Table of Contents

Summary
Banking Industry

The banking sector has witnessed a dramatic change during the last five years, which is
not only redefining priorities and focus of the banks, but also threatening the domination
of traditional players.

The story begins with the freezing of the foreign currency accounts in 1998, which was a
catalyst for the nosedive of the economy into the recession. Some US $ 11 billion of
foreign currency deposits came under threat and resulted in flight of capital to havens
outside Pakistan. With the rupee under pressure and market liquidity going down, the
interest knee-jerked upwards, investors confidence plummeted and the industry went into
a glide mode with the wait and see attitude.

After the 9/11, the international scenario changed dramatically and with it the global
perception of Pakistan, which suddenly became a much sought after the member of the
war against terrorism. Apart from some direct benefits such as an improvement in the
term of trade with the European Union (EU) and restructuring of substantial part of the
foreign debt, perhaps the greatest economic benefit came from the clamp down on the
informal channels of foreign remittances and investigation into the movement and
sources of any large amounts held abroad. This resulted in a flight of Pakistani Capital in
the reverse direction and a large increase in the home remittances. This in turn led to a
strong Rupee and an increasingly liquid market.

The Sate Bank of Pakistan (SBP) also took measures to bring down the interest rates and
the discount rates reduced from 14% p.a. in July 2001 to 4 in April 2003. However,
despite the low interest rates, the global recession and local uncertainties stifled credit
demand and liquidity further accumulated. Apart from the narrowing of spreads due to
the fall in the interest rates, deregulation of foreign currency transaction forced banks to
quote highly competitive prices to tight market, resulting in a further erosion of profits
from traditional source.
Mean while, State Bank of Pakistan (SBP) moved ahead to setup an environment to
ensure healthy and secure banks, through good governance discipline, capital adequacy
requirements and higher disclosure. All the commercial banks operating in Pakistan now
have a minimum capital on One Billion Rupees.

Due to unfavorable market conditions and more demanding regulatory environment, the
weaker players, which had only tapped limited markets, went up for sale. In the
foreseeable future we are likely to see more banks being sold or merged. On the other
hand, the managements of the big four banks showed good results through better
management, and adopted a more aggressive and accommodating stance towards the
markets they were serving. These banks are now posing a bigger challenge to the smaller
banks. Due to their greater reach, increased focus on customer needs, improved response
times, and increasing use of technology.

In this new era, the foreign banks will also witness serious threats to their traditional
markets, i.e. corporate financing, from the invigorated large domestic banks and fast
growing new private sector banks. Most banks will focus more intently on retail banking
products such as personal loans, small business finance, mortgages and investment
products. The advent into the retail will only be hampered by scarcity of skilled human
resource with exposure in handling consumer products especially assets. The consumer
will also be reached through technology dependent channels of distribution such as ATM,
Debit and Credit cards and the Internet. The other potential market that the domestic
banks will start to explore is the rural Pakistan, with a renewed interest in financing
agriculture and related activities. The banking industry will also be driven towards more
“market tradable’ instruments, especially for its corporate clients, including short and
long term paper.
Historical Overview

Union Bank was incorporated on June 21st, 1997 as a public limited company under the
Companies Ordinance 1984. Its banking operations commenced from November 1st,
1997. The bank is engaged in commercial banking and related services as defined in the
Banking companies ordinance, 1962. The Bank is currently operating through 104
branches in 36 cities, with the registered office at B.A. Building, I.I. Chundrigar, Karachi.

Since its inception, as the new identity of H.C.E.B after the privatization in 1997, the
management of the bank has implemented strategies and policies to carve a distinct
position for the bank in the market place.

The strategic goals set out by its board of management, the Bank has invested
in revolutionary technology to have an extensive range of products and services.

This facilitates our commitment to a culture of innovation and seeks out synergies
with clients and service providers to ensure uninterrupted services to its customers. We
perceive the requirements of our customers and match them with quality products and
service solutions. During the past five years, we have emerged as one of the foremost
financial institution in the region endeavoring to meet the needs of tomorrow today.
 Vision Statement

To be the premier Organizations operating locally and internationally that

provides the complete range of financial services to all segments under one roof.

