47991266 standard chartered bank

PAKISTAN

BANKING AND FINANCIAL SECTOR

Courageous, International, Responsible, Creative…

1

AN OVERVIEW OF THE ECONOMY:

No doubt, ours is a developing economy. Apart from a few years e.g. 1954, 1991, etc.

the economy of Pakistan has been staggering all the time. Lack of proper planning,

corrupt leadership, political instability and inefficient utilization of the resources has

put the country in serious problems of heavy debt servicing, inflation, corruption,

injustice, poverty, unemployment and many more.

However, during the last one year, after the 11th September attack, there has been

some revival in the economic condition of the country as

• External reserves continue to increase and are currently at USD 6.2 billion

representing seven months import cover.

• GDP growth improved from 2.5% last year to 3.6%.

• The threat of war with India has subsidized, however clashes on the line of

control continues.

• Stock market has shown some signs of improvement and the currency has

stabled as the restoration of democracy in the country.

BANKING AND FINANCIAL SECTOR IN PAKISTAN

The pace of banking development in Pakistan has perhaps very few parallels in the

world. Starting virtually from scratch in 1947, the country today possesses a full range

of banking and financial institutions to cope with the multifarious needs of a growing

economy. At the time of partition, total number of commercial banks in Pakistan was

38. Out of these, the Pakistani banks were 2, Indian banks 29, and exchange bank 7.

The total deposits of Pakistani banks stood at Rs. 88.0 millions where as advances

were Rs. 198.0 millions.


2

Since 1990 the Government of Pakistan (GOP) has introduced various reforms in the

financial services sector enhancing the level of autonomy enjoyed by the SBP. The

number of banks operating in Pakistan has increased, which in turn has resulted in

increased competition. The banking sector, in general, has shown good progress

during the last few years. During previous five years, the combined total assets of

domestic banks, showed an average annual increase of 22 percent, while combined

deposits have recorded an increase of 27 percent per annum.

Three major nationalized commercial banks (NCBs) are still the dominant players in

the market, controlling about fifty-one percent of the entire banking sector deposits

and fifty percent of advances.

Commercial banks play a key role in the regeneration of economic activity in the

country. As the country’s largest deposit institutions and the main source of short term

credit, they form, so to speak, the heart of the financial system.

The financial sector of Pakistan can be divided into three broad categories namely

• Banking Companies

• Non-Banking Financial Institutions

The Banking Companies can be further categorized as

• According to the nationality of the share holders

• According to the size of the bank

.

ACCORDING TO THE NATIONALTY OF THE SHARE

HOLDERS:

This includes the banking institutions


3

• PAKISTANI BANKS

Nationalized Commercial Banks

Denationalized Commercial Banks

Domestic Private Commercial Banks

Cooperative Banks

• FOREIGN BANKS

ACCORDING TO THE SIZE OF THE BANK:

In case the basis of classification is size, then these are of two categories:

• Scheduled Banks

• Non-Scheduled Banks

The NBFIs are composed of

• Investment Banks,

• Leasing Companies,

• Mutual Funds,

• Modarabas,

• Development Financial Institutions (DFIs) and

• Housing Finance Companies.

The Commercial Banks along with all the NBFI's, except for Modarabas and Leasing

Companies are governed by the State Bank of Pakistan (SBP) through its Prudential

Regulations. Pakistan is in the process of adopting an Islamic (Shariah) financial

system, under which interest-based banking is not allowed. There are

• 13 private commercial banks,


4

• 4 privatized commercial banks,

• 3 nationalized commercial banks and

• 21 foreign banks

• 16 Investment Banks

• 29 Leasing Companies

• 53 Modaraba Companies

.

The number of branches for Pakistani banks, stand at 8,597 and for foreign banks at

87. The combined total assets of domestic banks have increased from Rs. 771.3

billion in 1992 to 1,616.3 billion in 1997, showing an average increase of 22 percent

annually. Similarly, combined annual deposits have recorded an increase of 27

percent, from Rs. 318.9 billion in 1992 to 1,066 billion in 1996. Advances recorded

an annual growth of 27 percent from Rs. 192.8 billion in 1992 to Rs. 641 billion in

1997. Capital adequacy ratio is 8 percent for domestic private banks compared to less

than 5 percent for NCBs.

Foreign banks

The twenty one foreign banks operating in Pakistan are playing a significant role by

incorporating new technologies and providing better quality services. Policies of

privatization, foreign exchange reforms and structural adjustments, have increased the

inflow of foreign resources through direct and portfolio investment. Most foreign

banks in Pakistan have branches only in big commercial/industrial centres, unlike

local banks which also operate in small towns.

In trade financing, the role of foreign banks is even more significant, as approximately

30 percent of the total trade of the country is transacted through them. Major portion

of the trade financing is for importers to establish letters of credit.


5

In 1991 when GOP allowed resident Pakistanis to open foreign currency accounts,

many banks directed their efforts towards the previously untapped consumer and retail

banking sector. New products such as credit cards, housing finance and automobile

finance were introduced. Foreign banks also play an important role in assisting local

corporations to access international capital markets. The total deposits of the foreign

banks increased from Rs. 74.4 billion in 1992 to Rs. 213.4 billion in 1997.

Furthermore, their advances increased from Rs. 34.2 billion in 1992 to Rs. 100 billion

in 1997 showing an annual increase of 37 percent.

LIST OF THE BANKS OPERATING IN PAKISTAN

FOREIGN BANKS

• ABN Amro Bank Ltd.

• American Express Bank Ltd.

• Bank of America

• Standard Chartered Bank

• Chase Manhattan Overseas Corp.

• Deutsche Bank AG

• Credit Agricole Indosuez

• Habib Bank AG Zurich

• The French International Bank

• Al-Baraka Islamic Investment Bank

• Emirates Bank International Ltd.

• Mashreq Bank

• The Bank of Tokyo Mitsubishi Ltd.

• Hong Kong and Shanghai Bank

• Oman International Bank S.A.O.G.


6

LOCAL BANKS/DFIs/MODARABAS

• Allied Bank of Pakistan Ltd.

• First Women Bank Ltd.

• Habib Bank Limited

• Muslim Commercial Bank

• National Bank of Pakistan

• Askari Commercial Bank Ltd.

• Platinum Commercial Bank Ltd.

• United Bank Limited

• Faysal Bank Ltd.

• Prime Commercial Bank Ltd.

• Union Bank Ltd.

• Bankers Equity Ltd.

• Bolan Bank Ltd.

• Prudential Commercial Bank Ltd.

• Bank Al-Falah Ltd.

• The Bank of Khyber

• Gulf Commercial Bank Limited

• Pakistan Industrial Credit & Investment Corporation Ltd.

• Citibank Housing Finance Co. Ltd.

• National Development Finance Corporation

• International Housing Finance Ltd.

• First Professional Modaraba

• Industrial Development Bank of Pakistan

• House Building Finance Corporation

• Investment Corporation of Pakistan


7

LENDING AND DEPOSIT

RATE (Percentage)

Year Weighted average

lending rate

Weighted average

deposit rate

Difference between

lending & deposit

rate Nominal Real Nominal Real Nominal Real

June 1998 15..6 7.8 8.4 0.6 7.2 7.2June 1999 14.6 8.9 8..0 2.3 6.6 6.6June 2000 12.9 9.3 7.4 3.8 5.5 5.5January 2001 14.2 9.3 6.4 1.5 7.8 7.8February 2001 13.7 8.9 6.4 1.6 7.3 7.3

BRANCHES OF FOREIGN AND DOMESTIC BANKS (Numbers)

Year Domestic Banks Foreign Banks Total June 98 8049 81 8,130June 99 7973 85 8,058June 2000 7877 78 7,955March 2001 7638 78 7716

Source: State Bank of Pakistan


8

NUMBER OF BANKS (June 2000)

Number of nationalized scheduled banks 4Number of private scheduled banks 16Number of specialized banks/development financial

banks16

Number of investment banks 12Number of foreign banks 19Number of bank branches 7,955Number of leasing companies 29Number of Stock exchanges 3Total number of listed companies 1,679Aggregate market capitalization Rs. 293bn

Banking and financial sector plays an important role in the economic development of

every country. So in order to develop our country, our banking sector need to be very

well organized, efficient and up-to-date. Economy of Pakistan is passing through a

difficult phase and these are the banks which can bring our country out of this

whirlpool victoriously. The financial services sector still offers good opportunities in

consumer banking, corporate bonds, underwriting of equity issues for privatisation,

refinancing of U.S. exports to Pakistan under letters of credit and advisory services

for due diligence and project feasibilities

I joined Standard Chartered Grindlays Bank (Tufail Road Branch) to get my

internship experience of six weeks which falls under the category of FOREIGN

BANK. While it is felt in certain quarters that the operations of the foreign banks tend

to inhibit the development of the Pakistani Banks, others feel that foreign banks must

be allowed to play their valuable role by setting up sound traditions which can help

the national banking system to develop on the healthy lines. A rather important

feature of foreign bank financing is the predominance of exports, imports, and stock

exchange securities financing in their operations. In the past few decades, the


9

financing of the foreign banks in these agriculture, manufacturing, commerce, and

construction has been far greater than that of Pakistani Banks.


10

INTODUCTION

STANDARD CHARTERED BANK


11

The prelude:

Here is a brief introduction describing the incorporation, locations and performance of

SCB

• Standard Chartered is the world's leading emerging markets bank

headquartered in London. Its businesses however, have always been

overwhelmingly international.

• The Bank is currently operating in Africa, Asia Pacific, America, Middle

East & South Asia and Europe.

• Standard Chartered is employing nearly 30,000 people in over 750 offices

in more than 56 countries primarily in countries in the Asia Pacific

Region, South Asia, and the Middle East, Africa and the Americas and its

assets stand at approximately US$ 90 billion.

• The bank has the privilege of holding two of the largest acquisitions in the

history of the bank with the purchase of Grindlays Bank from the ANZ

Group and the acquisition of the Chase Consumer Banking operations in

Hong Kong in the year 2000.

• The Bank target market comprises of both Consumer and Wholesale

banking customers.

• The Consumer Bank provides credit cards, personal

loans, mortgages, priority banking, investment advisory

services, personal investment, insurance, rental services,

retail FX products deposit taking activity and wealth

management services to individuals and medium sized

businesses.

• The Wholesale Bank provides services to multinational,

regional and domestic corporate and institutional clients

in trade finance, cash management, custody, lending,

foreign exchange, structured finance, electronic


12

banking, interest rate management and debt capital

market.

• In Pakistan, the Group comprises of Standard Chartered Bank and

Standard Chartered Grindlays Bank, the largest foreign banking group in

the country, with a collective experience of 270 years in Pakistan alone.

• The bank with its long heritage of nearly 150 years is capable to change

with time, offering quality products by means that are convenient to the

potential customers.

• The bank has currently 21 online branches across Pakistan in all the four

provinces and eight major cities which ensure that the services are being

performed quickly and efficiently.

• There are 6 branches (two of Standard Chartered Grindlays Bank and four

of Standard Chartered Bank) in Lahore, offering unmatched services to its

customers.

• The bank head office capital account stands at Rs. 2,521.236 millions

where as its reserves and unremitted profits aggregate at Rs. 618.691

millions as on 31st Dec. 2001.

• The bank recorded an increase of 20% in the deposit holdings in the

financial year 2001.

• First Grindlays Modarba, the pioneer and the largest leasing entity, has

been introduced by Standard Chartered Bank (a foreign bank) in the

industry and this is the only Modarba in Pakistan with an external credit

rating of A2.


13

THE STANDARD CHARTERED BANK

IN

HISTORICAL PERSPECTIVE

HISTORICAL PERSPECTIVE


14

Standard Chartered is the world's leading bank headquartered in London. However, it

has been operating all around the world. In fact it is more successful in the regions

other than Europe such as South Asia and Middle East. Here I am giving a brief

summary of the main events in the history of Standard Chartered and some of the

organizations with which it merged.

THE PRE-WAR YEARS

THE CHARTERED BANK:

1853

Of the two banks, the Chartered Bank is the older having been founded in

1853 following the grant of a Royal Charter from Queen Victoria. The moving

force behind the Chartered Bank was a Scot, James Wilson, who made his

fortune in London making hats. James Wilson went on to start “The

Economist”, still one of the world's preeminent publications.

1958

The Chartered Bank

• opened its first branches in Chennai and Mumbai

• A branch opened in Shanghai that summer beginning Standard

Chartered's unbroken presence in China.

1859

The following year the Chartered Bank

• opened a branch in Hong Kong


15

• an agency was opened in Singapore.

1861

The Singapore agency was upgraded to a branch which helped provide finance

for the rapidly developing rubber and tin industries in Malaysia.

1862

The Chartered Bank was authorized

• To issue bank notes in Hong Kong.

• To issue bank notes in Singapore, a privilege it continued to exercise

up until the end of the 19th Century.

Over the following decades both the Standard Bank and the Chartered Bank printed

bank notes in a variety of countries including China, South Africa, Zimbabwe,

Malaysia and even during the siege of Marketing in South Africa. Today Standard

Chartered is still one of the three banks which print Hong Kong's bank notes.

1862

The Chartered Bank expanded opening offices including Myanmar.

1863

The Chartered Bank opened its branches in Pakistan and Indonesia.

1872

The bank extended its banking network in Philippines.

1875


16

Malaysia was included in the global banking network of the bank.

1880

The bank’s expansion plan continued as it opened its offices Japan in 1880.

1892

Some 34 years after the Chartered Bank appointed an agent in Sri Lanka, it

opened a branch in 1892 to take advantage of business from the tea and rubber

industries

1894

The chain of expansion continued as the bank entered the soil of Thailand in

1894.

1900

The Chartered Bank opened offices in New York and Hamburg in the early

1900s. The Chartered Bank gaining the first branch license to be issued to a

foreign bank in New York.

1904

During 1904, a branch opened in Vietnam.

THE STANDARD BANK

1862

Nine years after the formation of The Chartered Bank, in 1862, the Standard

Bank was founded by a group of businessmen led by another Scot, John


17

Paterson, who had immigrated to the Cape Province in South Africa and had

become a successful merchant.

Both banks were keen to capitalize on the huge expansion of trade between Europe,

Asia and Africa and to reap the handsome profits to be made from financing that

trade.

1863

The Standard Bank opened for business in Port Elizabeth, South Africa, in

1863. It pursued a policy of expansion and soon amalgamated with several

other banks including the Commercial Bank of Port Elizabeth, the Colesberg

Bank, the British Kaffarian Bank and the Fauresmith Bank.

1867

The Standard Bank was prominent in the financing and development of the

diamond fields of Kimberly in 1867.

1885

The Standard Bank extended its network further north to the new town of

Johannesburg when gold was discovered there in 1885. Over time, half the

output of the second largest goldfield in the world passed through the Standard

Bank on its way to London.

1892

The Standard Bank opened for business in Zimbabwe.

1894

The Standard Bank expanded into Mozambique.


18

1897

The Standard Bank came to Botswana in 1897.

1900

The Standard Bank opened offices in New York and Hamburg in the early

1900s.

1901

The bank extended its services in Malawi in 1901.

1906

The bank entered the region of Zambia in 1906.

1911

Kenya, Zanzibar and the Democratic Republic of Congo (D.R.C.) started

enjoying the privileged services of the bank in 1911.

1912

Uganda was the one included in the global banking network of the bank in

1912.

Of these new businesses, Botswana, Zanzibar and the D.R.C. proved the most difficult

and the branches soon closed.

1934

A branch in Botswana opened again in 1934 but lasted for only a year


19

1950

The Bank re-opened for business in Botswana in 1950.

THE IMPACT OF WAR

The First World War:

Even the First World War offered opportunities for expansion when the Standard

Bank set up a branch in Tanzania shortly after British troops occupied the formerly

German administered Dar-es-Salaam in September 1916. Both banks survived the

inter-war years but the world trade slump led to the closure of operations in the

Canary Islands, Liberia, the Netherlands, and Equatorial Guinea. Disaster struck the

Chartered Bank's office in Yokohama, Japan, when it was destroyed by an earthquake

in 1923 killing a number of staff.

The Second World War:

The Chartered Bank was particularly affected by the Second World War when

numerous Asian countries were occupied by Japan.

THE POST WAR YEARS

After the Second World War many countries in Asia and Africa gained their

independence. This led to local incorporation in some countries, particularly in Africa.

Other operations such as those in Iraq, Angola, Myanmar and Libya were

nationalized, while in Indonesia the Jakarta office was destroyed in an attempted coup

detest.

1948

In 1948 the Chartered Bank opened in Bangladesh.


20

1957

During 1957 it acquired the Eastern Bank. The Eastern Bank gave the

Chartered Bank a network of branches including Aden, Bahrain, Beirut,

Cyprus, Lebanon, Qatar and the United Arab Emirates.

1959

The Chartered Bank also entered into a joint venture to form the Irano-British

Bank which opened for business in 1959. The bank grew rapidly and had 24

branches when it was nationalized in 1981. By the mid 1950s the Standard

Bank had around 600 offices in Southern, Central and Eastern Africa.

1965

Its network grew substantially in 1965 when it merged with the former Bank

of British West Africa which had some 60 branches in Nigeria, 40 branches in

Ghana and eleven branches in Sierra Leone in addition to operations in

Cameroon and Gambia. Despite these acquisitions and expansion into new

countries such as Mexico, South Korea and Oman (1968), both the Standard

and Chartered Bank networks were comparatively small. Both viewed the

future with some trepidation as the need to protect themselves from

acquisition became ever more apparent.

STANDARD CHARTERED PLC:

Standard Chartered is named after two banks which merged in 1969. They were

originally known as the Standard Bank of British South Africa and the Chartered

Bank of India, Australia and China.


21

The Merger between Standard & Chartered Banks:

In 1969 the decision was made by the Standard Bank and the Chartered Bank to

undergo a friendly merger thus forming Standard Chartered PLC. It was one year later

that the descendants of the "Chartered Bank of India, Australia and China" were

finally permitted to open a representative office in Sydney, Australia.

ACQUISITION OF HODGE GROUP:

Standard Chartered subsequently acquired the UK based Hodge Group, in which it

already had a minority shareholding. The Hodge Group brought to Standard Chartered

an extensive network of UK offices specializing in installment credit and industrial

leasing, and after a period of rationalization its name was changed to Chartered Trust

Limited.

ACQUISITION OF WALLACE BROTHERS GROUP:

Subsequently Standard Chartered acquired Wallace Brothers Group. Its operations in

Jersey emerged from the integration of other Hodge Group businesses with those of

Wallace Brothers Bank (Jersey), Limited.

STRATEGY FOLLOWING MERGER:

Standard Chartered decided, after the merger, to expand the Group outside its

traditional markets.

In Europe

• A number of offices were opened including Austria, Belgium,

Denmark, and Ireland, Spain and Sweden as well as several major cities in

the UK.


22

• Standard Chartered also opened offices in Argentina, Canada,

Colombia, the Falkland Islands, Panama and Nepal.

In USA

• A number of offices were opened and three banks were acquired. These

included the Union Bank of California which gave Standard Chartered a

presence in Brazil and Venezuela.

• The opening of a branch in Istanbul in 1986 was overshadowed by a far

more dramatic event when Lloyds Bank of the UK made a hostile take-

over bid for Standard Chartered. Standard Chartered won its right to

remain independent but entered into a period of considerable change.

STANDARD CHARTERED IN 1980s:

By the late 1980s

• Standard Chartered already had considerable exposure to third world

debt.

• The bank had provisions against loans to corporations and

entrepreneurs who could not meet their commitments.

• The bank reviewed its operations and decided to focus on its core

strengths of Consumer Banking, Corporate & Institutional Banking and

Treasury in its well established operations in Asia, Africa and the Middle

East.

• Prime focus in Asia, Africa, and Middle East led to a series of

divestments notably in Europe, the United States and Africa.

• Staff numbers were reduced; businesses not considered core were sold

or closed; associate holdings disposed of; unprofitable branches closed and

back office functions consolidated.


23

• Expensive buildings were sold with the proceeds reinvested in the

business, and the senior management team was radically changed and

strengthened.

STANDARD CHARTERED IN THE 1990s:

The main headlines included

• Even within this period of apparent retrenchment Standard Chartered

expanded its network, re-opening in Vietnam in 1990, Cambodia and Iran

in 1992, Tanzania in 1993 and Myanmar in 1995.

• With the opening of branches in Macau and Taiwan in 1983 and 1985

plus a representative office in Laos (1996), Standard Chartered now has an

office in every country in the Asia Pacific Region with the exception of

North Korea.

