durrani, Ashfaq Hassan
Qureshi, Shariqe Umar Farooqi (secretary).

3. Officers:

Officers are selected by the directors to manage their banks. An officer’s relationship to the board
is that of an employee to an employer. Chief Officer (Rashid M. Chaudary) of ABL is known as
Chairman, Senior Executive Vice President (M. Saleem Sheikh, S. Jauhar,). They are also
members of the board of director and are large shareholders. They are in a position, to dominate
the bank's policies as well as its administration.

The Chief duty of the chairman is to lend the bank's funds. This work is often subject to little
supervision by the board of directors.
STRUCTURE OF ABL LIMITED
No bank can be expected to operate efficiently unless all employees with in a department,
division or section know:

A) From whom they are to receive the work they are to do.

B) What they are supposed to do with the work after they receive it.

C) How they are supposed to handle the operation of item.

D) When they are supposed to do work, perform the operation.

E) To whom they give the item or function after finishing it.

To perform the functions efficiently the bank has its Head Office in Karachi, which is controlled by
the president of the Bank. The bank has regional office under head office in major areas of the
country. Regional Chief heads this office. The region Consist of many zonal offices with a zonal
chief. There are many branches in a zone to carry the functions effectively and performing
customer services locally.

ABL Ltd. is functionally organized into divisions and divisions are further divided into department
and sections. Every province has its own regional office and zonal offices. Executive vice
president heads the divisions and departments are further headed by OGI (Officer of Grade I).
Manager heads branches.

BRANCH NETWORK
There are Four Provincial Headquarters of Allied Bank Limited situated at Lahore (Punjab),
Karachi (Sind), Peshawar (NWFP & Azad Kashmir) and Quetta (Baluchistan).

PROVINCIAL HEADQUARTERS
PUNJAB:

7E/3, Main Boulevard, Gulberg, Lahore

SINDH:

Jubilee Insurance House, I.I. Chundrigar Road, Karachi

NWFP:
1st floor, State Life Building, The Mall,

AZAD KASHMIR:

Peshawar Cantt.

BALUCHISTAN:

C.C. & I Building, Zarghoon Road, Quetta.

CIRCLES
There are 22 circles of ABL through out the country under which 46 zones are present. Their
detailed is as follows:

City Circle Karachi

Zones 3

Branches 36

Sadar Circle Karachi

Zones 2

Branches 37

Nazimabad Circle Karachi

Zones 2

Branches 34

City Circle Hyderabad

Zones 2

Branches 34

Commercial Circle Hyderabad

Zones 2

Branches 37
Sukkur Circle

Zones 2

Branches 33

City Circle Lahore

Zones 2

Branches 47

Project Circle Lahore

Zones 2

Branches 29

Gujranawala Circle

Zones 3

Branches 73

Islamabad Circle

Zones 2

Branches 27

Rawalpindi Circle

Zones 2

Branches 43

Jhelum Circle

Zones 2

Branches 46

Faislabad Circle

Zones 2
Branches 46

Sargodha Circle

Zones 3

Branches 67

Multan Circle

Zones 2

Branches 66

Bahawalpur Circle

Zones 2

Branches 41

City Circle Peshawar

Zones 2

Branches 27

Cantt Circle Peshawar

Zones 2

Branches 47

Mardan Circle

Zones 2

Branches 31

Abbottabad Circle

Zones 2

Branches 38

Azad Kashmir Circle

Zones 2

Branches 50

Quetta Circle

Zones 1

Branches 36

Foreign Branches 4

Total Branches 929

TRAINING ACADEMIES

Allied Bank Limited has five training academies, two in Lahore, two in Karachi, and one in
Islamabad. In these training academies the new as well as the existing staff get training. When a
new employee comes in ABL then most often he is sent to any of these academies for
training. The training period may be minimum of one-month upto maximum of one year. The
training period depends upon the nature of the job. During the training the new employees are
acquainted with all the necessary information about their jobs.

When any change occurs in the policies of the Bank, then the seminars are held in these
academies in which employee as well as executives participate to get information about the new
policies of the Bank. For example if the Bank policy regarding the financing schemes change then
the Managers of the Advances Section are invited in these seminars. They learn about the new
changes and then implement these changes in their branches.

In these academies a permanent staff is present for the training of employees. However, if
requires, subject specialists are invited to deliver lectures on certain subjects. For example the
Bank has a contract with Sajjad Associates which send its executives to deliver lectures on
project financing. Exams are also held in these training academies.

ORGANIZATIONAL STRUCTURE (MULTAN

CIRCLE)
 ALLIED
BANK OF

PAKISTAN

JAHANIAN BRANCH
The Branch of ABL Ltd. is responsible to provide all services to its customer. This branch is
located in Jahanian.

FUNCTIONS OF JAHANIAN BRANCH OF ABL LTD

There are following functions which are performed by Allied bank Limited Jahanian Branch.

ACCEPTS DEPOSITS

The Bank provides deposit facility to its customers. The types of deposits are:

a) PLS Saving Account:

In this type, the depositor shares profit and loss with the bank.

b) Fixed Deposits

They bear high profit, but these can only be withdrawn after a fixed period of time

c) Current Accounts

No profit is paid on these deposits but amount could be withdrawn without any restriction.
Branch Setup
REMITTING OF FUNDS

The Bank provides the facility to its customers for remitting large amounts of money in the form
of bank drafts, T telegraphic Transfers and Mail Transfers to where ever the customers want.

The Senior Vice President heads the personnel department. Its head office is at Karachi. All the
policies and rules, regulations etc. This department deals about personnel.

HIERARCHY OF POWER
Senior Vice President.

Vice President.

Assistant Vice President.

Officer.

CATEGORIES OF WORKERS
The work force in the personnel department is as follows:

Officers

Clerical staff

Non-clerical staff

OFFICERS

Officers are designated according to their grades.

Executive grade.
 Sr. grade-I

Sr. grade-II

Sr. grade-III

Officer grade-I

Officer grade-II

Officer grade-III.

CLERICAL STAFF

Cashiers

Assistants

Senior Assistants

Typists

Steno typists

Steno graphers

Telephone operators

Telex operators

Godown keepers

NON-CLERICAL STAFF

Drivers

Messengers

Guards

Godown Chowkidars.

Sweepers
ELIGIBILITY CRITERIA FOR PROMOTIONS

From Clerical to Officers Cadre

QUALIFICATION LENGTH OF SERVICE

Graduate two years

Intermediate four years

Matriculate six years

From Typist and Stenotypist and Stenotypist to Stenographer Cadre

Confirmed staff in clerical cadre.

Required shorthand typing speed.

Stenotypist 80/45 words per minute

Stenographer 120/45 words per minute

From Clerical to Non Clerical Cadre

QUALIFICATION LENGTH OF SERVICE

Intermediate one year

Matriculate two years.

For the purpose of promotion it is important consideration that an employee has rendered service
in rural areas.

PROBATIONARY PERIOD

The probation period varies for various posts. It is usually from 1 to 2 years.

CONFIRMATIONS

After the probation period comes the confirmation period. The branch manager refers him/her
for confirmation. The confirmation of various post rights rests with the zonal/area chief. For big
posts the confirmation is centralized by central office Karachi. Confirmation is made after 1 year
of probationary period.

PHYSICAL ACTIVITY

The personnel department also takes case of physical activities of the employees. They encourage
the employees in physical games like cricket,

Football, tennis, hockey etc. They hold regional and zonal competitions. For

Publicity purposes the bank also employs famous players to play on behalf of the bank. In this
way the bank on the other side provides financial help to our talented boys.

EMPLOYEES MATTERS

ABL policy is very socialistic about its employees, its motto is:

“Every employee is the owner of the bank”

Literally the bank has given power to even an officer to sell the ABL assets; the authority of an
employee is unlimited. This attitude encourages the employees to get most involved in to the bank
affairs. ABL also provides lot of facilities to the employees. Here is a list of loans and leaves, which
can be granted to the employees:

LEAVES
Casual leave

Sick leave

Maternity leave

Disability leave

Privilege leave

Extra ordinary leave

Hajj and Ziarat leave

Leave preparatory leave

CAUSAL LEAVE.
One can take fifteen days causal leave in one year, five days maximum at a time. The unvalued
leaves are not granted in coming next year. These leaves should be availed in the respective year.

SICK LEAVE.

There is a criterion for sick leave.

With full pay the staff can take 12-month sick leave in the entire service of his life with out pay the
staff can request the sick leave, as he/she requires.

MATERNITY LEAVES.

The maternity leave is granted once in three years. It’s for female employees. It varies from 15
days to three months. The bank gives full pay during the leave.

DISABILITY LEAVES.

The disability leave is conditional to following rules:

The disability is caused during the service of the employee.

It is brought into the notice for prompt action with in three months of its occurrence.

Its period lies between one day to 24 months as recommended by the doctor.

Six month pay is granted and afterwards its half pay.

PRIVILEGE LEAVES.

Privilege leave is granted one per eleven days in a year and accumulated up to 90 days.

EXTRAORDINARY LEAVE.

This leave is with out pay. When sick leave is unsatisfactory or some special occasions occurs,
when no leave is due then the extra leave is granted.

HAJJ AND ZIARAT LEAVE.

It is provided after completing five years of the service. Its period extends to one month. It’s on
full pay basis.

PREPARATORY AND RETIREMENT LEAVE.

It’s the kind of leave which is allowed to a person retiring from the service for the period of leave
earned and due up to 90 days.
• AUTHORITY FOR LEAVE SANCTIONING
Causal and privilege leave or sanctioned by mangers, zonal chief, but all other is dealt in the
central office Karachi.

PROMOTION PLANS
OFFICERS.

Normally promotion is done on seniority basis. A promotion is due after a person has completed
three years in the same grade.

CLERICAL AND NON CLERICAL STAFF.

It’s on the basis of their length of service and the written tests and qualifications.

QUALIFICATION LENGTH OF SERVICE

Matriculate. Six years service.

Intermediate. Four years service.

Graduate. Two years service.

More over interviews and tests also contribute in promotion.

LOANS FOR EMPLOYEES

Allied Bank has a long list of loans, which it offers to its employees. The hire the post is, the more
facilities are given to the employees.

Loans are as follows.

PROVIDENT FUND LOAN.

Provident Fund loan is loan which is given after the retirement of the employees. Its is equal to
own contribution plus the interest on the amount. Three basic salaries plus banks own
contribution.

OLD OPTION BENEFITS.

In P.F.L a lumps is taken in this case and the pension is not given.

New option benefit.

In case of option pension, loan against general provident fund is allowed equal to own
contribution and 3 months basic salaries.

CONVINCE LOANS.

The convince loan include scooter loan, car loan, cycle loan. Etc.

The car loan is equivalent to 12 basic salaries, which is sanctioned to officers, executives drawing
basic salary of. RS. 1250. Month. Such loans bear interest of ten 10% pa. They are recoverable in
120 monthly installment

MOTOR CYCLE LOAN.

Such loans are sanctions to lower grade officers and clerical, non-clerical staff. The limit of the
loan is not more then Rs. 10,000. It is conditioned that the employees have completed 3 years of
service in the bank. Motor Cycle loan is interest free loan.

HOUSE BUILDING LOANS.

This loan is given if the employees have completed of full 5 years of service, as a confirmed
officer. It is equal to 80 months salary.

FACILITIES
MEDICAL FACILITIES

Banks provides medical facilities to its employees. It also has fixed amount, which is limited in
order for tremens of employees. The record of medical expenses is maintained at zonal office and
monthly statement is sent to central office Karachi.

TRAVELLING ALLOWANCE

There is facility of TA. /DA. For employees who go on official visit out side the city.

EDUCATION ALLOWANCE

Education allowance is given to the children of the employees and employees as well. The
maximum allowance for one employee will be RS. 450. App. Per month for maximum three
children.

HOUSE ALLOWANCE (RENT)

House rent allowance is upto 90% of basic salary at all stages. The house rent allowance differs
according to the areas and its rates.

LOCAL COMPENSATORY ALLOWANCE

Local compensatory allowance is given in accordance with areas of work such as Islamabad and
Karachi maximum Rs. 200 and at Lahore, Rawalpindi, Peshawar and Quetta it is Rs.100 per
month.

CONVEYANCE ALLOWANCE

The conveyance allowance is given to the employees in accordance of their designation.

DOMESTIC SERVICE

The Allied Bank provides the services to top men in the bank such as Executive Vice President, Sr.
Vice President, Vice president and Asst. Vice President etc.

They also provided by Mali/Chowkidar and furnishing the house is also bank facility.

TELEPHONE ALLOWANCE

There is fixed amount of telephone bills for executives/officers, which is paid every month to
them.

PENSION/GRATUITY FACILITY

The pension is given when an employee completes his ten years in the bank. The gratuity is given
if employee qualify the rules then he can ask for the pension of 15 year at one go.

PROMOTIONS

Upto clerical staff the promotions are on tests and their daily work/efficiency and their length of
service.The promotion of officers is with seniority.

RECRUITMENT
After the Privatization of ABL central office at Karachi is dealing with the appointments to
different officers posts. And the central office also fills other executive posts. For certain posts the
executives also have right to appoint the qualified persons. But the main criteria of appointment
are by test and interviews.

Allied Bank has a criteria already prepared for the appointments of employees. the criteria
involve:
Academic work.

Extra curricular activities

Working experience.

The candidates must be the citizens of Pakistan and the state of Jammu and Kashmir should not
be more than 25 and less than 18. However in certain cases the age can be relaxed. Normally the
citizen for under developed areas of Pakistan has the age relaxation. The executives also have the
power to employ an over age person etc.

General banking is one of the major

departments of Allied Bank, Ltd. It
consists of sub department, which are fol
lowing.

