20550755 internship report on rbs

8/4/2019 20550755 Internship Report on RBS

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INTERNSHIP REPORT ON

DEPARTMENT OF MANAGEMENT SCIENCES 1


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ABN AMRO is the third largest foreign bank in Pakistan, playing a prominent role inboth corporate and retail businesses. They are considered to be a leading bank in

bringing new products to the local market and a key player in assisting the

Government of Pakistan on various economic and financial matters.

ABN Amro Bank (Pakistan) Limited (AABPL) is a newly merged entity,

resulting from the merger of ABN Amro N.V-Pakistan branches with and into Prime

Commercial Bank Limited effective from September 01, 2007.ABN AMRO was

established in Pakistan in 1948. After the amalgamation, AABPL became the secondlargest foreign bank as it was able to expand its local operations with a network of 82

branches (including 3 Islamic Banking branches) in Pakistan and Azad Jammu and

Kashmir. The bank is principally engaged in retail banking, corporate banking and

treasury-related activities.

And thus, ABN AMRO bank Pakistan Ltd. Formerly Prime Commercial Bank

Limited (AABPL) is a banking company incorporated under the laws of Pakistan,

having its registered office at 77 Y BLOCK, Commercial Area, DHA Lahore,

licensed by the State Bank of Pakistan, pursuant to the Section 27 of the Banking

Companies Ordinance 1962.

According to the department internship program I completed my six weeks

internship at the ABN AMRO Bank, Bahawalpur. The following departments exist

here:

o Accounts Department

o Deposit Department

o Advances Department

o Clearing Department

o Accounts Maintenance Department

o Cash Department



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o Remittance Department

o IT Department

The function of deposit department is to collect cash from the customers and

to deposit it into the accounts (in whatever the account type they have maintained).ABN AMRO is offering different types of schemes for demand deposits and term

deposits.

Advances department issues agri loans and SME loans. ABN AMRO is

offering two types of loans or finances, fund based finances and non fund based

finances. Fund based finances include running finance, demand finance, cash finance,

FIM, LBD and FBD. Non fund based finance include letter of credit.

Clearing department performs the functions of the clearing of cheques forcollection.

Cash section performs cash related functions like receipt of cash, payment of

cash and collection of utility bills.

Remittance department performs transferring of funds from one branch to

another or from one account to another.

IT department is about the dealing and controlling of the sensitive devices

being used by the bank to carry out of the daily operations of the bank and therefore

is the most sensitive department of the bank and any problem in this department stops

the all operations of the bank.

1 But now AABPL has itself fell prey to acquisition, which got completed in the

last quarter of 2007. The bank was acquired by a consortium comprising, The Royal

Bank of Scotland Group Plc (RBSG) of Scotland, Banco Santander Central Hispano

(Santander) of Spain, and Fortis N.V. (Fortis) of The Netherlands (jointly called the

consortium). According to the acquisition plan of the consortium, RBSG, in addition

to some other geographical operations of the bank, mainly took over the Asian

business, in turn, becoming the new owner of AABPL. The rebranding of AABPL to

RBS was done in whole Pakistan on 1 st August, 2008. Now it operates through a

network of 82 branches in Pakistan and its employees are 2319.



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Be the leading bank serving world class

services to our clients.



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"ABN AMRO's mission is to create maximum

economic value for our shareholders through a

constant relationship focus on the financial

service needs of our chosen client segments and a

strict adherence to our financial targets.



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1.Creating value for our clients by offering high-quality financial solutions that best

meet their current needs and long-term goals.

2.Focusing on:

- Consumer and commercial clients in our local markets in Europe, NorthAmerica, Latin America and Asia and globally on:

- Selected multinational corporations and financial institutions

- Private clients

3.Leveraging our advantages in products and people to benefit all our clients

4. Sharing expertise and operational excellence across the Group

5. Creating fuel for growth by allocating capital and talent according to the

principles of Managing for Value, our value-based management model.

We aim for sustainable growth to benefit all our stakeholders: our clients, our

shareholders, our employees, and society at large. In pursuing this goal we are guided

by our Corporate Values.



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Our Corporate Values provide the foundation for the bank's Business Principles. The

bank formulated these Corporate Values in 1997.

Our values and principles also help us on our journey to sustainable development. By

living according our defined Corporate Values and Business Principles we can meet

the needs of our organization and stakeholders today, thus protecting, sustaining and

enhancing human, natural and financial capital for the future.

Integrity

Teamwork

Respect

Professionalism



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Based on our fourCorporate Values, we have formulated Business Principles to

guide all our employees in their daily work. Defining them clarifies what we stand for

and unites us as a group.

These Business Principles are:

We are the heart of our organization

We pursue excellence

We aim to maximize long-term shareholder value

We manage risk prudently and professionally

We strive to provide excellent service

We build our business on confidentiality

We assess business partners on their standards

We are a responsible institution and a good corporate citizen

We respect human rights and the environment

We are accountable for our actions and open about them.

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Chairman:

Mr. Muhammad Aurangzeb

President and Chief Executive:

Mr. Naved A. Khan

Directors:

Mr. Jawaid A. Mirza

Mr. Robert Ralph Davis

Mr. James Alexander Brown

Syed Naseem Ahmed

Lt. Gen. Muhammad Maqbool

Chief Financial Officer:

Mirza Zafar Baig

Company Secretary:

Mr. M. Shahzad Sadiq

Audit committee:

Syed Naseem Ahmed

Mr. Jawaid Ahmed Mirza

Mr. James Alexander brown


Human Resource Committee:

Mr. Muhammad Aurangzeb

Mr. Jawaid Ahmed Mirza

Mr. Naved A. Khan

Mr. James Alexander Brown



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Risk Management Committee:

Mr. Naved A. Khan

Mr. Robert Ralph Davis

Mr. James Alexander brown


Auditors:

Messers Ford Rhodes Sidat Hyder & Co.

Chartered Accountants

Progressive Plaza, Beaumont Road KarachiLegal advisor:

Messers Hassan & Hassan (Advocates)

7-D Kashmir/Edgerton road, Lahore

Registrar:

Messers Hameed Majeed Associates (Pvt) Limited

H.M. House, 7-Bank Square

The Mall, LahoreRegistered/Head Office:

77-Y Phase III, Commercial Area,

D.H.A., Lahore



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There are various views about the origin of the word

bank. One view is that it is derived from an Italian word banque which means a

bench that is where people were meet and solve their financial matters. The other point

of view is that it has originated from a German word banc which means a joint stock

firm.

According to Bank Companies Ordinance 1962 banker

means person transacting the business of accepting for the purpose of lending or

investment, of deposits of the money from the public, repayable on demand or otherwise

and withdraw able by cheque, draft, order or otherwise and includes any Post Office

Savings Bank.

According to Crowther,

A bank is a firm which collects money from those who

have it spare. It lends money to those who require it.

According to Mr. Parking,

A bank is a firm that takes deposits from the households and firms and makes

loans to other households and firms.

According to G.W. Gilbert,

A banker is a dealer in capital or more properly a dealer in money. He is an

intermediate party between the borrower and the lender. He borrows from one party

and lends to another.



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At present the banking structure in Pakistan comprises of the following:

State Bank of Pakistan (SBP)

Every civilized country now has its own central bank. The primary function of

the central bank is to regulate the flow of money and credit in order to promote

efficiency, stability and growth in the country. In Pakistan, State Bank of Pakistan is

the central bank.