• In 1998 Standard Chartered concluded the purchase of a controlling

interest in Banco Exterior de Los Andes (Extebandes), an Andean Region

bank involved primarily in trade finance. With this purchase Standard

Chartered now offers full banking services in Colombia, Peru and

Venezuela.

• In 1999, Standard Chartered acquired the global trade finance business

of Union Bank of Switzerland. This acquisition makes Standard Chartered

one of the leading clearers of dollar payments in the USA.

• Standard Chartered also opened a new subsidiary, Standard Chartered

Nigeria Limited in Lagos, acquired 75 per cent of the equity of

Nakornthon Bank, Thailand; and agreed terms to acquire 89 per cent of the

share capital of Metropolitan Bank of the Lebanon.

STANDARD CHARTERED IN 2000:


24

Today Standard Chartered is the world's leading emerging markets bank employing

30,000 people in over 750 offices in more than 56 countries primarily in countries in

the Asia Pacific Region, South Asia, the Middle East, Africa and the Americas.

The Acquisition of ANZ GRINDLAYS BANK:

The new millennium has brought with it the largest acquisitions in the history of the

bank with the purchase of Grindlays Bank from the ANZ Group in the regions of

Middle East and South Asia for US$ 1.34 Billion.

The Acquisition of Chase Consumer Banking operations:

The acquisition of the Chase Consumer Banking operations in Hong Kong for US$

1.32 Billion in 2000 demonstrates Standard Chartered firm committed to the emerging

markets, where it has a strong and established presence and where it sees its future

growth. Deal Makes Standard Chartered Market Leader in Hong Kong Cards.

Standard Chartered PLC announces that it has signed an agreement with The Chase

Manhattan Bank to acquire the entire issued share capital of Chase Manhattan Card

Company Limited ("Chase Manhattan Card") and Chase’s Hong Kong-based retail

banking business for around US$1.32 billion. The total consideration, which includes

goodwill of US$1.02 billion, will be paid in cash and will be determined by reference

to completion accounts.

CHARTERED TRUST SOLD TO LLOYDS TSB:

Standard Chartered sold Chartered Trust, the group’s UK and Channel Islands

consumer finance and contract hire businesses, to Lloyds UDT, a subsidiary of

Lloyds TSB Group, for £627 million in cash.

THE PRESENT STATUS:


25

Standard Chartered is a leading player in the world's major financial centers with clear

leadership in the emerging markets. Through their onshore presence in 57 countries,

they offer a one-stop risk management solution to our customers - the local corporate,

multinational companies, investment and financial institutions, and central banks.

At Standard Chartered, they understand your needs and they seek to deliver their

products and services to the customer without compromising on their standards of

service and delivery.

The Standard Chartered Bank is the first in the MESA (Middle East And South Asia)

region and the First in the local market to offer E-Statements to its customers. The

launch of this service further reinforces Standard Chartered’s commitment towards

providing prompt and hassle-free services to its customers. It allows its customers to

access to their statements anywhere in the world-A big SUCCESS.

The Bank serves

Consumer banking customers

Wholesale banking customers

Consumer Banking

Provides services to

1. individuals and

2. small/medium sized businesses.

And the facilities include:

credit card

personal loans,

mortgages,

deposit taking and

wealth management services


26

The Wholesale Bank

provides services to

1. multinational,

2. regional and domestic corporate

3. institutional clients

and the services include:

trade finance,

cash management,

custody,

lending,

foreign exchange,

interest rate management

debt capital markets.


27

THE MISSION, OBJECTIVES

&

STRATEGIES


28

CORPORATE GOAL

Organizational goal and strategy define the purpose and competitive techniques that

set it apart from others organizations. Goals are often written down as an enduring

statement of company intent.

A strategy is the plan of action that describes the resource allocation and activities for

dealing with the environment and for reaching the organizational goal. Goals and

strategies define the scope of operations and the relationship with employees, clients

and competitors.,

With over 140 years of experience in trade finance and an extensive international

branch network, Standard Chartered is committed to help the customer succeed in

every competitive environment. To keep pace with changing needs, SCB constantly

review its comprehensive cash, trade and treasury products and services, ensuring that

a full range of flexible and innovative services is always available for the customer

wherever they trade.

THE MISSION STATEMENT:

As it is said that an organization’s culture, products, services, employees, their

attitude, philosophy, self-concept, markets and environment throws light on the

corporate mission, so one of the business executives at the bank, based on his personal

observation and judgment, carved the following mission of The Standard Chartered

Bank as

“Be the emerging markets leading consumer bank and winning

equals doubling the economic profit in three to five years.”


29

This is not only a mission of the bank but also an inspiration for the entire

management either at higher level or at bottom.

VISION STATEMENT:

To put it simply

“Committed to making today’s more complex financial world easier for our

customers.”

OBJECTIVES:

The main objective is

“To offer outstanding value to the customers by providing a

knowledgeable, efficient and reliable service in a personal, helpful

and responsive-manner.”

The objectives of the Standard Chartered Bank carving way towards the mission are

• To be fast, focused, and determined.

• Its tough out there- we face brutal challenge from both global competitors and

local banks.

• Like leopard- be more agile, move swiftly, respond faster, and work smarter.

• Creating values for the customers, shareholders and employees.

• Customer satisfaction and delight is given the top priority as we are for the

customers and not the customers for us.

STRATEGIES:

FOCUS:

Wealth management, secured loans, basic financial services, and shared

distribution are the ways we can create value for our customers as well as for


30

shareholders and employees. 5 value centers have been created so as to show

to the customers that how much we value them.

Wealth management, secured} creating value

Loans, unsecured loans, BFS &} for customers, shareholders

Shared distribution} and employees

TRANSFORMATION:

Keep focused on the new opportunities in order to capitalize on them timely,

profitably and efficiently.

{Focus our organization against the opportunities} 5 core Values centre

INVOLVEMENT & MOBILISATION:

Ensuring the involvement through team work and participation.

Teamwork delighting customers

HOW WILL WE DELIVER THE CHALLENGE?

These objectives and guiding mission will be achieved through

• Focused objective

• Winning as a team

• Excellence in delivery

• Relentless quality

• Upward rising sales

FIVE CORE VALUES:


31

Courageous:

Being courageous is about confidently doing what’s right. Often the task may

seem insurmountable but with courage and tenacity the odds can be overcome.

A truly courageous act aspires and builds character.

Responsive:

How we respond to our customers will influence their belief in our

commitment to them. A productive response is often unexpected and more

effective for that. It clearly demonstrates our willingness to go beyond the

expected.

International:

As a member of global village, we view the world from the widest

perspective. We are all global citizens and believe the world is full of new

opportunities and exciting possibilities. We also deliver world-class product

and services.

Creative:

Creativity belongs those of us who are excited by challenges and engage them

with fresh thinking and an open mind. Creative thinkers are not limited by

convention but allow their minds to soar beyond practical solutions.

Trustworthy:

Trust is the foundation of every successful relationship. We trust, because, we

believe in the sincerity of the promise. Building trust can take forever. Losing

trust takes only moments.


32

THE BELIEF

People

Standard Chartered is an international organization operating in over 50

countries. Standard Chartered has world-class managers and employees. Its

aim is to develop this talent even further. This will create greater customer

loyalty and greater benefit for all - staff, shareholders and the community.

The challenge for the bank is that, unlike organizations who may be working

in one country or countries with similar cultures and laws, the bank have to

achieve the best people policies it can while being mindful of the different

countries and cultures in which it operate. Differences in culture, social

structure and economic status mean that one size may not fit all. Each of the

countries in which it operates will potentially have different laws, regulations

and customs. It strives to balance the need for global policies and processes

without imposing rules that may conflict with the diverse local needs and ways

of working of different countries.

Ethics

Standard Chartered reputation is critical to being the world's leading emerging

markets bank. The preservation and enhancement of that reputation depends

upon businesses operating to the highest standards of ethical conduct.

SCB faces a particular challenge to uphold consistent standards of conduct

while at the same time respecting the culture and varying business customs of

all the countries in which it operate.

The principles that govern the behaviour of its business and employees are

reflected in a Group Code of Conduct. The Group Code of Conduct is a


33

practical working document which guides employees through the many

difficult conduct issues which confront them on a daily basis. Complying with

each element of the Code will not always be easy but the employees recognise

that they will be judged not just by what is set out in the Code but on how this

is reflected in their day to day activities and the behaviours.

There follows a summary of key elements in the Group Code of Conduct:

Local Laws & Group Standards

Confidentiality & Data Protection

Suitable Products

Money Laundering

Insider Trading

Bribery & Corruption

Gifts & Entertainment

Conflicts of Interest

Dealing in Standard Chartered Shares

Speaking Up

Environment

Standard chartered Bank is proud to showcase commitments to and awareness for the

environment and encouraged if motivated by the customers in making day to day

choices.


34

http://www.standardchartered.com/global/csr/ethics_su.html

http://www.standardchartered.com/global/csr/ethics_dscs.html

http://www.standardchartered.com/global/csr/ethics_ci.html

http://www.standardchartered.com/global/csr/ethics_ge.html

http://www.standardchartered.com/global/csr/ethics_bc.html

http://www.standardchartered.com/global/csr/ethics_it.html

http://www.standardchartered.com/global/csr/ethics_ml.html

http://www.standardchartered.com/global/csr/ethics_sp.html

http://www.standardchartered.com/global/csr/ethics_cdp.html

http://www.standardchartered.com/global/csr/ethics_llgs.html

STANDARD CHARTERED PLC.


35

STANDARD CHARTERED PLC:

THE CORPORAT SETUP

The Executive Directors:

• Sir Patrick Gillam

The Chairman

Age-68 years

Appointed to the board on 1st August, 1988 and became Chairman on 6th May,

1933. He is also chairman of Royal & Sun Insurance Group.

• Mervyn Davies CBE

Group Chief executive (CBE)

Age-49 years

Appointed GCE on November 29, 2001. Prior to this appointment, he was the

Group Chief Director with responsibility for Hong Kong, China, and North

East Asia and for Group-wide Technology and operations.

• Mike Denoma

Age-45 years


36

Appointed to the board on 12th May, 2000. he is responsible for consumer

banking world wide and for corporate governance in Thailand, Indonesia,

Philippines, & Brunei. He is based in Singapore.

• Chris Keljlk

Appointed to the board on 7th May,1999. He is responsible for the Group’s

business in Africa, Middle East, & South Asia, Risk Management, Audit,

Special Asset Management, and external affairs.

• Kia Nargowala

Age-51 years

Appointed to the board on 7th May, 1999. He is responsible for the Whole Sale

Business world wide and for corporate governance in America, Singapore,

India, Malaysia, Australia, and Indo China. He is based in Singapore.

• Peter Sands

Age-40 years

Appointed as Finance Director with effect from May 14, 2002. Responsible

for Group Finance and Strategy.


37

The Non-Executive Directors:

• Lord Stewartby RD

Deputy Chairman

Age-66 years

Appointed to the board on 1st January, 1990. he is the chairman of the

Throgmorton trust PLC, Deputy Chairman of Amlin PLC and a former

member of thr Financial Services Authority.

• Ronnie Chan

Age-53 years

Appointed to the board on 1st January, 1990. He is the Chairman of the Hang

Lung Group and a founding director of the Morning Side/ Spring Field Group.

He is based in Hong Kong.

• Sir Ck Chow

Age- 51 years

Appointed to the board on 24th February, 1997. He is Chief Executive of

Brambles Industries Ltd. He is the governor of the London Business School.

• Barry Clare


38

Age-49 years

Appointed to the board on 31st July, 2000. He is an executive director of the

Boots Co. PLC.

Age- 55 years

Appointed to the board on February 19, 2001. He is finance director of

Unliever.

• David Moir

Age-62 years

Appointed on 1st January, 1993 as an executive director. He retired as an

Executive Director on 18th March, 2000 but remains as non-executive director.

He is a non-executive director of Finance Alliance International Pvt. Ltd.

• Ho Kwon Ping

Age- 65 years

Appointed to the board on 7th August, 1995. he is a non-executive director of

Inchcape Plc.

• Hugh Norton


39

Age- 50 years

Appointed to the board on 22nd October, 1996. he is the president of the Wah-

Chang Group and the Chairman of Banyan Tree Totel and Resorts. He is

based in Singapore.

• Sir Ralph Robins

Age- 69 years

Appointed to the board on 1st October, 1998. he is executive chairman of

Rolls-Royce Plc and non-executive chairman of Cable & Wireless Plc. He is a

non-executive director of Schroders Plc and Marks & Spencen Plc.

• Anthony Stenham

Age-70 years

Appointed to the board on 1st October, 1991. he is the chairman of Tele West

Communications Plc, Whatsonwhen Plc and IF Online Group Plc and a non-

executive director of other companies.


40

MANAGEMENT TEAM:

• Chief Executive Officers

UAE Andrew Duff

Bangladesh Rumee Ali

Jordan Zahid Rahim

Lebanon B Chandresekar

Bahrain Usman Morad

Qatar Arif Mansoor

• Regional Heads Of Corporate Affairs

UAE Alex Blake Milton

Africa Audrey Mpunawana

South East Asia Wong Ai Kwei

North East Asia Bethy Tam

America Rory Hayden

UK & Europe Sue Solomons

Kenya & East Africa Titus Mutiso

Ghana & West Africa Willing Vanderpuije

• Regional General Manager (MESA)

John Filmerids

• Country Heads of Corporate Banking (MESA Region)

Bahrain Abdul Rahman Buchiri

Bangladesh Bahul Ahsan

Gulf Andrew Duff

Jordan Sabry Ghouse

Lebanon Corine Sawaya

Pakistan Khadija Hashmi


41

Srilanka Jayasundara

Oman Shelton Peiris

• Head of Emiritisation & Administration Abdulla Al Sayyah

• Executive Director of Centre for Policy Dialogue

Dr. Debopriyo Bhattacharrya

• Group Economist of SCB Gill James

• MESA Coordinator Rumee Ali

• Head of Media Relations Paul Marriage


42

STANDARD CHARTERED PLC

ORGANOGRAM


43

HEAD; CORPORATE & INSTITUTIONAL BANKING


44

BOARD OF DIRECTORS

GROUP CHIEF EXECUTIVE (region)

GROUPs SENIOR REPRESENTATIVE & CHIEF EXECUTIVE (country)

HEAD OF CORPORATE & INSTITUTIONAL BANKING & CHIEF EXECUTIVE

&

CHIEF EXECUTIVE


45

HEAD OF EXTERNAL AFFAIRS

HEAD OF TREASURY

HEAD OFCONSUMER BANKING

HEAD OF HUMAN RESOURCE

HEAD OF FINANCE AND ADMIN

CHIEF OPERATINGOFFICER

HEAD OF GROUP TECHNOLOGY SERVICES

SENIOR CREDIT OFFICER

STANDARD CHRTERED BANK

AROUND THE WORLD

Africa:

Botswana

Cameron

Cote d’ lvoire

Gambia

Ghana

Kenya

Nigeria

South Asia

Tanzania

Uganda

Zambia

Zimbabwe

Asia Pacific:

Australia

Brunei

Darussalam

Cambodia

China

Hong Kong

Indonesia

Japan

Laos


46

Macau

Malaysia

Myanmar

Nepal

Philippines

Singapore

South Korea

Taiwan

Thailand

Vietnam

America:

Argentina

Bolivia

Brazil

Chile

Colombia

Ecuador

Mexico

Paraguay

Peru

Uruguay

United States

Venezuela

Middle East & South Asia:

Bahrain

Bangladesh

India

Iran

Jordan

Lebanon


47

Oman

Pakistan

Qatar

Srilanka

UAE

UK & Europe:

The Falkland Islands

Jersey

UK-Europe

Off Shore Financial Services

Standard Chartered Network


48

CORPORATE MEDIA CONTACTS:

AFRICA:

Name / Title Location Tel / FaxAudrey Mpunzwana

Regional Head

Corporate Affairs, Africa

Africa Tel: (4420) 280 7163Fax: (4420) 280 7156Mbl: (263) 11 606 950

Musonda) Trevor Botswana Tel: (267) 360 1688 (267) 360 1901


49

Mwamba

Head of Legal &

Compliance, Corporate

Affairs

Fax: (267) 353 446Mbl: (267) 7131 0910

Gladys Inoni

Corporate Affairs

Manager

Cameroon

Tel: (237) 230 335Fax: (237) 221 501

(Philippe ) Serge Bailly

Corporate Affairs

Manager

Cote D'ivoire

Tel: (225) 20 30 32 63Fax: (225) 20 30 32 61Mbl: (225) 07 03 90 47

Fatou Mas Jobe,

Head of Corporate

Affairs

Gambia

Tel: (220) 201 305Fax: (220) 227 714Mbl: (220) 961 577

Willing Vanderpuije

Area Head of Corporate

Affairs

Ghana & West Africa

Ghana & West Africa

Tel: (233) 21 669 688Fax: (233) 21 661 676Mbl: (233) 24 327 527

Titus Mutiso

Area Head of Corporate

Affairs,

Kenya & East Africa

Kenya

Tel: (2542) 217 235Fax: (2542) 214 086Mbl: (254) 7282 9236

Fola Akande

Corporate AffairsNigeria

Tel: (234) 1 320 2000Fax: (234) 1 262 6801-5Mbl: (234) 1 262 6814

Genevieve Kotta

Corporate Affairs

Manager

Tanzania

Tel: (255) 22 2139 825Fax: (255) 22 2113 770Mbl: (255) 744 311 455

Harriet Musoke

Corpoarte Affairs

Manager

Uganda

Tel: (256) 41 250 034 Fax: (256) 41 231 473Mbl: (256) 77 221 045

M’kwinda Sakala

Corporate Affairs

Manager

Zambia

Tel: (260) 1 225 244Fax: (260) 1 223 633Mbl: (260) 772 069


50

Fatima Antipas Zimbabwe Tel: (263) 4 752864Ext. 240

Fax: (263) 4 758630

SOUTH EAST ASIA:

Name / Title Location Tel / Fax

Abdul Halim Mahfudz

Head of Corporate AffairsIndonesia

Tel: (62 21)574 3492 (62 21)573 5555

Ext 2685 (62 21)251 3333

Ext 2685Fax: (62 21)571 9625Mbl: (62 816)190 3085

Zaiton Hj. Idurus

Head Of Corporate Affairs,

Malaysia & Brunei

Malaysia

Tel: (603) 2074 4178Fax: (603) 2026 0251Mbl: (60) 12 399 2318

Zeny MP Iglesias

Head of Corporate Affairs Philippines

Tel: (632) 878 2815Fax: (632) 886 7146Mbl: (917) 839 2326

Wong, Ali Kwei

Regional Head of

Corporate Affairs, South

East Asia

Singapore

Tel: (65) 6530 3450Fax: (65) 6423 0965 / 7Mbl: (65) 9672 8289

Safina Komoltamaetee

Head of Corporate AffairsThailand

Tel: (662) 724 8010Fax: (662) 724 8019Mbl: (661) 817 7776

NORTH EAST ASIA:


Crystal Jing Qian

Corporate Affairs Manager China

Tel: (86) 21 5887 1230

Ext 7365Fax:(86) 21 5876 8598Mbl

:(86) 138 0166 5750

Bethy Tam Hong Kong & China & NE Tel: (852) 2820 3812


51

Regional Head Corporate

Affairs

Hong Kong, China & North

East Asia

Asia

Fax: (852) 2537 3936Mbl:(852) 9026 8638

Cindy Tang

Head Corporate AffairsTaiwan

Tel: (8862) 2514 6627Fax:(8862) 2545 1380Mbl

:(8869) 3533 9743

MIDDLE EAST:

Name / Title Location Tel / FaxAbdul Rahman Buchiri

Head of Corporate /

Consumer Banking Product

Bahrain

Tel: (973) 209 677Fax: (973) 209 639Mbl:(973) 968 7779

Alex Blake- Milton

Regional Head of Corporate

Affairs

Middle East & South Asia

( excluding India)

UAE

Tel: (9714) 508 8150Fax: (9714) 508 8241Mbl: (971 50) 552 4946

AMERICA:


Rory Hayden,

Regional Head of Corporate

Affairs

Americas

Tel: (201) 333 7092Fax: (201) 333 7095

Mbl:(917) 678 6397


52

mailto:[email protected]


IN

PAKISTAN


53

SCB-A Global Company with a Personal Touch:

Standard Chartered bank has been present in the region that now constitutes Pakistan

for over 136 years. With 21 branches nationwide, it has as played a pivotal role in

establishing Pakistan as a key financial centre. SCB is Pakistan’s largest foreign

banking group and one of the world’s leading banks which offer a rear combination of

product and service benefits. Its commitment, friendly staff insists that customer

business is carried out quickly and efficiently.