1. Current department

2. Token department

3. Remittance debarment

4. Clearing department

5. Accounts department

CURRENT DEPARTMENT
This department maintains all formalities of the accounts and accounts holder, like accounts
name, account holder's name, code No., and full address. Different cheques debit and credit
voucher come from different departments like Token, Clearing, Remittance, Cash, and Foreign
Exchange, Advance and posted against different ac counts.

A working Journal called Manual is prepared daily which shown the balance accounts of all
parties. Mark-up and profit are calculated daily. That would be debited or credited from or to
Account holder's account after specific period of time. Mark-up is debit from the account after
every three month and profit is credited to accounts after every 6 month. New accounts are also
opened in this department. Total function perform by this department is shown by block
diagrams. These diagrams show the sequence of activities. These are simplified diagram of what is
ac tually being done in current department and what happen to a customer who comes to open an
account in the branch.

Following are the three accounts, which are maintained by this department.
• Current Account

• Saving Account

• Fixed Account

TOKEN DEPARTMENT
In token department, token are issued for the encashment of cheques Demand draft, Telegraphic
transfer, Mail transfer and miscellaneous expanses voucher of bank before issuing term we check
the following

 Date should be current or previous not advance.

 Specimen Signature of account holder should there.

 Signature of bearer should on backside of cheques.

 Amount should be same both in figure and words.

In case of DD, checking sign of authorized officer of bank if there is any discrepancy in above-
mentioned point, no to ken would be issued. Before issuing token, we stamped on backside of
cheques and write the no. Of token both front and back side of cheques, etc.

After all the process, the entry of cheques would be posted on the given register, which include
token no. Code no. and amount. After banking hours. Total amount on register would be tallied
with the cash department amount, that which has been paid. Any cheques that is returned from
the current department be cause of any discrepancy, is debited from the total amount on the
register in token department.

CASH DEPARTMENT
Cash department deals with the cash, which either comes in the Bank or goes out side the
Bank. Cash can be in any form of currency.

SOURCES OF THE CASH

There are different sources through the cash inflows the Bank. These sources are as follows.

DEPOSITS

This is the major source of the cash inflow. When someone deposits the cash in the Bank in any
currency, it means that the cash is coming in the Bank.

1. DEMAND DRAFT AND TELEGRAPHIC TRANSFER COMMISSION

These are the second major sources of the cash inflow of the Bank. When the Bank issues the DDs
and TTs on the behalf of customer then the Bank takes certain charges as commission. These DDs
and the TTs can be issued in any currency on the demand of the customer.

2. PRIZE BONDS, FEBCS, NDSCS ETC

Prize bonds, FEBCs, and NDSCs are other sources of cash. These instruments are sold to the
general public and cash is received from them. Though this cash is ultimately transferred to SBP
but still the Bank has to manage this cash.

MANAGEMENT OF CASH

It is necessary for every branch to maintain a specific amount of cash with it at any time, so that
when a customer comes to get cash, he may get it promptly. If a branch is not able to maintain
such appropriate level if cash then it will have a bad effect on its repute and it will not be able to
fulfill the customer expectations. So effective management of cash is very necessary for every
Bank. ABL has put an appropriate limit on its branches that they should keep that minimum
levels of cash wit them at any time.This limit is different for main branch and other sub-branches.

TREATMENT OF SURPLUS CASH

The surplus cash means the cash, which is over and above the limit of any particular branch. It
may happen that a branch may have the surplus cash with it. If a sub branch has surplus cash
with it than that of limit, then it will transfer it to the main branch on daily bases. If the main
branch has the surplus limit then he will transfer the surplus money to head office in Karachi
through the SBP. If these surplus funds remain with the main branch, they will be of no use and
will act as idle money because they are earning no profit.So these funds are remitted to the head
office, where they are invested and will earn profit for the Bank. The main branch earns the profit
on the funds, which it remits to the head office. Currently this rate of profit is 13%. There is no
profit given on the funds which the sub-branches which they transfer to the main branch.

TREATMENT OF CASH DEFICIT

As surplus of the cash occurs, similarly the deficit can also be there in the Bank. It means that the
cash shortage is there in the branch. To cover this shortage the patterns are followed. If shortage
is there in sub-branch, then it may take the cash from the main branch. If the main branch has the
shortage of cash, then it may take the funds from the head office. The head office charges certain
rate of profit, which is 13 % on the funds, which it remits to the main branch. There is no profit
charged by the main branch on the funds provided to the sub-branches.

CASH IN TRANSIT

The cash, which is transferred from any sub-branch to Main branch or from main branch to SBP
is called cash in transit. There is limit of cash in transit on main branch. This limit is of Rs. 20
millions i.e main branch can take the cash from any sub-branch or can transfer the cash to SBP
upto the limit to the 20 millions.

INSURANCE OF CASH

All the cash of the Bank is insured. The major companies, which insures the cash include Adamjee
Insurance Corporation, General Insurance Company and East West Insurance Company. The
Central Office pays all the expenses of the insurance of cash.

SECURITY ARRANGEMENTS

Few years earlier, the Bank has its own guards for the transfer of the cash from main branch to
SBP or from sub-branch to the main branch. But now the Bank has hired a security company for
the transference of cash. This company is “Brinks”. The commission which is charged by the
Brinks company varies from place to place and is different for different amounts of cash.

CLEARING DEPARTMENT

INTRODUCTION
The Bank is the member of the Clearing House and receives Cheques, demand drafts and other
negotiable instruments for presentation of its payment by the branch of a drawee bank located
within the city other then ABL. The proceeds of the clearing instruments are credited into the
account of the customer. The clearing facility is available on all working days.

Wherever the clearing facility is bot available or the drawee institution is not the member of
clearing house the Bank receives Cheques, demand draft or negotiable instruments for collection
and upon receipt of payment from the drawee the same is credited into the account of the
customer. Clearing may be outward or inward.

OUTWARD CLEARING

Suppose a customer deposits cheque in ABL HASSAN ARCADE BRANCH, drawn on Habib Bank
Multan Cant branch. Then the representative of ABL HASSAN ARCADE BRANCH will take this
cheque to the Clearing house in SBP, where representatives of all banks gather daily. Now in first
clearing this cheque will be exchanged with the representative of Habib Bank Multan Cant
branch. In the second clearing, if the cheque is honored, he will tell it to the ABL representative
and so the SBP credits the account of ABL HASSAN ARCADE BRANCH and debits the Habib
Bank Multan Cant branch through the clearing account. This is called Outward Clearing.

INWARD CLEARING

Suppose a person deposits a cheque in Habib Bank Multan Cant branch, drawn on any ABL
Multan branch; let it be the ABL main branch Cant. The representative of HBL will exchange this
cheque with the ABL’s representative in the first clearing in Clearing House. If the cheque is
honored by the ABL main branch then SBP will debit and credit the respective accounts. This is
called Inward Clearing.

TRANSFER DELIVERY

The clearing between the ABLs own branches within one city is called Transfer
Delivery. During this clearing Pak Account is not involved. In ABL, it is done twice in a
week. The Bank charges no commission from its customers for this transfer delivery.

BILL/REMITTANCE DEPARTMENT
Bills for collection means the Cheques or DDs/TTs/POs which are received from or sent to other
branches outside the city for collection, drawn on any other Bank. Bills for collection may be
inward or outward.

Remittances means, the transfer of cash from one place to other place through paper
transaction.Remittances may be inward and outward.

BILLS FOR COLLECTION

There are two types of bills for collection

• Inward bills for collection (inland & foreign)

• Outward bills for collection (inland & foreign)

INWARD BILLS FOR COLLECTION

Suppose a customer of ABL Mall Branch Lahore deposits a cheque drawn in the name of Habib
Bank Multan Cant Branch. Now the ABL Mall Branch Lahore will send this cheque to ABL Main
Branch of Multan for collection from Habib Bank Branch. Now ABL Main Multan branch will
collect this cheque from Habib Bank Branch through clearing, and will remit the amount to the
ABL Mall Branch Lahore. This is called Inward Bills for Collection (inland) for ABL Main
Branch Multan. It will be recorded in Inward Bills Collection Register. In the same way if
the cheque is received for collection drawn on any other Bank from Foreign Branch of ABL, then
this will be called as Foreign Inward Bills for Collection. It will also be recorded in Inward
Bills Collection Register.

OUTWARD BILLS FOR COLLECTION

When any branch of ABL sends a cheque or DD/TT/PO to main branch ABL in another city for
collection from any other Bank, then it is known as Outward Bills for Collection. Suppose a person
deposits a cheque in ABL Rashidabad Multan branch drawn on Habib Bank Lahore branch. Now
ABL Rashidabad branch will send this cheque to ABL main branch Lahore for collection from
Habib branch Lahore branch. ABL main branch Lahore will collect this cheque through clearing
from Habib Bank branch through clearing and will remit the amount to ABL Rashidabad branch
Multan. This is called) Outward Bills for Collection (inland)

and it will be recorded in Outward Bills Collection Register.

In the same way, if ABL Rashidabad branch Multan sends any cheque or DD/TT/PO to its foreign
branch for collection from any other Bank, then it will be called as Foreign Outward Bills for
Collection and will also be recorded in Outward Bills Collection Register.

COMMISSION

The rate of commission for both Inward and Outward Bills for Collection is .25 %, with a limit of
minimum of Rs.20, plus courier charges.

REMITTANCES
The remittances can be made through the following mode of transference.

• Demand Draft (DD)

• Telegraphic Transfer (TT)
• Payment Order (PO)
• SBP Cheque

DEMAND DRAFT

It is a kind of cheque, which is issued by the ABL to the other banks, or other branches of the ABL
on the demand of the client. On the Demand Draft there are different heads mentioned on
that. Such as the amount to be sent, the name of the person to whom it is to be sent. It is very
convenient and safe method of sending the money from one place to another. The businessman to
transfer or send the money from one place to another usually uses it. If one person issues the DD
in the name of other person, then it can be transferred to the account of the second person
easily. DD can be in Pakistani Rupee or in any Foreign Currency. When DD is issued, it is given to
the person, who wanted to make it. At that time Bank will have no concern with that DD but an
advise is sent to the concerned branch that we have issued the DD of such amount and on the
name of this person, and you will pay him on the demand of the client. This DD can be closed
before the issuing the amount. On issuance the DD, Bank take some commission.

TELEGRAPHIC TRANSFER

It is also a way of sending the money from one place to another. Like DD certain farms are to be
filled. In this the message sill not be sent through the paper, but with the help of the fax or things
like that. All other processes are same as of the DD.

PAYMENT ORDER
It is an order issued by the Bank and payable on itself, through this client can easily transfer the
money from one person to another within the same city. It is a written document on which the
certain commission is to be paid and certain documents are filled by the client. For this certain
amount is needed to deposit with the Bank.

PROCESS FOR REMITTANCE

All branches of ABL deal with each other through a central account named as “Pak Account”.

PAK ACCOUNT

Pak Account is maintained in Central Office Karachi. In Central Office there is an account of every
branch and all these accounts of all branches are maintained through this Pak Account. In Pak
Account, a specific code has been allotted to every branch’s account. These Pak Account controls
all the remittances made by different branches. Remittances may be outward or inward.

REMITTANCES OUTWARD

Suppose a person comes to the ABL HASSAN ARCADE BRANCH and asks to make a Demand
Draft (DD) of Rs.50, 000/- in the name of beneficiary whose Bank is ABL Mall Branch
Lahore. Now the ABL Multan branch will receive the cash and prepare the DD of Rs.50, 000/-
and will send it to the ABL Lahore branch.At the same time it will also prepare an advice and send
it to the Central Office. In this advice, the ABL Multan branch will tell the Central Office that it
has sent a DD of amount Rs. 50,000/- to the ABL Mall Branch Lahore, so make its account
debited by Rs. 50,000/- and make the account of ABL Mall Branch Lahore credited with the same
amount This is called “Remittances Outward”

REMITTANCES INWARD

Similarly when the ABL Mall Branch, Lahore sends a DD/TT/PO or cheque to ABL Multan Cant
Branch then it will be remittances inward for this branch. This type its account will be credited by
central office in Pak-Account and the account of ABL Mall Branch, Lahore will be debited.

REMITTANCE IN TRANSIT

Suppose the ABL Main Branch, Multan wants to send the surplus fund to the central office
Karachi. This branch will first deposit the funds in the State Bank of Pakistan, which will transfer
these funds to central office, Karachi. Here the SBP acts as a cash agent. Now the ABL Multan,
Branch will send an advice to central office, Karachi that it had remitted that many amounts
through SBP. This is called Remittance in Transit. Now the SBP Multan, Branch will remit
this fund to the SBP Karachi, Branch and from there, funds will be ultimately transferred to the
central office.
In the same way when ABL Multan, Branch requires the funds then Central Office will remit these
funds through SBP and will send an advice to the ABL Multan, Branch. The funds will be
ultimately transferred from SBP Multan, Branch to ABL Multan, Branch. This is
also Remittance in Transit.

FOREIGN BILLS AND REMITTANCES

These can be

• Foreign Currency Telegraphic Transfer

FOREIGN CURRENCY DEMAND DRAFT

Allied bank can transfer funds to the remotest fart of the country for payment/credit to the
account of the customer himself or a third party, through Telegraph Transfer for the payment on
the same or next day.

The Bank also issues the Demand draft for remittance of fund by customer. The Demand draft can
be issued in favor of the purchaser himself or a third party. It is secured and convenient to
send/carry, instead of cash.

TELEGRAPHIC TRANSFER

In this case the authority is given to one bank from another bank on the behalf of the customers
through telecommunication to debit their inter office account with them and credit his/her or
party's account mentioned in telegraphic transfer (T.T.) This is the fastest way of transferring
money from one place to another within the country as well as out side the country.