Commercial Banks:

Commercial banks have been the most effective mobilizes of saving and have

been providing the short term requirement of working capital in trade, commerce and

industry. They are profit earning concerns. They receive deposits and advance loans

to the borrowers. They greatly help in financing internal and external trade of the

country. They also provide agency services and other utility services. In Pakistan,

National Bank Of Pakistan, United Bank Limited, Habib Bank Limited etc. are

performing the functions of the commercial banks.

Exchange Banks:

The main function of the exchange banks is to finance the foreign trade by the

purchase and sale of the currency in the form of the drafts, bill of exchange and

telegraphic transfer. They also perform other functions of the commercial banks. In



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Pakistan banks other than Indian banks have been commonly known as exchange

banks in the IndoPak, were engaged primarily in finance of the foreign trade.

Cooperative Banks:

Cooperative banks are an integral part of the cooperative movement which

aims at the promotion of the thrift, self-help and mutual aid among the agriculturists

and others with common economic needs so as to bring about better living, better

business and better methods of production etc.

Saving banks:

Saving banks are those banks which collect and keep the small savings of the

public. They called thrift promoting institutions. The saving banks invest the funds in

the safest government securities. Post Offices and Saving centers perform the

business of saving banks in Pakistan.

Agricultural Banks:

Agricultural banks are set up to provide the financial assistance to the

agriculturists. The agriculturist banks provide short term credit to the farmers and

also make medium term advances. In Pakistan, Agricultural Development Bank of

Pakistan (ADBP) was set up in 1981 for meeting the financial requirement of

agriculture.

Industrial Banks:

Industrial banks mainly provide medium and long term credit to the industries.

Since the industrial banks have long term deposits, they are in a position to permit



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long term investment in industries. In Pakistan the Industrial Development Bank

(IDBP) was set up in 1961. The other institutions engaged in providing financial

assistance to the industries are NDFC, ICP etc.



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There were only two banks in IndoPak before partition; they were Habib Bank

Limited (established in 1941 in Bombay) and Australia Bank Limited (established in

1944 at Lahore). All other banks, at that time, were either owned by Hindus or

Foreigners.

At the time of partition there were 631 bank branches in area which came under

Pakistani control. But due to blood shed and violence at large scale, mostly branches

were closed and the disparity can be assessed from the fact that on July 1948 there

were 195 branches with deposits of Rs. 88 crore (880 million) only. Also a factor of

lagging in Pakistani industry was the absence of central bank of its own, as by that

time the Reserve bank of India was acting as Central Bank for both countries and

same currency note were used in both territories. But Reserve Bank of India was

biased and set down Pakistan on many occasions such as issue of funds transfer etc.

In this period drastic steps were taken in government sector for improvement of

overall position. The private sector also responded to these changes and some very

positive changes were observed. Some of the steps taken by the government in this

regard were as under:

1) Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.



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2) Setting up National Bank of Pakistan in November, 1949 to control the jute

export in East Pakistan and to act as agent of SBP.

3) Larger powers were given to SBP through SBP Act (1956) for controlling

purposes.

4) Banking Companies Ordinance 1962 for protection and guidance to banks.

5) Establishment of specialized banks, such as ADBP (1952);

a. HBFC (Nov. 1952)

b. PICIC (Oct. 1975)

c. IDBP (Aug. 1961)

d. NDFC (Jan. 1973)

These were the steps, which built a strong banking sector in Pakistan. This is also

obvious from the facts that by 1973 there were almost 10 foreign banks working in

Pakistan and all over deposit position were around Rs. 2300 crore (23,00 million).

NATIONALIZATION OF BANKING

On January 01, 1974 all Pakistani banks were nationalized through

Nationalization Act 1974. Under this law all Pakistani banks became a public

property. All small banks were merged in bigger banks to create 5 major Pakistani

banks. These banks were controlled by Pakistan Banking Council. There are still

controversies this act of the government as whether it contributed in success or failure

of banks.



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POST NATIONALIZATION ERA

In 1990 the government decided to denationalize all the nationalized institutes.

Some were also suggested in banking sector. For this purpose, amendments were

made to Nationalization Act 1974 and 2 nationalized banks were privatized. Along

with this the permission to open banks in the private sector was also granted. The

rules regarding the establishment of new banks and for incoming foreign banks were

also relaxed.

After these changes a large number of foreign and private banks started their

operations in Pakistan and presently there are more than 44 scheduled banks working

in Pakistan.



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BACKGROUND:

On 29 March 1824 King Willem-I issued a royal decree creating the

Nederlandsche Handel-Maatschappij with the aim of reviving trade between the

Netherlands and the Dutch East Indies. In 1964, NHM merged with De Twentsche

Bank to form Algemene Bank Nederland (ABN), while Amsterdamsche Bank and

Rotterdamsche Bank joined to become Amsterdam-Rotterdam (Amro) Bank. In 1991,

these two banks merged as ABN AMRO Bank. Today, ABN AMRO Bank has a

powerful presence in world markets, building on a tradition of stimulating

international trade.

ABN AMRO is listed on the New York Stock Exchange and Euro next. It is

the largest bank in the Netherlands and Europe's eighth largest with assets of EUR

987 bln (as at 31 December 2006). It operates 4,500 branches and offices in 53

countries and has 110,000 employees worldwide. In Asia, ABN AMRO has been

active since 1826 when it opened its first branch in Jakarta to finance business

ventures in the Dutch East Indies. The bank has been operating for well over 100

years in a number of countries in the region

ABN AMRO was established in Pakistan in 1948. They service their corporate

and institutional clients as well as their private banking clients. ABN AMRO is the

third largest foreign bank in Pakistan, playing a prominent role in both corporate and

retail businesses. They are considered to be a leading bank in bringing new products

to the local market and a key player in assisting the Government of Pakistan on



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various economic and financial matters. They are represented in key financial sectors

and government policy forums.

ABN Amro Bank (Pakistan) Limited (AABPL) is a newly merged entity,

resulting from the merger of ABN Amro N.V-Pakistan branches with and into Prime

Commercial Bank Limited effective from September 01, 2007. As ABN Amro N.V-

Pakistan branches had been operating in Pakistan since 1948, as a scheduled

commercial bank, under a banking license from the State Bank of Pakistan; the Prime

Commercial Bank Limited was incorporated on September 30, 1991 as a public

limited company. On March 5, 2007, ABN Amro N.V entered into an agreement to

buy 93.4% stake in Prime Commercial Bank Limited, later it offered to purchase the

remaining stake in the bank. AABPL is a majority owned subsidiary of ABN Amro

Bank N.V., Amsterdam. ABN Amro Bank N.V. held a total of 99.22% shareholding

of the bank as at December 31, 2007. ABN AMRO is already the third largest foreign

bank in Pakistan. The acquisition will add significant scale to ABN AMRO's

franchise in Pakistan, making the combined entity the second largest foreign bank and

one of the top 10 banks in the country with assets of PKR 124 billion [EUR 1.547

billion] and 82 branches (including 3 Islamic Banking branches) in Pakistan and

Azad Jammu and Kashmir. The bank is principally engaged in retail banking,

corporate banking and treasury-related activities. So all Prime branches across the

country are now re-branded ABN AMRO, carrying the distinctive green and yellow ABN

AMRO shield logo which symbolizes reliability, tradition, protection and security.