Mission Statement

To develop and deliver the most innovative products, manage customer

experience, deliver quality service that contributes to brand strength, establishes a
competitive advantage and enhances profitability, thus providing value to the stakeholder
of the bank.
Chairman’s Message

Since the inception of Union Bank, by the grace of the Almighty, we have moved rapidly
in expanding our branch network and deposit base, along with making profitable
advances and increasing the range of products and services. We have made a break-
through in providing premier services at an affordable cost to our customers.

Keeping in view our valued clients and the need for constant and effective
communication of information, we have designed this website to be as user-friendly as
possible.

As we pursue the path of excellence, customer satisfaction remains our priority. It is only
when we know our customers better, can we deliver a higher quality of services, thereby
adding synergy to our existing management expertise, financial strength and profitability.

This is yet another channel of communication for the delivery of quality products and
services that enhance value to our stakeholders.

Dr. Abdullah Basodan

Management Members

Union’s management is known for their hard work, innovative spirit and dedication
to create exceptional value of the Bank's clients and to keep the Bank ahead of
competition. With a team of talented and dedicated professional bankers, the Bank
commits all its energies, resources and time to cater to banking and financial needs of its
valued clients.

Mr. Parvez A. Shahid Mr. Sirajuddin Aziz

Executive Incharge Executive Incharge
Strategic Planning & Global Marketing International &Treasury Division

Mr. Bakhtiar Khawaja Mr. Asad Jamil

Executive Incharge Executive Incharge
Human Resources Division IT Division

Mr. Mohammad Yousuf Mr. Shakeel Sadiq

Executive Incharge Executive Incharge
Credit Division Corporate Banking & Home Finance.

Mr.Mahmood Ashraf
Mr. Ather Shehab
Executive Incharge
Executive Incharge Credit Monitoring Division
Establishment & Administratration

Mr. Shahid M. Murtaza Mr. Hamid Ashraf

Executive Incharge Executive Incharge
Business Development Division Legal Affairs Division.

S.A.M./ Car Finance/ Leasing

Mr. Mohammad Iqbal Saifee Mr. Zahid Ali H. Jamall

Executive Incharge Executive Incharge
Audit & Inspection Division Finance Division
Mr. Adil Rashid Mr. Ijaz Farooq
Executive Incharge Executive Incharge
Cards Division Islamic Banking Division

Mr. Nadeemul Haq

Executive Incharge
Systems & Operations
Different Categorization of Banking

Branch Banking
Deposits, Remittances, Foreign Trade, Lockers...

Consumer Banking
Credit Cards, Auto Loans, Home Loans, Consumer Durables, RTC's, Money Gram...

Electronic Banking
Phone Banking, ATM's, Online Banking...

Corporate Banking
Short/Long Term Finance, Trade Finance, Structured Finance...

Treasury & Investment

Money Market, Forex Market, Investments, Govt. Securities, Correspondent Banking...
Products Offered by the Bank
Corporate Banking
Current Account

Individuals Partners, companies associations, Clubs, Societies, and NGOs are eligible to
open current account with the bank. Salient features of the current account are
Minimum initial deposit Rs.10, 000/-
Minimum average balance Rs.10, 000/-
There is no restriction on number of transactions.
There is no limitation on amount of withdrawal.

Foreign Currency Account

Both resident and non-resident Pakistanis as well as foreigners can open foreign currency
accounts. Foreign currency accounts can be opened either as savings accounts or current
accounts.

Consumer Financing
PLS saving Account

Saving account are designed to mobilizing savings primarily from a large number of
individuals and household. any one or more individuals or partners can open a PLS
saving account with the Bank. Salient features of PLS accounts are as follows.

1. Minimum initial deposit is Rs.5,000/-

2. A smaller initial deposit can be accepted at the discretion of branch management
if average deposit is expected to remain above RS.5,000/-
3. Profit on PLS saving account is calculated on minimum monthly balance basis.
4. Profit rates are announced and paid biannually in January and July respectively.
Royal Patriot Account

The main feature of the Royal Patriot Account is

1. Short to long term deposit.

2. Choice of terms 1, 3, 6, 12, &24 months.
3. Minimum balance required-Rs.25,000/-
4. Profit paid on maturity of respective term.
5. Profit rates increase with tenure and amount.