As we know that when a bank issues a T.T. it is given some service to the customers, so service
charges for issuing T.T'S, credit vouchers are prepared. Crediting the cable charges and a debit
advice is made for the party telling them that so much services charge have been deducted from
your account with us. All the TT'S are serially numbered. There are two types of TT'S.

1. Incoming TT'S

2. Out-going TT'S

So far both type of T.T'S separate registers are maintained. While issuing a TT a confidential code
no. called the test numbers is also being given to TT by two authorized officers and this code
number is only under stood by the two other authorized officers in the receiving bank. By this test
some multiplications 'C done which confirm the instructions in the body of T.T.

MAIL TRANSFER
As it is clear from its name that in this case the transfer of money (in the shape of a document)
takes place through mail. The procedure is like TT, that is instructions are given to the receiving
bank that inter office account should be debited and 'edited to the mentioned party’s account. It is
slower as compared to the TT. Records are maintained in the same way as of telegraphic transfer,
commission is also charged in the same manner but at a different rate.

ACCOUNT DEPARTMENT
Every Transaction, which takes place, is recorded in the computer. Transaction takes place
through different vouchers which are finally posted to computer. As I already wrote that total
branch was computerized so all transaction in different dept. Would be made on computer. Each
dept prepare a summary of daily transaction 'at is forwarded to Account dept. Since all voucher
from differ-it dept. also forwarded to current dept. So this dept. will tally it such transaction with
current dept after maintaining the ledger each dept.

The dept take care about bookkeeping, maintains ledger and current accounts of different dept.

Following are the different functions performed by this de partment.

1. Preparation of monthly, quarterly, semiannually and yearly balance sheet of the branch.

2. To maintain all accounts of different department.

3. Calculation of profit of different investment schemes.

4. Calculation of mark-up of different advances.

5. Preparation of different type of reports for state bank of Pakistan.

6. Preparation of daily position report of cash and every account.

7. The most important function is the checking and tallying daily summaries of different
departments with ledger's balance

DEPOSITS SCHEME
Deposits to the bank are as the backbone to the body of man it is lifeblood of a bank. The bank
borrow money from general public by accepting or by an offering suitable rate of lit on them, or
simply promise to repay on demand.

When the bank receive the deposits, it become the debtor and client assumes position of creditor.

At ABL the main thrust is on customer satisfaction. The Bank provides many opportunities to
place the funds in variety of deposit accounts including foreign currency deposit account and offer
a wide range of facilities and services tailored to suit the personal as well as domestic and foreign
business requirements of its customers. The different deposit schemes offered by ABL are as
follows:

1. Current Deposit Scheme

Purpose

The purpose of this account is to provide the facility to the account holder that he can deposit or
withdraw any amount of money from his balance at any time.

Deposit of Funds

Funds can be credited into the current deposit account in the form of cash, Cheques and other
financial instruments drawn on any other Bank or any other branch of ABL.

Minimum & Maximum Balance

This account can be opened with a minimum balance of Rs. 100 and there are no maximum limits
on balance.

Mark-Up

No Mark-up is given to the current deposit account holders. Furthermore the current accounts
are exempted from Zakat.

2. PLS Saving Bank Deposit

Minimum & Maximum Balance

Profit and Loss sharing Bank account can be opened with a minimum of Rs. 100. There are no
limits on the maximum balance.

Deposit of Funds

Funds can be deposited into this account through Cash, Cheques and other financing instruments
drawn on any Bank or any other branch of ABL. The Bank will take care of to see that the credit
and debit entries are correctly recorded in the accounts of the account holders but in case of any
error, the Bank shall be responsible make the correct adjusting entries without noticing the
account holder and recover any amount due from the account holders.

Profit
The profit is given after every six months and the rate of profit is announced semi annually. The
overall profit of Bank for six months is determined and on that basis the rate of profit on this
account is calculated.The profit is given to the account holder on the monthwise product. It is
determined on the minimum balance of account from 7th to 31st of every month.

The PLS saving rate announced by ABL on 31st Dec. 1998, for the next six months is 8%.

Eligibility for Sharing Profit/Loss of the Bank

• PLS saving account having a running minimum credit balance of Rs. 100, would be eligible
for sharing profit/loss of the Bank the proportion of the profit or loss on PLS Saving Account shall
be determined by the Bank in its sole discretion and the Bank decision shall be final and binding
on the PLS Account holder.
• The Bank shall be within its rights to make investment of credit balances/deposits in PLS
Saving Account in any manner at its sole discretion and to make use of the funds to the best of its
judgement in the banking business under the PLS system.

Withdrawals

• Account holder can only withdraw sums from his account by means of Cheques supplied to
him by the Bank for that particular account.
• Cheques should be signed as per specimen signature supplied to the Bank and if there is any
alteration in the signature of the drawer, then it must be authenticated by the drawer’s full
signatures.
• Post dated and stale Cheques shall not be paid.
• Withdrawals from PLS saving accounts are allowed not more than eight times in a month and
a total amount not exceeding Rs. 25,000. For withdrawal of larger amount, seven days notice is
required to be given.

CERTAIN OTHER FEATURES

• Every account holder will be required to give a specimen of his signature for record. If there is
any slightest doubt realized by the Bank regarding the signature of the account holder, Bank is
entitled to refuse payment of cheque drawn by the account holder.
• Each account will be given a number and account holder should always quote this number
when writing to the Bank regarding his account or when making deposits or withdrawals.
• Any change in address of account holder should be immediately communicated to the Bank.
• Account may be transfer from one branch to another branch of the Bank free of charge,
without effecting the profit/loss accruing position of the account.
• The account holder wishing to close the account must present the passbook and unused
Cheques to the Bank, in order to draw the balance amount. In case of account holder wishing to
close the account within a period of six month from the date of its opening a charge of Rs 5 on
account of cost of passbook will be made.
• No credit facilities will be allowed against the balances in PLS Saving Accounts.
• The Bank has a right to close any account without giving any previous notice to the account
holder, which in its opinion is not being satisfactory operated upon.

3. PLS High Premium Account

Minimum & Maximum Balance

This account can be opened with the minimum of Rs. 2, 50,000 and there are no limit on the
maximum balance.

Profit

The profit is paid on the daily product, i.e., the minimum balance from 1st to 31st is calculated and
on that balance the profit rate is applied. The rate of profit on this account as announced on
31st Dec. 1998, is 8%.

4. Overseas PLS Account

Overseas Pakistanis can open this account by remitting their amount into this account. This
account can be opened only when the Client remits his amount here from abroad.

Deposit of Funds

Funds can be deposited into this account through Cheques, DDs, TTs and other financial
instruments drawn on any Bank or any others branch of ABL.

Profit

To attract the overseas Pakistanis, ABL offers 3% higher rate of profit than the PLS term deposits
for Pakistani residents. The current rate of profit on this account as announced by Bank on
31st Dec. 1998, is 11 %.

5. PLS Term Deposit

The client deposits the amount for a specific period of time in this account and the Bank issues a
certificate in the name of client for that period. After maturity period the Bank pays back the
principle amount.

Maturity Period
The minimum period of PLS term deposit is of three months and the maximum period is five
years. The PLS term deposit may be for 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5
years.

Profit

Longer the period, for which the amount is deposited, higher will be the rate of profit. The rate of
profit given by ABL on PLS term deposit ranges from 8% to 14%, depending upon the period of
deposits. The rates of profits on different term deposits with respect to their maturity period are
as follows:

PLS Term Deposits Rates Of Profits (per annum)

3 Months 8.8 %

6 Months 9.9 %

1 Year 10.4 %

2 Years 11.3 %

3 Years 12.2 %

4 Years 13.1 %

5 Years and above 14.0 %

6. Overseas PLS Term Deposits

This scheme is only for Overseas Pakistanis. Here the rate given to clients is 3% higher than the
PLS term deposits. Like the PLS term deposits, the maturity period ranges from three months to
five years. All other features are same as that of PLS term deposits.

Overseas PLS Term Deposits Rate OF Profit

3 Months 11.8 %

6 Months 12.9 %

1 Year 13.4 %

2Years 14.3 %

3 Years 15.2 %
4 Years 16.1 %

5 Years and above 17.0 %

7. Allied Super Premium Term Certificates

Minimum and Maximum Balance

The minimum balance for this account is Rs. 1,00,000 and no maximum limit. However the
balance should be in multiples of Rs. 1,00,000.

Maturity Period

The maturity period of Allied Super Premium term certificates is fixed and it is three years.

Profit

There are three different categories for the payment of profit. For each category the profit rate is
different.Normally the profit ranges from 13.5% to 14.5%. The profit may be paid quarterly, semi
annually or annually. The rates of profit for these categories are as follows:

Quarterly rate of profit 13.5 %

Semi annually rate of profit 14.0 %
Annually rate of profit 14.5 %

When these Certificates are issued to the customers, different profit coupon is attached with
them. When the customer shows the coupon, the profit is paid to him. If the term certificate
carries annually payment of profit then it will bear three coupons, one for each yearly
payment. Similarly, a semi annually profit payment certificates will have six coupons and
annually profit payment certificate will have twelve coupons.

Suppose a client has yearly profit term certificate and he does not take his first year profit, then
this profit will remain with the Bank and he can take it in the next in the next year with the second
payment. But no markup will be given on his previous profit.

8. Allied Mahana Amadani Certificates

Salient Features

• Minimum investment in Allied Mahana Amadani Certificates is Rs. 25,000.

• The maximum investment limit in these certificates is Rs. 1,000,000.
• The maturity period for Mahana Amadani Certificates is five years.
• Investment can be made by:
• — Individual or jointly.
• — Proprietorship, Partnership concern or Corporate bodies in their names.
• It carries special attractions for:
• — Retired, civil and Armed forces employees.
• — Widows and Children being brought up by guardians.
• Expatriates looking for permanent monthly income.

Profit

Profit on Mahana Amadni Certificates is given on monthly bases. The estimates minimum rate of
profit is 1.1 % per month. The expected monthly profit on various amounts would be as follows.

Amount Monthly Profit

Rs 1,000,000 Rs 11,666

Rs 500,000 Rs 5,830

Rs 100,000 Rs 1,160

Rs 50,000 Rs 583

Rs 25,000 Rs 291

TAX AND ZAKAT DEDUCTION

• Payment of profit is subject to deduction of Withholding Tax and Zakat as per rules.
• Exemption on Zakat is available as per law.

Mode of Payment

• Client will enjoy the facility of receiving the profit through Payment Order /Demand
Draft/Postal Money Order, every month at his doorstep.
• At Client’s discretion he or his authorized representative can also receive the profit through
Cash/Pay Order/Demand Draft.
• Since the profit shall be payable by the Branch where Client will open his account under the
‘Allied Mahana Amadni Schemes’ it can also be credited to his account every month

9. Allied Young Saver Certificates

This scheme has been offered specially for the children. This scheme has the maturity period of
ten years.This scheme was introduced, on the same footings as that of National saving certificates,
which are issued by National saving centers. The amount deposited in these Certificates becomes
four times after the maturity period of ten years. For example, if a person deposits 5,000 Rs in
this account, then after maturity period this amount will be 20,000.

Standing Instructions

The Bank extends the facility to its customer to give standing instructions to meet financial
obligations or commitment, such as payment of loan installment of HBFC, payment of insurance
premium, etc. The Bank provided there is a balance in the account or some other arrangements
have been agreed upon between the Bank and the customer carries out the standing instructions.

Standing Instruction Fee

Standing instruction fee will be recovered in addition to the usual charges on remittances, if
any. The standing instruction fee is Rs. 30 per transaction.

Stop payment instructions

If a client wants to stop the payment on the issued cheque, when it will come for clearing to the
bank, then he has to give an application. in this application the client has to give some reasons
because of which he wants to stop the payment on the issued cheque. This stop payment
application is recorded in the stop payment register and a caution is marked on the account of the
client so that, when the issued cheque comes for clearing it may not be cleared.

Advances department of a bank provides many facilities to various individuals and businessmen
against charging the interest from them.

It is the usual practice of the back level it examines the perusal characteristics of the borrower and
the reputation and scope of the business, he is doing or going to start.

However, there are there ways normally used to seem the account.

1. Pledge

2. Mortgage

3. Hypothecation
1. PLEDGE

Pledge is a contract between the borrower and the back whereby the goods are transferred into
the banker's possession while the ownership remains in the possession of the borrower. This
possession remains with the bank until the payment of loan is dully made. In case of default, the
back can sale the goods after giving the notice.

2. MORTGAGE

Mortgage is a contract whereby the interest in any specified immovable property is transferred to
the banker in order to give the security for the payment of debts.

3. HYPOTHECATION

Hypothecation is a term where goods are charged for the purpose of security. But the possession
and ownership remains with the owner of the goods.

CATEGORIES OF ADVANCES
The bank can make the advances in the following three ways.

1. Overdraft

2. Loan

3. Cash Credit

1. OVERDRAFT

Under such arrangement the customer is allowed to withdraw the amount excessive from his
balance. But the limit of amount is sanctioned by the manager and given for a fixed period.

2. LOAN

When the bank make the advances in a lumpsum, to be repaid in lumpsum or in forms of
installments with interest at any future date, is known as loan. These loans may be of short and
long term.

3. CASH CREDIT

These advances are made against the security of the goods which may be made like in the form
pledge or hypothecation. The bank credits the borrower's account with the amount making as
loan. The amount can not be withdrawn in lumpsum. While interest is paid on the amount
withdrawn from the bank.
TYPES OF LOANS
The Bank provides the facility of two types of financing.

1. Funds based Financing

2. 2. Non Funds based Financing

FUNDS BASED FINANCING

The type of Financing in which the funds of the Bank are directly involved is called Funds based
Financing.

There are following types of Funds based Financing.