2

3 As Year 2007 brought about significant changes both in the local profile and

ownership structure of the bank. In Pakistan, ABN AMRO Bank N.V. (AAB)

acquired PCBL in line with its strategy to expand its local operations as well as to

diversify its advances portfolio into fast growing SME segment because of the latters

strength and established client base in this area of business. Meanwhile, AAB itself

fall prey to acquisition, which got completed in the last quarter of 2007. The bank

was acquired by a consortium comprising, The Royal Bank of Scotland Group Plc



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(RBSG) of Scotland, Banco Santander Central Hispano (Santander) of Spain, and

Fortis N.V. (Fortis) of The Netherlands (jointly called the consortium). According to

the acquisition plan of the consortium, RBSG, in addition to some other geographical

operations of the bank, mainly took over the Asian business, in turn, becoming the

new owner of AABPL.

1

2 Currently AABPLs BoD comprises seven members out of which five hold

senior management positions in AABs worldwide operations and two are independent

directors. The Chairman, Mr. Muhammad Aurangzeb, is currently serving as Global

Head Commercial Client Segment ABN AMRO N.V. at Head Office, Amsterdam.

Recently, Mr. Shehzad Naqvi is appointed as CEO of AABPL. Mr. Naqvi has extensive

experience with renowned local and multinational financial sector entities. While

expediting the integration process would be the main priority, he would be responsible

for the re-branding ABN AMRO to RBS in Pakistan. It operates through a network of

82 branches in Pakistan and its employees are 2319.

ABN AMRO focuses on four customer segments:

o Personal banking

o Private banking

o Business and commercial clients

o Corporate and institutional clients

THE PERSONAL BANKING offers a range of products that meet the everyday

financial needs of individuals. The wide range of financial services offered enable to

build and expand long-term relationships with clients.

consumer clients are getting benefits in the areas of Personal loans ,Credit cards,Mortgages, Savings, Retirement planning, ,Education planning, Personal internet

banking, Insurance and Online trading.



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THE PRIVATE BANKING offers highly personalized banking for private clients,

aiming to structure and enhance their wealth with services like Banking, Investment

advisory, Discretionary portfolio management, and Investment funds.

BUSINESS & COMMERCIAL BANKING offers a full range of commercial

financial and lending services for small to larger-sized businesses. These services can

help clients finance their business, manage their cash flow, trade internationally,

succeed in e-commerce and find new opportunities.

CORPORATE AND INSTITUTIONAL BANKING is active in and gives the

scope and global expertise to meet the banking needs of the corporate and

institutional clients. It is delivering a full range of high-quality advisory, financing

and operational services, tailored to best meet the clients' current needs and long-term

goals.



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As an International bank, ABN AMRO has more than 4500 branches in over 55

countries. They cater to the person needs both at home and abroad. They have a clear

focus on consumer and commercial clients in local market and provide global reach.

NORTH AMERICA Venezuela Russia

Mexico ASIA Saudi Arabia

Canada China SingaporeUnited States of America Hong Kong Taiwan

SOUTH AMERICA India Thailand

Argentina Indonesia United Arab Emirates

Brazil Japan Uzbekistan



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Chile Kazakhstan Vietnam

Columbia South Korea AFRICA

Ecuador Malaysia Egypt

Paraguay Pakistan South AfricaUruguay Philippines

EUROPE

Austria Norway

Belgium Poland

Channel Islands Portugal

Czech Republic Romania

France RussiaFinland Slovakia

Germany Spain

Gibraltar Switzerland

Greece Turkey

Ireland United Kingdom

Italy AUSTRALIA

Luxembourg AustraliaNetherlands New Zealand



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Karachi Hyderabad Sukkar

Lahore Gujarat Gujar khan

Islamabad Mirpur (Azad Kashmir) Mardan

Peshawar Sargodha Kharian

Quetta Gujranwala Bhalwal

Rawalpindi Vehari Bahawalpur

Faisalabad Jehlum

Multan Turbat

Sialkot Dera ghazi khan



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The purpose of banks is to provide some services to the general public. And for this

purpose different banks provide different services to the people in different forms.

For proper functioning and the overall bank has been divided in different

departments. These departments handle different jobs so that division of work is there

for improvement of functions and also it is easy to control the situation. The general

divisions in the branch are as follows:

1. Cash Department

2. Deposit Department

3. Advances and Credit Department

o SME Loans

o Agricultural Loans

o Credit Administration Department (CAD)

4. Remittance Department

5. IT Department

6. Sales Department

o Treasure Plus

o Golden Years

7. Clearing Department



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This is very important department because cash is the most liquid asset and mostly

frauds are made in this department. Here the individuals that are authorized to go in

this department have to be very careful because when at the end of day the cash is

balanced, a little more or little less balance can cause problem and then they have to

see where they have made mistake. So extra care is taken in this department andnobody is allowed to enter in this department except authorized persons only.

When cash is received in the counter, this entry is recorded in the computer by

the cashier. At the close of the day, these entries are balanced with each other.

When the cheque or any negotiable instrument is presented at the counter for

payment, the cashier at first ask for the photocopy of CNIC of the person who has

come with the cheque and then they record the transaction in the computer and then

payment is made to the payee. At the end of the day, the entries the cashier has made

are balanced with the entries that have been made by the assistant manager.

The consolidated figure of the receipt and payment of the cash is entered in the

cash balance book (in the computer) and drawn closing balance of cash.

Opening balance + receipts payments = closing balance

Here they have to maintain the cash regulatory requirement (reserve) with the

local authority that is 7% while the head quarter holds the reserves of 18% and this

equalized the minimum cash reserve requirement that a bank should possess i.e. 25%.

In this department the utility bills are also accepted and also here they also

accept the sorted, reissuable notes, defective (numbers mismatch) or soiled notes etc.

and the bank is also authorized by the State Bank of Pakistan to replace these notes



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with the new ones. Here the online charges are taken from those who want to avail

the online facility of online banking and its charges are Rs. 138.

Bank deals in money and they are merely mobilizing funds within the economy.

They borrow from one person and lend to another, the difference between the rate of

borrowing and lending forms their spread or gross profit. Therefore, we can rightly

state tat deposits are the blood of the bank which causes the body of an institution to

get to work. These deposits are the liability of the bank so from point of view of

bank we can refer to them as liabilities.

All types of accounts of customers are managed and maintained in this

section. All the money deposited and withdrawn is properly recorded in a specific

account number which is allotted to every account holder.

Banks has different kinds of deposit schemes in order to induce deposits.

TYPES OF THE ACCOUNTS:

Customers can open the following types of accounts with the ABN AMRO.

1. CURRENT ACCOUNT

As the name signifies the depositor can draw or demand amount at any

time by presenting the cheque in the bank. Unlike term deposits there is no

restriction of withdrawals of money. The bank neither pays any kind of

interest nor deducts the Zakat from the deposits of this account. The bank also

does not take any service charges up to the minimum balance of account from

the depositors.

2. PROFIT & LOSS SHARING SAVING ACCOUNT:

In these P.L.S. accounts the bank gives no fixed rate of profit. These

types of deposits are designed to encourage the saving habits of the people.



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After every six months a rate of profit is announced by the Head Office and

after calculating the amount, it is credited to the depositors account. On 1st

day of RAMADAN, Zakat is deducted at the rate of 2.5 %. If any customer

does not want to pay Zakat from his account then he must give an undertaking

that he will pay Zakat himself.

3. SAVING ACCOUNT:

ABN AMRO also offers saving accounts and it is of three types.

Access Account: (Enjoy greater accessibility and reach)

ABN AMRO Access Account provides you the option of earning profit

with a tiered rate structure while ensuring the ease of carrying out your day-to-day transactions.

o You can open your ABN AMRO Access Account with a

minimum balance of PKR. 50,000.