Monthly Income Account

More profit every month now you can sit back and relax while your money grows! Union
Monthly Income Account now offers you more profit and ensures a steady stream of
monthly income for you.

1. Profit Rs.855/- per month

2. Variable terms 1, 2 & 3 years
3. Profit credited directly to your account
4. Minimum deposit Rs.25,000 or multiples thereof
5. Loan facility
6. Network of 42 branches in 20 cities.

Foreign Currency Account

Both resident and non-resident Pakistanis as well as foreigners can open foreign currency
accounts. Foreign currency accounts can be opened either as savings accounts or current
accounts.

1. Rupee travelers Cheque

2. Benefits and features of Union RTC's are as follows:
3. Convenient denominations available Rs.1,000 Rs.5,000 & 10,000
4. Buy Travelers Cheques and get rewarded
Earn points daily and win great gifts.
5. Encashment Commission receive a commission of 0.15% if you encash your TC's
after 7days at any of our branches.
6. Maximum Security Features special embossed intaglio printing in the UK, Union
security thread and Union watermark. Just some of the advanced features that
make your TCs secure.
7. Fully refundable you can refund your TC's without any penalty or loss
transferable and Endorsable
8. You can transfer and endorse your TCs over to anyone
9. Unlimited validity Union Bank TC will always remain encashable.
10. You don't have to be an account holder to get our TCs' benefits.
Safe Deposit Lockers

Union Bank also provides safe deposit lockers facilities to its customers for safe
keeping of their valuables like documents, securities and jeweler etc. Important features
of lockers facility are as follows:

1. Various sizes to choose from small to extra large: small, medium & large.
2. Annul locker rent ranges from Rs.1, 000/- to Rs.3, 5000/-.
3. Locker rent is waived for customers maintaining a deposit of Rs.2 million or
above in a rupee current account or above US $25,000/- in a current account or
US $ 50,000/- in a saving account.
Consumer Banking
Union Bank has many directions for banking and facilitating consumers, but which
direction I dedicate my service is sub heading of Consumer Banking “Auto Loan”.

“Auto Loan” other name of this department is Car Financing

Car Finance

Uni Car Financing is specially designed for you with easy affordable and flexible
installment plan.
• Easily affordable & flexible installments
• Flexibility of adjustment at any time during the tenure
• Quick processing
• Minimum down payment
• Minimum insurance

Eligibility of Car Financing

Yes you get a car loan form Union Bank to purchase a brand new car if you are:
Pakistani National Identity Card holder.
Over 20 years of age (Maximum 60 years in case of salaried and 62 in case of a business
person at the time of maturity of the loan).
Salaried, Businessman or self employed.
 Car Mark-up

NEW-Car Loan of Brand New Vehicles 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr

Suzuki Vehicles (deal) 12.50% 13.00% 13.50% 14.00% 14.00%

Suzuki Vehicles (W/o Deal) 13.00% 13.50% 14.00% 14.50% 14.50%
Other than Suzuki Vehicles 13.00% 13.50% 14.00% 14.50% 14.50%
Imported Vehicles (Un-registered) 15.00% 15.00% 15.00% 15.00% 15.00%

NEW-Car Loan of Commercial Vehicle

All type of Vehicles (Local Assembled) 14.50% 14.50% 14.50% 14.50% 14.50%

OLD-Car Loan of Used Vehicles (Non Commercial)

All type of Vehicles (Local Assembled) 16.00% 16.00% 16.00% 16.00% 16.00%
All type of Vehicles (Imported) 16.00% 16.00% 16.00% 16.00% 16.00%

OLD-Car Loan of Commercial Vehicles DISCONTINUED

All type of Vehicles (Local Assemble) 0.00% 0.00% 0.00% 0.00% 0.00%
All type of Vehicles (Imported) 0.00% 0.00% 0.00% 0.00% 0.00%

OLD-Car Loan of Internal

BTF

All type of Vehicles (Local Assembled) 15.00% 15.00% 15.00% 15.00% 15.00%
All type of Vehicles (Imported) 16.00% 16.00% 16.00% 16.00% 16.00%