• • Running Finance
• • Cash Finance
• • Demand Finance
• • Demand Finance against Foreign Currency Account
• • Demand Finance to Staff
• • Finance Against Local Manufactured Machinery
• • Allied Equity Building Plan
• • Unorganized Sector Financing Scheme
• • Housing Finance
• • Agricultural Finance
• • IDA Financing
• • Consortium Finance
• • Finance Under Small Business and Small Industries
• • Overseas Employment Financing Scheme
• • Finance Against Trust Receipt
• • Term Finance Certificates
• • Finance for Government Operations

1. RUNNING FINANCE

PURPOSE

Running Finance is short-term loan usually given for the working capital management. The
running finance is suitable for meeting day to day financial needs of the Business. The running
finance account can be operated and daily sale proceeds can be deposited into the account.

SECURITY
The Bank requires following types of securities in running finance.

PRIMARY SECURITY

The primary security requires by the Bank is stock. Bank hypothecates a specific amount of stock,
that is, stock remains in the custody of borrower, but the lien is of Bank. The borrower is
responsible for keeping and managing the stock well and providing the regular stock reports to
the Bank. The Bank advances a certain percentage of the value of the hypothecated stock as loan
after keeping some margin.

PERSONAL GUARANTEES

Under the SBP laws, ABL can give the loan to the extent of Rs. 50,000 on two personal guarantees
along with the primary security.

PRINCIPLE SECURITY

If the loan required by the borrower is greater than Rs. 50,000 then the Bank requires some
collateral security along with the Primary security. The security taken as collateral is usually
immovable. However, according to ABL laws, the agricultural land cannot be taken as collateral
security. In some rare cases it may also happen that a creditworthy firm may keep some moveable
security as collateral but provided that it is very easily encashable, e.g. defense saving certificates
etc.

MARK-UP

Normally the cost of running finance is 14% but it is negotiable and may vary. 1-% rebate is given
to a client who gives three times more business to Bank than his limit. Furthermore, 1% more
rebate is given to a client who exports three times more than his limit.

Limit means the maximum amount of finance, which is sectioned from the Bank authorities in
favor of client.

PERIOD

Running finance is usually given for a period of one or less than one year.

REPAYMENT SCHEDULE

The borrower has to repay the loan on the daily sail proceeds of stock. It is necessary for the
borrower to adjust the account on the date of expiry of loan period. However, Bank may give a
period of one month after the maturity of loaning period, so that the borrower may repay the loan
during this period. This period is called ‘Date of Final Adjustment’.
2. CASH FINANCE

INTRODUCTION

Cash finance is the account of the Bank. It is like the current account. In this account a certain
amount of cash is available for the borrowers at all the times. A limit is first sanctioned to the
borrower and then, on his needs, the amount is transfer from cash finance account to the
borrower’s current account from where he can withdraw the money. This transfer of cash from
the Bank’s cash finance account to the borrower’s current account is just the paper transaction
and the borrower takes the finance in no time. The borrower can take finance unto his limit
sanctioned by Bank’s authorities. However, the Bank cannot keep the cash finance account
greater than 30% of its equity.

PURPOSE

Cash finance is normally giver for seasonal needs e.g. in Cotton season, Rice season etc. But in
some cases it can be given for regular needs.

SECURITY

Following securities are required by the Bank.

PRIMARY SECURITY

The primary security required by the Bank is stocks. But unlike running finance, in which the
stock is hypothecated, here the stock is pledged by the Bank. The stock pledged is kept with the
Bank at the cost of the borrower. Usually the stocks are kept at the warehouses of the Borrower
Company, but certain representative of Bank as Inspector is always there to keep a check on the
stock. The Bank advances certain percentage of the pledge stock after keeping some margin.

PRINCIPLE SECURITY

Like running finance, some collateral security is taken as principle security.

MARK-UP

The Mark-up of cash finance is normally 14%, but is negotiable.

PERIOD

The maximum period for cash finance is one year.

REPAYMENT SCHEDULE
Repayment of the loan is made after the completion of loaning period, along with the markup.

3. DEMAND FINANCE

PURPOSE

Demand finance is usually given for the financing of new Projects. For example, if a person wants
to open the Floor mill or textile mill, he can get the demand finance from the Bank.

MODE OF FINANCE

Demand finance is given in installments to the borrower. First installment is given to purchase
the land, then second installment is given for the construction of building and finally the
remaining amount is paid to the supplier to install the Machinery.

SECURITY

The Bank requires the following types of securities.

PRIMARY SECURITY

No primary security is required as the finance is given for the new projects and the Borrower
Company has no existing stocks with it.

PRINCIPLE SECURITY

Like running and cash finance, some collateral security is required as principle security. This
collateral may be land, building or machinery.

MARK-UP

Normally 14% but negotiable.

PERIOD

Demand finance is usually given for the long-term period e.g. for two years, five years or even
upto fifteen years.

REPAYMENT SCHEDULE

The repayment of loan is made in installments. A grace period of one year is given, after the
maturity of loaning period. But this grace period can be extended to two years. The installments
may be quarterly, semi annually or annually. The markup is also included in these installments.
IMPORTANT FEATURE

Demand finance is given on the basis of debt equity ratio which 40-60. It is standard ratio. It
means that a borrower can finance 60 percent of its project cost through demand finance
scheme. But the remaining 40 percent should be financed himself.

4. DEMAND FINANCE AGAINST FOREIGN

CURRENCY ACCOUNT

PURPOSE

To attract the foreign currency, ABL has offered this scheme. This scheme is useful for those
Foreign currencies account holders who don’t want to incash their currency, but at the same time
want to start a new project. So they can get the required finance against their foreign currency.

SECURITY

The security for this scheme is the foreign currency of the borrower, which is prevailing in his
foreign currency accounts. The Bank advances a certain percentage of the foreign currency as loan
after keeping its margin. The Bank charges a Lien on this Foreign Currency Account of the
borrower.

MARK-UP

Mark-up of this scheme is 13.0%.

PERIOD

Demand finance against foreign currency is given for one-year period.

REPAYMENT SCHEDULE

No installments are made on the repayment of the loan. After the completion of the loaning
period (i.e. one-year) he whole amount along with the markup is paid back.

5. DEMAND FINANCE TO STAFF

PURPOSE

This scheme has been started to give the benefit only to the employees of Allied Band Limited. If
any employee of ABL wants to start a new project then he will be given the demand finance on the
priority bases.

SECURITY
Some collateral security is required such as land building or machinery.

MARK-UP AND PERIOD

The Mark-up is less than 14% but not fixed. The demand finance to staff is given for long term
period. It may be upto 15 years.

REPAYMENT SCHEDULE

Repayment is made in installments. The installment may be quarterly, semi annually or annually.

6. FINANCE AGAINST LOCALLY MANUFACTURED MACHINERY

PURPOSE

This scheme has been started by State Bank of Pakistan. The basic purpose of this scheme is to
encourage the local manufacturers and to boost up the local industry. Usually people buy the
machinery of out side the country due to non-availability of that in Pakistan. To produce the
machinery in the Pakistan this scheme is introduced so that people will buy it from their own
country.

SECURITY

Land, building and machinery are mortgaged with the Bank.

MARK-UP

To encourage the investors the Mark-up on this scheme is comparatively very low, which 12.0%.

PERIOD

The maximum period for which this finance is given is 8 years. A grace period for the repayment
of loan is also given which is maximum of two years.

REPAYMENT

The repayment of loan is made in installment, which may be semi annually or annually. The
amount, which the ABL finances to borrower, is refund to it by SBP. The ABL acts only as the
Sponsor. So the periodic installment of the repayment of the loan are paid back to SBP.

PROCESS OF GIVING THE FINANCE TO THE BORROWER

According to the scheme the total finance is not given to the borrower once. Instead of it, he is
given the finance in three different installments and these installments are subjected to the
installation of the machinery. Allied Bank Limited has no recognized supplier (manufacturer of
machinery). So the client himself goes to any supplier, gets quotations of machinery from him and
shows these quotations to the Bank. Then the Bank’s Engineers visit the supplier and examines
his capability of installing the machines.After his approval, the quotations are accepted and loan
is sanctioned to the borrower. As a first installment, a cheque of normally 30% of total finance is
given to the borrower. In response the supplier installs the 50% of machinery. After this, another
cheque of 40% of total finance is given to the borrower and at this time the supplier installs the
remaining 50% of machinery. The remaining 30 % of finance will be given to the borrower when
the project starts working.

7. ALLIED EQUITY BUILDING PLAN

PURPOSE

The equity building plan has specially been designed to help accelerate the industrial pace in the
country.The plan is primarily designed to provide financial assistance to those professionals,
technocrats and overseas Pakistanis who are planning to set up their own industrial units.

Through this executive plan the investors will be able to build up their 30% to 40% equity over a
specific period of time and after taking 60% to 70% from the Bank, will be able to put up their
own industrial projects.

SALIENT FEATURES

• Equity investment can be made both in local as well as well foreign currency.
• Plan periods are 3 years and 5 years in local currency and 18 months 24 months in foreign
currency.
• Minimum monthly deposit in local currency for 3 years plan would be Rs. 8,000 and for five
years Rs. 5,000. For both plan periods the monthly deposits would be acceptable in the multiple
of Rs. 1,000.
• Minimum monthly deposit in U.S. Dollars would be $ 680 and $ 515 for 24 months and 18
months plan period, respectively. Similarly, minimum monthly deposit in Pound Sterling would
be 360 Pounds and 280 Pounds for 18 months and 24-month plan period, respectively.
• At any stage if the customer decides not to invest his funds in a project, he shall be offered to
place his funds in any other scheme of the Bank.

ADVISORY FACILITY

The Bank will also extend on request of the investors’ consulting/advisory facility in selection of
project free of cost.

RATE OF RETURN

The deposit installments for the first year will be placed in PLS-SB Deposit Account and
thereafter transferred to PLS-TDR Account for the remaining period of investment. The rate of
return on PLS-SB and PLS-TDR will be in accordance with the half yearly rates of profit declared
by the Bank. The rate of profit as announced by Bank on 31st December 1997 is 8%.

8. UNORGANIZED FINANCING SCHEME

PURPOSE

This scheme has been started for the following purposes:

• To assist the entrepreneurs in the Unorganized sector and to increase their productivity.
• To encourage expansion in employment level within the Unorganized sector.
• To participate in community development work and help build country's economy through
the Unorganized sector.

SALIENT FEATURES

• The scheme aims at elevating and enhancing the earning capacity of small men.
• Under the scheme, financial assistance is provided to individuals or group of individuals
requiring capital to establish a new business or expand his existing enterprise.

FINANCING UNDER THE SCHEME.

The financial assistance will be given for meeting working capital requirements and fixed
investments.Under this scheme the maximum amount of financial assistance to the individual
borrower is Rs. 25,000 and to group of borrower is Rs. 50,000. This loan can be obtained from
designated zonal offices and branches of Allied Bank throughout the country.

9. HOUSING FINANCE

PURPOSE

The Bank extends Housing Finance to customers, under the scheme envisaged by the State Bank
of Pakistan. The housing finance can be given for the following purposes:

* For the construction of new houses or flats.

* For the purchase of new houses or flats.

SECURITY

The housing finance is given to the customers against the mortgage of land or building. The
mortgaged land may that one on which the hose is to be built or it may be any other.

LIMIT
The housing finance can be made to a person once in his or her lifetime. The finance is considered
for an amount of more than Rs. 150,000 and up to Rs. 300,000. The finance is admissible
maximum up to 60% of the value of the house or flat to be constructed or purchased.

PERIOD

The housing finance is given for a maximum period of 15 years.

REPAYMENT

The hosing finance is repayable in the installments and has to be paid back during the maximum
period of 15 years.

10. AGRICULTURAL FINANCE

PURPOSE

Bank under agricultural financing scheme envisaged by the State Bank of Pakistan extends short,
medium and long-term credit. The Bank gives two types of credits, i.e. farm and non-farm
credit. Farm credits are extended for production (inputs) and the development purposes. Non-
farm credits are allowed for livestock (goats, sheep and cattle), poultry, factory including social
forestry and fisheries (inland) and marine excluding deep-sea fishing).

LIMIT

Agricultural finance is given on the basis of cultivated area. Bank normally advances Rs. 2,000
per acre (cultivated). But this amount varies from crop to crop i.e. different for "Rabbi" and
"Kharif" crops.

PERIOD

The agricultural finance is given for both short and long-term periods.

RATE OF MARKUP

For short-term agricultural finance the rate of markup is 11%. For long term and high value
financing, the rate is normally 14% but it is negotiable.

TYPE OF LOAN MARK-UP

Production loan (including sugar 12% per annum
cane loan) upto the maximum of
Rs. 25,000/-
Production loan (including sugar 12% per annum
cane loan) above Rs. 25,000/-
Production loan (including sugar 14% per annum
 cane loan) upto Rs. 50,000/-
against guarantee of two
creditworthy parties.
Financing against guarantees of 14% per annum
Processing Units
Tractor 11% per annum
Other development loans 13% per annum

11. INTERNATIONAL DEVELOPMENT AGENCY FINANCING.

PURPOSE

International Development Agency provides finances to the different Banks in Pakistan to

encourage the industry. These Banks then forward this finance to their customers. Allied Bank
also has such financing scheme. IDA gives this finance on concessional rates, normally ranges
from 6% to 7%. ABL then gives this finance to its customers.

SECURITY

The Bank gives this finance by mortgaging land, building or machinery.

MARK-UP

The Bank charges 14% markup on this financing. From this 14%, SBP charges 2-3% from the
Bank.

PERIOD

IDA finance is given for long term basis. The maximum period of this financing is 10-12 years.

REPAYMENT

Repayment is made on installments, which may be semiannually or annually.