Standard Chartered is an international bank, focused on the established and emerging

markets of Asia, Africa, the Middle East and Latin America with an extensive global

network of more than 750 offices in over 56 countries.

The three principal business groups are

• Global Markets,

• Consumer Banking

• Corporate and Institutional Banking .

In Pakistan, SCB is one of the leading banks offering an extensive range of products

and services for

• Personal customers,

• Corporate customers and

• Financial institutions.

The Corporate Banking Division covers all corporate segments of the local market. In

Treasury, Standard Chartered Pakistan has put great emphasis on tailoring and


54

http://www.standardchartered.com/pk/home/cib/1_me_pakistan.html

http://www.standardchartered.com/pk/home/cb/cbhome.html

http://www.standardchartered.com/global/gmkts/index.html

marketing customer focused Treasury related products and services.

Personal Financial Consultancy Facility:

Central to this service philosophy is its professional consultative approach it takes

with each customer. By getting to know its customers better, SCB can identify with

their needs and match them with tailor-made quality products and service solutions.

The helpful personal financial consultant will look after all customer needs from a

single desk.

Priority Banking:

Their priority banking centers offer an unmatched private banking service where

customers receive a higher quality of service and personal attention in an exclusive

and elegant environment. So let green and blue set the standard for you. Standard

Chartered bank has five branches in Lahore in different areas the main branch of

Lahore is at Tufail road Cantt; other branches are in Defense, Gulberg, Mall and

Garden town (NGT).

Adopting a pro-active approach, SCB is able to offer a flexible and comprehensive

range of financial services, in particular transactional banking products. Standard

Chartered have also invested in their branches to ensure that their business is

supported by high-tech operations using state-of-the-art technology. Standard

Chartered have dedicated Customer Service Centers with solution-oriented cash

product specialists to provide customers with cost-effective solutions. Electronic

delivery system has been put in place to give customers maximum control of their

transactions. Pakistan's currency is the Rupee (SWIFT code: PKR).


55

Standard Chartered fully understands the importance of time, convenience and

efficiency to the success of customer business. They make easy the complex financial

world for its customer and help them maximize every opportunity.

The Acquisition of ANZ Grindlays:

Before 31st July, 2000 ANZ Grindlays and Standard Chartered bank were two separate

entities. Standard Chartered PLC announced on 31st July 2000 the completion of the

US$1.34 billion acquisition of Grindlays Bank and the associated Grindlays Private

Banking business from Australia and New Zealand Banking Group Limited after

obtaining necessary regulatory approvals for completion.

On 31st July 2000 ANZ sold its 51% shares to Standard Chartered bank in MESA

(Middle East South Asia) MESA consisting of 16 countries. So it became Standard

Chartered Grindlays bank. The acquisition was to be completed within three years and

now all the Grindlays Bank’s account holders have been transferred to the Standard

Chartered Grindlays Bank-Gulberg Branch (ALM-Assets Liabilities Migration

Process) and once again it has become Standard Chartered Bank.

A declaration in this regard was published in the daily “The News” dated December

01, 2002 that Standard Chartered Bank has successfully completed the acquisition

process of Grindlays Limited on Dec. 01, 2002. As a result of the amalgamation, both

banks have begun to operate as a single legal entity under a corporate identity with no

change in banking services.

THE IMPACT OF ACQUISITION:

This move positions Standard Chartered as the leading international banking business

in India, Pakistan, Bangladesh and Sri Lanka, and gives a much stronger position in


56

the Middle East where it is now challenging for market leadership. The move has

brought great benefits to international customers and customers in the region.

The move also significantly strengthens Standard Chartered’s position as the world’s

leading emerging markets bank, adding India to rank alongside Hong Kong, Malaysia

and Singapore as significant profit contribution.

In Pakistan, the strength of staff for SCB is 325. Last year it was 502 declining as a

result of the merger.


57

Standard Chartered Bank- Consumer Banking In Pakistan


58

Head ofConsumer Banking

Abid Sattar

Admin Support

Tehmina S. Petigara

Shared Distribution

Aasim Akhtar

Unsecured Loans

S. Mujtaba Abbas

Secured LoansHaroon

Mahmood

Marketing Support

& Wealth ManagementMohammad

Ali Habib

Credit & CollectionsMehreen Ahmed

Hubs

Network Branches

Sales & Service Centres

Direct Sales -Liabilities

Credit Cards

Merchant Acq

Personal Loans

Sales

Marketing

Auto Loans

Mortgages

Sales

Marketing

Alternative Channels

Marketing Support

Product Support

Service Quality

Data Ware-housingB I U

Brand Management Media/Age

ncyManagement

Advertising/Outdoor

Liability Products

Wealth Management

Distribution

Alternative Channels

Credit Policy

N B U

Collections

Legal

Recovery

Regional Credit &Risk Management

MESA


GENERALSTRUCTURE


59

Group Representative

Country Manager (Two)

Area Managers

Branch Managers

TSM

Floor Managers

PFCs

Govt. Sec. Lockers Cash

CROs

BSU

Chief Head Teller

Tellers

Peons


HIERARCHICAL STRUCTURE

(TUFAIL ROAD BRANCH)


60

Branch ManagerAlishan Zaidi

Teller Services Manager (TSM)Sarfaraz Hussain

Floor Manager (FM) Fariha Ramzan

Direct Sales

AsmaraCoordinator

ShehrazHafeezRana DSOContractual

Qasim KhanDSOContractual

AmirDSOContractual

Credit Deptt.North

Asif A. HabibTeam Leader

M.Hanif Credit Clerk

ShahzadContractual

SadiaContractual

Raees AhmedCredit OfficerFaisal

DSOContractual

RabiaDSOContractual

PFCS

FarooqMujahid

Faisal Arshad

ArshadIqbal

CROs

Sheher BanoContractual

ShakeelContractual

Khurram ButtHead


61

Credit CardsDepartment

CorporateCenter

Teller Services Manager (TSM)Sarfaraz Hussain

SajjadBhatti

SabtainMustafa

Govt. Securities

Team LeaderFarzana Shah

WaseeemButt

Cash TellerBSU Teller

Head TellerSyed Hassan R.Kirmini

Ahmed Hassan

Bilal GhiasMalik

Shahab

AghaJaffarRaza

Waqar

Sohail Nadeem

These two departments directly reports to Karachi head office.

RESOURCING

&

EMPLOYEES AT SCG


62

RESOURCING

ORANISATION DESIGN

A small comment on organization design (OD) has been included for complete

understanding of the term “resourcing”.

In brief ,organization design (or organization development ) is a process or tool

whereby an organization , or a section of an organization , can step back and do an

inventory of itself in relation to the business it is doing or, more usually, the business

it intend to do.

From the H R perceptions, the most common application is effectively a skills

inventory. The process would involve an assessment of the skills\competencies

required to conduct the business, now or in the future, followed by an audit of the

current existence and level of that skill within the organization, and then decisions on

how to bridge the gap between the required competencies and the existing pool. It is a

process that is often used by organization that intend to either fundamentally

transform themselves, or organizations that intend to move into wholly new areas of

business (perhaps through vertical or horizontal integration).

A small practical example of the process at work was seen in Dubai (though it wasn’t

called organization development\deign at the time). In 1995, the Consumer Baking

business underwent a significant transformation, moving away from ‘traditional’

branches to the concept of a branch as “sales & service platform”, and the attendant

centralization of virtually all CB operations.

During this process it became evident that new skill sets would be required,

particularly in the sales and service area, and it also became clear that SCB did not

have an adequate supply of those skills amongst existing staff. Therefore, a decision

was made to combine a redundancy program with a recruitment program in order to


63

provide the necessary skills (along with some re-skilling of existing staff where that

was possible).

OD is a useful technique, and although SCB now has the fundamental building block

for an OD process, with the competency model, it does not have the in-house

capability for major OD work, and any business contemplating a major change should

seek outside expertise.

MANPOWER PLANNING

Manpower planning is a technique usually associate with employers who employ

large numbers of the same sort of people in one location or country. In essence it

attempts to map supply and demands of skills as a basis for making strategic decisions

on how to influence the supply side of the equation, and on whether and where to

establish businesses. Typical users would be central and local government (e.g. supply

and demand of teachers), large manufacturing organizations, and service

organizations having a dominant employment position in a particular area.

Though SCB worldwide is a significant employer in terms of numbers, those numbers

are spread over many geographies and business, such that it rarely has such a

dominance of the market for particular skills which would require it to do formal

manpower planning.

The only instance in which it might be applicable in the SCB context would be in

countries where it is trying to build significant numbers of local national employees

from a low base. And with limited supply (e.g. U.A.E.). However, even in such cases,

it would be likely to depend on manpower planning work done by the central

government.

MANPOWER BUDGETING


64

Manpower budgeting refers to the annual process of establishing the manpower

requirement to conduct the business for the forthcoming year. It is one of the key

processes in the overall resourcing process. It is at this stage that get to the detail of

identifying immediate (one year horizon) manpower requirements. It is key because

decisions on manpower budgets have a direct impact on total headcount and a

significant impact on total cost. A properly constructed manpower plan also allows

some planning in the recruitment process.

The manpower budget for each business, and for the support functions, must

flow/derive from the business plan for the forthcoming year. Clearly the prime

responsibility for the manpower budget lies with each business/function head. The

‘easiest’ way in which to prepare a manpower plan is, from a review of the business

plan, to simply add and subtract positions from the current organization. This however

assumes that the current structure and numbers are appropriate, an assumption which

may be incorrect.

Standard Chartered Grindlays has a number of tools which can help build a more

accurate manpower budget, and H R can play a challenging/facilitating role in the

process. The following are some suggestions on how that might be done.

First, for each business, based on the business plan, and using capacity information,

standard structure and job family information where available, build structure and

number for the ‘front’ office.

Then again based on capacity information and estimates of transactions from the

business plan, build appropriate back-office structures and numbers.

Finally, based on business requirements and the support function plans (derived from

the business plans), build the support department structure required.


65

JOB DESCRIPTIONS, COMPETENCY PROFILES AND

JOB GRANDING

Once agreed organization structure and charts produced then, and in advance

preparation for recruitment/resourcing activity. Line management must ensure that for

each position on the organization charts, an up-to-date and signed-off job description

exists. This must include new positions that are vacant at that point in time. This has

two main benefits – first, for new positions, the job can be in preparation for

recruitment, and second the job description from the basis for the recruitment and

selection process, including advertising and selection.

For managerial level jobs (only, at present) each job must also have a competency

profit from the standard set of competency profiles.

RECRUITMENT PLAN

The final product of the manpower budgeting process should be a recruitment plan.

This plan should be prepared by the H R function, based on the agreed requirements

for the business and functions as expressed in the organization charts, and the timing

of those requirements. This in turn allows advance planning of recruitment so that

timetables are met.

PAY DAY

Your Gross Salary (Basic + Housing Rent Allowance + Utility Allowance) is paid

monthly in arrears, normally by the 25th of each month. The pay period runs from the

first to the last day of the month inclusive. Where the 25th falls on a non-working day,

payment is made on the last preceding working day.


66

If you join the Bank other than on the first day of the calendar month, your salary and

allowances for that month will be prorated.

BONUS SCHEME

Standard Chartered operates a discretionary bonus scheme. Bonus payments are

subject to determination of the bonus pool based on business, unit or country

performance as applicable. Individual bonuses are based on individual performance as

assessed by the immediate manager against performance factor – including

achievement of business objectives.

Bonus payments are normally made in February for the previous performance year

[January to December]. To be eligible you must have joined the Bank on before 1st

October in the year for which the bonus is payable and still be employed and not

under notice of resignation at the normal date payment. Staff joining after 1st October

will not be entitled to receive a bonus for that year. Staff joining before 1st October

will receive a pro-rated bonus payment for that year.

If you do not have a document Performance Assessment by the end of February,

neither you nor your manager will be eligible for consideration for a bonus payment.

INDIVIDUAL COCTRIBUTION RECOGNITION

Our policy is to recognize and reward an individual’s contribution which goes beyond

normal expectations but which may not be adequately covered through salary or

bonus. Examples of rewards are:

• Spot awards to recognize significant contributions to revenues &profits;

• Spot awards to recognize significant contribution to cost-reduction;

• Chairman’s award scheme.

CHAIRMAN’S AWARD SCHEME


67

The chairman’s award scheme is designed to recognize outstanding achievements of

employees Group-wide and to encourage the pursuit of excellence. Award are to

recognize the full range of employees achievements whether revenue generation, cost

savings and improvements or environmental and community work.

Five awards are made annually which recognize individual or team achievements,

each with a cash prize. Individual winners or a representative of the winning team, are

invited to visit a Standard Chartered Regional office outside their home country.

PERFORMANCE – PLANNING & ASSESSMENT

Plan for People Performance

Standard Chartered recognizes that motivating people to achieve high levels of

performance in alignment with business goals is essential to gaining competitive

advantage.

The Group has outlined this approach to performance planning and assessment in Plan

for People Performance. People ask your manager or HR Department for a copy of his

booklet if you don’t already have it.

The information is designed to ensure that people identify and focus on those

activities that are really important for the success of the Group. It also provides

individuals with opportunities for personal challenge growth and recognition by

ensuring that everyone contributes to their highest level and to the best of their

capabilities.

Performance Management Cycle


68

There are three key activities in Plan for People Performance:

• objective setting

• Performance planning and tracking

• Performance Assessment

Objective Setting

Business and performance objectives are set annually and ensure that:

• Employees’ efforts are focused on key priorities:

• The work is co-coordinated with that of others:

• The employees understand exactly what is expected of them.

The employees are required to prepare and draft the annual performance objectives

for discussion and agreement with the manager. A standard form has been designed

for this purpose. Every employee should have a set of annual objectives that have

been agreed with their line manager.

Performance Planning & Tracking

Staff members and their managers meet to informally view progress against objectives

a at least once every quarter. These are called interim performance assessments. Their

purpose is to check that the objectives are still valid, to give the opportunity to revise

them if appropriate and to agree on how well staff is doing.

The employees need to access their performance against their objectives regularly, to

decide what action to take to ensure their achievement.

Performance Assessment

The performance against agreed objectives is formally assessed at the end of the

performance year during a Performance Assessment Interview with the manager. A


69

performance rating is given to each employee that reflects his/her performance against

the objectives allocated.

CAREER LADDER:

Most people in banking service are interested in ways to advance in their present field

of work. SCB and SCG offer ways through which its employees can advance by

transfers, promotions, and reclassifications within a particular job family. This process

of advancement is called "advancing on a career ladder."

What is a Career Ladder?

A Career Ladder is a planned progression to a new job and provides another way for

employees to advance in their careers. Since the employee and the manager negotiate

the advancement to the next higher level position, there does not have to be a position

vacancy. Career Ladder progression is a two-fold process. The department must need

the higher level position, and the employee must be both interested in the higher level

job as well as demonstrate the potential to attain the skills needed to perform it

successfully. This program can provide a valuable opportunity for both employee and

organization development.

THE PROCESS FOLLOWED AT SCG/SCB:

Who is Eligible?

Employee is eligible if he is a regular full or part time employee who is not on

probation. The overall rating on his most recent performance review must reflect

overall performance that "Meets Expectations" or better.

What Positions are Eligible?


70

The primary criterion for advancement through a Career Ladder is whether or not

bank’s department needs someone to perform the more complex duties and

responsibilities stated in the job description for the higher classification. However,

individual Career Ladders can be developed for most jobs

Why Participate in Career Ladders?

Employees

• They can learn new skills and duties at their own pace while performing their

current duties.

• They can advance in their current position without competition.

• They can demonstrate initiative and a willingness to consider department and

organization’s goals.

• They can assume more responsibility and advance their career without moving

to a different department.

Managers

• They retain valued employees who are motivated to advance their careers.

• They can attract high quality employees.

• They maintain a work force of well-trained employees who have high morale.

• They provide more high quality products and services to their customers.

How to Initiate a Career Ladder Progression


71

There are two types of Career Ladders are followed at SCB and SCG: Pre-Approved

and Individual. The Pre-Approved Career Ladders have been developed by Human

Resources. The Individual Career Ladder is used for progressions where no pre-

approved ladder exists and for unique progressions.

After the employee and his manager have agreed that a Career Ladder is appropriate,

the process is initiated by the manager. A completed Pre-Approved or Individual

Career Ladder form, containing the education, experience, distinguishing

characteristics and job responsibilities required for progression to the higher

classification is required. The manager completes and signs this form. It includes a

proposed time-line for completing the acquisition of the necessary skills or knowledge

and the proposed salary increase. The salary increase will be based on his additional

qualifications using the same criteria that would be used if the next level position had

been filled through recruitment. Pre-approved Career Ladders are developed by

Human Resources while Individual Career Ladders are developed by the manager,

and then approved by Human Resources.

A copy of the signed Career Ladder form is sent to Human Resources for approval

before the employee start the tasks listed on the form.

Pre-Approved Career Ladders

For a Pre-Approved Career Ladder, the distinguishing characteristics of the proposed

higher level classification have been analyzed, and the progression between the

existing and the proposed classifications has been approved in advance..

Individual Career Ladders

For a Career Ladder move between positions that have not been pre-approved, your

manager analyzes the progression and the distinguishing characteristics of both the

current and proposed higher classification and inserts them into a blank Individual

Career Ladder form. This form is submitted to Human Resources for approval.


72

The length of time needed to complete the plan depends on:

• The time it takes the employee to attain the qualifications, knowledge, skills

and abilities required by the higher level classification. All distinguishing

characteristics must be attained before the ladder can be completed.

• The time it takes for the employee to demonstrate effectiveness in the higher

level classification.

• The time it takes the department to develop the need for the responsibilities of

the higher level classification. Generally, a Career Ladder can be expected to

take at least six months to complete.

Getting started

• First, the employees meet with the manager to discuss their interest in a Career

Ladder.

The Manager

• Discusses the employee's proposed Career Ladder plan in light of

departmental plans and goals.

• If the employee is eligible for a Career Ladder, and is interested in progressing

to a position on the eligible list, he completes the Pre-Approved Career Ladder

form and submit it to Human Resources.

• If there is not a Pre-Approved Career Ladder available, he considers using the

Individual Career Ladder option.

Estimating pay rate upon completion

• The salary increase is given when the Career Ladder is completed.


73

• The employee's base pay is at least the minimum of the range of the higher

level classification.

• The employee pay rate increases is reviewed based on qualifications that are

related to duties and skills of the new position.

• A reasonable promotional increase is usually 10%.

• Finally review the increase in the context of other employees in similar

positions in the department.

• WORKERS DESIGNTIONS & QUALIFICATONS

STANDARD CHARTERED GRINDLAYS –Tufail Road Branch

Name Of the Employee Designations Qualification

Aalishan Zaidi Branch Manager Master in Finance

Fariha Ramadan Floor Manager MBA

Sarfaraz Hussain TSM MBA

Faisal Arshad PFC MBA

Farooq Mujahid PFC MBA

Sammar Rasool Lockers Custodian M.A.Economics

Sher Bano CRO B.A.

Shakeel CRO MBA

Farzana Shah Head Of Govt. Sec. MPA

Sajjad Bhatti Team Member (Govt.

Sec.)

MBA

Sabtain Mustafa Team Member (Govt.

Sec.)

M.A. English, M.A.

Economics

Asif Habib Head of Lending Dept. MBA

Saadia Azhar Team Member

(Lending Dept.)

MBA


74

Shahzad Asif Team Member

Lending Dept.

MCS/MCSE

Raees Ahmed Team Member

(lending Dept.)

M.A. Economics

Shahab Hussain Head of BSU MCS

Waqar BSU ACMA

Sohail Nadeem BSU B.A. + Banking Courses

Agha Jaffar BSU B.A. + Oracle Certification

Bilal Ghais Malik Cashier MBA

Khurrum Butt Head of Direct Sales MBA

Sheraz Hafeez Rana Direct Sales ( team

Leader )

MBA

Asmara Sarfaraz Direct Sales MBA

Qasim Khan Direct Sales MBA

Rabia Direct Sales MBA

Aamir Direct Sales MBA

TERMINOLOGY STANDS FOR

TSM TELLER SERVICES MANAGER

PFCs PERSONAL FINANCIAL CONSULTANT

CRO CUSTOMER RELATIONS OFFICER

BSU BASIC SERVICE UNIT

GOVT. SEC. GOVERNMENT SECURITIES

JOB DESCRIPTION

1 JOB TITLE

PERSONAL FINANCIAL

CONSULTANT GRADE2 Name3 Reporting Job Title


75

Relationship3.1 Reports Direct To Branch Sales & Service Manager3.2 Reports Indirectly To None3.3 Direct Reports None3.4 Indirect Reports None

4 Job Purpose

• To provide the highest level of

personalized service to the Bank's Customers.• To maximize the sale of Personal Banking

products & services to help towards making SCB

the bank of choice for PB customers in Pakistan

5 Key Responsibilities

• To ensure that the highest level of

customer service is provided at all times and the

customers personal banking needs are fully met in

a professional and competent manner.• To maximize the sale of Bank's retail

products/services and meet specific sales targets,

agreed from time to time.• To generate business through local sales

promotion; outdoor marketing calls on existing as

well as potential individual customers and target

groups through seminars.• To ensure that whatever cross sell

opportunities are fully exploited in dealings with

existing and new customers. • To maintain a high standard of appearance

of the sales location and of the sales staff.• To fully conversant up-to-date in the PB

products and market knowledge and to have the

knowledge of the various products offered by

other divisions.• To co-ordinate the sales efforts of other

sales staff.