Anchor Account: (Providing you financial security with high

returns)

ABN AMRO Anchor Account provides you the option of earning

monthly returns on your balance. Profit is paid on the minimum balance you

maintain in a month. A tiered rate structure allows you to earn higher returns

on higher balances.

o You can open your ABN AMRO Anchor Account with a minimum

balance of PKR. 50,000.

Classic Account: (A perfect combination between high liquidity

and high yield!)

The ABN AMRO Classic Account is the ideal solution for individuals

looking for maximum returns while maintaining their day to day transactional

needs. Your profits are calculated on a daily basis ensuring that you get the

most out of your deposits. With a tiered structure, ABN AMRO Classic

Account provides you transacting freedom and you earn higher returns.



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o You can open your ABN AMRO Classic Account with a minimum

balance of PKR. 50,000.

4. Value Term Account:

For those seeking great returns with great service, ABN AMRO Value

Term Account has all the answers.

With a minimum balance requirement as low as PKR 100,000, your

profits are calculated on a daily basis ensuring maximum mileage on your

investments.



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The banking history is full of various examples of fraud largely due to incorrect

opening of accounts. These frauds could have been avoided if the branch mangers

and other designated officers had taken due care and exercised precautions at the

time of opening of accounts.

At the time of opening of an account, officers should tactfully obtain as much

information as possible about the integrity and character of the person, his correct

name and address and occupation. This infect will be the only opportunity they

will be able to talk to the prospective customers in a friendly and frank

environment. This is the time when they have a slight edge over the customer.

He/she at this point in time is willing to divulge as much information about his or

her personal status and business etc. to the bank officer. It is therefore necessary

that due care and proper procedure be followed for opening of any account for

any customer.

ACCOUNT OPENING:

Account opening is an agreement in which customer his funds and

bank accepts these funds, therefore the nature of relation between a banker and

customer is of contractual one and all the conditions applicable to this contract act

are also applicable.

Here the customer first gives the application of opening the account which is

sent to Karachi (head office) and after approval from the head office, further

proceedings are done which are as follows:

Requirements for Account Opening:

The following are the requirements for account opening:



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Bank usually requires that new depositor must be introduced by the person who is

known to the bank i.e. the employee of the bank. If the manager is satisfied he

will fulfill the following requirements:

o

ACCOUNT OPENING FORM:A person who wants to open an account has to fill an

account opening form which is provided by the bank, free of cost. It is the

form that contains the account number, date, title of the account

introducers name and address, special instruction (if any), information

about Zakat Deduction, and any other information about whether the

person wants to get online facility or ATM Card etc. Then this filled form

is submitted to the bank, the bank admits the signatures of the applicantand verifies the introducers signatures. Then these are sent to the head

office which after doing the world check, issues the account number to the

applicant.

o SPECIMAN SIGNATURE CARD:

This card contains account number, title of the

account and the specimen signatures of the account holder. When this form

is submitted in bank, the bank officer admits the signatures of the applicant

and keeps this specimen card in record.

o CHEQUE BOOK REQUISITION SLIP:

This is the request made by the client to

the bank to issue him a cheque book containing number of leaves

mentioned (25_100). It enables a customer to make a withdrawal from

their account or make payments of various parties by issue of cheque. In

this request, the customer has two options:

1. OUTSOURCE CHEQUE BOOK:

These cheque books are printed from Karachi

(headquarter) and these are sent to the bank in 2-3 days.



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2. INSOURCE CHEQUE BOOK:

These are printed inside the banks. But this is in the

case of urgency and it is free for some categories like employees,

clients avg. balance of more than 1 million etc.

DOCUMENTATION NEEDED:

o Employment verification

o CNIC (Computerized National Identity Card)

o NTN Certificate

o Driving license

o Account statements of any other accounts

o RAF (Risk Assessment form)

o KYC (know your customer)

OPENING OF AN INDIVIDUAL ACCOUNT

Following are the requirements for opening of an individual account:

If employee then

Employment verification certificate

CNIC

Driving License

Filled account opening form

Three photographs

If sole proprietor then

Along with the above documents,

1. Sole Proprietorship Declaration (in this declaration, the proprietor of the concern will

declare that he is the sole proprietor of the concern.)

2. NTN Certificate (NTN = National Taxation Number)


Internal


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OPENING OF JOINT ACCOUNT

In this, along with the above said documents CNICs of all the account opening

parties are required. And also in the box of special instruction it should be clearly

mentioned that which option they select from the following:

One is authorized (single person can update)

Both two jointly update

Any one can update

Either or survival.

NOTE:

In the above three cases, in case of mishap the account will be stopped and to

update the account, the person will have to go to the court.

OPENING OF PARTNERSHIP ACCOUNT

Along with the other documents, partnership deed is required. A partnership deed is

the document that shows the nature of the business that will be carried out by the

partners, number of partners, their share, who will run the business, what will be the

loss and profit sharing ratio, what will be the initial investment of each partner, who

will be the limited partner and who will maintain the account with the bank etc.

According to the bank point of view, the most important thing is the persons name

who will maintain the account with the bank. Computerized national identity card of

the person who will maintain the account is required.

NOTE:

Partnership in which minor is involved, banks usually avoid opening the accounts of

such persons.

OPENING OF ACCOUNT OF A COMPANY

If someone is interested in opening of a company then in addition to the above

documents following documents are required:



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o CERTIFICATE OF INCORPORATION:

This is a certificate that the company is registered according to

companies act and the nature of the business, which will be carried out

by the company.

o MEMORANDUM AND ARTICLES OF ASSOCIATION:

This contain the full name of the company, the location of the

registered office, the objectives of the company, information about the

liability of the member that whether it will be limited or unlimited, the

capital of the company, who will be the director and how he will be

selected and what will be the duties and powers of the director.

o LIST OF DIRECTORS:

This list contains the names of the directors of the company.

o RESOLUTION:

This is a document that states that the meeting of directors of

the firm has taken place on the place mentioned and these persons have

been selected to open and operate the bank account and they can sign

all the negotiable documents on behalf of the company. The specimen

signatures of the persons are attached. This document is very important

with the bank point of view because with the help of this document the

bank comes to know that who will operate the account with the bank.

NOTE:

This bank do not open the accounts of the following persons:

Money Changer

Gold smith

Car dealers

Hotels



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The reason is that there is no idea of their cash generation.

In case ofminor, birth certificate or B-form is required.

In partnership account, when minor becomes mature he has to got maturity

certificate from the court and submit to the bank. In case of death of person who has an account with the bank, his heirs has to

got the succession certificate from the bank and submit that to the bank after

which they will get the amount according to the agreed ratio.

Here the customers are required to maintain a limit of Rs. 50,000 in their bank

account, otherwise service charges of Rs. 50 will be deducted from the

account.

In case of some categories like widows, students, govt. employees (thepersons who have salaried accounts) or one who have an avg. balance of less

than Rs. 1 million/month.

If signature is different from CNIC, then a form is being filled i.e. Vernicular

Indemnity Form (it is for shaky signatures)

If the person is politically exposed or belongs to a political party or on the

world check, if that person is shown as doubtful and if the person is the

resident of the countries which are considered as high risk, his account willnot be opened.

If some customers address is not matched with the address given on their

driving license and address on the bills then the marketing/sales persons verify

this either by calling or by personally visiting that place.



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It includes six things:

o Stop payment of cheques

o When account becomes dormant.

o Preparing of relationship cards

o Cheque books

o Recording of mark up of agriculture and commercial loans

o Closing of account

STOP PAYMENT OF CHEQUES

Here the bank stops the cheque of their own branch because of following reasons:o The customer does not want to make the payment due to any reason.

o If the cheque book is lost.