12. CONSORTIUM FINANCE.

When the project cost is high, usually several banks under a lead bank form a consortium to
finance the project. ABL participates in such consortium financing. The Bank itself has
constituted such consortium and is playing a lead role. The Bank is a lead bank in multimillion
consortium financing to Pakistan Steel Mills Corporation, Sui Northern Gas Pipelines Limited,
etc.

13. FINANCE UNDER SMALL BUSINESS & INDUSTRIES.

ABL has started this scheme in order to support the small business owners, e.g. welders,
electricians, etc.The Bank advances the loan of minimum Rs. 25,000 and of maximum Rs.
50,000. The loan is repayable in installments which may be quarterly or semiannually.

If some one wants to start a very small business, e.g., a shopper making factory, a plastic toys
making factory, etc, then he can take finance from the Bank through this scheme. The maximum
limit of finance given by this scheme is of Rs. 300,000.

14. OVERSEAS EMPLOYMENT FINANCING SCHEME

SALIENT FEATURES

• The scheme extends financial assistance to emigrants going abroad for employment through
Overseas Employment Corporation (CEO) in meeting their preliminary expenditures.
• The maximum finance of Rs. 15,000 and Rs. 25,000 is made available to unskilled and skilled
emigrants, respectively.
• The scheme also covers doctors, engineers, professors and highly technical individuals.

REPAYMENT SCHEDULE

• The finance under the scheme is repayable in ten equal monthly installments.
• The first installment is payable within 60 days from the date of financing.

ELIGIBILITY

• Persons only drawing salary equivalent to Pak Rs. 5,000 p.m. And above will be eligible for
availing the finance under this scheme.
• The applicant will undertake to regularly canalize home remittance through Allied Bank or its
Correspondent bank.

15. FINANCE AGAINST TRUST RECEIPT

The Bank delivers the imported consignment to the importers against the execution of the trust
receipt by him. Suppose an importer imports certain commodities, from abroad through Bank
L/C. But it has not the enough finance to release the documents from the Bank and in turn release
the consignment. So he asks the Bank to release his documents and he will repay the Bank’s
amount from the sale proceeds of the consignment. In turn, he deposits the receipts of the sale
proceeds to the Bank. This is called finance against trust receipt.

16. TERM FINANCE CERTIFICATES

Term finance certificates are redeemable equity based instruments issued by the Bank. In TFC the
rate of markup is determined through mutual agreement between the Bank and the Sponsors of
the company in between the minimum and maximum rates determined by the SBP. The TFC may
be for short or long terms.

17. FINANCE FOR GOVERNMENT COMMODITIES OPERATIONS

The Bank gives finance to the Government for purchase of different commodities. The
Government then sells these commodities and repays the loan to the Bank. For example Bank
may give finance to the Government to import wheat and when Government sells this wheat to
the floor mills, it repays the loan to the Bank.

In addition to above mentioned financing schemes, the following finances schemes are also
available, which will be discussed in Foreign Exchange Department.

• Export Finance
• Finance Against Foreign Bills Negotiated
• Finance Against Foreign Bills Purchased
• Finance Against Documents (Sight)
• Finance Against Imported Merchandize
• Finance Against Inward Bills purchased

NON-FUND BASED FINANCING

The type of financing in which the funds of the Bank are not involved is called "Non-Fund Based
Financing".Under non-fund based financing, the following schemes are available in Allied Bank
Limited.

• Letter Of Guarantee
• Performance Bonds
• Bid Bonds
• Letter Of Credit (Inland)
• Letter Of Credit (Import)

1. LETTER OF GUARANTEE

The Bank issues the letter of guarantee in local and foreign currency and thereby undertakes the
responsibility on behalf of the customer for the debt, default or miscarriage by the customer,
whether such requirement is domestic or overseas. There are many types of Letter of Guarantee.

Suppose a person wants to purchase pesticides from Pan Pacific on credit and Pan Pacific says to
him that we will provide you the pesticides, if you give us the bank guarantee, so that if you will
not be able to pay the amount on the specific date, the bank will pay the amount on your
behalf. So that person will come to the Bank and the Bank will give him the guarantee after
fulfilling its requirements.
The Bank also issues the Letter of Guarantee in favor of collector of custom. Suppose person
imports some inventory as raw material, but the collector of custom says that this imported
inventory is not the raw material but the finished goods. So he charges the custom duty on this
inventory by considering it as the finished goods. As the custom duty on the imported finished
goods inventory is more than the raw material, so the importer will protest it and the matter is
taken to the court. Now the court asks the collector of custom to release the inventory of importer
and at the same time ask the importer to give the bank guarantee in favor of collector of
custom. So the Bank gives the guarantee that if later on the court gives the decision against the
importer, he will pay the full duty. If he becomes default, then the Bank will pay the amount.

SECURITY

The Bank issues the Letter of Guarantee by either mortgaging the security or keeping the security
as collateral. Besides this, the Bank may also issue the Letter of Guarantee by hypothecating the
stock. The type of security depends upon the credit worthiness of the customer.

PERIOD

Normally the Letter of Guarantee is issued for the period up to 1 year.

COMMISSION

The Bank charges a commission fee on the issuance of Letter Of Guarantee which is o.45%
quarterly.

2. PERFORMANCE BONDS

Performance Bond is a type of guarantee which a Bank issues in the favor of technical know how
of its customer. Suppose a person engaged in construction, made an agreement to construct a
building within six months. Now suppose, if the owner of the building is not satisfied with the
technical ability of the constructor and he is not sure that the constructor will be able to construct
the building within six months, then he may ask the constructor to make him available with the
Bank guarantee. Now the Bank issues the performance bonds on seeing the technical abilities of
the customer and gives guarantee that he will construct the house within a period of six months.

3. BID BONDS

Bid bond is also a type of guarantee that is issued in support of the customer who is getting a
contract from any company. Suppose a person gets a contract from corporation of worth one
million and promises to pay the amount of contract in four installments. But the corporation may
ask him to give the Bank guarantee.So the contractor comes to the Bank and the Bank issues the
Bid bond in his favor and gives guarantee that the contractor will pay the amount of contract. Bid
bonds are issued in both local and foreign currency.

The following non-funds based schemes will be discussed in foreign exchange department
Letter of Credit (Inland)

Letter of Credit (Import)

RECOVERY OF LOANS
If the loans are not returned within their maturity period, then Bank adopts the following process.

First of all the Bank will personally request the customer to repay the loan.

After this, first legal notice is sent to the customer. If the customer does not respond to this first
legal notice, then after fifteen days the second legal notice is sent to him.

In the third step the Bank sue the customer in the court. Two types of courts have been setup
under two difference ordinances, especially to hear and decide recovery suits i.e.

1. Special Courts (banking)

2. Banking Tribunals

Special courts were established under the banking companies (recovery of loans) ordinance 1979
to hear allowed interest-based system of Financing.

INTRODUCTION

In the very beginning of this era people were not aware of foreign exchange. All the foreign money
was kept at hand and this idle money did not contributed in the Pakistan economy at that
time. But in 1991 foreign department introduced was introduced by the government of that
time. After being introduced people deposited their currency in the Bank. It was the amount equal
to the total Pak Rupees that were in the circulation in the economy of Pakistan.

After the foreign currency accounts were opened, the economy gradually improved because
foreign currency contributed a lot. Before the facility of foreign currency accounts, nearly 60%
foreign currency was held by the people as idle.

ABL FOREIGN CURRENCY ACCOUNTS

In Allied Bank Limited, Foreign Currency account can be opened in four major currencies.
US Dollar

Sterling Pound

Japanese Yen

Deutsche Mark

CRITERIA FOR OPENING FOREIGN CURRENCY

ACCOUNT

There are not hard and fast rules for becoming the Foreign Currency Account holder. Bank wants
only introduction of the Client and very little about the background. I.D card is also not necessary,
if someone has; well and good, otherwise no restriction will be there for him. Minimum
requirements are not also fixed F.C.Accounts. It can be operated by 10$ only. But other Banks
may have some limits on minimum requirement.

INCENTIVES TO FOREIGN CURRENCY ACCOUNT

HOLDERS

The following incentives will be granted to the Deposit Holders who maintain a Foreign Currency
Deposit with minimum balance of US. $50,000/- or Japanese Yen 5,000,000/- pr P. Stgk.35,
000/-or D.M 75,000/-

The branches Authorized to deal in Foreign Exchange and maintain Foreign Currency Accounts
will ensure that the following services will be rendered by the bank to the Foreign Currency
Account Holders in above category, free of charge/or reducing the commission in certain
transactions as mentioned against each item.

Issuance of Foreign traveler Cheques to the Account-holders to the debit of there Foreign
Currency Accounts.

Remittance abroad through Foreign Currency Accounts commission @US $2/-per US 1000/and
telegraph transfers charges are 200/-

Issuance of Balance Confirmation Certificates (free of charge)

Delivery of Cheque Books Registered Mail (free of charge)

Issuance of Proceeds Realization Certificates (free of charge)

FEATURES OF FOREIGN CURRENCY ACCOUNTS.

There will be legal protection for the account holders.

According to foreign exchange rules and regulation every citizen of Pakistan, either within the
Pakistan or outside the Pakistan, can open the foreign currency account.

Resident firms and Resident Companies including investment Banks can open Foreign Currency
Accounts.

All foreign nationals and foreign Companies in Pakistan or abroad can open Foreign Currency
Accounts.

Opening of Foreign Currency Accounts in the joint names of residents/non-residents is

permissible.Foreign Currency can be deposited by:-

* Remittance received from abroad

* Traveler Cheques

* Foreign Currency Notes

* Foreign currency bearer Certificates

There will be no restriction and questioning to him about the currency, which he wants to deposit
that from where he got that money.

No Zakat will be deducted on these accounts; no Income Tax deduction, no Wealth Tax deduction
will be there.

These incentives reinforce and motivated the people to invest in foreign currency accounts rather
to keep the foreign currency idle.

Foreign currency accounts can easily be transferred from one person to another, one place to
another, with in the ABL Branches or in other Bank. This facility is not available in Pak Rupee
account.

The account holder can transfer the funds freely, in any currency to any part of the world.

Traveler Cheques can be issued for abroad to the account holders without any limit.

Foreign currency Accounts can be used for payment of purchases at Duty Free shops.

Foreign Exchange Bearer Certificates and U.S. Dollar Bearer Certificates can be purchased from
Foreign Currency Accounts.

FOREIGN DEPOSITS SCHEMES

Deposit Schemes of Foreign Currency Accounts are very much related with Pak Rupees Accounts
such as saving deposit, current deposit and fixed deposits.

SAVING ACCOUNTS

In these accounts there is no Minimum limit for opening the account and the Bank offers certain
rates of interests on all Foreign Currency Accounts.

RATE OF INTERESTS ON SAVING ACCOUNTS

For Dollar, 6.5% rate of interest is offered

For Sterling, Pound 8% rate of interest is offered

For Deutsche Mark, 4.2 % rate of interest is offered

For Yen 1% rate of interest is offered

FIXED DEPOSITS

PERIOD

Fixed deposit facility is also provided to clients. These deposits can be for three months, less than
six months, six months, less than twelve months, twelve months, two years, three years, four
years and for five years.

Rate of Interest

Rates of Interests are different for different Currencies for different Periods.

CURRENT DEPOSITS

Multiple withdrawals of any part of balance can be made on demand. Funds can be credited into
the current deposit account in the form of cash, Cheques and other financial instruments drawn
on any bank or other branch of ABL. The current account is suited to meet both domestic and
business requirements of the customer.

FINANCING SCHEMES
In foreign exchange department both Fund-based and Non-fund based Financing schemes are
present.First Non-based financing schemes are discussed.

NON-FUND BASED FINANCING SCHEMES

• Letter of credit (Import)

• Letter of credit (Inland)

First of all Letter of Credit is explained.

LETTER OF CREDIT

Letter of credit (L/C) is the type of guarantee, which the Bank extends on behalf of its customer in
favor of the exporter.

PROCESS OF L/C

Suppose a person wants to import certain commodities from abroad. He asks the export to send
the commodities and he will pay the amount later after receiving the commodities. But the
exporter asks the importer to give him the Bank guarantee. Suppose the importer is the very loyal
and creditworthy customer of ABL, so he will come to ABL and will ask the Bank to open a letter
of credit in favor of exporter.The Bank will now issue a letter of credit in favor of exporter on
behalf of its customer and promises to stated amount if the customer becomes default. In return
the Bank keeps some security from the customer.This security may be any property, machinery
etc. The Bank will send this letter of credit to its any correspondent Bank in that country and asks
the Bank to give this L/C to that exporter. The L/C contains specifications of the imported
commodities along with other necessary details. Now the correspondent Bank will inform the
exporter about the L/C. The exporter will receive the L/C and after seeing all the requirements of
the contract, ship the commodities to the importer according to specified manner discussed in
L/C. After shipping the commodities the exporter will go to the correspondent Bank or any other
Bank and will receive money after handing over the documents to the correspondent Bank. The
correspondent Bank will give him the money after analyzing the documents of shipment. Then
correspondent Bank will send a covering letter and documents of shipment to the Allied Bank
Limited. This covering letter specifies that the correspondent Bank has given the amount to the
exporter and documents of shipment are sending to ABL. After receiving the documents ABL
contacts the importer and tell him that his commodities have arrived and his documents of
consignment are with the Bank. Now he can take these documents of shipment by paying the
specified amount of L/C to the Bank and can release his consignment.The Bank charges certain
rate of commission on the days, which start from the payment to exporter by the correspondent
Bank till the day of payment by the importer. This is called Letter Of Credit Import.

TYPES OF L/C

There are many types of L/Cs but two are of most importance.

SIGHT L/C
If the L/C specifies the payment to the exporter immediately after the shipment of consignment to
the importer, then it is called “Sight L/C”.

USANCE L/C

If the L/C specifies the payment to the exporter within specific period of time after the shipment
of consignment to the importer, then it is called “Usance L/C”.