76

• To ensure the bank's exposure under the

PB credits portfolio assigned, remains fully

secured and meets all requirements at all times:

and proper, up-to-date, complete records and

documentations are maintained in line with the

credit policy.• To open and update customers' accounts,

as part of service within time frames agreed from

time to time.

6

Key Relationships

(Internal & External) INTERNAL1. Branch Sales & Service Manager2. Manager Operations3. Treasury Dealers4. Retail Credit Control5. Asset & Liability Product Managers

EXTERNAL1. Existing and potential customers2. Commercial Customers of the bank3. Counterparts at other banks4. Key officials at Local Regulatory Bodies

7 Contributes To

• Achievement of sales targets as

determined in the sales plan.• Maintenance of minimum service quality

standards at all levels.• Close co-ordination with all other

departments to facilitate customer

transaction processing.• Development of Marketing/Sales Plan and

Distribution Strategy.

8 Judgment/Complexit

y

• The jobholder has to constantly apply his

judgment negotiation skills and decision-


77

making ability.• Reviewing and approval of lending

proposals within delegated authority.• Planning and execution of sales promotion

plans towards meeting own sales targets.• Deciding on the right type of products to

meet the needs of individual customers.• Providing financial/ investment advice to

customers.

9

Know How &

Experience

• University degree preferably with a

Banking Diploma/MBA• Good interpersonal /communication skills.• Knowledge and familiarity of banking

laws and exchange control regulations.• Decision making and analytical skills.• Strong leadership qualities.• Strong customer service orientation.• Sound knowledge of bank's retail

product/service and pricing strategies as

well as those of major competitors.

10 Dimensions • Varies from branch to branch

11 Authorities

• Authority delegated by way of separate

delegation of authority.

JOB SATISFACTION

On the basis of my observation at SCG, Tufail Road Branch, I have found the

employees at low level of job satisfaction.

SCB is a foreign based bank with great repute and prestige nationally as well as

internationally. Many people dream to be a part of this emerging esteem by becoming

either its customer or employee. High repute, beautiful layouts, auspicious financial


78

positions and foreign label draw many potential employees with high job

expectations. But once they start their careers, some how or the other, majority of

them seem not to be satisfied with their jobs. An obvious indicator of this fact is the

tenure enjoyed by its employees. Majority of employees at SCG, Tufail Road joined

the bank one or less year ago. They are always in search of a better opportunity and

do capitalize on it as and when it arises. Three employees left the bank during my

internship training (a small period of just six weeks) as they got better offers from

other competing banks.

Contractual Hiring:

SCB follows the policy of hiring on contractual basis. Generally all the employees at

lower ranks such as CROs are appointed on one year contract and these contracts are

renewable at the expiry of the contractual period. Which means the banks can retain

the same employee without giving him the status of a permanent employee and thus

benefiting from the lower salary package. This is what the bank is actually following

and I have seen the employees working there for more than 2 years but still enjoying

the benefits a contractual hiring only. This is the area where the job dissatisfying

element creeps into the employees.

Low Job Security:

Based on my observation, one reason for this low job satisfaction was no job security

on account of recruitment on contractual basis. There seems to be no job security in

contractual recruitments as the employees are laid off at any time on short notice. Two

employees have been laid off before my eyes by serving a short notice of less than

one day. It not only discouraged the current employees but also the potential ones like

us. It created chaos and a very uncertain climate for all the employees.

Salary Package:

Contractual recruitment is also discouraging the employees as they don’t enjoy the

benefits of the permanent employees (such as high salary, allowances, perquisites,

facilities, etc. etc.).


79

Strict Performance Evaluation Criteria:

Another reason seems to be the very strict procedure followed in the performance

evaluation, allocation of grades and promotions. The manager is very mean in

appreciating, encouraging and upgrading the employees. It is considered to a

tremendous achievement to achieve a grade point of “2 and above” out of total grade

score of “4”. Despite continuous and breath taking efforts the employees fail to get a

good evaluation of their performances.

Frequent Changes in Policies:

Although change is the essence of success in the modern world and an organization

that fails to implement the change at the right time loses the race of success. But we

should also not forget that excess of every thing is bad. Too frequently change in

policies leads to unrest, mental disturbance, & wastage of time and resources in

adopting the new policies. This is one of the reasons for low level of job satisfaction

observed at SCB, Tufail Road branch.

Job Timings:

Employees at SCB have a long working day which does starts at 9:00 a.m. but there is

not end limit to it. They stay at bank late at night depending on the work load and

nature of the job. Although these element exist in all other jobs, but they are paid

accordingly. At the banks, the employees have the feelings that they are paid less for

more work done by them.

Transport Facilities:

No transportation facilities have been provided by the bank and the employees face

problems in getting to the bank (as it is situated at quite a distant place from the centre

of the city).

Sales Targets:

Whether an employee is working as a teller, CRO, a locker custodian, or a lending

officer, each one has to meet specific sales targets assigned to him/her. Which means


80

an element of sales personnel is present in all the jobs. One needs to have lots of

personal contacts and social sense in order to be successful in his job.

Strict Action against Mistakes:

Finally strict actions are taken against even small mistakes. The manager seems to

have forgotten that “to err is human.”

There is a saying by Crothe

“Correction does good but encouragement do more.

The most important factor in the success of an organization is its employees. It’s the

employees who make up an organization. So its very important for the management of

SCB to raise the morale and job satisfaction of its employees otherwise its financial

success may prove to be short


81

POLICIES FORMULATION PROCESS

&

THE MANAGERAIL POLICIES


82

POLICIES FORMULATION PROCESS:

Policies are needed to make a strategy work. Policies refer to specific guide lines,

methods, procedures, rules, forms, and administrative practices established to support

and encourage the work towards the stated mission. Like every organization,

SCB/SCG also follows a number of policies in order to ensure strategy

implementation with success. However before discussing these policies, I would like

to discuss the policy formulation process followed at the bank.

POLICY STATEMENT:

“Operating our businesses to the highest standards of ethical conduct is crucial to

the preservation and enhancement of bank’s reputation. Individually, and as a

Group, we must earn that reputation every day by consistently demonstrating

unquestionable integrity and good judgment in the conduct of our banking

business.

Our Group faces a particular challenge - to uphold consistent standards of conduct

while at the same time respecting the culture and varying business customs of all

the countries in which we do business.

For these reasons, we have taken various steps over the years to develop our

compliance standards, such as issuing the Group Code of Conduct and growing a

network of compliance officers to help businesses operate to the required standards.

We now have to achieve a more fundamental goal.

The goal is to fully integrate compliance into our day to day operations, so as to

develop and enhance the culture of compliance in the Group. This is particularly

achieved by continually evaluating the compliance risk areas and successfully

managing them through comprehensive compliance training programs,


83

implementation of policies and procedures and ongoing awareness program within

thevarious-businesses.

Demonstrating a high level of compliance will provide the necessary reassurance to

the Board, our stockholders and to our regulators. It therefore follows that

responsibility for compliance lies with every individual in each area of operation. It

is essential to our continued success that we all accept this personal responsibility

and treat compliance as a priority. This will help us to achieve our goal of a

successfucomplianceculture.”

Group-Chief-Executive

July 2001

THE PROCES:

In the ordinary course of business the Standard Chartered Group (the Group) collects,

holds, processes and transfers personal data of its employees (current, past,

prospective and temporary employees, and their dependants).

As a first class international banking group it is vital that the Group establishes and

operates to a very high standard of data protection for personal data and for

commercial data. Failure to do so can have serious commercial and legal implications

for the Group. Clearly personal data in some contexts means personal data about

customers, but this Policy is designed for employee personal data.

This Data Protection & Privacy Policy relates to the handling and processing of all

Group employee personal data, whether held manually or electronically. It forms

an important part of the overall Group data protection environment, the other key

parts of which are


84

• The Transborder Data Protection Agreement for Human Resources, by which

all entities in the Group are committed to comply where necessary with the

Group global standard of personal data protection, and

• Data Protection & Privacy Statements for Group Employees, Temporary

Employees and Job Applicants, by which the Group states to its employees the

purposes for which data will be used and the circumstances in which data will

be disclosed.

This Policy sets out the minimum global standards of conduct and procedure the

Group expects from data users in HR and other functions for the handling of

personal data wherever the Group operates.

If country HR heads consider that it is necessary to provide staff with translations of

this Policy, or of other associated documents, they may do so provided that the

translations accurately reflect the requirements of the original.

If local legislative requirements or local procedures are more stringent they must also

be complied with. Local legislation must be complied with at all times.

SCOPE

Who does this Policy apply to?

• All users of personal data, that is

• All entities within the Group, including all country offices and branches,

• All managers, i.e. line and business managers (and their delegates) who

use personal data,


85

• Everyone in HR, and

• All employees who use personal data, whether permanent, temporary or

contractors.

Failure by any of these parties to adhere to this Policy may result in civil or criminal

legal action being taken against the Group, or against individual managers or other

employees, by data protection authorities or by the individuals to whom the personal

data relates.

It is the responsibility of managers to ensure that their staff are aware of and comply

with this Policy, and willful or negligent non-adherence to this Policy by any

manager or employee is a serious disciplinary matter which could result in

dismissal.

If the employees have any questions about this Policy, or about data protection, they

should consult their local HR department or their Legal & Compliance department

who will provide clarification, liaising with Group specialists as necessary.

What does the Policy relate to?

The processing of employee personal data.

Processing means collecting, recording, holding, or carrying out any operation or set

of operations on the data. In fact doing anything at all with the data, including

transferring, amending, consulting, disclosing, sharing, archiving, and even destroying

it.


86

Employee means prospective, current and former employees of the Group and their

dependants, subcontracted employees, secondees, temporary and contract employees,

and voluntary workers.

Personal Data means any information at all related to employees, including their

contact details, details of their family, employment and remuneration records, medical

and absence records, expressions of opinion, appraisals, career plans, etc.

It makes no difference whether the data is in a computer database, on e-mails, or on

paper in files and desk drawers.

CORE PRINCIPLES OF THIS POLICY

1. Respect for the Privacy of Employees

2. Data Protection and Privacy Laws

3. Collection and Use of Personal Data

4. Rights of the Individual

5. Sensitive Personal Data

6. Disclosure of Personal Data

7. Data Security

8. Cross Border Transfer of Personal Data

9. Automated Decisions

10. Appointment of Delegates

PROCESS FOLLOWED AT SCG TUFAIL ROAD BRANCH:

Although the Standard Chartered is a centralized bank but still every region follows

the policies appropriate to the culture in which it is operating. There are a few ones

followed in all the banks unanimously but most of these are area specific. At SCG,


87

Tufail Road Branch, the branch meetings are held twice a month where different

policies are discussed, reviewed, introduced, reinforced and abolished. All the

employees, top level or bottom level alike, have to attend the meeting in order to have

their voice in the decisions taken at the meeting.

MAJOR MANAGERAIL POLICIES:

The Standard Chartered Bank has a strong management, which formulates

implements and evaluates different policies. Through this process they are able to

determine the most effective goal seeking objectives. These policies act as a path,

which focus the bank in the required direction. The bank is able to cope with

imbalances in the banking procedures due to these policies.

The main policies followed at Standard Chartered and Standard Chartered Grindlays

Bank is namely:

1. Financial Policies

2. Lending Policies

3. Procurement Policies

4. Service Policies

5. Human Resource Polices

6. Research & Development Policies

7. Audit Policies

8. Investment Policies

9. Money Laundering Policies

10. Security Policies

11. Social & Environmental Policies


88

Financial Policies:

The financial policies of any bank are the most important policies through which

the whole banking activity is conducted. These policies are primarily conducted

on:

• Source of funds

• Use of funds

Sources of funds:

One part of bank’s finance policy is acquiring funds from the following sources such

as:

• Deposits received from the various account holders.

• Different type of accounts designed to meet the customers’ requirements.

• Interest income and commission by providing the services to its customer.

• Mark up/interest earned on advances and loans granted to the debtors.

• Fees, brokerage and commission from the various services provided by the

bank.

• Discount earned on specific facilities provided.

• Dividend earned from investments in other securities (shares of listed and

unlisted co.)

Uses of funds:

After the acquisition of the funds, comes the next stage i.e. the utilization of these

funds in an efficient way.

• The bank has an investment portfolio according to which it allocate its funds

to different classes of debtors,


89

to different sectors of the economy

investment in the securities,

Investment in the real estate property and so and so.

Note that the banks don’t invest the whole funds raised by them as they have to

comply with certain restrictions imposed by the State Bank of Pakistan such as

• The bank has to maintain 25% of its time and demand liabilities with the SBP.

• A further 5% of its time and demand liabilities are deposited with the SBP in

order to be a member of clearing house.

1) Lending Policies:

Lending policies of the bank are composition of two different heads

• Firstly, there are some regulations to be followed by the commercial banks

while disbursing funds to various borrowers named Prudential Regulations by

State Bank of Pakistan.

• Secondly, the policies formed by the top level management regarding the

disbursement of funds in the form of loans.

The Prudential Regulations are discussed while discussing the Lending Department of

the bank in the Departments Section in detail.

The bank’s lending policy depends on the interest rates it offers, balances maintained

and repayments. The Bank follows some rules as far as lending is concerned, which

are as follows:

1. the bank conducts a complete analysis of the borrower before sanctioning

any amount.

2. The bank only invests in those sounds viable projects, which have good

rate of return.


90

3. Loan is sanctioned against Govt. Securities and Bank Deposits (maintained

at any bank), Property and stores (stocks & raw materials) are not financed

against.

4. Bank prefers to advance loan to their account holders as the bank already

knows his/her credit worthiness.

5. No political loan is sanctioned by bank.

6. The manger appraises the past record of account holder and his credit

worthiness in order to clear his apprehensions and in case any thing wrong

he can refuse to sanction the amount.

7. CBI report from SBP is the main document determining the sanction of

loan to a great extent.

8. The bank while taking security prefers Govt. securities over shares.

9. Lending against cash is done after marking lien on the amount to be lent

out (75% lending is allowed and 25% is the margin maintained by the

Bank).

10. Lending against Government Securities is allowed up to 75% of the

security and 25% margin is to be maintained by the bank.

The rate that the Bank charges on loans mainly depends on the following factors:

a) Global economic prosperity

b) General conditions of the economy

c) Competition in the market.

d) The rates prevailing in the local market.

e) Taxes levied on the Bank’s products.

f) The demand and supply of funds in the market

g) Government regulations on interest rates.

h) Compensating balances or minimum balance requirements that are maintained

by the account holders in their accounts.


91

i) The credit managers get a guideline as to how to proceed in identifying

profitable projects which have good creditworthiness so that more loans could

be extended to them and interest earnings could be increased.

4) Procurement policies:

Procurement policies are more relevant to a manufacturing concern. Although the

banking companies area a service organization, but they do follow some procurement

policies.

In bank industry, procurement means the procurement of funds from various sources

such as deposits. It involves attracting and holding the funds of the depositors. The

deposits, no doubt, are inputs / raw material in the banking operations. After the

acquisition of funds, the bank has to made decision regarding their usage.

Deposits Process Lending

As already mentioned in the above paragraph the major sources of funds for a bank

are the deposit and the other sources of income include interest or markup charges

received for various services offered by the bank to its clients.

A bank tries to attract maximum no. of accounts so that it can increase its deposits and

its lending ability. In order to get maximum no. of accounts the staff of the bank must

be efficient as compared to the other banks and the manager of the branches must take

personal interest in attracting deposits.

Standard Chartered spends around USD 1.0 billion annually on the procurement of

goods and services. The bank’s management recognizes that they need to manage this

expenditure from a social, ethical and environmental perspective by ensuring that

their suppliers meet their high standards for responsible behavior. To achieve this aim

social, ethical and environmental considerations have become an integral part of how

the bank evaluates and selects its suppliers.


92

There are three key areas of focus for the procurement activity:

Human-Rights

The bank expects its suppliers to have adopted and be able to demonstrate human

rights policies and records that reflect international legislation such as the UDHR

(Universal Declaration of Human Rights) and which are consistent with Standard

Chartered’s own standards. In the procurement processes, SCB aims to screen for

abuses with the intention that suppliers who perform poorly in relation to Human

Rights be excluded from doing business with the bank.

Ethics

SCB claims to be a highly ethical company. So it expects its suppliers to be ethical

too. The procurement processes of the bank aim to surface ethical issues. Where

serious ethical issues are identified suppliers will be excluded from doing business

with the bank.

Environment

The procurement process of the bank is designed in such a way that it ensures all

possible steps have been taken to believe that the suppliers do not unnecessarily

impact the environment in the way they produce, consume and dispose of materials.

Where practicable the bank will favour suppliers who recycle and reuse products and

will encourage priority suppliers to improve their environmental performance. The

bank aims actively to ensure that due regard is given to each of these issues in every

managed procurement by Standard Chartered. This will be achieved by taking account

of each issue throughout the sourcing process ensuring each issue is a factor in the

supplier selection process. This should lead (wherever possible) to Standard Chartered

favouring the use of suppliers whose policies and actions demonstrate, at a minimum,


93

compliance with Standard Chartered's own social, ethical and environmental

standards and policies.

5) SERVICE POLICY:

The bank emphasizes on providing personalized services. The bank’s efficient and

competent staff is there to provide top class services to its customers. The service

policies followed by the bank are

• This includes 9a.m. –5p.m. nonstop banking so that the customer can come to the

bank any time it is convenient for him.

• ATM facility allows the customer to access his account after banking hours and on

holidays from any Branch of the bank.

• Evenings banking for those people whose busy schedule don’t permit them to visit

the bank in the morning.

• Phone banking allowing banking on phone anytime, anywhere.

• Online banking according to which the customer can operates his account from

any Branch of the bank in Pakistan.

• Solving the problems of the clients on the phone lines and thus saving their

precious time.

• Having the Bank Statements e-mailed ensuring privacy.

• ATM cards let availing exiting discounts across outlets forming part of Bargains

network.

• Priority banking facility for its privileged customers (maintaining large accounts)

to provide them the best service.

PERSOANL BANKING PLANS

PRIORITY BANKING CENTRES


94

Karachi Clifton, Karachi Hill Park and Lahore New Garden Town Branches of the

bank are the Priority Banking Centres across the country. The idea behind these

Priority Centres is to make them a Model Branch for the whole banking enterprises

throughout the world.

A Customer Relationship Manager (CRM), an officer with a lot of banking

knowledge and experience (is actually a senior PFC-Personal Financial Consultant) is

there to serve the priority customers and provide them customized services.

PRIORITY CUSTOMER

A priority customer is that customer who opens the account

• Avg. balance of Rs. 1 million & above in their Rupee Current Account

• Avg. balance of Rs. 2 million & above in their PLS accounts

• Avg. balances of US $ 50,000 (or equivalent, in other FCY)

at the Priority Centre and gets it operated at the same branch in order to enjoy priority

services.

PRIORITY SERVICES

The following personalized services are provided to the priority customers free of

charges:

• Issuance of Pay Orders, Drafts and T.Ts

• Issuance of Travellers Cheques

• Standing Instructions

• Stop payments of cheques

• Cancellation of DDs/Pay Orders

• Issuance of balance Confirmation Cerificate/PRCs

• Collection of cheques (LCY/FCY)

• Return of unpaid cheques

• Delivery of cheque books by courier

• Inward Remittances

• Issuance of counter cheques


95

• Issuance of cheque books

• On-line banking

• Waiver of lock purchase fee on lockers issued w.e.f. 01-07-2002 to 31-12-

2002

Call centers will be established in the future to cater for customer’s individual

requirements.

Officers from other Branches also visit the priority centre so that similar services can

also be provided there. Hence the priority centres are provided services of dual nature

• General one for the general customers

• Customized one for the priority customers

6) Human Resource Policies:

These policies are concerned with the recruitment and training of staff in order to

maintain the same standards of banking services.