OLD-Car Loan of External

BTF

All type of Vehicles (Local Assemble) 15.00% 15.00% 15.00% 15.00% 15.00%

OLD-Car Loan against Existing Car

All type of Vehicles (Local Assembled) 16.00% 16.00% 16.00% 16.00% 16.00%
All type of Vehicles (Imported) 16.00% 16.00% 16.00% 16.00% 16.00%

OLD-Refinancing of Existing Customers DISCONTINUED

All type of Vehicles (Local Assemble) 0.00% 0.00% 0.00% 0.00% 0.00%
All type of Vehicles (Imported) 0.00% 0.00% 0.00% 0.00% 0.00%
 NOTE
Suzuki Vehicles (deal)
Alto/Cultus/Liana
contains:
Other than above
Suzuki Vehicles (W/o Deal)
models

Corporate Discount Rate

0.5% less then the existing rates in all Loan Types

* "Suzuki Ravi" will be treated as Commercial Vehicle and its financing

rate will 14.5% for all the tenures.
* Financing of "Imported Commercial Vehicles" is discontinued

Documents Required
• Two passport size photographs.
• Copy of National ID card.
• Bank statement for the last six months.
• Salary certificate {for salaried individual}.
• Business proof {for a business person}.
• N.T.N Certificate.
• Co borrower’s NIC copy {if the car is to be in the name of the co-borrower}.

Benefits and Features

• Quickest processing

• No hidden charges

• Minimum down payment

• Complete repayment at any point of time

• Balance transfer facility {BTF} for existing as well as new clients from other
Banks Tenure period ranging from 1 to 5 years.

• Financing of all brand new locally assembled vehicles and used cars.

• Financing limit ranging b/w Rs. 200,000/- to Rs. 2000,000/- for brand new cars
Corporate & individual car leasing
Union’s recently introduced car leasing facility for individuals and corporate sector has
set new dimensions for the product. Now you are provided with the option of either to get
the vehicle leased or financed.

Insurance

Renowned and reliable Insurance companies are offering the competitive rates of
Insurance. Pay year insurance premium in advance {at the time of down payment } and
remaining in the subsequent equal monthly installment.

How much extra money being paid?

Union Bank's mark-up rates are as follows,

NEW-Car Loan of Brand New Vehicles 1 Year 2 Year 3 Year 4 Year 5 Year
Suzuki Vehicles * 12.50% 13.00% 13.50% 14.00% 14.00%
Suzuki Vehicles ** 13.00% 13.50% 14.00% 14.50% 14.50%
Other than Suzuki Vehicles 13.00% 13.50% 14.00% 14.50% 14.50%
Imported Vehicles 15.00% 15.00% 15.00% 15.00% 15.00%

NEW-Car Loan of Commercial Vehicle 1 Year 2 Year 3 Year 4 Year 5 Year

All type of vehicles (Local Assembled) 14.50% 14.50% 14.50% 14.50% 14.50%

OLD-Car Loan of used vehicles (Non

1 Year 2 Year 3 Year 4 Year 5 Year
Commercial)
All type of vehicles (Local Assembled) 16.00% 16.00% 16.00% 16.00% 16.00%
All type of vehicles (Imported) 16.00% 16.00% 16.00% 16.00% 16.00%

* Suzuki Vehicles: Alto/Cultus/Liana

** Suzuki Vehicles: Other than above model
Repayments

Easily affordable installments on monthly basis in the form of postdated cheques will set
you free of depositing your rental cheques every month.

Security

Hypothecation of vehicle in the name of the Union Bank.

You Can Act As a Co Borrower

Acting as a co borrower, will enables your family members {spouse, children- 18 year
and above} to avail the financing facility and can get the car registered in their names as
well.
Departmentalization of Union Bank

Consumer Banking Division (CBD)

The CBD is responsible for developing and managing brands that serve the investment
need of the consumer market. It focuses on deposit mobilization and provision of value
added services based on modern technology. Keeping in mind tough competition in the
market, the division continuously makes an effort to provide value added services and
products to its clients. In the arena of consumer banking, the bank has carved a niche for
themselves in the market place, with their products like car finance, rupee travelers’
cheques, credit cards, home and car loans for the UAE based non-resident Pakistani.