L/CS ESTABLISH BY ABL

ABL establishes following kinds of confirmed and irrevocable letters of credit.

• Sight credit
• Usance letter of credit
• Reimbursement letter of credit
• Revolving credit
• Transferable credit
• Deferred payment standby L/C
• Term credit
• Negotiation credit

LETTER OF CREDIT (IMPORT)

The Bank in order to finance commerce and trade, extends its prestige financial strength by
establishing overseas letters of credit, on behalf of the customers and thereby undertakes to pay
the amount stated on the letter of credit or accepts a bill of exchange on behalf of customer, in
return for delivery of the commercial and shipping documents.

LETTER OF CREDIT (INLAND)

The Bank, in order to finance trade and commerce within the country establishes inland letter of
credit and thereby undertakes to pay the amount stated on behalf of its customer, in return for the
delivery of commercial and other documents provided there documents are strictly in accordance
with the terns and conditions of the letter of established by the Bank.

FUND BASED FINANCING SCHEMES

Among fund based financing schemes, the following schemes are present:

• Export Finance
• Finance Against Foreign Bills Negotiated
• Finance Against Foreign Bills Purchased
• Finance Against Documents as Security
• Finance Against Imported Merchandise
• Finance Against Inward Bills purchased

1. EXPORT FINANCE

The Bank makes available finance for export. This finance may be pre-shipment or post-
shipment.

PRE-SHIPMENT FINANCING

The pre-shipment finance is to meet the financial requirements of the export order before
shipment.Suppose a person who exports certain commodities to various countries, receives a
huge order to export.The importer will send him the L/C through his Bank, which has many
correspondent banks here. Let ABL is one of them. Now if the exporter has not enough finance to
meet the export order, then he will come to ABL and will get the financing against L/C of the
contract and by pledging some security. After shipping the consignment to the importer, the
exporter will take the documents of shipment to the Bank and will ask it to collect the amount
from importer. This is pre-shipment financing.

POST-SHIPMENT FINANCING

The Bank makes post-shipment finance available after shipment of export consignment. Usually
in case of usance L/C, the post-shipment financing is made.

Suppose an exporter has usance L/C in his favor which shows the payment of exported
consignment after a period of say 6 months, but the exporter needs money now. So he will go to
the Bank and ask them to purchase or the shipping documents and give him the finance. So the
Bank will give him the finance by purchasing the shipping documents. This is post-shipment
financing.

2. FINANCE AGAINST FOREIGN BILLS NEGOTIATED

When the exporter exports the commodities and gets the L/C from the correspondent Bank of the
importer’s Bank let it be any Bank other than ABL and the L/C is open L/C. Now after the
shipment of exported consignment the exporter has the option to negotiate the shipping
documents with any Bank and gets the amount of exported commodities. Suppose it comes to
ABL. Then ABL on seeing the repute and good will of the importer’s Bank will negotiate the
shipping documents and will give the finance to the exporter.
3. FINANCE AGAINST FOREIGN BILLS PURCHASED

Suppose the importer sends the usance L/ C in favor of exporter here. The usance L/C specifies
the payment to the exporter after the 6 months. But if the exporter wants to get the amount
now. So he will go to the Bank and asks the Bank to purchase the documents. Now the Bank will
purchase the documents at discount and give him the finance. The difference between the
purchase price of these foreign export bills and the amount due against these foreign bills is the
profit of the Bank.

4. FINANCE AGAINST DOCUMENTS AS SECURITY

In this type of financing the Bank accepts shipping documents from the exporter and finance
against that documents by seeing the worth of the documents. It keeps the documents as security
but not purchases it. Bank also takes some security by the borrower.

5. FINANCE AGAINST INWARD BILLS PURCHASED

The Bank also extends finance against bills of exchange drawn by the beneficiary of inland letter
of credit provided such Bill of Exchange and other related documents are strictly in conformity
with a term and conditions of letter of credit.

6. FINANCE AGAINST IMPORTED MERCHANDIZE

The bank extends facility of clearing the consignment through its approved clearing agents and
considers finance against pledge of consignment imported through the Bank. This is called
Finance against Imported Merchandize.

7. EXPORT REFINANCING

It means to finance the persons for export purposes. Government introduced this scheme on the
basis of bad conditions of exports as compared to the imports. Before this scheme the Exports of
the country were very poor. All the money was spend on the imports. To increase the exports this
scheme was introduced.Under this scheme only those goods are manufactured which the
Government allows. Rate of Markup offered is very less as compare to others. Once the ABL has
financed the customer, then the State Bank of Pakistan will return it to ABL after two or three
days, so it is called the refinancing. Period of payment for this scheme is 150 days but for the
carpets, it is extended to the 180 days.

8. FORWARD COVER
When a customer deposits the foreign currency in a Bank then the Bank has to send this foreign
currency to SBP on daily basis. In return SBP gave an equivalent amount to the Bank in Pak-
rupees. When the client comes back to withdraw his money the Bank gets back the foreign
currency from SBP and it gives it back to the client. All these transactions occur in paper. Now it
may happen that the rate at which the Bank deposits the foreign currency, say US$ in SBP is
lower than the rate at which the Bank gets back the US$ from SBP. It means that Bank may suffer
loss. To avoid this loss the Bank makes an agreement with the SBP.According to this agreement
the rate at which the Bank deposits the foreign currency in SBP, gets back the currency at the
same rate regardless of the period of time. This is called Forward Cover. The SBP charges certain
rate of commission on forward cover of different currencies. Currently the rate charged at US$ is
5.25% and at Pound Sterling is 4.5%.

The bank provides its customer various products & services, to cater there need of investments,
and other social or business requirements. These Product & Services offered by the bank are as
follows:

LOAN FOR COMPUTER

Now a days ABL is also standing with the government of Pakistan in spreading the IT education
through financing in the purchase of computer. ABL provides computer to those professionals
who are interested to get computer related education.

ABL finances 80% of total cost while,

The clients have to bear 20% of total cost.

Markup is 14%

And the repayment period is 5 years.

TRAVELER CHEQUES
Allied Bank issues Traveler Cheques both in foreign currency and in Pak
Rupees. The traveler Cheques issues in foreign currency are called ABL
Traveler Cheques while those issue in Pak Rupees are known as ABL Rupee Traveler
Cheques.

DENOMINATION

ABL Rupee Traveler Cheques are issued in the denominations of Rs 1,000, Rs. 5,000, Rs 10,000
and Rs. 50,000.

SERVICE CHARGES

The bank charges Rs 20 on the issuance of traveler cheque of any denomination.

REQUIREMENT

The Bank requires Identity Card on the issuance of the Traveler Cheque.

VERIFICATION

Client makes one sign on the Traveler cheque when he is purchasing it and the other sign is made
when he will cash the cheque.

LOCKERFACILITY
The list of Lockers is maintained in the register. In this register the name of locker holder is
mentioned along with the locker number. The key is provided to the locker holder called the
Normal or Ordinary key.The Bank keeps himself one key himself. When the locker holder wants
to operate to the locker, then he will operate the locker firstly entering the name in the register
along with the initials. The date and time of the transaction will also be recorded in the
register. Then the leaving time will also be recorded in the register.

Criteria for Acquisition of Locker

There are certain criteria for acquiring the locker facility.

OPENING FARM
There are opening farms, which are filled by the client to get the locker facility. In this form the
name is mentioned along with the signatures of the locker holder. In the locker number is also
mentioned on the farm.

SECURITY

Certain security is kept by the while providing the locker facility. This security is in shape of the
cash.

SIZES OF LOCKERS

There are four sizes of lockers, small, medium, large, or extra large, on which certain security is
made and the locker holder pays the following amount of rent annually.

Locker Size Security Rent

Small Rs. 1,500 Rs. 750

Medium Rs. 3,500 Rs. 1500

Large Rs. 5,000 Rs. 2500

The key, which is with the Bank, is called Master key and the key, which is kept by the holder, is
called normal key. A locker cannot be operated with one single key. Both the master and normal
keys are required for operating the lockers. If the key is lost from the locker holder, then the
locker holder will pay the entire recovery fee and the client launches FIR. If person wants to
operate the locker, he will operate it alone.

ALLIED BANK MASTERCARD

TYPES OF MASTERCARD

Allied Bank issues two types of MasterCard.

• Local MasterCard
• International MasterCard

The normal limit of local MasterCard is Rs. 25,000, but it can be extended upto Rs. 50,000 only
for creditworthy customers. The maximum limit of International MasterCard is Rs. 100,000. The
Bank charges 8 to 10 % commission on the used amount.

It’s the any time shopping card

Having the ABL MasterCard is likely having an account with hundreds of shops, restaurants, and
hotel outlets all over Pakistan and abroad. The client no longer waits for his bonus to start
shopping.

Lost card liability

If ABL MasterCard is lost or stolen, the cardholder will have to bear only the first Rs. 100 from the
amount misused, provided the Credit Card Division of the Bank is notified immediately.

Its “Free Credit Card”

If the total outstanding amount is settled by the due date, (approximately 15 days from the
statement date), no mark-up is charged. This means that you enjoy a maximum of 45 days of
“frees credit” from the date of transaction.

Free Personal Accident Insurance

As a holder of prestigious ABL MasterCard, the Bank covers the client with the personal accident
insurance value that Rs. 50,000/- in case of death or permanent disability.

It’s an Instant Cash Card

ABL MasterCard enables the cardholder to obtain the cash advance from his MasterCard account
from any designation branch of ABL during banking hours, at a two percent service charge.

Extra Cards. Supplementary +

As an ABL MasterCard holder, client can receive the extra cards with different names and
signatures for two other eligible persons of his immediate family nominated by the client himself,
may be his spouse. The two cards are absolutely free any membership fee.

It’s the Invaluable Expense Planner

The sales slip client receives any time, when he makes a purchase and his monthly statement
helps him to plan out his monthly expenses. Thus the client will never overshoot his Budget while
holding the ABL MasterCard.

RATE OF CHARGES
Local Card Rate of Charges

Membership fee Rs 500 (flat)

Annual fee Rs 1,000 (flat)

Supplementary card fee Rs 500 per card

Cash advance 2.5 % per transaction

Replacement fee Rs 350

International Card rate of Charges

Membership fee Rs 500 (flat)

Annual fee Rs 1,500 (flat)

Supplementary card Rs 750 per card

Cash advance 2.5 % per transaction

Forex markup 1.25 %

Replacement fee Rs 350

UTILITY SERVICES
The banks also provide its customers the non-banking services, such as Collection of Utility bills,
etc.

Utility bills can be paid through cash or cheques drawn on any branch of the branches at their
convenience under "Cheque Drop-in" system. The Bank mails the bills after payment to the
consumer.

HAJ SERVICES
The bank serves the intending pilgrims by helping them in performing their religious obligation.
The Haj forms and other related services are provided by the bank.

However the terms and conditions for accepting the Haj forms from intending pilgrims are in
accordance with the Haj Policy announced by the government each year.

BANK’S

FINANCIAL POSITION
Financial position of the ABL can be judged from different financial heads that on which level it
stands, with respect to the other banks.

Total Assets

Total assets of the bank increased from Rs. 72 (billions) in 1997 to Rs. 89 (billions) in 1998,
thereby increasing at the rate of 23.3% over the last year. This is the highest rate of growth for the
last five years, and better than other banks..

Advances

Advance, net of provision, have increased from Rs. 36 (billions) in 1997 to Rs. 43 (billions) in
1998 thus increasing by 18% during the year. Though the advances to private sector have declined
country-wide yet in case of Allied Bank share of credit to private sector remains unchanged as
compared to previous year.

Investments

Investments have increased from Rs. 20 (billions) to Rs 26 (billions) in 1998. Thus increasing by
27% during the year under review. It is encouraging to observe that during last two years the
priority of the management has remained to increase investments after, of course, meeting the
genuine credit needs of our customers.

The investment of 90% has been made in Govt. Securities which mitigates the default risk on
statutory liquidity reserves and ensures safe return to our share holders.

Deposits

The peer banks floated various high cost deposit mobilization schemes during the year. However,
Allied Bank, depending upon its quality of services and experienced field force successfully
mobilized additional deposit of over Rs. 13 (billions) during the year reflecting a growth of almost
21% over the previous year.

Equity

Equity has remained one of the main concerns of the management. In order to increase equity,
the bank issued 100% right shares in 1995 and 25% in 1996, also ploughing back profits through
bonus shares of 25% each in 1995 and 1996. In 1998, the management decided to revalue land
and buildings acquired by the bank several years’ back and were being carried at book
value. However, the international properties of the bank have not been revalued. As a result of
revaluation of the domestic land and buildings of the bank the reserves of the bank have increased
by almost Rs. 1.5 (billions) thereby increasing the equity of the bank almost 100%. Now the total
equity stands at 3.002 (billions).

Profitability
Pretax profit of the bank increased from Rs. 29 million in 1997 to Rs. 170 million in 1998. Thereby
reflecting a growth rate of almost 490%. The main reason for this profit increased was rise in yield
from 387 million in 1997 to Rs. 769 million in 1998.

PERFORMANCE HIGHLIGHTS OF 1998

HEADS 1997 1998 GROWTH Rs GROWTH %

Capital & reserves 1515 3002 1487 198%
Deposits 63430 76541 13111 21%
Advances 36231 42719 6488 18%
Investments 20193 25605 5412 27%
Income 8397 8984 587 11%
Expenditure 8368 8814 450 9%
Pretax profit 29 170 141 490%
Total assets 72404 89358 16954 23.42%

The year 1997 had been very difficulty for Pakistan economy. The commercial banking industry
has been reflecting declining trend in the pre-tax over the last three years due to ever increasing,
quantum of non-performing assets, resent cost of funds and inter-mediation and declining
manufacturing sector.