Standard Chartered supports the rights of the individual as expressed in the 1948

United Nations Universal Declaration of Human Rights (UDHR).

The UDHR contains a number of fundamental rights, which it aims to uphold in all

circumstances, including:

• The right to life

• The right to legal recognition as a person Freedom of thought, conscience and

religion

• Freedom of opinion and expression

• Freedom from torture

• Freedom from cruel, inhumane or degrading treatment

• Freedom from slavery and servitude


96

• Freedom from retroactive penal legislation

Standard Chartered meets all relevant international legal obligations and all relevant

local legal obligations in the countries in which it operates.

The bank is strictly apolitical and does not engage in political activity, support

political parties or have any political affiliations worldwide. It recognizes that it has

direct responsibility for the impact of its activities on its employees, suppliers,

customers and the communities in which it operates. The bank’s management works

to protect human rights in their own operations through its internal policies and

procedures. Its policies also ensure that human rights are taken into account in

procurement and lending decisions.

Human Resource Department of the bank is situated in the Head Office Karachi. The

HR policies are also formulated there. Some recruitments are directly through head

office but in some cases the relevant branch/ department has the authority to make the

selections. The policies of the Bank regarding HR are:

• Hiring fresh graduates /MBAs of prestigious institutions generally from

LUMS.

• Most of the recruitments are on contractual basis.

• Selection of energetic and capable employees.

• Attractive salary package for motivation of employees.

• Vacation package (of 30 days) is offered to the high grade employees once in

a year.

• Selection of PFCs on the basis of their knowledge, experience etc.

• Continuous changes are introduced in the salary package from time to time

• Recruiting experienced people for higher positions from other organizations.

• Golden Handshake for senior employees.


97

• Job promotion based on bank product promotion.

• Regular training sessions conducted in and outside the country.

The Bank prefers to hire new employees on contractual basis because they perform

the same functions as the permanent employees do but at a lower pay. This is

beneficial for the Bank because less investment is made on its employees.

The bank also hires experienced employees from other organizations. By recruiting

experienced personnel the Bank is able to introduce new ideas, procedures and

methods of performing its banking functions.

The Bank offered Golden Handshake to its employees at the time of merger. The idea

behind this was that only those persons should be employed who are capable,

competent and challenging. The existing employees were interviewed at the time of

merger. The management quantified each designation and rated each employee, those

who didn’t meet the set standards were offered a golden handshake.

Now promotion is based on the employee’s ability to perform sales of the assets and

liabilities offered by the Bank. The management conducts a quarterly appraisal to

evaluate the performance of the employees. This is done to keep a regular check on

their performance and to give a healthy feedback to them. This is beneficial because if

any shortcomings in performance arise they can be removed immediately.

Some allowances that were previously offered to the employees have been

withdrawn. This was done in order to properly manage the Bank’s finances.

The Bank conducts training sessions at its main Branches. This is done so that the

employees of different branches get a chance to interact with each other. These

sessions are focused on improving employee’s service quality standards. Employees

are also given a chance to highlight any problem they are facing and raise any issues


98

concerning them. The Bank employees are required to have complete knowledge of

the Prudential Regulations in order to work according to the terms and conditions of

the State Bank of Pakistan.

7) Research & Development Policies:

This policy is essential because it gives vision, insight and creativity to the Bank. We

can discuss its two aspects.

• Research and development as far as the technological progress of the bank is

concerned is conducted at its Head office, which is situated at Dubai. All the

soft wares, which are used by the Bank, are created here. This department is

concerned with updating I.T. procedures and it tries to incorporate the latest

techniques as well. Supervision of the computers, software, servers, teller

systems & signature systems all is done there.

• The Marketing Department also conducts research and develops new products.

This department conducts surveys to determine the needs and requirements of

the customers so that new products can be launched accordingly.

8) Audit Policies:

An Audit is very important since it helps to regulate the operations of the bank. The

bank conducts three audits:

(a) Regulatory Audit

(b) Group Audit

(c) Internal Audit

(a)REGULATORY AUDIT

The State Bank of Pakistan performs the regulatory audit. This audit starts in the

month of January and it is usually conducted in the main branches of all the banks.


99

The SBP checks the performance of the banks on all issues. The SBP has given

license protection to the banks and they are supposed to follow its regulations. The

auditors inspect the functions performed by the banks to check whether the policies

enforced by SBP and the procedures which have an impact on government revenue

collection, are being followed or not, such as collection of withholding tax. The

regulatory audit is applicable to all the banks.

(b)GROUP AUDIT

The Standard Chartered Bank’s auditors perform the group audit. The auditors come

from the Regional Head office in United Arab Emirates or the Group’s Head Office in

London to audit the MESA region (Middle East and South Asia). The group rating

depends on the level of abidance of the group policy. The auditors rate the

performance of the different branches in the countries. The country with the best

performance is rated at the top. This audit is conducted rarely, only when the need

arises.

© INTERNAL AUDIT

This audit is conducted at the National level. One representative of the management

committee is appointed to perform the audit. He further appoints a Hub Manager to

conduct the audit in his region. The Hub Manager assigns the job to a particular

Branch Manager in his region. Presently Mr. Abad Ullah (the BSSM of the Mall Road

Branch) is in change of conducting the audit in the Lahore Region. A group of

employees are selected from the different branches as auditors. Those people are

selected who have an enriched experience of the Bank’s operations. The auditor

checks the procedure of documentation and related records. This is an ongoing

process as records are scrutinized every month. At the branch level the branch

manager is held responsible for the performance of his employees. The employees are


100

supposed to follow the key control standards (KCS). These standards specifically

mention the duties to be performed by them in their own capacity. The BSSM

monitors their working according to the KCS.

9) Investment Policies:

The Bank’s Treasury invests its deposits in profitable ventures. The funds, which are

not required for lending in the foreseeable future, prove to be a source of the Bank’s

investment portfolio. The Bank aims at obtaining the maximum income with the

minimum exposure to risk. The Treasury usually deals in stocks at the national and

the international level. The Treasury deals with international trading. At the national

level it invests in federal investment bonds, treasury bills, national investment units

(NIT) and Federal and Provincial loans. The whole amount of funds generated from

various sources is not invested because it is a requirement of the State Bank of

Pakistan to keep a certain percentage of funds with it as assigned capital. The

Treasury also deals in the sale and purchase of different currencies.

10) Money Laundering Policies:

Money laundering is the process by which criminals attempt to hide and disguise the

true origin and ownership of the proceeds of their criminal activities. The term

“Money Laundering” is also used in relation to the financing of terrorist activity

(where the funds may or may not originate from crime). This is a step taken to

legitimize the black money through banking channels. The Standard Chartered Group

has a policy based on dealing with this issue. The group policy states:

a) It is essential, in order to protect its reputation and to meet its legal and

regulatory obligations that the Group minimizes the risks of being used

by money launderers.


101

b) The Group’s policy on the prevention of money laundering applies to

all countries in which the Group operates and to all business activities

within those countries.

c) As an organization committed to the prevention of money laundering,

they will establish clear lines of internal accountability, responsibility

and reporting. Primary responsibility for the prevention of money

laundering rests with the business, which must ensure that appropriate

internal controls are in place and operating affectively and that staff are

adequately trained.

d) The documents implement and maintain local procedures and controls,

which interpret Group Policy and the Group Standards for each

business in the context of local law and regulations.

e) Reasonable steps will be taken to verify the identity of the customers,

including the beneficial owners of corporate entities and the principals

behind customers who are acting as agents.

f) The policy should aim at establishing procedures to retain adequate

records of identification, account opening and transactions for a

minimum of five years.

g) Any transaction, whose source of funds is doubtful, should not be

accepted.

h) Money laundering issues should be reported to local senior

management and Group senior management on a regular basis.

i) Create awareness on money laundering prevention and train staff

accordingly.

12) Security Policies:

Cameras are installed in all the Branches of the Bank covering the entire key areas

e.g. cash management, lockers and ATM. Thus in this way the activities of the Bank


102

are monitored throughout the day. Guards are posted all around the clock in order to

provide security to the bank officials and for the safety of the transactions taking place

within the Bank. The use of floppies is not allowed so that no vital information of the

Bank can be leaked outside through the computer.

These steps are taken to ensure maximum possible safety and to minimize the

possibility of mishaps.

12) Social & Environmental Policies:

The Bank lays emphasis on environmental issues. It is playing its part in increasing

awareness about environmental hazards. It wants to minimize any adverse impact on

the conduct of business on the environment. Therefore, it aims at the following:

(a) Disposing off waste properly.

(b) Creating awareness amongst its customers.

(c) Conducting its business with minimum use of energy and other resources.

(d) Supporting environmental friendly organizations.

The Gulberg Branch celebrated a “Clean and Green” week in October this year. The

Bank was decorated with sceneries and plants. Customers were given seedlings to

plant in their gardens. This was done in order to create an interest for the safeguard of

the environment amongst the customers. Some of the newly established Branches of

the Bank have also taken a solid step in this direction e.g. the Defence Branch has

spent Rs. 10 lakhs to purchase and maintain a garden in the vicinity of its Branch

The above-mentioned policies highlight how much emphasis the Bank gives to the

different aspects of its operations. These policies are very important because they help

to direct the procedures and the processes followed by the Bank. The policies are the

guidelines, which are to be referred to all the time.


103

Social and Environmental Risk

At Standard Chartered understanding the customers' business and responding to their

financial needs is fundamental to the way it conducts its business. As social and

environmental issues gain higher profile, the bank needs to understand how its

customers meet these challenges and the impact this has on the way they do business.

As the world's leading emerging markets bank headquartered in the UK SCB is

acutely aware of the pressure on both multinational enterprises and local emerging

markets businesses to conform to the highest international standards. It recognises its

responsibility to manage the risk associated with its lending. Many of these risks are

indirect and arise from social, ethical or environmental standards imposed on the

customers by importers of their goods. These risks have always been implicitly

recognised in reaching lending decisions but are now being explicitly identified.

The bank has revised its lending policy to ensure that it identifies its customers' social

issues and any impact they may have on the natural environment. The bank

• takes account of internationally acceptable environmental and social

standards in all applicable lending proposals, and

• includes consideration of social and environmental issues resulting

from the lending proposal in its decision making where appropriate.

This means that the will be more conscious of the way all its customers operate, their

attitude to social standards such as child labor and the impact their activities have on

the environment.


104

ORGANIZATIONAL STRUCTURE

&


105

MANAGEMENT STYLE

STRUCTURAL DIMENSION

Structural dimension provides label to describe the internal characteristics of an

organization.

FORM OF INTERDEPENDENCE

There is a “pooled interdependence” in which each department is the part of the

organization and contributes to the common good of the organization but works

independently. The connection between branches is that they share financial resources

from a common pool and success of each branch contributes to the success of the

organization.


106

FORMALIZATION

In Standard Chartered Grindlays, division of labor is characterized by small and

specified tasks and there is written rules and procedure approved by Karachi head

office.

SPECIALIZATION

Specialization is low in STGB so that the employee performs a wide range of tasks in

their jobs.

CENTRALIZATION

Centralization refers to the hierarchical level that has the authority to make a decision.

There is centralization in Standard Chartered Grindlays Bank almost all departments

are centralized i.e. most of the activities is centralized to management.

WORKERS SKILL LEVEL AND PROFESSIONALISM

Work staff is highly educated and experience according to their post or job title. Staff

has both formal education and job experience. For multi skill development

management rotate the employees after time to time. Standard Chartered Grindlays

bank have larger professional staff ratio.

SPAN OF CONTROL


107

Span of control is the number of employees who report to single manager or

supervisor. In Standard Chartered Grindlays bank, span of control differ from

department to department according to task and requirement.

COMMUNICATIOON AND COORDINATION

Communication activity and frequency increases as task Varity increases. Frequent

problems require more information sharing to solve problems and ensure proper

completion of activities. The direction of communication in Standard Chartered

Grindlays bank is both horizontal and vertical. If task is highly analyzable, statically

and written forms of communication is used such as reports, memos and rules. If the

task is less analyzable information is conveyed through mails, telephone or in small

meetings.

DEPLOYMENT OF EMPLOYEES

Personnel ratio in this organization is according to requirement that includes

administrative ratio, clerical ratio, and professional staff. Beside this deployment of

employees to various functions and departments takes place.

CONTEXTUAL DIMENSION

Contextual dimension characterize the whole organization.


108

SIZE

Size can be counted as number of employees in the organization or through total

assets or total sales. There are 21 branches of Standard Chartered Grindlays

Bank in which a large number of employees, administrative staff, clerical staff

and others are performing different functions accordingly.

THE ENVIRONMENT

It includes all the elements present outside the boundary like customer, government

suppliers and financial community. They all have a clear influence on SCGB and act

to satisfy all of them.

GOALS AND STRATEGIES

Standard Chartered Grindlays Bank has clear cuts goals and strategies to have an edge

on its competitors and to be a market leader and always at the top to serve.

ORGANIZATIONAL CULTURE

A culture is the underlying set of key values, beliefs, understandings and norms

shared by the employees. Standard Chartered Grindlays Bank has a good corporate

culture having a touch of clan culture. It has a good family friendly environment that

pertains to ethical behavior, commitment to employees, efficiency or customer

services and they provide the glue to hold organizational members together.

ORGANISATION CHARTS


109

One of the principal and key output from the manpower budgeting process must be

agreed, signed-off organization charts. Not only are signed off organization charts

required by the audit technical guidelines, they also ensure that we can control the

headcount for the country (which will have been committed to through the budget

process), and also provide a basis for recruitment planning.

Line management will take responsibility for generating the organization charts.

Organization charts must:

• agree precisely with headcount figures approved in the budget;

• clearly show reporting lines, whether single or multiple;

• for each position, identify the position title, grade, name of incumbent (where

this is the case) or a vacancy and, ideally, a reference number for each position

for clarity of future discussions; - be signed off by the function head and H R

• be produced as soon as the budget (and therefore the manpower budget) is

approved

Organization charts are not, and are not intended to be, milestones; rather they are

useful tools to allow the management to plan and control the headcount of business,

and to allow the planning of recruitment. They must be working documents, and as

and when changes to the structure are agreed, and/ort changes to headcount are

approved, they should be updated accordingly.

HEADCOUNT CONTROL

We are all aware that the Group pays attention to overall headcount, and this

translates into a requirement for a workable headcount control process for each

country/business. Indeed, headcount budget are one of the targets against which

country and business managers are measured. As stated above, agreed organization

charts, which reflect accurately what has gone into the budget, are the single best

methods of headcount control, and should be viewed as such.


110

TECHNOLOGY COMMUNICATIONS

&

ORGANIZATIONAL DESIGN

A bank is actually called a product and services firm that are labor intensive, with

many employees needed to meet the needs of the customer. The inputs to the banking

sectors are the consumers themselves. The productive process that transforms the

inputs into outputs consists of labor, technology, information, and the like. The output

of such system is the altered state of the consumer. So the technology plays a key role

in producing quality services to its customers. Advanced technologies have been

applied with great intensity in the SCG’s routine operations in order to ensure

efficiency and quality in the services offered.

At Standard Chartered Bank Major technologies used are

• Basic Banking System (BBS)

• Internet and Intranet (Emails)

• Telecommunication

• Faxes

• Face to face medium

• Written addressed documents (memos, notes, mails)

There is information richness in this organization i.e. information capacity of data to

ensure, reinforces or alters understanding while data is the input of communication

channel.

Basic Banking System:

All the 21 branches of Standard Chartered Grindlays are on line through BBS by

which they can access any type of required data when needed and of any branch of

Pakistan. This system is very much helpful and advanced. They can access the


111

required information when needed. So the technology is not craft but organic in

nature.

Internet & Intranet:

More over the information flow is also through e-mails and mails. Intranet, internal

communication system, accessible by the employees only, is not only an effective

way to share information; it is also proving to be a convenient way for the employees

of SCG to collaborate on documents and projects from different locations. Its further

benefits will be shown while discussing account opening, closing, transfer of funds,

etc.

Telecommunications & Faxes:

Telephones and fax machine is also used for urgent communication through out the

World. Fax machines are available in almost all the important departments of the bank

allowing transmission of the documents containing both text and graphics.

Meetings:

Face to face meeting and group meeting are held whenever required for better

communication.

The whole system is almost computerized all sort of data regarding accounts and

others documentations is also computerized.

Due to this advancement in technologies the bank structure is highly affected in a

positive way. Their productivity increases, they have an edge on its competitors, their

customers are satisfied and they can survive in this highly competitive era.


112

Standard Chartered Grindlays bank tries to make advancement in its IT department

whenever needed. They try to make their system advance and up to date for the true

flow of data and information through out the branches of Pakistan. All the employees

are assigned their passwords to be online through out the working hours. It’s a sort of

internal networking. Moreover, extranet is also provided to be up to date and

informative. This all types of technologies gave the latest and modern touch to its

structure in terms of technology, departments and even to the employees.

MANAGEMENT STLYE:

The management style observed at the Standard Chartered Grindlays is more like an

autocratic one. Although in some departments it does give a glimpse of a democratic

style to some extent.

Autocratic Style:

The management of Standard Chartered Group believes in the centralization of

authority and unilateralism of decision making. All the work methods are dictated to

the employees limiting their participation in majority of the matters. Almost all the

decisions are taken at the head office located in Karachi and the instructions follow to

all the branches which are to work accordingly. I have observed that, at times, even

for a very trivial matter they have to wait hours for the instructions and operations of

Karachi Head Office which creates chaos and demoralizes the employees. It does give

the feeling of working in an environment with both hands tied and limited circle to

move and operate.

Democratic Style:

At SCG, there are a few departments in which democratic style of management is

being followed. The departments work in the form of teams with a team leader who

delegated authority with limitations. Any operation exceeding those limits is to be

referred back to Karachi Head Office and is to be finally executed by them. However

the team leaders are free to take decisions within the limit sanctioned to them.


113

In some departments, the subordinates’ participation and involvement is encouraged

but this is not true for all the departments. For example, in the Direct Sales

Department, Khurrum Butt, the head of the department, encourages and appreciates

team participation and involvement and decisions are taken based on collective

thinking. But I didn’t get the same feeling while working in Lending Department.

Asif Habeeb, the team leader, assumes the role of more like an autocratic leader and

believes less in employee/sub-ordinate orientation. He shows more concern for the

tasks and less for the employees performing the tasks.

In short, we can say that Standard Chartered Group is highly centralized in decision

making with the limited delegation and employee participation.

POWER AND POLITICS:

There is no place without power and politics but in certain places it is in the form of

authority (legal) which dominates and rules others so is the case with Standard

Chartered Grindlays Bank, authority is more dominant rather than politics.

Power is potential ability of a single person or department to influence other person or

department to carry out orders or to do something they would not otherwise have

done. In certain cases politics became illegal while authority is due to positions .In

Standard Chartered Grindlays Bank managers have authority due to their positions or

title of the job. The subordinates have to carry out orders because they believe that

positions holders have a legitimate right to exercise authority.

In Standard Chartered Grindlays Bank authority exists along the formal chain of

command, and positions at the top of the hierarchy are vested with more formal

authority than are positions at the bottom.


114

Certain rights, responsibilities and prerogatives accrue to top positions in SCGB the

subordinates through out the bank accept the legitimate right of the top managers to

set goals, make decisions and direct activities. The highest form of authority or power

is in the hands of head quarter Karachi from where final decisions are made and

obeyed by every employee of SCB no matter whatever the branch and where ever the

branch of SCB is through out the Pakistan. All types of decisions regarding any

criteria, any problem or any matter are considered by Karachi branch and the

decisions made by Karachi branch are final. More over, country manager have a clear

view and hand in every major decisions made by the authority.

Some of the legitimate power is given to the middle managers so that they can be

highly productive and initiative and it can enhance empowerment among workers. But

empowerment is very little in SCB i.e. power sharing. Power is authorized according

to positions and rank of the job.

However the political free environment of Standard Chartered Grindlays Bank

emphasizes teamwork, mutual support, freedom, motivation, independent effort and

commitment to the total organization rather than to narrow jobs or departments.

Hence, the power and politics in Standard Chartered Grindlays Bank is of

“Legitimate” type. And is use to influence subordinates to desire solutions.

HOW DECISIONS AND CONFLICTS ARE RESOLVED

The higher authority in Karachi branch does decision-making of all sorts. Decisions

making in Standard Chartered Grindlays Bank is of programmed type i e. repetitive

and well defined and Conflicts are resolved through negotiation and group meetings.