So the bank stops the payment of the cheque on the request of customer.

In this turn around time is 5 minutes and it is not done in the given time, then

there will be the problem in the audit committee and its charges are Rs. 200.

After the payment is stopped, the concerned client is informed about that

through a letter of stoppage of payment.



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WHEN ACCOUNT BECOMES DORMANT

When someone does not operate their account i.e. they do not make transactions in

their account for one year then their account becomes dormant. And to make further

transactions, the customer has to reactivate the account. So to activate the account,

the following things are required:

o Application

o Original ID card

o Transaction in their account ( whether of Rs. 10)

o Slip copy

o A/c Holder himself (there are no representation in this account so the

account holder has to come by itself.)

PREPARING OF RELATIONSHIP CARDS

Relationship cards are used as debit cards/ ATM card. Some banks are using ATM

Cards while some banks like Askari Commercial Bank are using debit cards as

relationship cards.

o Here the differential edge is that the customer can withdraw Rs. 1 lac in

one day (limit) while other banks limit is less than this limit.

o The bank do not issue ATM Cards until the cheque book from Karachi

(head quarter) is received. Once it is received, it is sent to delivery

channels which after verification hand it over to the client who is having

the letter of authorization (whether the client himself or his /her

representative )



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CHEQUE BOOKS

Size of cheque book varies from 25 leaves to 100 leaves. The assistant writes

Issuance date, Name of account holder, Account number & Type of account on the

title page of the cheque book and cheque book issuance register. After authentication

by the authorized officer on the cheque book register, the cheque book is handed over

to the account holder.

Customers obtain the cheque books from two sources and it depends on them

which option they choose.

1. Outsource (printed from Karachi, takes 2-3 days)

2. Insource (customers in urgency, and those whose avg. balance is more than

Rs. 1 million, free of charges)

RECORDING OF MARK UP

Here the mark up of agriculture and commercial loans is recorded. That means that

you deduct the interest from the account of the person having loan (whether

agricultural loan or SME commercial loan) and thus you debit (bank account) and

credit (customer account) the amount.

CLOSING OF ACCOUNT

Here the customer gives the application of closing the account. Its charges are Rs.

500. The bank takes back the cheque book. If there is some money in the account, the

bank makes pay order and then courier to that persons address. If the person has left

her house and bank is unable to approach that person then the amount is transferred to

the unclaimed deposit accounts. Usually those accounts are closed that have a cash

balance of Rs. 0.



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The rapid advancement in Information and Communication Technology (ICT) has

had a profound impact on the banking industry and the wider financial sector over the

last two decades and it has now become a tool that facilitates banks organizational

structures, business strategies, customer services and other related functions. The

recent IT revolution has exerted far-reaching impacts on economies, in general, and

the financial services industry, in particular.

Within the financial services industry, the banking sector was one of the first

to embrace rapid globalization and benefit significantly from IT development.

ABN AMRO is one of the leading banks of the world and it is completely

dependent on the use of technology i.e. it is doing the paperless banking.

Information Technology Department (ITD) is responsible for management and

support of the technology architecture, hardware, software, and the respective

resources throughout the country as well as the whole world.

The IT department of ABN AMRO is one of the most sensitive departments as

the working of the bank is completely dependent on the computer based and the web

based technology and any problem at any part can negatively impact the whole

working of the bank. Thus, a great care is taken in the management of IT Department.This whole system of ABN AMRO is using two lines of electricity. One is

provided by the WAPDA and the other is the use of UPS. In case the electricity is

powered of, the UPS is started which causes the computers not turn off and in this



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case there is no case of data loss and in is for 10-15 seconds after which the

generators are powered on which provides the electricity to the whole bank.

The IT Department of the ABN AMRO bank consists of the following:

1. CITRIX Web Interface:

It is the software being used in the ABN AMRO and in this there are many

other soft wares used for different banking functions e.g.

Lotus notes are used to access e-mails

TCSS (Total Consumer Services Suite) used for different functions

etc.

This CITRIX Web Interface is the link which is being operated either from the head

office (Karachi) or from the main branch (Lahore). When there comes any blockage

in the operating of link from one city then it is operated from the other as because of

this the whole working of the bank is stopped.

2. SWITCHES:

This is the device in which the cables of all the computers being operated

in the bank are connected. Through this device it becomes visible that which

computer is operating and which is not and also if there is any problem in the

working of any computer then the switch of that concerned computer shows that there

is some problem in the operating of that computer by any light present on the switch

depicting the problem in the concerned computer.

3. DTU (Data Traveling Units):

As for the working of the bank the link is operated either from the head

office or from the main branch (Lahore) but to access to Lahore there are two routes

being used either from Vehari or from Multan. When there is more traffic of signals

from one route then the system shifts these data traveling units automatically to the



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other route in order to make the access quicker and this traffic is shown on the

computer because it takes more time for data to reach at the desired place.

4. V Set (wireless satellite):

In the V Set device, the communication through the satellite is done. It

is used in case the link is failed to be operated both from the head office and from the

main branch and thus, the last resort is to use the satellite communication in order to

keep the working of the bank going.

5. ROUTERS:

This is a very important device as the switches of the above mentioned

devices i.e. V Set, DTUs and Switches are plugged into this device and connected

with it.



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Clearing is a system by which bank exchange cheques and other negotiable

instruments drawn one each other within specified area and securing the payment for

their clients through the clearing house.

A clearing house is the place where representative of all banks of the city get

together and settle the receipts and payment of cheques drawn on each other for their

clearance through their branches in the city. Clearing cheques received from other

banks are sent to branches, which will clear the cheques and instruments to respective

amount.For a bank, following are the requirement of being a member of clearing house:

It must be scheduled Bank i.e. It is registered is State Bank of Pakistan.

50 cheques per day must be drawn on it for continuously three months.

It must have account with State Bank of Pakistan.

Sufficient balance should be in this account.

ABN AMRO is using their own intercity clearing software and collection

schedule and they are using the software named TCSS 4(Total Consumer services

Suite).While other banks are using the services provided by NIFT (National Institute

of Facilitation Technologies) i.e. clearing house.

ABN AMRO is also using the services of NIFT but only in the case of same

day clearing.



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In the case of same day clearing the maximum amount should of Rs. 200,000

and for this the charges are Rs.300 per instrument.

For the cities in which there are branches of the ABN AMRO, for those cities

it is using its own intercity clearing software. Other local banks are not using intercity module.

For the cities in which there is not any branch of the bank, there the bank uses

the collection schedule for clearing.

Instead of hiring the services of the NIFT the bank directly contacts with the

concerned branch of the other bank.

For these services the bank is charging Rs. 400\425\450 (Rs.300 commission

+Rs.100 postage +10% excise duty) but these are only for amount up to Rs.

300,000 and for the amount beyond Rs. 300,000 then it will be charged 15%.

PROCEDURE OF CLEARING

At 10:30 am authorized representatives of all the bank of the city get together

in State Bank of Pakistan for 1St clearing, where in clearing house register bank wise

entry is made and exchange of cheques takes place, here 1st clearing ends.

Representatives of ABN AMRO take the cheques drawn on ABN AMRO. These

cheques are entered in the inward clearing register and after sorting out these are

delivered to respective branches of ABN AMRO. Some cheques are passed and some

may be dishonored and a memo showing the reason of dishonor is attached with

them.