The beginning of 1998, however, has brought a ray of hope for economic revival. The emergence
of new government with heavy electoral mandate has considerably restored the people’s
confidence, which is reflected in the rise in the country’s stock price index after almost two
years. The policies being pursued by the new government are expected to revive all sectors of the
economy.

Operational review
The performance of ABL remained mixed and very improved during the year, 1998. Total assets
(less contra) increased to Rs. 89.358 billion in 1998 indicating a growth of 23.4 % as compared
with 1997.Declaration of 25% right shares together with rising reserves increased the equity of the
Bank by RS. 170 million or 14.0% resulting in improved capital adequacy ratio of the Bank. Total
deposits of the Bank reached to 76.541 billions showing a growth of 21% over last
year. Investment and advances rose to Rs. 25.605 billion registering a growth of 27%. The growth
in total income was only 11% (from Rs. 8.397 billion in 1997 to Rs. 8.984 billion in
1998). Whereas the growth in total expenditure was 22.5%(from Rs 8.368 billion in 1997 to Rs.
8.814 billion in 1998) resulting in a relatively lower pre tax profit for the year 1998.

The pre tax profit Rs. 170 million for the year was very much high as compare to the previous year
figure out as 29 million in 1997. This increase in pre tax profit was due to higher margin by
making lower (even normal) payment of return to depositor and other creditors.
International Business
The import business of the Bank leaped to Rs. 31.239 billion registering an unprecedented growth
of Rs. 8.727 billion or 38.8% over last year’s imports. The export business, too, rose from Rs.
15,393 billion to Rs. 17,892 billion indicating a growth of 16.2%. The Bank has also recorded a
growth of 3.3% during 1998 in home remittances, which stands at Rs. 2.705 billion.

Network
The branch network continued to expand in 1998 and additional 29 branches were opened in the
country.Total domestic and foreign outlets aggregate to 951 at the end of 1998.

Computerization & Automation

Computerization and Automation remained one of the top priority areas of the
management. During the year 1998, additional seven ATMs were installed. Now a total of 28
ATMs are available in almost all major cities of Pakistan.

By the end of December 1996, computerized on-line branches were 48 while work on 20 branches
to be computerized off-line whereas work on 99 branches to be computerized off-line was
underway. But now in 1998 and 1999, many other branches have also been computerized in the
country’s major cities. They aim to computerize all branches within 7 years.

In addition Allied Tele-banking Service was made available in Finance & Trade Center Branch,
Karachi and Blue Area Branch, Islamabad.

Human Resource Development

The development of human resource continued to receive utmost attention of the
Management. Towards this end the Bank inducted qualified personnel, such as MBAs & M.Coms
who were also required to undergo vigorous extended training of the existing personnel training
programs continued with main thrust on computer appreciation to encourage computer usage in
the Bank.

NINE YEARS PROGRESS 1990-98

1990 1991 1992 1993 1994 1995 1996 1997 1998

Capital & Reserves 418 451 566 645 733 1,219 1,389 1515 3002
Deposits 19,825 25,041 33,757 37,121 41,445 51,124 55,897 63430 76541
Advances 11,115 11,871 15,734 18,037 19,901 29,552 32,436 36231 42719
Investment 7,268 9,981 14,586 14,948 16,549 15,610 15,574 20193 25606
Income 2,044 2,349 3,435 4,453 5,010 6,102 7,056 8397 8984
Expenditure 1,983 2,249 3,080 4,038 4,665 5,571 6,822 8368 8814
Pre-tax Profit 61 100 355 415 345 531 234 29 170
Total Assets
23,319 28,342 37,973 41,759 47,390 58,480 63,439 72404 89358
(Less contra
Account)

If we see the above table, we can well imagine the growth trends in the pretax profit. Why is it so
that previous year it was 29 million but in 1998 it is 170. One thing is that its assets have
increased from 72404 to 89358 millions in 1998. All this happened due to the increase in deposits
and double figure of the capital and reserves in 1998 as compared to the 1997. And the capital
expenditure remained almost the same for the 1998 and 1997. So we can say the in 1998 the
financial strength is more as compared to the previous years due to less expenditures and more
deposits and advances to earn profits.

Following graphs show the real trends of the Allied Bank growth in different aspects.
 STRENGTHS

Allied Bank Limited has certain

strengths which are different from the
other Banks.

• ABL is the first Muslim Bank of the world, which is owned and managed by its own
employs. This is the biggest strength of the Bank. A feeling of ownership is present in every
employ, which not only helps in increasing the productivity of employs but also creates
sincerity with the Bank in them.

• Another strength is the high motivation of employees to their work because they know that what
so ever they do, it will be in their own benefit. They know that the profit, which they will earn,
will be distributed among all the employees. So they work with high motivation and
concentration.

• Salaries are very reasonable, so the employees are not financially disturbed and they devote their
selves fully to their work.

• They have wide area network in all over the Pakistan, so that they cover a lot of portion of cash
transactions and make customer satisfied.

• The Bank has very strict rules and regulations about the customer’s complaints. The customers
are treated as very special persons in the Bank.

WEAKNESSES

• No entertainment facilities are available in the Bank when customer goes to the Bank and wait
for a longer time. These facilities can be the newspaper, magazines, etc.

• Advertisement of ABL is not such goods as of other banks.

• Out look of the ABL branches is not attractive to the people.

OPPORTUNITIES

• The policies of the new government to uplift the economy and pursue financial sector reforms
are expected to yield positive results in the banking industry of the country. The ABL is very
well praised to avail promising opportunities.

• As a result of the different steps taken by the Government regarding the betterment of the
economy, small borrowers are attracted to get the financing and start small businesses. So,
the ABL has an opportunity to attract the customers by giving them attractive schemes.

THREATS
• First threat is that of political influence. Three boards of directors are of government. So that
they can influence on the decisions of the ABL.

• The biggest threat in the banking sector is the continuous downfall of the country economy since
the last few years. If this downfall remains for more few years then it may be the great
hindrance in achieving the Bank’s objectives.

• The privatization of other banks is also a threat for the Bank. Due to the privatization of the
different bank e.g. MCB, the competition has increased a lot. Furthermore many private
banks have come in the sector due to which it is becoming more difficult day by day to attract
the customers.

FUTURE PLANS

Some future plans of ABL are as follows:

• Installation of ATMs in every major city of the country.

• Computerization of all the branches through out the country. In the first instance a target of 250
branches has been set. Among them about all the branches of Lahore and Karachi have been
computerized. In addition to this main branches of Bahawalpur and Rahim Yar Khan has also
been computerized. Now the next target is Multan Circle

• Shares Investment Scheme i.e. Bank will trade in shares of different renown companies to earn
profit.

• Purchase of Sick Units, rebuild them and make them profit earning institutions.

SUGGESTIONS

Following are some observations and suggestions during the internship.

• When giving the loan, the Bank must carefully analyze the past six months transaction history of
the borrower. This will help in judging the dealing behavior and financial status of the
client. In most cases, this thing is not properly done and it is the major reason of default of
many clients.
• The Bank should keep the proper cheque on stock which is hypothecated. A textile owner may
ret the loan on same 10,00 bales of cotton from checking system of the Bank.

• The Bank should have the moving cameras in their branches for security purposes.

• The Bank should try to give more loans to the small borrowers as the past history shows that
most of the loans given to the corporate borrowers have converted into bad debts.

• The Bank has a lot of financing schemes but there is very little advertisement of these schemes.
So Bank should increase its advertisement.

• When any one comes to operate the lockers, then the things which he keeps in locker should be
checked through metal detector for security purposes.

• Staff turnover particularly of trained staff results in financial and other losses. The amount spent
by the bank on employment, induction and training of outgoing officers constitutes to beat till
another officer should ready prove his work. The exodus of bank officers in the past has
worsened the situation.

• Most of the bank employees are sticking to one seat only, with the result that they become
master of one particular job and loose their grip on other banking operations. In my opinion
all the employees should have regular job experience all outÄlook towards banking. The
promotion policy should be adjusted.

• Refresher courses for the staff are most important in any international organization. All the
employees should have these courses according to their requirements. Foreign experts can
also be called for this purpose.

• Every year some of the employees should be sent for training to other countries and employees
from other branches should be brought here. More reading material should be brought /
provided in the reference Room, it should be relevant and its purpose should be to educate
the employees with the advance studies in their field. The employees should be provided the
opportunities to attend and participate in seminars and lectures on banking.

• With the internship letter should also be requested to provide us the financial reports. Because
when we demanded the financial reports they said that this is confidential. And they are not
allowed to provide these statements to any trainee.
1. ACCEPTANCE.

The action of the drawee signifying his intention to pay the bill on its maturity is called
acceptance. The bill may be accepted by the drawee without addition of any word but it is
customary to add the words accepted across its face indicating the date under the signature.

As stated above, acceptance is the act of accepting the term or usance bill of exchange by drawee,
but the word is more commonly used to refer the accepted bill of exchange, though on behalf of
his customer, as such bill accepted by the bank is known as bank acceptance. This item appears
on the liability side of the bank’s balance sheet with contra on assets side for the bills (liability)
accepted on behalf of the customers (importers) for whom documentary letters of credit have
been issued.

2. ACCOMMODATION BILL.

A bill is called an accommodation bill when it is drawn, accepted or endorsed by a party with the
object to oblige or accommodate another party without receiving any consideration for the same.
The person putting his signatures lends his credit (without consideration) for enhancing the
credit worthiness of the bill for the purpose of accommodating the other person, who may raise
the funds by discounting the bill and is expected to meet the bill at maturity from his own source.
But it should be clearly noted that in case of dishonour of the bill, the accommodation party (who
has lent his credit) is liable to holder for value. By discounting an accommodation bill the bank
becomes holder for value.

3. ADMINISTRATORS.

Administrator is a person, who is appointed by a competent court to administrate the estate of the
deceased person who has left a will without naming any executor, or, the person named in will has
died before the testation, or the person named in the will has refused to act as executor.

4. ADVICE.

An official intimation issued by a banker during the course of his business to the customer, other
branches including overseas branches, banks and correspondents and his head office, is generally
called an advice, such as credit advice (which is sent to the customer when a credit in his account
has been received), debit advice (which is sent to the customer when his account has been debited
for charges, mark up and debit raised in compliance of his instructions/standing orders), draft
advice (when a draft has been issued), pak account advices (credit or debit) when branches
accounts have been credited or debited.

5. AGENT.

As per contract act 1872, section 182, and agent is a person employed to do any act for another or
to represent another in dealing with third persons. The person for whom such act is done, or who
is so represented, is called the principal. Thus an agent has powers to bind his principal according
to the terms of the authority. Before dealing with an agent, may have limited authority to act for
some particular or special duty such as authority to purchase house only or to collect rent of a
particular building or buildings. The authority given to a person may be for performance of
multifarious duties, in that case the is regarded as general agent. Where un-limited powers are
given to a person, he is called a universal agent and he can bind his principal by all his acts
provided these are in accordance with the law of land.

6. ALLONGE.

A slip or a sheet of paper attached to a bill of exchange (or cheque) for the purpose of writing
endorsements when the place on the back of the bill (or cheque) has been filled up with the
endorsements of the parties through which the bill (cheque) has passed. In order to prevent
fraudulent use of the allonge, the first endorsement on the allonge is recorded in such a way at the
junction of the two documents that half of the endorsement is on the bill while other half is on the
allonge. Since it is permissible to use copy (photo copy) of the bill in place of allonge, in certain
countries, in view of which bill of exchange act 1882, section 32(i), provides that in a country
where such a copy is recognized the endorsement written on the copy shall be deemed to have
been written on the bill itself.

7. ALTERNATE PAYEE.

One of the two parties or one or some of the several parties to whom a negotiable instrument or
an account is payable, is an alternate payee.

8. AMBIGUOUS INSTRUMENT.

Ambiguous means doubtful or of uncertain nature-difficult to distinguish or classify –

obscure. Thus an ambiguous instrument is that which has been drawn in such a manner that it is
doubtful to classify it as a bill of exchange or a promissory note. The holder may treat it either as a
promissory note or bill of exchange and when option of the holder is in favour of any one of
them ,in future , the instrument shall be treated accordingly . In the following cases the
instrument is ambiguous where: (a) in the bill the drawer and drawee are the same person (b) the
drawee mentioned in the bill is a fictitious person (c) Drawee mentioned in the bill is incapable of
contracting (d) the instrument in the form of bill of exchange is not addressed to any person.