115

In case on small problems the higher authorities in Karachi office solve through group

meetings and negotiation while in case of huge problems search has been made to

confirm that who is responsible for that, who is affected, when, who and how is

involved. After the identification of the problem different alternatives solutions are

invited and the higher authorities try to seek solutions and suggestions from the

subordinates. Different alternatives are evaluated and judged and they choose the best

alternative in that.

The decision making in Standard Chartered bank is highly logical and rational. Due to

centralization higher authorities make most of the decisions but in case of unclear

problems decision-making is shared to some extend with other managers.

During my internship I never observe any huge conflict in the bank but small conflicts

do occurs. Conflicts are there whenever there is more than one person so if a large

number of people are working under a single roof conflicts are there.

In case of small conflicts like difference in opinion the employees of Standard

Chartered bank try to solve them by them selves, if the situation is little worse the take

their conflict to their immediate boss and most of the conflicts solve then. But if the

situation becomes worse the case is sent to Karachi head office and action is taken

there (but this happens rare). Most of the conflicts are solved through negotiation.

The environment of the Standard Chartered bank is not always stable it changes

according to the environment out side the domain chances. So the uncertainty arises

and disputes may occur. But it will solve immediately to make the environment

certain and stable.

Moreover to avoid conflicts face-to-face meeting are held after time to time with other

departments heads and list what he or she expects from the other departments.


116

Standard Chartered bank have shared mission and goals to make this bank an ideal

one, this shared goals mission and goals require cooperation among departments.

In Standard Chartered Grindlays bank there is family friendly atmosphere and all

work as a member of a single family so they have no psychological distances with in

them and conflicts are there.

They are able to customize a suite of risk management products and services as well

as package debt financing solutions to meet the unique needs of each of their

customers. Through more than 150 years of emerging market experience, their in-

depth understanding of the local market is unrivaled by most other financial

institutions, especially in the currencies of Asia, the Middle East and Africa.

CUSTOMIZED CLIENT SOLUTIONS

• Structured risk management products to match customers' risk appetite and

requirements

• Solutions for currency, interest rate and corporate finance exposures:

- Foreign Exchange: Transaction, translation, economic exposure

- Interest Rates: Funding enhanced deposits, hedging

- Corporate Finance: arising from acquisitions disposals, CAPEX and

dividends

• Access to more than 100 onshore and offshore illiquid and restricted

currencies

• Asian Currency and G3 Currency Debt Financing capabilities

• Syndicated Loan financing

• Treasury and Fixed Income research

• On-Line Treasury trading capabilities


117

ORGANIZATIONAL ENVIRONMENT

TASK ENVIRONMENT

Task environment of Standard Chartered Grindlays bank includes market sector,

Human resources, international sector and customers (both priority or general) they

have direct influence on the bank and that have a direct impact on the bank’s ability to

achieve its goals.

Market sector have a direct influence on the bank as the market criteria changes so is

the bank’s environment, human resources have also affect the environment domain

the bank tries to attract the highly skill and qualified personnel .The customer have its

own importance to the bank, the bank is due to its customer and is for its customer.

The international sector has also a direct influence on the bank. Like advance

technology, communications, ideas and capital investment, business strategies,

products and services flow freely and rapidly around the world. Standard Chartered

Grindlays bank has to update it self according to the environment. The customer

invests its money in the bank and the bank flourished and provides products and

services to its customer.

GENERAL ENVIRONMENT

The general environment of the Standard Chartered Grindlays bank includes the

government, socio cultural, economic conditions, technology and financial resources

sectors.

The bank regulates according to government rules and regulation and the criteria

changes whenever the government regulation or criteria changes. The economic


118

conditions have a very immediate and direct influence on the bank. In inflation the

bank behaves in a different manner so is the case with deflation. Socio cultural

conditions also binds the bank to some extends the bank has to behave in a specific

manner according to the country culture and socio economic conditions.

As mention earlier technology affects an organization in many ways it may promote

an organization to superior or wrong usage may cause heavy losses to it. Whenever

the technology advancement take place the bank has to up date its technology too, to

pace with the current environment. All has to concern to financial resources so is the

Standard Chartered Grindlays bank.

Beside all this the environment of the Standard Chartered Grindlays bank is unstable

and organic in nature. They changes occurs more frequently than any other competitor

bank.


119


120

MARKETING MIX

MARKETING MIX

Standard Chartered PLC follows an Adapted Marketing Mix as the marketing mix

elements are adjusted to each target market.

Marketing mix covers

1. Product & Service Mix

2. Place

3. Price

4. Promotion


121

PRODUCT AND SERVICE MIX:

SCB follows a planned strategy in launching as well as diffusion of the products and

services. Product mix is the set of all products offered by SCB. Product mix structure

of SCB has both breadth and depth. Breadth in the sense that a no. of customized

products has been offered by the bank and depth in the sense that there is wide range

of variety & flexibility within each product offered.

PRODUCT MIX

PERSONAL BANKING

• Managing Personal Needs

• Deposits

• PKR Deposits

• Current

• Saving

• Fixed

• Foreign Currency Deposits

• FE12

• FE 25

• FE 31

• Loans

• Over Draft

• Personal Loans

• Auto Loans

• Lifestyle Loans

• Personal Banking Plans

• Priority Banking

• Services


122

• Phone banking

• Evening banking

• Cheque Books home delivery

• E statements

• Bargain Network

• Money link (ATM)

• Free online services

• Remittances

CORPORATE & INSTITUTIONS

• Cash Management

For corporate affairs

Account Services

Payment Services

For financial Institutions

Collection Services

Asian Gateway

Clearing Services

Continuous Linked Settlement

• Trade Services

• Custodian Services

• Lending Services

• Structured Finance

• Electronic Banking

PERSONAL BANKING

Managing Personal Needs


123

DEPOSITS

There are three main types of accounts:

1. Saving Account

2. Current Account

3. Fixed Account

4. Foreign Currency Account

PRODUCT CODES:

Saving Accounts

Supersave Account 01

Privilege Account 26

High Yield Account 18

Flex Account 08

Current Account

Tijarat Account 10

SAVING ACCOUNT

There are five types of saving account offered at SCB/SCG namely:

• Super save

• Flex

• High yield

• Privilege

1. SUPERSAVE

“As Your Balance Climb, So Does Your Rate Of Return”

Standard Chartered Pak rupee saving account, Super saves, offers the dual advantages

of earning profit without sacrificing liquidity.


124

SAVE MORE. EARN MORE

A tiered rate structure automatically adjusts return relative to the balance, resulting in

higher absolute returns. This simply means, the higher the balance, the more profit

one will earn.

PROFIT CACULATION

The profit on super save Account is calculated on the minimum balance held in the

account each month, every month for six-month periods. Which means, even if the

balance drops below the minimum requirement of PKR 25,000, it will continue to

earn profit at the lowest tier .On the other hand, the more the balance grows, the

higher he rate of return.

PROFIT PAYMENT

Based on calculations, the profit will be credited to the account on a six monthly basis

in January and July.

HOW TO OPEN AN ACCOUNT

Anyone above 18years old with an identity card or a passport can apply with a

minimum opening deposit of PKR 25,000.

2. FLEX (The Most Used Scheme)

“Build your salary with flexibility and profits”

Flex account is the most flexible account ever for individuals who want more value

from their salaries. There is no minimum balance requirements and no penalties.


125

NO MINIMUM BALANCE

With no transaction fees and no penalties for low balances, one can open a flex

account for as little as one wish.

PROFIT ON BAILY BALANCE

Put the salary to work from the day it credited. Profit on flex will be calculated on a

daily balance basis. This means, one benefit on his/her closing balance every day of

the month and not the minimum monthly balance typical of other accounts.

PROFIT PAID MONTHLY

Based on daily calculations, the profit one earns on his/her daily balance will be

credited to the account at the end of each month. One doesn’t have to wait for a series

of months to earn the profit.

COUNTER TRANSACTIONS

By using ATM and phone banking facility, avoid the over-the-counter fee of Rs.50/-

per transaction (for withdrawals only).

FIRST CHEQUE BOOK FREE

Flex offers a first chequebook free of charge. How ever, subsequent chequebooks will

be charged Rs.10/-per leaf



126

You qualify if you’re 18 years old with an identity card or a passport.

3. HIGH YIELD

“Reap the dual advantage from a current account that works like a saving

account.”

This account is ideal for businesses and offers a dual advantage of earning profit

without sacrificing liquidity as one has full access to his/her savings at all times. A

high-yield account holder also qualifies for 24 hours banking giving day and night

access to his/her savings throughout the year-even on holidays.

SAVE MORE.REAP MORE

A tiered rate structure automatically adjusts return relative to the balance, resulting in

higher absolute returns. Which simply means, the higher the balance, the more will be

the profit.

PROFIT ON DAILY BALANCE

The profit on high yield account will be calculated on a daily basis. Which means,

benefit on the closing balance every day of the month for as, long as the account is

held.

PROFIT PAID MONTHLY

Based on daily calculations, the profit one earns on the daily balance will be credited

to ones account at the end of each month.

FLEXIBILITY OF UNLIMITED TRANSATIONS


127

High yield offer an unlimited transaction facility without any charges. So there is no

limit on the number of transactions one make. And no charges will be levied even if

the balance falls bellow PKR 500,000.




4. PRIVILAGE

“The king of accounts offers you liquidity and growth at the highest rank”.

Ideal for the individuals, Standard Chartered Privilege Account offers the dual

advantage of earning profits without sacrificing liquidity. It’s an account tailored to

the customer’s status and financial position. In other words, it matches with the

financial status of the customer.

SAVE MORE. EARN MORE

A tiered rate structure automatically adjusts the return relative to the balance, resulting

in higher absolute returns. Which simply means, the higher the balance, the more will

be the profit.

PROFIT CALCULATION

The profit on Privilege Account will be calculated on the minimum balance held in

the account each month. Which means, even if one balance goes below 500,000.the

profit will be calculated at the lowest tier rate for that month.

PROFIT PAID MONTHLY


128

Based on daily calculations, the profit one earn on his/her daily balance will be

credited to the account at the end of each month.

FLEXIBILITY OF UNLIMITED TRANSATIONS

Privilege Account offers an unlimited transaction facility without any charges. So

there is no limit on the number of transactions one make. And no charges will be

levied even if the balance falls bellow PKR 500,000.




CURRENT ACCOUNT

There is presently only one current account named

• Tijarat

TIJARAT

“Access your business and trade account from 21 online branches, countrywide.”

Variety in the product line provides surety of the success of the enterprise. Standard

Chartered new current account, Tijarat, a customized product, is ideal way to support

the business. With so many services especially packaged for convenience, security

and flexibility of businessmen, Tijarat ensures that the success of their businesses is

its business.

ACKNOWLEDES VALUE OF TIME:


129

Understanding the value of the time, Tijarat is the only account that’s operational at

the time of account opening. So one can literally begin transacting right away.

WELCOME PACK:

To ensure immediate usage, the “welcome Pack” contains a cheque book, ATM card

and PIN (Personal Identification Number), TIN (Telephone Identification number),

cash and cheque deposits slips at the time of account opening. So one doesn’t need for

days to receive the financial collateral.

OPEN AN ACCOUNT THAT’S OPEN TO BUSINESS

Tijarat is ideal for people engaged in business including sole proprietors, retailers,

wholesalers, distributors who qualify if they are 18 years old or above with an ID card

or a Passport.

MINIMUM BALANCE, MAXIMUM SERVICE

Tijarat is opened and ready for business with a minimum balance requirements of

PKR 200,000/- on a current account basis.

FREE AUTO LOANS

As an incentive, Tijarat also waives the processing fee for auto loan.


130

FREE ATM CARD WITH THE HIGHEST WITHDRAWAL LIMIT

Tijarat automatically issues a free ATM card (with no annual fees and the highest

withdrawal limit of PKR50, 000) to access funds 24 hours a day, 7 days a week, 365

days a year.

FEATURES COMMON TO ALL THE ACCOUNTS

FREE ATM CARD

All the accounts, current and saving alike, qualify foe\r a free a free ATM card

allowing access to funds round the clock through its nationwide ATM network.

MNET

MNET-a collaboration with MCB has opened new avenues of greater convenience

and accessibility for its customers. Now the customers can have access over 100

additional 24 hour ATMs, 356 days a year, around Pakistan. MCB ATMs bearing the

MNET, has made it easier, convenient, and simpler to withdraw cash and check the

account balances.

BARGAINS

A free ATM card also lets to avail exciting discounts across the favorite outlets in

Karachi, Lahore and Islamabad as part of its bargains network.

FREE ONLINE BANKING WITH BONUS WAIVERS


131

Online connectivity ensures access to the accounts from across Pakistan. 21 online

branches from the largest foreign banking network in Pakistan gives access to its

world class product and service portfolio which includes checking accounts and term

deposits, lockers facilities, credit facilities, auto and personal loans. One can enjoy

online transactions of up to RS.1 million without any charges.

BANK ANYWHERE, ANYTIME WITH PHONEBANKING

One doesn’t have to wait to visit the branch or stand inline. With most banking

services at fingertips, the bank is only one call away.

LEVIES

• Taxes and Zakat are applicable according to the government of Pakistan’s

regulations.

• Bank charges and fees are levied according to the bank’s schedule of charges.

• Out of pocket expenses are collected for all banking services and otherwise

covered by the schedule.

• Charges may be collected in Pak Rupee or Foreign Currency in all categories.

• Courier charges and postage charges are also recovered.

• Correspondent bank charges are recovered at actual.

• Charges relating to corporate customers may differ as a result of an agreement

between the concerned customer and the bank.

FIXED DEPOSIT

Currently SCB is offering only one account under this head

• Term Deposits

TERM DEPOSITS

“Take home attractive returns short term, long term, all terms, your terms”


132

SCB’s term deposit ensures flexibility and suitable profit payment plan.

CHOICE OF TENURES

With a perfect match of regular income and attractive returns, Standard Chartered Pak

rupee term deposits are 7 days, 14 days, 1 month, 3 months, 6 months (conventional),

and 1,2, 3 years conventional tenors.

PERFECT BALANCE

Tiered rates have been structured in such a way that higher balances offer higher

expected profits carving its way to a perfect balance.

OPENING A REUPEE TERM DEPOSIT:

Anyone above 18 years old with an identity card or passport and a minimum opening

deposit of PKR 200,000 for all tenors, can open a rupee term and high return on such

low balances.

DEPOSIT OF FUNDS

Funds can be deposited by cheques, cash notes, remittances and/or transfers from

other accounts.

PROFIT PAYMENT

There is an option of earning profit monthly, quarterly, six monthly, annually or to

simply receive a lump sum amount at maturity and can be paid out in PKR

transactional account for easy access.

RENEWAL OF EXISTING RUPEE TERM DEPOSIT

An Automatic Roller Option is provided by the bank where the balance of the rupee

term deposit is automatically renewed ensuring continual hold of deposit with the

bank as long as one wants without the hassle of renewals or notifications to the bank.


133

FOREIGN CURRENCY ACCOUNTS

These are of three types:

FE 12

FE 25

FE 31

FE 12

These are the foreign currency accounts which have been marked frozen from 28th

May, 1998 by Nawaz Sharif Govt. under circular No. 12.

After the Nuclear Test experiment conducted by Pakistan, Nawaz Sharif Government

on 30th June, 1998, the operation of all the foreign currency accounts were freezed in

anticipation of strict response from the outside world and resultant tremendous

increase in the demand of foreign reserves.

FE 25

Under FE Circular No. 13 dated June 2, 1999 Nawaz Govt. allowed the public to open

foreign currency accounts and facilitate to operate them whenever they want.

FE 31

These are the customer extension accounts. Afterwards Banks’ customers were given

permission to extend their account. The permission was given under circular 31 to

operate frozen circular accounts.

RETURNS THAT SIMPLY STACK UP


134

Standard Chartered Bank Pakistan also offers current and savings accounts in US

Dollars.

OTHER FACILITIES

• Unlimited chequing facility

• Funds from new foreign currency accounts freely remittable

• No Zakat or withholding tax deductions

• PKR overdraft facility available

LOANS

SCG, Tufail Road branch deals in three types of loans namely

• Auto loans ( detail given while discussing departments)

• Personal loans

• Lifestyle loans

• Over drafts ( detail given while discussing departments)

PERSONAL LOANS

“Time to bounce back and Spring onto life’s opportunities.”

Standard Chartered’s Personal loan provides the opportunity to cash in on boosting

the purchasing power.

The Benefits:

We know that the needs and the wants of all the people are not unanimous. SCB’s

Personal Loan, the easiest and cost effective financing, has been specially designed to

meet the individual requirements and circumstances.

Who is eligible?


135

Any one between the age of 23 and 60 years is eligible

If salaried individual, net salary of Rs. 12000 or above

Must have full time work experience

Residence in Karachi, Lahore and Islamabad

If self-employed, must have business or practice of 3 years.

MAXIMUM FUNDS AVAILABLE:

A loan upto PKR 300,000 can be obtained from the bank depending upon the work

experience and the present net monthly salary.

THE PROCEDURE:

To get a personal loan one has to simply

submit the completed loan application

submit the necessary documents

UTILIZATION OF THE LOAN AMOUNT:

The loan amount sanctioned can be used for any legal purpose such as

child’s wedding

higher education

home reimbursement

the purchase of computer

In short, the borrower has complete freedom regarding the decision on how to use the

funds.

PROCESSING FEE:

A processing fee of

1 % of the loan amount or

Rs. 1500


136

Which ever is higher is required to be deposited once the loan application is approved

prior to the loan disbursement for covering the documentation and operational

expenses.

DISBRUSEMENT OF LOAN:

SCB’s team takes all the efforts to reduce the time taken in loan approval and

processing so that the funds are available at the right time.

REPAYMENT OF LOAN:

In order to make the loan repayment an easy and hassle free activity, the same account

in which the loan amount was deposited, is used to pay back in equal, monthly

installments through standing instructions.

PAY-BACK PLANS:

SCB’s personal plans provide flexibility to choose a repayment period between 12

and 36 months depending on the individual earning capacity and circumstances.

Loan Amount Monthly Repayment AmountYear 1st 2nd 3rd

50,000 4,728 2,644 1,962100,000 9,456 5,287 3,923150,000 14,184 7,931 5,885200,000 18,912 10,574 7,874250,000 23,640 13,218 9,808300,000 28,368 15,861 11,770

Note that all these monthly repayment plans are subject to change.

LIFE STYLE LOANS:


137

SCB’s life style loans have been specially designed to meet the standard of living

requirements of each individual. It’s the loan that ensures that the dream of a

luxurious and comfortable life is not far from being converted into the reality. With

zero percent mark up and zero percent down payments, it’s easier to enjoy the life

style of your likings.

CREDIT CARDS (PLASTIC MONEY)

• Master card

• Visa card (Gold & Silver)

• Photo cards

CREDIT CARDS

(PLASTIC MONEY)

“the one to choose”

Credit cards are defined as

“An interest free loan for a specific time period with revolving facility”

There are mainly two types of credit cards which Standard Chartered bank offers,

these are

Master card

Visa classic

Visa (Gold /Silver)

Visa Classic

One can also avail “Photo Cards”.

Standard Chartered credit cards combine the international acceptability of VISA/

Master card with the worldwide reliability and excellent service that Standard

Chartered represents. One can use credit cards more than just making purchases. The


138

Standard Chartered credit cards provide travel benefits, added securities features,

access to other Standard Chartered banking services and a Varity of entertainment

facilities.

GLOBAL ACCEPTABILITY

Standard Chartered credit cards are globally accepted:

MASTER CARD

Over 16.8 million establishments in 160 countries (including 10,000 in

Pakistan) around the world displaying the Master Card logo accept it.

VISA CARD

Acceptable at 18 million establishments worldwide with 10,000 in Pakistan.

SERVICE

INSTANT CASH

Standard Chartered Credit cards allows to with draw any mount up to 75 % of

the available credit limit assigned.

For Master Cards 456,000 ATMs with 16 ATMs in Pakistan

For VISA Cards 562,000 ATMs with 16 ATMs in Pakistan

OVER THE COUNTER CASH ADVANCE:

Cash can also be withdrawn by requesting a cash advance “over-the-counter” at

• 360,000 financial institutions world wide (VISA CARD),

• 23,000 financial institutions world wide (Master Card),

including 21 Standard Chartered branches in Pakistan, or other VISA/MASTER Card

member banks in Pakistan.

SUPPLEMENTARY CARDS


139

One can also avail the opportunity of Standard Chartered Visa and Master

supplementary cards .One can get up to three supplementary cards for his /her family

members above the age limit of 18 years.

PROCESSING TIME:

Processing of the application and delivery of the credit cards generally takes 3 to 4

weeks to complete.