IT Division
This division has been the most visionary pf all the bank’s operating units. It has
established Union bank as the leading provider of electronic services and solution to its
customer, and solution to its customers, and continues to lead in innovation and
introduction of new technology based products. It is clear that one of the main drivers of
the information age is the integration of historically disparate concepts and approaches
into an interrelated environment that offers more value then the sum of its parts.
Traditional distinctions and boundaries in technologies, access to information demand for
services, organizational structures ad processes are fading away. Everything is becoming
structurally integrated into networks that exchange information or services among
individuals, groups, or institutions on a real time basis.

Obviously, these technical and cultural changes determine how successful organizations
compete in this dynamically changing period. It planning and management has moved
from an independent tactical activity to an essential part of an organization’s strategic
processes. The demand and expectation level of internal ad external customers for
information requires organizations to plan and provide integrated it service and that is
something, which it committed to deliver.
The division also plays an essential role in the development of banking software and
provision of computer hardware to all business units, and also engages in the
development of tecn0ology based value added services. It had also played a pivotal role
in the development and launch of internet banking, ATM services and debit cards.

Investment Banking Division

The investment banking division is responsible for developing and managing brands that
serve the investment needs of the consumer market. It focuses on deposit mobilization
and provision of value added services based on modern technology. Keeping in mind
tough competition in the market, the division continuously makes an effort to provide
value added services and products to its clients.

Human Resources Department

Human resource division (HRD) is strategically the most important contributor to
organizational effectiveness. It is responsible for Human Resource Management.,
including areas like recruitment, training, performance appraisal and career
development.
HRD acts on the conviction that the people are the most important assets for the bank.
The division tries to create an environment for mutual trust and dignity. It plans to hire,
develop and retain the human resource base with the right level of skills and talent to
meet current and future business needs. Staff is given on the job as well as off the job
training in diverse area of banking and management.
Internal audit division (IAD)
The division is the front line when it comes to monitoring and promoting internal
controls, risk management and governance. The call for stronger internal audit function
has never been greater than it is today. In these fast paced, need- answers now
environment, IAD emphasis on doing more with fewer resources, looking at the new
ways to improve effectiveness in key areas including risk control and governance. The
consultative outlook of division is cultured to not only ensure compliance to the policies,
laws, directives and prudential regulations but also provide assistance to the branches and
management in ensuring the business objectives of the bank. The division maintains an
appropriate internal audit infrastructure, tailors audit approaches to each level of business
with in the bank using electronic platforms and focusing on collaboration with senior
management creating value addition.
The staff being the asset of the division is also being groomed through continuing
professional development to possess tangible skills in the areas of corporate finance, from
strategy to control, risk assessment, quantitative methods and reporting to have vision
whereby it can see whether it can see where the things may go wrong.
The branches are audited modern methodology by assigning risk matrix to each level of
business and rating the branches according to their performance on compliance to the
policies, law and regulation. Each branch is awarded separate rating on operations, credit
administration and credit quality.
Risks in Banking

General
In practice it appears that especially the financial industry runs a number of businesses
related risks. The recognition of the different types of risks and the
valuation of their relative importance basically constitute any well-defined
control system.
Following are the some types of risks, most of which can be logically distinguished when
going through the bank’s operational processes. It is clear that controlling mechanisms
must be put in place in order to minimize these risks to the minimum level acceptable.

Credit Exposure
This may me the oldest and most well known banker’s risk. It represents the incurred by
granting credit facilities to and the withdrawal of money under these
facilities by customers in case of non-repayment of amounts due (principal,
interest and fees) and / or insufficient security under such contracts
(collateral). This risk also includes the risk of a debtor’s country imposing
measures that factually make it impossible to repay any amounts from that
country (country risk).
Own Position Taking

Apart from the credit risk the bank may conclude contracts that generate a bank position
incurring a risk against market are changes such as:

• A foreign currency rate (currency rate risk).

• The market interest rate when the placing and funding of money do
not match in terms of (remaining) tenors (interest rate risk).
• Own positions in securities and derivatives that, at the same time,
may incur credit risk, currency rate risk as well as interest rate risk.