9. ARTICLES OF ASSOCIATION
In a document, which contain various regulations for the internal management of a company and
terms and conditions regarding issues of shares, transfer of shares , alternation of capital ,
borrowing powers , general meeting , voting rights , appointment of directors and their
powers, dividends, accounts, audit of accounts , winding up and others .
10. BANKER AND CUSTOMER.
The relationship of banker and his customer in primarily that of a debtor and creditor and not of a
trustee and beneficiary. Customer on depositing money to the credit of his account with the
banker banker becomes the creditor the banker becomes the debtor. On obtaining finance/loan,
the position is reversed and the customer is then, the debtor and the banker the creditor. This
relationship confers certain rights and duties to each others. One of the fundamental duty which
sprung out of it, unless revoked, is honouring of customer’s cheques is technically in order and
there is no legal bar on it. However, it is entirely in the banker’s discretion to allow overdraft
(finance) to his customer.
11. BANKER’S BOOKS
It has been defined in S. 2(3) of the banker’s book evidence act, 1891 as under:-
“banker’s books include ledgers, day books, cash books, account books and all other books used in
the ordinary business of bank”.
12. BANKER’S DRAFT.
Draft is an order cheque drawn by one branch of a bank upon itself i.e. on another branch of the
same bank. It is a negotiable instrument and cannot be made payable to bearer.
13. BANKER’S LIEN.
Lien is a right in one man to retain the property held by him legitimately belonging to another
against present and accrued claims (debt) till such claims (liability) are satisfied. Property
ownership remains with the debtor (borrower) while the creditor (lender) keeps its possession.
14 BANKER’S RIGHT OF SET-OFF.
It is statutory right of bankers to combine two or more accounts enjoying same rights of the same
customer, in order to arrive at the net balance due between them. Where a customer has more
than one account at the same branch of a bank or at two or more branches of the same bank, the
bank has a right to combine these accounts of the same customer to work out the amount due to
him or from him. In order to exercise such right without notice a letter of set-off duly signed by
the customer is obtained confirming the right of set-off without notice and to return cheques,
which would overdue the combined balances.
15 BANKER’S REFERENCES.
It is a well-established practice amongst banks to exchange information regarding their
customer’s mean, standing and credit worthiness. A bank usually collects such status opinion
from another bank at the request of the customer or conversely other banks may refer for such an
opinion about his customer.
It is also in practice that banks call such opinion for their own information respect of their new
customers, special, when any financing is likely to be approved in their (customer) favour. The
reference so made is called Banker’s Reference or Status Enquiry or Status Opinion.
16 CHEQUE-STATE AND POST-DATED.
As per practice, a cheque antedated by six months or more i.e. presented after six months which it
was drawn is regarded as a stale cheque in Pakistan. On presentation such a cheque is returned
unpaid with the remarks that the cheque is out of data. A post-dated cheque is one, which bears
the date after the day of issue i.e. the date given on the cheque has yet to arrive. The bank has no
authority to pay a post-dated cheque until the due date. Post-dating of a cheque convert it from
Demand Instrument to time instrument. On presentation such a cheque will be returned with
cheque post-dated, it may be paid on or after the date mentioned on it.
17 CONTRIBUTORY NEGLIGENCE.
Where a banker has been found negligent in case and his customer (plaintiff) has also been
negligent, he (customer) is said to have contributed to such a loss as well. The courts according to
his contribution reduce the claim of the customer. Examples are: customer recklessly issuing
blank signed cheques or by failing to exercise proper check over his clerk or agent, handling or
writing his cheques books.
18 GARNISHEE AND GARNISHEE ORDER
Garnishee means a person who is Garnished and warned through a garnishee order. Garnishee
order is process of law, which warns a garnishee (bank) to attach a debt (deposit) owing or
accruing due at the time of service of order of his customer to paid to the person who has secured
final orders against such customer.
A garnishee order “nisi” is issued first by the court, which means that this order will become final
on a particular date unless set aside or invalidated by certain specified contingencies. Thus the
bankers on service of such notice is required to attach all the debts due by him to the judgment
debtor for payment to the judgment creditor as directed by the court. The banker has to attend
the court for paying the debt or to show cause why it cannot be paid. On hearing the concerned
parties the court issues garnishee order or set aside the earlier order i.e. garnishee order “nisi”. By
issuing garnishee order absolute the garnishee is ordered to pay the debt due or accruing in
satisfaction or part satisfaction or part satisfaction of the judgment debt.
On receipt of garnishee order “nisi” it should be carefully examined which account(s) of the
customer has/have been attached and upto what extent? The amount earn\marked should be in
the same mane or names of the customer as per garnishee order. The funds marked should be
those, which are repayable on demand including those term deposits, for which notice for
payments has been received before receipt of the order.
19. HOLDER
As applicable to bill of exchange, promissory note or cheque, means the payee or indorsee or
bearer of an instrument who is entitled in his own name, to its possession and to receive or
recover the amount from the parties thereto. Mere possession f the instrument would not entitle a
person to recover its amount from the parties thereto, as in case of person finding a bearer
instrument or a thief or forged indorsee. Even the payee of an instrument will not be entitled to
receive the amount who has been restrained by the court orders. But where the instrument has
been lost or destroyed its holder would be the person who was entitled to its possession at the
time of its loss or destruction.
20. HOLDER IN DUE COURSE
Holder in due course is a person who fulfills the following four conditions.
(i) That he is holding negotiable instrument for value either as bearer, payee or indorsee.
(ii) That he got the possession of the instrument before the maturity i.e. before the amount
mentioned therein became due.
(iii) That he took the negotiable instrument in good faith.
(iv) That he became the holder with due care or without notice of any defect in the title of the
person (indorser/transferor) from whom he derived his title.
21. IMPERSONAL PAYEE.
Cheques drawn payable to “Cash or Order” or “Wages or order” etc., are instruments, which are
payable to impersonal payee as these are not payable to any specified persons, these are paid to
the drawer or his known agent only against an indorsement. Similarly cheques drawn in favour of
“Income Tax or ordre or water rates or order” are payable to impersonal payee. In such cases,
indorsement of concerned official is obtained before payment i.e. in the first case from the income
Tax officer and in the second case from the revenue officer or director revenue, water and
sanitation agency, LDA, Lahore.
22. INCHOATE INSTRUMENT
Inchoate means begun but not completed or nt perfected. Inchoate instrument is an instrument,
which is incomplete in some respect, e.g. a cheque issued with no payee stated thereon or bill
form signed by a person and handed to another person to fill up and make into a complete bill.
23. INDORSEMENT
It is also spelt as endorsement. In its literal sense, it means to write at the back of an instrument.
Technically it is to inscribe one’s signature on the back or face of a negotiable instrument i.e.
cheque, bill, note etc., with the intention of transferring the instrument and the property therein.
This act is, to indorse and the person signing it is called indorsement. The person specified in the
instrument is called indorsee. The indorsement can be made by the holder of the instrument and
its maker (when it is drawn o the maker’s order). A strange to the instument can not indorse it. It
may be noted that no specific form has been prescribed by law for an indorsement, any form of
words over the signature of the indorser, which imports intention to transfer the instrument, is
sufficient.
24. INDORSEMENT - TYPES
(i) Indorsement in blank or blank indorsement or general indorsement.
An indorsement is described as indorsement in blank or blank indorsement when theindorser
simply signs on the instrument without mentioning an indorsee. The effect of such an
indorsement is tht instrument becomes bearer one unless it is converted into special
indorsement or indorsement in full by writing over the signature of the indorser.
Example; “Muhammad Naeem-ud-Din.”
(ii) Special or full indorsement.
The indorser under his signature also states the name of person (indorsee) to whom such
instrument is desired to be paid as per his order.
Example; “Muhammad Naeem-ud-Din.”
25. INSTRUMENT
A legal term used in banking and finance to denote cheque, draft, promissory note, bill of
exchange, bond, shares certificates, bill of lading, trust receipt etc. the term also includes any kind
of legal document by which some right is conferred or contract is expressed such as deed, grant
etc.
26. MANDATE MANDATORY
A mandate is an official order, command or charge, but as applicable to banking it is a written
authority given by a bank customer (the mandator) to another person (the mandatory) to sign
cheques or conduct banking business on his behalf. Thus a mandatory is a person to whom a
mandate or an authority is given. The person who gives the mandate is called the mandator. The
relationship of banker and customer in this context is that of mandatory and mandator.
A mandate is terminated by the death, bankruptcy or mental incapacity of the person or one of
the persons in case of joint account, who gave the authority. It should be noted that the person
(the mandatory) who has authority to sign on behalf of other, has not, as a rule, any power to
delegate that authority.
27. MATERIAL ALTERATION
Section 3(f) of negotiable instrument act, 1881 defines material alteration as “material alteration’”
in relation to a promissory note, bill of exchange or cheque includes any alteration of the date, the
sum payable, the time of payment, the place of payment, and , where any such instrument has
been accepted generally, the addition of a place of payment without the accepter’s assent.
The list of material alterations given above is not an exhaustive and there may be some other
alterations which one. As has been stated that “any alteration is material, which would alter the
business effect of the instrument if used for any purpose for which such an instrument is used.”

28. MATURITY
Maturity as relating to banking and finance means: (a) state of being due (b) the time when a note
or bill of exchange becomes due. Section 22 of negotiable instrument act, 1881, describes maturity
as “the maturity of a promissory note or bill of exchange is the date at which it falls due. “three
days of grace are allowed to every bill or note which is not payable on demand, at sight or after a
certain event will be at maturity 3 days after the day on which it is payable.
29. MEMORANDUM OF ASSOCIATION.
Memorandum of association is Magna Charta of company. It detail the scope and conditions on
the basis of which certificate of incorporation is given by the Registrar of the companies. The
clauses and the conditions recited in the memorandum of association are fundamental and
unalterable. Only certain specified particulars can be changed in accordance to the provisions of
law. Objects of the memorandum can not go beyond the provision of the companies ordinance,
but the articles of association, which contains bye-laws or regulations to control its internal
management despite being limited to companies ordinance are also subordinate to
memorandum. Since the memorandum is in the nature of a contract between the company or a
persons dealing with the company is required to know the provisions of memorandum (and
articles of association) of the company especially pertaining to the nature of business, extent of
the powers of the company and directors and those concerning conduct and operation of banking
transactions.
30. NEGOTIATION
Negotiation is a process by means of which an instrument is transferred from one person to
another in such a manner that the transferee becomes its holder. Where the instrument is payable
to the order, it is negotiated by necessary endorsement and by delivery. In case of a bearer
instrument, negotiation is completed by delivery only.
31. NOT NEGOTIABLE
The phrase “not negotiable” does not restrict the transferability of cheque, but it destroys its
characterity of negotiation and it cannot be negotiated in an ordinary way. It resembles a bill
bearing a “restrictive indorsement”. As indicated in section 130 of negotiable instrument act 1881,
the transferee of such a cheque does not acquire the rights of a holder by negotiation, he gets no
better title than that of transferor.
32. NOT NEGOTIABLE CROSSING
An important feature of negotiable instrument is that bona fide transferee getting it in good faith
and for value will acquire a good title despite any prior defect in the chain of title.
33. NOT PROVIDED FOR
The answer to the unpaid cheque indicates that the drawer was supposed to provide funds for
payment of the cheque which he has failed to meet with.
34. NOT SUFFICIENT
The answer is used when the funds at the credit of customer are insufficient to clear the cheque
presented for payment. This term is also likely to convey the idea that the customer is maintaining
balance lesser than the amount of cheque as such use of term “not sufficient” should also be
abandoned in favour of “Refer to Drawer”.
35. NOT TRANSFERABLE
The crossing of cheque “Not Transferable” restricts its characteristic of transferability as well as
negotiability. The cheque bearing such crossing cannot pass from one person to another and no
one else, but the payee of the cheque is entitled to the proceeds.
36. OBLITERATING A CROSSING
Obliterating means to rub of or to erase. So obliterating a crossing is quite different from opening
of a crossing. This method is used by fraudulent people to deceive the banks to obtain cash
payment on the counter. Since no particular safety rules can be prescribed for such cases but all
the cheques presented for cash payment must be scrutinized carefully at every stage. More
detailed scrutiny should be done of the cheques of big amounts presented by a stranger. However,
protection is available to the bank under section 89 of negotiable instrument act under the
following circumstances.
(i) the alteration is not apparent and can not be noticed even with minute scrutiny.
(ii) The payment has been made in good faith and according to the apparent tenor of the
cheque.
37. OPENING OF CROSSING
The act of drawer, canceling crossing of the crossed cheque by writing upon it “Pay Cash” under
his signature is called opening of crossing. By this action a crossed cheque is converted into an
open cheque and its payment can be obtained at the bank’s counter. It need not be presented
through a bank in case it was crossed generally or to the specified bank in case it bore special
crossing. Although no provisions exists in law for cancellation of crossing but writing of words
“Pay Cash” in this way has recognition of the custom.
38. PAYMENT IN DUE COURSE
Section 10 of the negotiable instrument act, 1881 has laid down following conditions for a
payment to be a payment in due course.
(a) That the payment should be made in accordance with the apparent tenor of the
instrument.
(b) The person to whom it is made should be in possession of instrument.
(c) The payment should be made in good faith, without negligence and under
circumstances, which do not afford a reasonable ground for believing that the person
to whom it is made, is not entitled to reveive the amount.
Thus the payment to be in due course, must be according to the directions appearing
on the face of the instrument as per intention of the parties. A payment cannot be a
payment in due course if it is made before due date, to a person not entitled to it. A
payment without good faith and without care and caution is not a payment in due
course. The payment made on a forged cheque is not a payment in due course.
39. POWER OF ATTORNEY
Power of attorney is a written document by which authority is given by one person (donor) to
another (donor) to act on his behalf either generally or for some specific transaction. The power of
attorney contains, names, addresses, and descriptions of donor and the done, the reason or the
purpose for giving the authority, and the scope of the authority.
40. REFER TO DRAWER.
The term “Refer to Drawer” is one of the mostly used answers for returning the cheque for
conveying various reasons of dishonour i.e. “balance insufficient”, “balance under lien” or “service
of garnishi order”. By stating this term the banker indicates to the presenter (payee) of a cheque,
“we are not paying, go back to the drawer and ask why”, or else “go back to the drawer and ask
him to pay”. The use of the term should always be with due care and would not be is leading to the
presenting party which is to be construed properly by him, a any misunderstanding can cause
damage to the credit of the customer.
41. SIGNATURE
Signature includes a person’s name, sign, cross or mark impressed or written by him. The
signature of a customer (which must conform to the specimen provided to the bank) on cheque
(or on a paper) is an authority to comply with his instruction; to pay cheque if otherwise in order
or to debit his account.
42. TRAVELLER’S CHEQUES
Also known as international cheques. These are widely used by the persons traveling within the
country or abroad. The instrument is preprinted in various convenient denominations of the
currencies, in which these are issued. Most popular currencies are U.S. Dollars and U.K. pound
sterling. They are not drawn on a particular bank or banks, but are encashable at all banks or
authorised business houses and institutions through out the world.