24-HOUR CUSTOMER SERVICE

A well trained Customer Service team is available 24 hours a day, 365 days a year to

• Answer the queries

• Register and resolve the complaints

• Report a lost/stolen card

ZERO LOSS LIABILITY

In case of lost of a card, all fraudulent charges are covered as soon as the reported

lost to the bank. SCB’s Credit Cards ensure complete security from loss, theft and

even bad luck.

BALANCE TRANSFER FACILITY

Standard Chartered Credit cards provide the facility of switching any other credit

card’s outstanding balance to Standard Chartered credit card at the lowest market rate

of 2 % for Master Card and 2.75% per month on VISA card.

REVOLVING FACILITY:

By paying a nominal amount of only 5% of the amount due or Rs. 500, whichever is

greater by the payment date, the balance can be revolved for further financing

• For Master Card, 10 days

• For Visa Card, 21 days


140

DOCUMENTATION REQUIRED FOR SELF-EMPLOYED APPLICANTS

• Copy of NIC

• Computerized bank statement for the last 6 months.

• If partnership firm, attach Partnership Deed/Bank Letter.

• If proprietorship, attach Bank Letter.

• If private ltd, attach Memorandum/Articles of Association/ Form A and

Financial Statements.

• If Professional, attach recognized Professional Degree/ Membership

Certificate to Professional Associations..

DOCUMENTATION REQUIRED FOR SALARIED APPLICANTS

• Copy of NIC.

• For govt. employees, Salary Slip/proof of BPS.

• For Armed Forces, Proof of Ranks and bank statement on original bank

letter head for the last six months.

• For other salaried individuals, Salary Slip.

Note that if the Bank Statement is Typed/ Handwritten/ Photocopied, they should

contain

1. Bank Stamp

2. Signature of the Authorised Signatory

3. Code of Authorised Signatory

FOR SUPPLEMENTARY CARD MEMBERS

• a copy of NIC is required.

THE DUAL BENEFITS OF BOTH CARDS:


141

By holding the both cards at the same time, one is perfectly positioned to take monitor

and control its finances as

• Standard Chartered Visa can be used for travel, entertainment and for

those spur-of-the-moment opportunities that can add so much pleasure.

• Standard Chartered Master can be used for those pragmatic, long term

purchases giving the families the things that really brighten up the lives.

STANDARD CHARTERED CARD CENTRES:

Karachi

Standard Chartered Grindlays Bank

1.1. Chundigar Road

Lahore


Tufail Road Branch, Cantt.

Islamabad


1 Diplomatic Enclave

STANDARD CHARTERED MASTER CARD

“a better way to plan your major purchases.”

LOWER FINANCIAL BUREDN

Standard Chartered master card features a low financial charge of only 2.33% per

month. A free credit up to 40 days is also available in case of retail transactions

provided that the billed amount in the monthly statement of the account is fully paid.

SECURITY:

This card also offers a complimentary travel accident cover up to Rs.3.5 million.


142

CHARGES AMOUNT Financial Charges per

monthAnnual Fee Rs. Rs.Basic Annual 2000 2.33%Supplementary 750 -

Annual fee of Rs. 1000 is charged for Standard chartered and Standard Chartered

Grindlays account holders.

Standard Chartered master card is delivered through carrier service.

STANDARD CHARTERED VISA CARD

Putting more within reach, Standard Chartered Visa cards promises global

acceptability and empowerment of lifestyle.

Standard Chartered Visa Card has two sub cards i.e.

Visa Gold

Visa Classic

BANKING SERVICE

Dial ‘a’ draft:

One can also place an order for draft or other payment instructions over the

phone.

Auto Debit:

It provides the option of making the minimum or 100% payment outstanding,

as specified on the monthly bank statement, through Standard Chartered

Grindlays account

SECURITY:

Complimentary Travel Inconvenience:


143

• Coverage of Rs. 10,000 for delayed flights

• Coverage of Rs. 20,000 for lost baggage

Complimentary Travel Accident Insurance:

• For Classic Card holders, coverage of Rs. 3.5 million

• For Gold card holders, coverage of Rs. 7 million

TRAVEL ACCIDENT COVER

One can get a comprehensive cover up to Rs.3.5 million on Standard Chartered master

card/ Standard Chartered visa card and Rs.7 million on Standard Chartered visa gold

card in case of an accident while traveling on any common carrier.

HOSPITAL INCOME PLAN

This plan is tailored for Standard Chartered Visa Credit card members who can enroll

and receive cash income of up to Rs.6000 for each day spent at the hospital, with out

having a medical check up at the timing of enrolling.

TRAVEL INCONVENIENCE COVER (INTERNATIONAL

TRAVEL)

If the ticket is purchased on Standard Chartered Visa credit card, the inconvenience

caused by flight delays and lost baggage is reduced.

• If the flight and baggage is delayed more than 6 hours you can have

refreshments, meals etc., and charge it on the card. Charges up to Rs.10,000

can be claimed for reimbursement.

• In the event of lost of the baggage, the card can be used to buy the necessary

items in the baggage and reimbursement claim can be made up to Rs. 20,000.


144

DISCOUNT:

Visa cards of Standard Chartered offers great discounts through out the country. The

discounts categories are

• Jewellery

• Clothing

• Shoes & Bags

• Optical

• Restaurants

• Miscellaneous

• Gift items

Discounts are given in percents at every item accordingly.

TRAVEL COMPANION:

Standard Chartered Credit cards simply travel and eliminate the need to carry cash.

HOTEL PRIVILEGES

As a Standard Chartered card member one can enjoy a complete range of benefits in

many prestigious hotels like

SHERETON HOTEL (KARACHI)

• Accommodation: 50 % discount

• Dining: 15 % discount at any restaurant

• Gourmet Shop: 10 % discount

• Health Club membership: 20 % discount

• Laundry & Dry Cleaning: 15% discount


145

AVARI HOTEL (LAHORE, DUBAI & TORONTO)

• Accommodation: 50 % discount

• Dining, Laundry, Cake Shop, Health Club, Rent-a-car and Beauty Parlor: 20

% discount

AVARI AFFILIATED HOTELS

Khalldia Palace Hotel (Abu Dhabi)

• Accommodation: 40% discount

• Food & Beverage: 10% discount

• Health Club: 20% discount

• Laundry: 10% discount

Regent Four Seasons Hotel (Singapore)

o Accommodation: 50% discount

MARRIOT

Renaissance Hotel (Dubai)

• 50% accommodation discount (limited time span)

• Complimentary newspaper, breakfast, transfers, fruit basket on arrival

Ramada (Dubai)



146

• Break fast: 62 % discount

• Upgrading to Deluxe room upon availability

• Complimentary transfers and welcome fruit basket

• 20% off on food & Beverage within hotel premises

Marriot Resort & Spa (Bangkok)


• Complimentary American Buffet breakfast, welcome drink and fruit

basket

• Upgrade to Junior Suite on availability

CAR RENTAL:

Credit cards offer an exclusive 25% discount on car rental services of Europe cars in

Pakistan and abroad.

AKBAR GROUP OF COMPANIES

Collaboration with the Akbar Group of Companies has brought the following

privileges for the card holders namely;

TRAVEL PACKAGE:

A SCB’s credit card holder also has the privilege to the exclusive travel

packages offered by Akbar Group of Companies (representing more than 18

major international airlines as Swissair, Singapore Airlines, Japan Airlines,

Aitalia, Royal Jordanian, and Srilankan Airlines and so on) from time to time

and has the world largest reservation system.

FAST FOOD:


147

Joint venture with McDonalds in North Pakistan (Lahore).

SPORTS WEAR:

Sole distributorship of Nike in Karachi and Lahore.

CIP LOUNGE:

For international travelers, SCB offers Commercially Important Person (CIP) Lounge

at Karachi International Airport with

• Free Secretarial services

• Free buffet

• Internet connection

• Reading materials

• 24 hours patronage

CHARGES GOLD CLASSIC

BASICJoining Fee Rs.500 Rs.1000Annual Fee Rs.2000 Rs.4000SUPPLEMENTARYAnnual Fee Rs.750 Rs.2000FINANCIAL CHARGES Per Month 2.75% 2.75%

Joining fee for the Visa Card (gold and Classic) has been waived for Standard

Chartered and Standard Chartered Grindlays account holders.

PHOTO CARDS

“Enjoy Instant Recognition Where Ever You Are”


148

One can have the option of covering credit card into a photo card. The color photo

digitally embedded can secure the identification.

SERVICE-MIX

A no. of valuable services are offered at SCG such as

PHONE BANKING

“Bank on your phone anytime, anywhere.”

One doesn’t have to wait to visit the branch or stand inline. With most banking

services at fingertips, the bank is only one call away.

A TIN (Telephone Identification Number) is assigned to each account holder in order

to ensure confidentiality.

• Phone banking ensures getting to the bank without leaving for the bank.

• It allows an easy, hassle free access to the account without wasting the

valuable time and energy of the customer.

• All the simple account inquiries are handled by the trained and efficient staff

on the phone.

• Currently available in three major cities of Pakistan: Lahore, Karachi and

Islamabad.

• The following services are available on the phone:

Checking the latest account balance

Getting an update of the last 5 transactions

Placing a request for a cheque book

Requesting the mail or fax of a statement

Transferring funds from one account to another provided the

master number is the same


149

Changing TIN (Telephone Identification Number)

EVENING BANKING

Standard Chartered banking has broken the orthodox nutshells and now the branches

are open for customer dealings from 9 A.M. till 5 P.M. Evening banking has brought

convenience for those who find it difficult to get free time in the morning to visit the

bank.

CHEQUE BOOKS HOME DELIVERY

In the modern era when every one is in haste and busy, Standard Chartered‘s home

delivery of cheque books is the right facility at the right time. One doesn’t need to

visit the bank personally in order to collect the cheque book.

E-STATEMENTS

“Have your bank statement mailed to you-anywhere and everywhere.”

• Any person having an e-mail address can have his e-statement mailed by the

bank resulting in minimum paper work and maximum convenience.

• No charges are debited by the bank for this service.

• One can have the privilege of getting e-statements delivered at as many e-mail

addresses as one likes.

• It ensures confidentiality and security as the others will not be having any

access to the bank statement which seems to be a major concern for certain

account holders.

• Frequency of the e-statements depends on the instructions given by the

customer in the application form.

BARGAINS

“Get discount with your atm card as you shop throughout Pakistan.”


150

• ATM card also lets to avail exciting discounts across the favorite outlets in

Karachi, Lahore and Islamabad as part of its bargains network.

• As a Standard Chartered Customer, a maximum discount of 25% is available

on the selected outlets.

• Discount is available on all types of products ranging from boutiques to

hospitals and so on.

• To avail the unfair advantage, one has to just present his/her Priority or

Moneylink Card as a proof of being a SCB’s customer.

• SCB continues to upgrade the list of approved outlets from time to time

• Any favorite outlet of the customer can also be included in the bargain

network upon recommendation by him.

MONEYLINK

“Get super-convenient complete banking in the time it takes a red light to turn

green.”

Standard Chartered’s ATM’s network, with over 150, 24 hours ATMs, provide super

convenient banking to its account holders.

Standard Chartered Group ATM bearing the MNET sign provide the following

facilities to its account holders:

CASH WITHDRAWALS:

Cash can be withdrawn from both the Standard Chartered and the MNET ATM

Network in the country, 24 hours a day, 365 days a year subject to the maximum

withdrawal limit. However this limit can be extended depending on individual

requirements.

CASH OR CHEQUE DEPOSITS

Cash and cheque deposits can be made at any Standard Chartered 24 hours ATM

across the country.


151

MINI-STATEMENT

A mini-statement showing the last 10 transactions is also available at the Standard

Chartered ATMs.

CHEQUE BOOK REQUEST

A cheque book request can be placed by pushing just button and the bank will provide

it within 3 working days.

SPECIAL INSTRUCTIONS

Use the deposit envelops as an electronic mailbox to issue written instructions to the

bank regarding any of accounts.

FUNDS TRANSFER

Funds transfer is also available from one account to another account in the same

branch with the full control of cash flows.

PIN CHANGING

The PIN assigned for each current and saving account can be changed at any time if

the holder feels that it is no more secure.

MNET

MNET-collaboration with MCB has opened new avenues of greater convenience and

accessibility for its customers. Now the customers can have the access to over 150

additional 24 hour ATMs, 356 days a year, around Pakistan. MCB ATMs bearing the

MNET has made it easier, convenient, and simpler to withdraw cash and check the

account balances.


152

ONLINE BANKING

Online connectivity ensures access to the accounts from across Pakistan. 21 online

branches from the largest foreign banking network in Pakistan gives access to its

world class product and service portfolio which includes checking accounts and term

deposits, lockers facilities, credit facilities, auto and personal loans. One can enjoy

online transactions of up to RS.1 million without any charges.

PRICE

INDICATTIVE PKR DEPOSIT RATES (p.a.)

From 1st July 2002 to 31st December 2002

SAVING DEPOSITS

Supersave

Tiers 6 monthly APR

0-24,999 0.01 0.01

25K-99,999 0.03 0.0302

100K-499,999 0.04 0.0404

500K-4,999,999 0.045 0.0455

5,000k+ 0.055 0.0558

Account opening requirement Rs. 25,000

Profit calculated on minimum Monthly Balance

No upper limit for profit calculation

Privilege

Tiers monthly APR

0-4999,999 0.01 0.01


153

500K-999,999 0.045 0.0459

1,000K+ 0.055 0.0564


Profit calculated on minimum Monthly Balance


High Yield Savings

Tiers monthly APR

0-499,999 0.50% 0.005

500K-999,999 3.50% 0.0356

1000K-2,999,999 4.50% 0.0459

3000K+ 5.00% 0.0512


Profit calculated on Daily Balance


Staff Account

No minimum balance requirement


Flex Account

Rate Monthly 2.0%No minimum balance requirement


No product for salaried persons

TERM DEPOSITS


154

7 days

Tiers Rates APR

Maturity200K-<2000K 2.50% 2.53%2000K-25000K 3.00% 3.04%

14 Days

Tiers Maturity APR

200K-<2000K 3.0% 3.04%

2000K-25000K 3.5% 3.56%

1Month

Tiers Maturity APR

200K-<2000K 4.0% 4.07%

2000K-25000K 4.50% 4.59%

3 Months

Tiers Maturity APR

monthly quarterly

200K-<5000K 5.15% 5.30% 5.41%

5000K-10000K 5.25% 5.40% 5.51%

10,000K-25,000K 5.30% 5.50% 5.61%

Special 3 Months TD

Tiers Maturity APR

200K-<5000K 5.30% 5.41%

5000K-<10000K 5.40% 5.51%


155

10,000K-25,000K 5.50% 5.61%

6 Months (conventional)

Tiers Maturity APR

monthly quarterly 6 monthly

200K-<2000K 5.40% 5.45% 5.55% 5.63%

2000K-25000K 5.45% 5.50% 5.60% 5.68%

1 Year (conventional)

Tiers monthly quarterly 6 monthly annually

200K-<2000K 5.55% 5.60% 5.65% 5.75%

2000K-25000K 6.05% 6.10% 6.15% 6.25%

2 Year (conventional)

Tiers monthly quarterly 6 monthly annually maturity

200K-<2000K 6.15% 6.20% 6.25% 6.30% 6.50%

2000K-25000K 6.60% 6.65% 6.70% 6.75% 7.00%

3 Years (conventional)

Tiers monthly quarterly 6 monthly annually maturity

200K-<2000K 6.55% 6.60% 6.65% 6.78% 7.25%

2000K-25000K 7.00% 7.05% 7.10% 7.22% 7.25%

OPERATION OF THE DEPOSITS:

1. System support not available for 7 days TDs

2. System support not available for 14 days TDs

3. Bank does not offers Call/Notice Deposits

4. Minimum Threshold for opening a term deposit with the bank is PKR 200,000


156

5. As apparent from the above tables, specific rates have been generated for the

amounts below or equal to PKR 25 million. For amounts above this limit,

Treasury determines the applicable rates.

6. Penalty for premature withdrawal is computed as

For Conventional Deposits:

completed tenor rate – 2% for the number of days completed

For Cluster Deposits:

completed tenor rate – 3% for the number of days completed

7. Term Deposits of less than PKR 200,000 are rolled over from 5/7/2001

onwards over at the lower tier (200K to <2000K) rates.

8. Fresh bookings in clusters are not allowed but the Existing Clusters are rolled

over after the prior approval of Country Distribution Manager.

FOREIGN CURRENCY INTEREST RATES (p.a.)

USD

SavingsTier FE25 Frozen

10,000+ 0.50% 0.00%Minimum balance requirement: USD 10,000

Term DepositTerm 1 Month 3 MonthsNature FE25 FE25

10,000+ 0.50% 0.50%Minimum balance requirement: USD 10,000

GBP

Savings FE25 Frozen10,000+ 0.00% 0.00%

Minimum balance requirement: GPB 10,000

Term deposits are not offered in GBP

EURO


157

Savings FE2510,000+ 0.00%

Minimum balance requirement: Euro 10,000

Term deposits are not offered in Euro

EUR & JPY

Savings/Current Frozen/ExtensionAll balances -3.00%

OPERATIOIN OF FOREIGN CURRENCY ACCOUNTS:

The bank offers FE25 in currencies like USD, GBP and EURO only.

No mark up is offered on all FE25 deposits except for USD deposits.

No markup is offered o all Frozen FCY deposits.

A negative sign with the interest rate in case of frozen end extension EUR &

JPY Deposits is indicative of the administrative cost charged for their

operation.

PLACE

Standard Chartered Bank, a local international bank gives the peace of mind

that only comes when you're at one of the world's leading banks. You can

avail Standard Chartered Bank's value-added, award winning services across

21 branches in Pakistan's 8 major cities.

1. Karachi

2. Lahore

3. Faisalabad

4. Ialamabad

5. Rawalpindi

6. Sialkot

7. Peshawar


158

8. Quetta

The branches marked with an asterisk (*) offer exclusive Priority Banking

Centres. Branches marked with ** show 24-hour banking with ATMs.