At 12:30 pm all the representatives again get together for second clearing

where payment & receipt of passed cheques takes place and dishonored cheques are

delivered back to the representatives of respective banks. No physical payment or

receipt of cash takes place, actually every clearing house agent (bank) have account

with SBP which is debited or credited respectively; with an amount equal to the

amount of payments or receipts.

FUNCTINS OF CLEARING DEPARTMENT:



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To accept transfer, clearing and collection cheques from the customers and to

arrange for their collection.

Transfer Cheques: are the cheques, which are collected and paid by

the same branch of the bank. Clearing cheques: are those cheques which are drawn on the

branches of some other bank of the same city or of another city which are

covered by a particular clearing house.

Collection cheques: are those cheques which are drawn on the

branches of other banks for the cities which are not coming in their clearing

house.

CLEARING OUTWARDWhen the customer deposits cheques and other instruments of other banks for

collection, the bank sends the cheques in outward clearing

INWARD CLEARING

In inward clearing the cheques received from other banks are collected and sent to

branches for their payment.

ADVANTAGES OF CLEARING

1. Since clearing does not involve cash and all the transactions take place through

entries in the computer, the number of transactions can be unlimited.

2. No cash is needed as such the risk of robbery and embezzlement is totally

eliminated.

3. Systematic arrangement for collection and clearance of cheques.

4. Speedy and economic collection and clearance of cheques.

5. Clearance of cheques and other instruments of different branches of different

banks in a systematic manner without any flaw and mistake.



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One of the major functions of banks all over the world is remittance of funds from

one customer to another customer and from one center to another center. Remittance

means transfer of funds and the remittance department is mainly concerned with

transfer of funds.

Remittance is of mainly two types.

1. Inward remittance.

These are in the favor of bank account holders. It includes all the cheques for

collection.

2. Outward remittances

These are all the payments made for other people on behalf of account holders of

bank. The people who do not have a account in the bank can also apply for remittance

by depositing cash in the bank. The bank has predetermined charges on remittances.

Ways for Remittances for Customers

1. Pay order

2. Demand draft

1. Pay Order:



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Pay orders are mostly used within the city when a person wants to pay to any person

who is with in the same city and who prefers no cash payment. This PO serves as DD

because the PO of ABN AMRO is payable at any branch of this bank within the

whole country. In this cheque is required as the supporting document.

Its charges are Rs. 200 + 10% excise duty i.e. Rs. 220

Its benefit is that here the risk is minimized and the person can be escaped from tax

i.e. 0.3%.

ISSUANCE PROCEDURE

Get the Pay Order application form.

Issue pay order after recovering charges.

Do necessary vouchering.

Make entry in PO register.

All Pay Orders shall be crossed Payees Account Only.

Parties involved

o Purchaser

o Issuing/purchasing branch

o Payee

2. Demand Draft (DD)

Demand draft is a written order drawn by one branch of a bank upon the other

branch of another bank to pay certain sum of money to or to the order of some

specified person.

Demand draft can be issued to customers as well as to non-customers against cash

or cheques as well. Its charges are Rs. 300 + 10% excise duty i.e. Rs. 330.

Parties involved:

Following parties are involved in this;



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o Purchaser

o Issuing or drawing branch

o Drawee branch

o Beneficiary or payee.

Advances are the most important source of earning for the banks. Thus the creditportfolio of ABN AMRO is in a very much advanced shape than other financial

institutions of Pakistan and the credit goes to the regulatory authority, the

management and the staff who are concerned about the quality as well as the quantity.

The advances department plays a vital role in the function of the

bank. The advances department issues short term and long term loans to the

customers. In ABN AMRO the sharing ratio in profits is very high. The main source

of its income is its mark up on different types of short term and long term loans. Here

the mark up rate is 3.25%+ 3 months KIBOR or 17%.

While issuing the loan the advances department makes credit

proposal for credit report the following information is required before preparing the

credit proposal:

o Account number of the borrower and the type of account whether current

or PLS.

o Nature and structure of the borrower business and its main products.

o Name of the borrower, whether proprietor, partners and directors.

o Types of ownership whether proprietorship, partnership or company.

o Details of all the firms and companies associated with the borrower

business.



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o Current financial conditions of the borrower business.

o Accurate and up to date financial statement of last five years (if the

borrower business life is five year or more).

o

Market report on borrower when borrower has maintained an account withanother bank and in his case the report from this bank is also obtained and

whether he/they has already taken any other loan from the bank. In this

case the CIB (Credit Information Bureau) Report is also required.

CIB (Credit Information Bureau) REPORT:

This is the report which is provided by the SBP. It contains details about the

credit history of the borrower i.e. whether they have taken any loan from any other

bank, at what date and how much and if he has then how his repayment behavior was.

This information is not told to the customer

After collection and fulfillment of all these requirements the bank prepares the

credit proposal for the borrower. And if the repayment behavior is not good, or

partially good then bank refuses to pay him the advances.

Types of Credit Proposal:

In ABN AMRO two types of credit proposals are made:

1. For SME Loans

2. For Agricultural Loans

The requirements for both types of proposals are different which

will be described later.

The purpose of the credit proposal should be:o Starting of new business

o Expansion of existing business

o Purchase of stock



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The proposal of finance is:

o New: that the borrower has applied first time for the finance.

o Renewal:that the borrower has applied again for the issuance of finance

o Enhancement: that the borrower has applied for enhancement in the

existing loans.

The credit proposal also reveals that what will be the arrangement for

the repayment.

The rate of mark up and amount of finance is also mentioned.

This loan application will be only for one proposal whether renewal or

enhancement.

The things which are taken as collateral are as follows:

Cash

Near cash

Shares

Mortgage of property

Hypo of assets

Bank guarantee

Etc.

90% financing is given against Rs. 100,000 of National Saving Centre

Certificate where you have fixed any amount for some years.

Bank at first insured the things which are given as collateral e.g. building or

stock from earth quake, fire, and floods or against stolen of stock.

Here the markup is 17% or 3 months KIBOR + 3.25 chargeable on

quarterly/semi annually/annually basis.

50% of loan is advanced on gold jewellery.



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Loans and advances offered are of two types:

FUND BASED FINANCES

In these type of advances or finances there is physical movement of

cash from bank reserve to customer who applies and successful in getting

loan.

NON FUND BASED FINANCES

In these finances physical movement of cash from bank reserve to the

customer does not occur.

FUND BASED FINANCES

1. RUNNING FINANCE:

Running finance is a facility of credit allowed for working capital. In a

running finance certain limit is sanctioned to the borrower and then he utilizes the

loan facility provided he does not exceed the sanctioned limit. The interest is charged

only on the amount of the loan utilized. In running finance, the finances are secured

against the hypothecation of stock and in the case of collateral the ratio maintained is

60:40.

DEMAND FINANCE:



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This type of finance is payable on demand for a shorter period of time.

The client is bound to repay it in monthly installments where whole amount is

supposed to be adjusted along with the mark up within that period.

CASH FINANCE:The cash finance is offered for short period of time, for some month

mostly for seasonal business. The cash finance is commercial loan mostly given to

business owners. Cash finance is given against the pledge of goods. On the request of

customers goods are pledged and cash is given to them.

TERM FINANCE:

This type of finance is offered for a longer period of time and here in

this case the client is bound to repay it whether in monthly, quarterly, semiannually or

annual installments.