Processing & custody

When processing transactions it may happen that errors are made which, when not timely
disclosed, will lead to unauthorized, incorrect and / or incomplete records and
subsequently might result in losses. The risk of non-efficient and redundant process steps
(thus causing inefficient utilization of the bank’s resources) must also be categorized
under the processing risk type. This risk type relates to various aspects of the processing
of transactions such as internal checks and balances, proper filling and documentation,
authorization, fiating, shielding, physical and logical security, backup and recovery etc.
Bank assets are to be defined broadly i.e. cash, gold and other tangible valuables but also
prime records, key documents such as credit files etc. The safekeeping of these assets is
crucial because these assets may be disposed of in an unauthorized way causing a
material loss to the Bank.
Risk involve in Auto Loan

Some parameters are already prepared to analyze the current risk and their level for the
Bank. The main idea of preparing these parameters is to make sure that the Bank has a
sound business position and holds a good reputation in the market. Risk grading has two
components

• Multiple Credit Consideration

Multiple Credit Consideration

Multiple credit consideration again divided into some sub headings, which are graded
differently each according to their importance.

Business Information (about Clint’s Business)

It has 50% weight-age of the total points. It includes

• Ownership Proof.
• Position in the industry (physical existence)
• Market Reputation (how much market know about his business).
• Number of years in business.
• Management Quality / Professional Qualifications: (Technical &
Commercial).
• Existing Bank Accounts (if any).
• Availability of Financing (Excluding installment for dead-burden).
• Instant Repayment Ability.
Financial Information
It has the 35% weight-age and includes

• Availability of financials
• Evaluation-Debt to Net Worth
• Working Capital
• Sales & Profitability Turnover
• Payment Information on Long of Payment Tenure

Collateral
It has 15% weight-age and includes

• Security support ( must be assessed according to the stringent

criteria that take into account our past experiences with the realization of
such collaterals).
Problems

As we know that there is nothing perfect in this universe, if we are getting benefits from
some thing on the other hand it has some problems and difficulties also. So same is the
case with “Auto Loan”. Banks are financing cars as per their policies for customer benefit
but some time some customers push the bank in difficulties and end results of this
agreement are not so good. Some problems are…

• Customers show the fake data about their businesses

• Show fake jobs he/she is doing, and gets car from bank on Salary bases
• After Some time bank knows that there are in loss by giving them Car
• Recover cost is also an expense for bank to get back their car bank from defaulter
customer
Recommendations

I addition after going through all processes and problems, bank is facing. I would like to
recommend some safety steps before going to finance a car to any new customer. Those
steps are …

1. There should be a panel of secrete agents who get all information about applicant
customer (about his Business/Job, Family background, Market repute)
2. When all information gathered than there should be a legally forced contract
between bank and customer (because customer get out any where)
3. Minimum down payment should be 50%
4. Turner should increase from 5 to 7 year for financing (by doing this bank can earn
more profit from customer side)
5. There should not deviation system for approval of case
Conclusion

By getting benefits from some thing on the other hand it has some problems and
difficulties also. So same is the case with Banking sector specifically “Auto Loan”.
Banks offers different facilities to customers and car financing is one of those facilities.
Sometime financing cars as per their policies for customer benefit but sometime some
customers push the bank in difficulties and end results of these facilities are not so good,
how much bank expecting. Some problems are which bank has to face are, sometime
customers show the fake data about their businesses, show fake jobs he/she is doing, and
gets car from bank on Salary bases, after Some time bank knows that there are in loss by
giving them Car, recover cost is also an expense for bank to get back their car bank from
defaulter customer

In addition, knowing about all processes and problems related “Auto Loan”. I would like
to recommend some safety steps before going to finance a car to any new customer.
Those steps are, there should be a panel of secrete agents who get all information about
applicant customer (about his Business/Job, Family background, Market repute), when
all information gathered than there should be a legally forced contract between bank and
customer (because customer get out any where), minimum down payment should be
50%, turner should increase from 5 to 7 year for financing (by doing this bank can earn
more profit from customer side), there should not deviation system for approval of case.