FIM (Finance against Import Merchandize)

In this type of finance the borrower pledge only imported goods. In this

type of finance, when the imported goods came on the site and when borrower is

asked for money, then he says to the bank that you pay the money and I will pay that

to you. Then bank creates the FIM i.e. the pays on his behalf and take the goods in his

custody. In this case the borrower can not use the stocks without the permission from

the bank. In case the borrower wants the delivery of the goods then he has to make

payment equivalent to the value of pledged stock. And then can take the delivery.

LBD (Local Bills of Discount)

In this type of finance the borrower transfers the local bills into funded

facility. It is for same bank customers.

FBD (Foreign Bills of discount)In this type of finance the LC (letter of credit) is transferred to funds.

And it is for different bank customers. This discounting takes 1-2 days.

NON FUNDED FINANCES



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LETTER OF CREDIT:

It is a written undertaking by bank given to seller at the request and on

the instruction of buyer to pay at sight or on the stated date within a specified time

period, specified amount mentioned in the commercial invoice.It is most widely used mode of settling trade debt on international level. It

is the safest way for trade due to method of payment. Through this you can easily

placed order to importer and receive goods from importer.

SLC:

In this case the bank issue site letter of credit that money will be given

only after the stock has reached the port.

ULC:

Its limit is 30 days. In this the bank on the request of the customer issues

ULC i.e. the usance letter of credit in which it allows the borrower to use

the material which is in the bank custody and the bank has also placed a

person called muqadum to supervise the material and this muqadum

allows the borrower to use the material as required after watching ULC.

ILC:

In case of inland LC, two banks of different cities give guarantee of their

customers and in this case, the bank also asks for 20% cash margin,

commission to be deposited at first in the bank and after that the bank

issues the remaining requested credit.



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These are the loans which are given to someone for commercial uses and for the

improvement in the SME sector. Actually the minimum limit in this to advance loanis Rs. 2 million and the person who has come for loan less than this will not be able to

get the loan. These loans are for 1 year and after 1 year the customer has to renew this

loan if he wants.

REQUIREMENTS:

The following are the requirements that make the person eligible for the loan. If

the person fulfills the following criteria, he can get the loan.o Net worth statement

o BBFS( borrower basic fact sheet)

o ORR* (operational risk rating----- according to the value that has been

derived here the bank decides that to which customer they should

forward the loan and to whom not, on the basis of whether the party is

[+ve----superior, satisfactory, acceptable] or [-ve----watch, substandard,

doubtful, loss].o SME prudential regulation checklist

o Financial statements

o Financial analysis ratios

o Customer profitability analysis



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o Application for the sanction of loan (LAF)

ORR:

It is the operational risk rating and in this the following things are included:

o Net worth

o Financial conditions (PR compliance & CIB Report)

o Profitability

o Relationship with ABN AMRO (new/existing)

o Security risk

o Mark up servicing (the behavior to pay the mark up)

o Restructuring in last 5 years

o Securities/documents shortfall

o Constitution (private, public, partnership etc.)

o Negative comments by bank , internal audit, CAD, SBP inspects

o Management quality

Then the values assigned to all of these calculated and this is the moment when

bank decides whether the person is eligible for loan or not.

NOTE:oThe things which the bank can take as collateral to advance the loan can be

cash, near cash, shares, mortgage of property, hypo of assets, bank guarantee

etc.

o If the person has come with National Saving Centre Certificates where

they have fixed some amount for some years to keep them as collateral, he

can get loan upto 90% of that.

oThe things which the bank take as a security the insurance of that from

earth quake, fire, floods, stolen of stocks etc is must.

o In the proposal, it is also mentioned whether there are different groups or

companies within the same company. E.g. Dehkan Traders------Dehkan

pesticides, Dehkan seeds, Dehkan fertilizers etc.



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oHere it is also mentioned that whether the documents which are the proof

of each and everything the person possess are consolidated and qualified or

not.

Agriculture loans are sanctioned either to buy agri. related products or to buy tractor,

to buy livestock or to make barren land in use, or for the development of land.

REQUIREMENTS:

o Pass book

o CNIC

o Fard-e-malkiyat

o Khasra girdawarii

o Two pictures of the applicant

o Two guarantors, their Fard-e-malkiyat and their CNIC

o Field visit

This loan is given for 3 years but its mark up is taken after 6 months and its

rate is 17.5% and this rate changes according to KIBOR.

And here the loan is advanced 50% of the total mortgaged land.

This agri finance scheme is for the following reasons:

o To buy agri related products

o To buy tractor



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o To buy livestock

o To make barren land in use

o Development loans

The assets that can be used as a security to get agri loan are as follows:o Automobiles (tractor, car, bike)

o House

o Animals

o All agri implements

The bank at first ask the customer to fill the form that is called Appraisal Form in

which bank requires each and everything about the person including his/her marital

status, children, assets, land etc.

Proposal for Agriculture Related Facilities:

In this proposal the bank at first describes the nature of facilities it is going to

offer to its customers and this form is known as AABAFS (ABN AMRO agri finance

scheme) and the other details that are required are as follows:

Appraisal Form

Basic information about the customer

2. Information of the land to be offered as

security (area, pass book and loan from other bank if any)

3. Farm enterprises

o Farm related activities

o Dairy activities

o

Livestock developmento Crops sown during the year (existing)

o Crops to be sown in the next season

(next cropping pattern)

o Equity contribution and Re-payment



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FINANCE RE-PAYMENT

Total Need Own

contribution

Loan amount

recommended

Debt/equity

ratio

Principal Mark up

4. Profit and loss statement (showing farmers

net income)

5. Conclusion and recommendations

6. Then all these documents are signed by

RM agri finance

Manager operations

Branch manager

Farm Field Visit Report

1. Personal information

2. Information of land to

be offered as security

3. Availability of farm

powers

4. Current crops (sown

during the year)

5. Next crop (sown in

coming years)

6. Others (applicant got

agri pass book etc.)

Evaluation

Certificate/Security Details



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1. Land owner

2. Location of land

3. Nature of land

4. Type of irrigation

5. Details of agri land

offered as security

6. Value of land as per 3

years Oast Baih

7. Value of land as per

market price

Application for

Agricultural Loan (whether for production or for development purposes. And

it is of 2-3 pages and in Urdu)

CIB Report of Customer

(it is provided by the State Bank of Pakistan and it shows whether the person

has taken loan from any bank or not)

Oast Baih Report (this is of

3 years and this shows the sale of any part of land in the area where the land

which is kept as security is situated within these three years.)

Khasra Report (it is the

detail of cultivated land or field or farm)

Aqs-e-Shajra (it shows the

map of location of land and it is not must in agricultural loan but it is must in

commercial loans.)

Note:

o The thing which shows whether the pass book is real or fake is the number

that is outside the pass book and also the stamp over that by GPO.



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o In someone wants to cancel the Pass book, they have to give the proper reason

for the cancellation.

o There is also another thing which is called constitution in which bank writes

the letter to the Tehsildar after which he becomes willing to provide all theinformation of land of that particular person to the bank and also easily signs

the documents which are required by the bank.



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1. HYPOTHECATION OF ASSETS

2. MORTGAGE

3. PLEDGE

4. GUARANTEES

5. PROMISSORY NOTE

HYPOTHECATION OF ASSETSWhen the properties in goods are charged as the security against the loan

obtained from bank but possession and ownership remains with the borrower

then the goods are said to be the hypothecated. When the goods are

hypothecated then it does not mean that goods will go in possession of bank,

ownership will transfer, and rather a security is granted by the mean of the

letter of hypothecation.

MORTGAGE

It is the transfer of an interest in specific immovable property for the purpose

of securing the payment of money advanced or to be advanced by way of loan,

existing or future debt.

PLEDGEIn pledge the ownership remain with the pledger but the pledgee has the

exclusive possession of the property until the advance is repaid in full. While

in case of default, the pledgee has power to sale this after giving due notice.

GUARANTEES



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When the application for advance cannot offer any tangible security the bank

may rely on personal guarantees to protect himself against loss on advance or

over draft to the applicant.

PROMISSORY NOTE

Promissory note is also accepted as security. It is an instrument in writing

containing an unconditional under taking signed by the maker to pay on

demand or at a fixed or determinable future time a certain sum of money only,

to, or to the order of certain person or to the bearer of the instrument.



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The main function of this department is to take custody of original as well as

replicated documents. The access to them is made on demand (only if auditor/ARM(assistant Relationship Manager)/SBP requires for it). They make two documents of

the original.

Credit Files: These are the photocopy of the original documents which are

always in their reach.

Security Files: These are original documents which are placed in lockers

and for special purposes, auditors or ARM can access them.

After the proposal for credit is made, then it is sent to the head office which afterapproval, send it to the CAD. CAD further checks it whether the documents are

complete and correct. Thus it checks all the legal and security documents.

Security documents: these are the documents which are in the

ownership of the client i.e. ownership documents.

Legal documents: these are the documents which are made after all the

negotiations and matters that have been done between the client and the bank. For

example: letter of continuity, promissory note, memorandum of deposit etc.

DOCUMENTS PREPARATION:

Here the main motive of the department is to save the bank in case the person has

defaulted. In this case the bank takes promissory note, letter of guarantee and letter of

continuity because if in future, the client becomes default, they can recover their

receivables in order to save themselves from court.

Letter of continuity is issued as a guarantee against the promissory note

transaction.

RECOVERY:



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Recovery of the loan is one of the most important things so the recovery is

usually made through the following ways:

Moral pressures on the borrower or the guarantors

With the help of revenue authority By going to court

REQUIREMENTS:

o Credit facilities/ offer letter

o BBFS (borrower basic fact sheet)

o Request for credit facilities

o Promissory note

o Letter of continuity

o Agreement for finance on the basis of mark up on price

o Letter of hypothecation of movables

o Irrevocable authority to recover accrued mark up

o Memorandum of deposit of title deeds

o Personal guarantee

o Scrutinizing of documents (legal documents)

o Non encumbrance certificate (this shows that the person has not taken loan

from any other bank.)

o Financial statements

o Account statements

o Memorandum of deposit of title deed

Schedule I: sale deed registered

Schedule II: total areas in Kanals and marlas

If sale deed is not there and only copy of jamabandi is there, then they will mortgage

the property with equal amount + 10% and its govt. charges are almost 8%.



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DEFAULT CLASSIFICATION:

The following are the categories or classifications in case the person becomes default.

OAEM: when the person does not pay the loan for 1-3 months.

SS: here SS stands for substandard category and it includes the persons who

do not pay loan for 6 months.

DF: here DF stands for doubtful and it includes those who do not pay loan for

1 year.

Classified: here the bank show the person in balance sheet as defaulter and

here the mark up is gone into the suspense account.

Here when the loan is sanctioned, with every account three accounts are

opened which are being opened by the head office which are as follows:

DF account: In this the loan that a person has taken is there and

whatever mark up he has paid is credited from the total amount of loan.

Mark up/ Income/ LSA account: whatever the mark up that the

person has paid goes into this account.

Current account: this is the account in which sanctioned amount is

transferred. Here the mark up is charged only on the amount that has been

withdrawn and not on the whole mount sanctioned.

In this two eye principle, four eye principle up to twelve eyes principle is used that

means that in case of two eye principle, only one person will look and confirm the

documents and so on. All this is done to share or minimize the risk.



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In this department, two things are offered to the clients and these are as follows:

1. Treasure Plus

2. Golden Years

Treasure Plus is an investment plan with an added advantage of an insurance cover

aimed at providing for customer childs education needs. ABN AMRO Bank believes

in providing the customer with the means and solutions to ensure stability in not just

their life but also their familys life. ABN AMRO Bank has tied up with EFU Life

Assurance Ltd. to bring to the customer Treasure Plus.

Treasure Plus is really very simple. Here the customers have to select the premium

amount (in multiples of 12,000) and term of the plan. Minimum annual premium

amount for Consumer Banking customers is Rs. 120,000 to Rs. 24 million. The

customer has the flexibility of paying the amount on a monthly, quarterly, half yearly

or annual basis.

When their child reaches the college going age, they will receive a lump sum amount

to meet his/ her education needs. In case of untimely death, his/her beneficiary child

will receive the sum assured under this plan. In case of an accidental death/ disability,

the beneficiary child will receive an additional payment of sum assured which will be

over and above the regular sum assured payable under this unique child education

insurance plan.

So we can say that Treasure Plus also offers a unique School Fee

Continuation Benefit. This option would ensure continuity of the



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customer dream to give his/her child the best education in case of their

untimely death.

Example: If the customer age is 35 years and he/she buy Treasure Plus for their child

for an annual premium of Rs.60, 000 for a term of 15 years. The above feature would

enable their child to receive Rs.6, 000 (1% of the sum assured) as monthly school fee,

till the expiry of the term of the plan in case of an unfortunate eventuality.

Academic Excellence Scholarship

Being a valued Treasure Plus policyholder, the beneficiary child will

automatically be enrolled for EFU Lifes Academic Excellence Scholarship

Program.

This program offers lump sum scholarship if the customers nominated child

gets first-class-first from a recognized panel of institutions in Pakistan so that

he/she can fulfill his/her dreams of completing his/her Masters.

So, Treasure Plus is not just an attractive investment option, its a protected and

secure investment that makes sure that the money the customers have earmarked for

there child stays there even if they dont.



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At the end of the 10 year guarantee period, the monthly pension will continue to be

paid to the customer till they are alive.

In the unfortunate event of the death of the policy holder during the 10 year period,

the pension will continue to be paid to their family and will only stop at the expiry of

the 10 year guarantee period.



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1. Current Ratio:

Current ratio = Current assets/ Current liabilities

Years Total current assets(Rs. In 000's)

Total current liabilities(Rs. In 000's)

Current ratio

2004 55603386 54216092 1.02%

2005 56859607 54466549 1.04%

2006 118642212 112716056 1.05%

2007 102038500 99240249 1.03%

1.00%

1.01%

1.02%

1.03%

1.04%

1.05%

2004 2005 2006 2007

Current ratio

INTREPRETATION:

As compared to the previous years the current ratio in the

year 2007 has decreased to 1.03% because of a huge increase in the payables. But

the whole picture is showing the satisfactory results.



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2. Net working capital:

Net working capital = current assets current liabilities

Years Total current assets

(Rs. In 000's)

Total current liabilities

(Rs. In 000's)

Net working capital

2004 55603386 54216092 1387294

2005 56859607 54466549 2393058

2006 118642212 112716056 5926156

2007 102038500 99240249 2798251

0

1000000

2000000

3000000

4000000

5000000

6000000

2004 2005 2006 2007

Net working

capital

INTREPRETATION:As compared to the previous years the net working capital in the

year 2007 has decreased to Rs.2798251 because of a huge increase in the

payables. This is showing the decrease in the liquidity position of the bank.



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3. Debt ratio:

Debt Ratio = Total liabilities/Total assets

Years Total liabilities

(Rs. In 000's)

Total assets

(Rs. In 000's)

Debt ratio