BRANCH NETWORK

STANDARD CHARTERED ACROSS PAKISTAN

KARACHI

Karachi's Clifton* Branch

10 Khayaban-e-Roomi, Clifton

PO Box 3888, Karachi-75600

Tel 21-5867777

Fax 21-5873642

Karachi's Main Branch**

I.I. Chundrigar Road, PO Box 4896

Karachi-74000

Tel 21-2425000

Fax 21-2425772

Karachi's Hill Park* Branch

SNPA 16-A/1, Shaheed-e-Millat Road,

PO Box 20087, Karachi

Tel 21-4544900-7

Fax 21-4544187

Karachi Rashid Minhas Road**

Off-site ATM t Shell Select


159

LAHORE

Lahore's Mall Branch

Shahrah-e-Quaid-e-Azam, The Mall,

PO Box 6, Lahore

Tel 42-7351921

Fax 42-7237407

Lahore's New Garden Town* Branch

Awami Complex, New Garden

Town,Lahore

Tel 42-5885830-7

Fax 42-5833578

Lahore Defence**

Tel. 589907-77

Fax: 5899126

Lahore Shami Road**

Off-site ATM at Shell Select

FAISALABAD

Faisalabad's Railway Road Branch

Railway Road, PO Box 20

Faisalabad

Tel 41-619056

Fax 41-642012

ISLAMABAD


160

Islamabad :Saudi Pak Tower

Tel. 2876742

Fax: 2876756

UAN in Karachi, Lahore and Islamabad : 111-400-400

STANDARD CHARTERED GRINDLAYS ACROSS PAKISTAN

(Now Standard Chartered Bank from Dec. 01,2002)

KARACHI

Karachi Chundrigar Road**

Tel. 2412671-6

Fax: 2414944

Karachi Allama Iqbal Road

Tel. 4529193-5

Fax: 4556678

Karachi Centenary**

Tel. 4538044-5

Fax: 4538043

Karachi Clifton**

Tel. 5871891-2

Fax: 5831798

Karachi Garden Road

Tel. 7210539

Fax: 7212519

Karachi Gulshan

Tel. 4980906


161

Fax: 4982239

Karachi Metropole Hotel**

Tel. 5660432

Fax: 5685403

Karachi North Nazimabad**

Off-site ATM at McDonald’s

Karachi Sheraton**

Off-site ATM located in the main body

LAHORE

Lahore Gulberg**

Tel. 5763453

Fax: 5877004

Lahore Tufail Road**

Tel. 6660746-8

Fax: 6660744

SIALKOT

Sialkot

Tel. 261477

Fax: 260866

ISLAMABAD

Islamabad**

Tel. 2875035-9

Fax: 2824128

RAWALPINDI


162

Rawalpindi**

Tel. 5513594

Fax: 5566703

PESHAWAR

Peshawar**

Tel. 275665

Fax. 275367

QUETTA

Quetta

Tel. 820911-2

Fax: 822106

UAN in Karachi, Lahore and Islamabad: 111-001-001

AUTO LOANS

Authorised Dealers :

Honda Drive-in 118-C/1, Rashid Minhas Road, Karachi Tel: 21-4992832-7

Allibhai Motors 233-A, Block-2, PECHS Main Shahrah-e-Quaideen, Karachi Tel:

21-4556510-2 and 4556073

Toyota Western Motors C-38, Estate Avenue, S.I.T.E, Karachi Tel: 21-2564531-4

Honda Sharah-e-Faisal 13, Bangalore Town, Sharah-e-Faisal, Karachi Tel: 21-

4547113 and4527070-5

Toyota Southern Motors Head Ofiice: Plot No. 13, Sectoir 23 Korangi Industrial

Area, Karachi Branch Office: 118, Defence Housing Authority, Phase 1 Main


163

Korangi Road, Karachi 75500 Tel: 21-5053181-6 and 4535246-9

Toyota Central Motors 3, Main Shahrah-e-Faisal, Karachi-8 Tel: 21-4532246-50

Anjum Motors 151-B, Block-2, PECHS Khaild Bin Waleed Road, Karachi Tel: 21-

4555723-6

Macca Motors SL 0809 Main Rashid Minhas Road Gulshan-e-Iqbal, Karachi Tel:

21-4588991-5

World Automobiles 3-A, Main Shahrah-e-Faisal Opp. Awami Markaz, Karachi Tel:

21-4540980-7

Toyota Eastern Motors 118-Rashid Minhas Road Gulshan-e-Iqbal, Karachi Tel: 21-

8114077 and 8114177

Riaz Motors 233-A, Block-2, Alibhai Center, PECHS Main Shahrah-e-Quaideen,

Karachi Tel: 21-4556132-3 and 4540018

ATM Bargain Network

OUTLETS & DISCOUNT:

Karachi

1. Ahmed Medical Store 10%

2. Al Syed Creating service 20%

3. Burger Time 10%

4. Calcutta Jeweler 25%

5. Cinderella 10%

6. Classic packers 10%

7. Crescent sweets 10%


164

8. Daily toys 10%

9. Eye Master 15%

10. Gift City 10%

11. Gotcha 10%

12. H.M. Ismail Jewellers 50%

13. Household Gifts 10%

14. Hunarmand 10%

15. Image Optics 10%

16. Karachi Optic 10%

17. Lights 2000 10%

18. Madras Jewel Point

19. Madras Jewelers 15 %

20. Menhas Cloth Gallery 15%

21. Modula Furniture 15%

22. Moonisali 15%

23. Nabila 10%

24. New Madras Jewellers 25%

25. Optic International 15 %

26. Prime Jewellers 15%

27. Prisma Furniture 15%

28. Rags & Riches 15%

29. Sach Creation 10%

30. Sentiments Gift Shop 10%

31. Snobiz 10%

32. Snoopy Ice Cream 10%

33. Something Fishy 15%

34. Subway 15%

35. Super Garment Store 10%

36. Tulip Beauty Parlour 25%

37. UK Chhotai 25%


165

38. Vincraft 15%

39. Vouge Optic 10%

40. Walkeaza 15%

41. X Y Zit 10%

Lahore

1. Al Baist Garments 20%

2. Art Craft 20%

3. Better Eyes Optics 20%

4. Classic Books 10-25%

5. Cnn Garments 20%

6. Curtain Centre 20%

7. Dulha Mahal 20%

8. Fire Collection 20%

9. Great Designer 20%

10. Huner 20%

11. Karigarth Collection 20%

12. Lahore Leather Club 20%

13. Look N Took 20%

14. Mak Shoes 20%

15. Men’s World 15%

16. Miss New 20%

17. Mumtaz Jewellers 20% (making & stones)

18. Nabila 10%

19. Pakistan Leather House 20%

20. Pilot Hotel And Catering 20%

21. Poshak Mahal 20%

22. Shoes N Boot 20%


166

23. Silver Fabrics & Tailors 20%

24. Silver Dolly 20%

25. Stylish Fabrics & Tailors 20%

26. Tayyaba Cloth House 20%

27. TR Garments 20%

28. Valentine’s Shop 20%

Islamabad

1. Chateau Royal 20%

2. Cross Streak Clothing 10%

3. D & L Fashion Mall 15%

4. Dental Clinic 40%

5. Dragon Clinic 15%

6. Fedral Motors 15%

7. Foot Locker 20%

8. Ferozesons 10%

9. Furniture Hut 20%

10. Guess Store 20%

11. Jiqson Showroom 10%

12. Kids & Mummies 15%

13. Masood Optics 15%

14. Missoni Boutique 10%

15. Movie 2000 15%

16. Occasions 20%

17. Pak Persian Carpets 20%

18. Progressive Photographics 15%

19. Raja Silk 15%

20. Reach Garments 20%

21. Red Onion 20%

22. Sam Computers 20%


167

23. Scandals 15%

24. Subway 10%

25. Tanweer Optical 20%

26. Vision Optik 20%

27. Wazir Tailors 20%

28. Shalimar Hotel 50%

29. Wee Care Interiors 15%

30. Xingzhu Restaurant 15%

PROMOTION

Standard Chartered Bank promote its products through various medias, different ads

are made to promote new products and to introduce different packages offered on

different occasions Moreover billboards on public places are upright, in newspapers

different printed ads were published from time to time and the same case with the

electronic media, ads are given on highly favorite and. famous channels of the media

to attract the customer through out the world.

Standard Chartered Bank has many ways to promote its product and services. Some of

the common promotional strategies are:

Advertisements

Sales Promotion

Public Relations

Personal Selling

Direct Marketing

ADVERTISEMENT:

Advertisement is used by the bank to build up a long term image and to trigger quick

sales of the products and services it offers and the Media used includes both


168

o Print Media

o Electronic Media

The Bank follows the policy of aggressive marketing of its products in order to

convert the potential customer into the loyal customers of the bank and advertisement

is the one which is the most effective as it efficiently reaches geographically dispersed

customers. The management takes all possible steps to keep its customers in touch

with the developments taking place in & outside the branches in the form of new

products, innovative services, and attractive offerings. The Bank resorts to various

means of promotion of its products and services such as:

(a) Website

(b) Advertorials ( Print Adds)

(c) Television

Infomercials

sponsorship

i. Young Entrepreneurs of the world telecasted by BBC World

ii. Documentaries sponsored on the National Geographic Channel

(d) Newspapers

Hajj & Umrah Scheme

(e) Magazines

(f) Billboards & Hoardings

Placed at the major commercial areas of the city such as Defence, Jail

Road, Upper Mall etc.

SALES PROMOTION:

Sales promotion tools showing the incentive and benefits for the customers are also

used by the bank on timely basis. The schemes such as

Free services such as phone banking, e-statements etc.

Discounts offered at the qualified outlets for being a part of SCB


169

Special service offered at Shell Petrol Pumps (Outlet Boxes to pay off

the utilities bills of SCB’s customers..)

PUBLIC RELATIONS

SCB believes in maintaining good public relations and positive

publicity as it helps in reaching out for the prospects who prefer to

avoid sales people and advertisement.

Publications, events, news, speeches and public-service activities are

use from time to time.

Sponsorships such as organizing a walk in support of pure and clean

environment are the tactics which help in building up strong public

image.

Children’s day at Wonderland on 19th May, 2002 sponsored by SCB

PERSONAL SELLING

SCB adopts the personal selling tools for building up the buyer preferences,

conviction and action (generally the last stage of the buying process).

Sales representatives are trained in developing personal relations with

the prospects and ultimately converting them into the loyal customers.

They have customers’ best interests at heart. Some other tactics are

Brochures are presented to various visitors to the bank

Call Centers have been established to provide information and satisfy

queries.

DIRECT MARKETING

Promotional Letters mailed to potential and existing customers the

Bank’s products.

Telemarketing to potential and existing customers.


170

Internet marketing

Besides this the Marketing Department of the Bank performs a very vital job. It

dispatches its sales representatives in the market to promote itself and introduce a new

clientage to the Bank. These sales representatives are given targets to meet over a

specified time period. An added advantage of this process is that the bank gets direct

feedback from its customers as well since these sales personnel also contact existing

customers

Apart from the sales representatives, the bank’s internees also play a major role in

promoting the bank’s credibility. The internees placed in the Direct Sale Department

of the bank are kept busy in conducting surveys and preparing their research report on

the basis of their integrated survey results. They visit major commercial areas across

the city getting the views of the people regarding the products it is launching, the

services it is providing, the facilities it is offering and the contribution it is paying in

the uplift of the economy and common man as well. Not only they get feed back about

its current performance but also what the general public aspires to be in the future.

The information such as

the product lacking in the current product mix offered by the bank

the updation required in the existing products/services

the defects found in the services and how to eliminate them

the standard of customer dealing and so on.

are generated through these surveys which help in further generation, modification

and elimination of a product or service.

Thus by following these methods the Bank is able to keep the public as well as its

customers informed about its new innovations and product offerings. Since the Bank

targets the upper middle and the rich class so it has to offer such products, which are

useful to them.


171

PRODUCT & SERVICE –MIX STRATEGIES:

To be successful, Standard Chartered Bank follows carefully planned strategies for

managing its product & service mix.

POSITIONING THE PRODUCTS:

SCB’s management pays full attention in differentiating its products in a favorable

way as it goes a long way in determining the product’s revenues.

Positioning strategy followed by SCB is always target market oriented. A number of

diverse products such as Tijarat, Supersave, Highyield, Privilege, and Flex have been

offered keeping in mind the requirements and the specifications of the potential

customers.

• Positioning In Relation to Competitors:

Differentiation is made in relation to competitors products and to the bank’s

other products. The bank keeps a close watch on the activities of the

competitors and adapts its strategies accordingly.

• Positioning by Price & Quality:

SCB is known for its high quality products and high prices. Despite placing its

products on the extreme end of Quality-Price Quantum, the revenues of the

banks have continued to increase over the years.

PRODUCT & SERVICE MIX EXPANSION:

SCB keeps on adding similar items to an existing product line with the view of

expanding its mix. Similarly expansion is seen in the service mix. An example is of

ATM service. SCB has collaborated with MCB in the ATM service named MNET.

Similarly ATM card also lets the holder availing discounts across outlets which form

part of bargain network.

PRODUCT-MIX CONTRACTION:


172

SCB, from time to time, does follow a contraction strategy. It follows a contraction

strategy if

• This action weeds out low profits and unprofitable products.

• The bank wants to position itself on one or few core products.

SCB recently followed a product-mix contraction as it has postponed fresh bookings

in Cluster Deposits. Its most used product, FLEX, has been banned for the time being

as it became unprofitable for the bank. The reason is that the bank has got a large

number of flex deposits with smaller amounts resulting in more administration costs

as it carries no minimum balance requirement with it. In other words, Flex is no more

cost effective for the bank.

TRADING UP & TRADING DOWN:

Trading up

means adding a higher-price product to the product line in order to attract a

broader market. “Prestige” offered by SCB is a good example of trading up.

Its launch has boosted up the sale of its lower-price products as well.

Trading down

means adding a lower-price product to a company’s product line. In this

regard “Flex” offers good example.

COMPETITIVE STRATEGIES

Competition is very dominant now a days and every firm is trying to have an edge on

others. Standard Chartered is aware of its competitors its competitors include CITY

BANK, ABN AMRO and others.

Standard Chartered Bank tries to satisfy its customer and keep an eye open for

improvements and innovations. The head office in Karachi makes these strategies to

compete the growing environment. It is not necessary that Standard Chartered Bank


173

follow all the strategies prevailing and used by its competitors but it try to have an

innovation when there is no rustle in the competitive environment.

What the competitors try to implement Standard Chartered bank tries to implement it

in a more innovative and advanced form. All sort of competitive strategies are made

by higher authorities.

REVENEU AND SALES COLLECTION STRATEGIES

Standard Chartered Bank is both the service and product firm .Its major revenue

collection is through accounts; Loans and interest rates gain from different products.

In sales collection strategies, direct sales department is performing best to sales it

product efficiently (open accounts efficiently) which have a big part in revenue

collection. The employees of direct sales department offer visits to different

companies, businessman, wormers to have an account in this bank, mean while PFCs

(personal financial consultant) try to get revenue for this bank in the same manner but

they have an authority to open an account of a customer who even walks in for some

other purpose.

STANDARD CHARTERED BANK’S MARKETING

PHILOSOPHY

Is to develop long-term relations with their clients/customers, based on understanding

their business, selecting the most appropriate and cost effective methodologies,

accepting challenges and exceeding expectations

PRIMARY RESOURCE

As with any professional service, the primary resource they offer is the experience of

their staff brings to research. Their research process utilizes a ‘participative approach’

- and work in close conjunction with Customer representatives.


174

SECONDARY RESOURCES

Extensive field network all across Pakistan, Integrated word and data processing.

DATA COLLECTION

They design research instruments, which ask the right questions using the best

methodology, such as,

In-depth Interviews,

One-on-One interviews,

Telephone Interviews,

Central Location Tests,

Mall Intercepts,

Mail Surveys,&

Observation Formats.

STUDIES INCLUDE

Attitude Research --------Customer Satisfaction

Advertising Pre-&-Post Evaluation ---Corporate image studies

Concept and Product Development ---Pricing

Creative Solution Finding----------------Social marketing research

Media Research------------------------------ Audit

REPORTING

Reporting of study results culminates in the development of specific marketing

recommendations. Their aim is to provide workable solutions to marketing problems

based on sound research.


175

Different products are offered like auto loan, over draft, running finance, personal

loan, corporate financing and others and in this return bank charges some percent of

mark up/interest is charged which contribute to the revenue collection of this bank.

MARKETING-MIX POLICIES

According to Berry

“The most important contribution the marketing department can make is to be

exceptionally clever in getting everyone in the organization to practice marketing.”

Policies Regarding Marketing Mix include

i. Product

ii. Pricing

iii. Place

iv. Promotion

PRODUCT

Banks are non-manufacturing concerns which deal in those products that are highly

intangible, perishable, inseparable, variable and client based. Their products meet

both

• a personal need ( a saving account like High Yield)and

• a business need ( a current account like the one offered at SCB named Tijarat,

or the overdraft facility to finance the working capital requirements a

business).

The various product policies followed at the Standard Chartered Grindlays are:

• The policy is to constantly figure out how to give the customers more for less.

• The emphasis is on the development of new, innovative and creative product

for its present as well as potential customers on timely basis.


176

• Offering a rare combination of unique products and convenient services so that

a large number of potential customers could be converted into the loyalty

customers.

• Launching different product for different classes of the target market such as

business men, salaried class, corporations, widowers, pensioners and even the

government organizations.

• Capitalizing on the new opportunities emerging in the existing and emerging

markets.

• The emphasis is on the benefit the service offers rather than on the service

itself. For example the “e-statement” service emphasis is on the customer’s

convenience and easiness and not on the service itself.

• For product promotion the use of visualization technique, association, physical

presentation and documentation are used. On every brochure of Standard

Chartered Grindlays product one sees an image. For example the “High Yield”

saving account brochure shows an image of wheat plant. What does it reflects

or communicates with the customer? It instantly gives the idea that something

very rewarding, giving higher returns, a worthy investment etc. so the

customer mind instantly visualizes, associates the service with something

physical.

• In relation to product feature the bank’s emphasis is on building up an

effective brand image. In includes the whole theme more than just the brand

name. Uses of distinctive colour schemes, tangible objects, slogans etc are

being used.

• Due to intangibility of products and in the absence of physical features the

bank has to emphasize on differentiation of their offering.

• The name used by the bank also connotes the level of services it is offering to

its customers.

PRICING


177

• At Standard Chartered Grindlays the pricing strategies applicable are:

One price strategy

Flexible price strategy

• Many of the charges have been waived for Priority Customers in order to

benefit them for building up loyalty with the bank and provide them with top-

class services.

• The bank staffs at top levels have the authority to waive some charges in order

to oblige their customers.

• The banks’ employees are also offered some concession in the listed prices of

the products and services.

• Prices offered are variable and flexible depending upon the type of the

customer.

DISRIBUTION

The concept of distribution channels is not limited to the distribution of physical

goods. The service organization, SCB also formulate the policies to

• Make its ideas and services available and accessible to target population.

• To establish new branches in order to reach out for the population spread out

over far distance places.

• Providing a Banking Network that provides access to world-class products

and service portfolio across Pakistan.

• To help people enjoy its services without expending unreasonable amount of

time, effort and/or money.

PROMOTIONAL POLICIES

Promotional policies go a long way in determining the success of any organization

including the banks. As far as promotional activities are concerned, the main objective


178

of the bank is to inform the existing clients and the potential customers about its new

products or modifications in the existing products and introduction of new and

innovative services.

The SCB group has adopted the Dual Adaptation (both in terms of product and

communication) promotional policy as it uses the same theme globally but adapts it

slightly to different local markets.

The Bank emphasizes on product promotion if it wants to progress in the highly

competitive market. The employees are required to promote the assets (i.e. credit

cards, personal loans etc) and liabilities (i.e. savings accounts or current accounts) of

the Bank. Each employee has a sales target to meet, which is supposed to be

accomplished in a specified time period.

The bank frequently conducts surveys in the market to know the following:

(a) What are its competitors offering?

(b) What are the requirements of target market?

(c) How are its current products performing in terms of customers’ satisfaction?

Keeping these factors in mind, the Bank launches new products in accordance with

the dynamic nature of the markets. The Bank reviews its interest rates from time to

time so that it offers the best deal to the customers. The concept behind this is to

introduce new customers and generate more deposits so that the Bank gets more

funds. More funds ultimately means more lending which is the ultimate goal behind

raising deposits and this leads to more revenues in return.

.

The Bank needs to continue these practices in order to increase its business circle and

to progress in the aggressive marketing environment of the banking sector.

• A huge amount of funds are allocated each year for the advertisement and

promotional activities.


179

• Aggressive marketing policies are followed so as to bring more and more

people under the customers head.

• Advertising plays a vital role in retaining and strengthening the customers’

loyalty.

• National and religious events are also sponsored from time to time in order to

build up public relations and general image.

• New and newer ideas are generated each day by the Direct Sales department to

attract the potential customers.

• Various events such as organizing a walk in the support of clean environment

are held in creating positive thinking regarding the bank’s services in the local

markets.

• All the promotional policies are focused on maintaining good relations with

the customers, government, investor, local bodies, environmentalists, trade

unions and media.

• Direct contact with customers, relation with business organizations, and

community relations.

• The Bank has introduced many products for the convenience of its customers

in order to facilitate banking for them. These products include internet

banking, such as:

(i) Online banking,

(ii) e –statements

These policies can be implemented by providing the right product and service to the

customer at the right place, at the right time, at the right price. It is necessary for the

managers to keep in touch with consumers, observe their needs and develop products,

which meet their needs


180


181


DEPARTMENTS


182


DEPARTMENTS

Consumer Banking Sales & Services

This department provides all sorts of products and services discussed in the Product &

Service Mix (Section of Marketing Mix). Further details are given ahead.

Collection

This department is located in Karachi Head office for the collection of outstation

cheques. The whole collection process is performed by there. Details given ahead

( while discussing BSU).

Verification

This department is located at the Mall Branch, Lahore. The main work vested into this

department is to conduct physical verification of the loans, specially the clean loans

against which there is no security/collateral received by the bank. Since special care is

required in disbursing clean facility, this department has been designed to deal with

this sole responsibility.

The main functions performed by this department are as follow:

• Conducts all the correspondence with the potential borrower

• Get their addresses, telephone numbers and checks their genuineness.

• Receives information about the client from outside sources.


183

• Finally, make recommendation whether the loan facility should be sanctioned

or not.

Personal Loan

Personal loans have also been discussed in detail in the Product Mix (Marketing Mix

Section) of the report.

Telemarketing

Telemarketing, as the word signifies refers to the process of marketing the products

and services on telephones. The department vested with this responsibility has been

placed at SCB, Mall Branch, Lahore. The department is responsible to call various

target customers, generally the well known businessmen and industrialists and to

convince them to take the benefits of the world class portfolio of products and

services offered at SCB.

IBG (Institutional Banking Group)

This department deals in the accounts of the banks and various financial institutions.

The whole services relating to the account opening to the operation of various

accounts of the banking and non-banking financial institutions are conducted by this

department

Administration


184

The administration department of the bank is placed at SCB, Tufail Road branch,

Lahore assigned with the responsibility of the general administration of the bank’s

operation.

PSB (Premier Service Banking)

PSB is a specialized department of the bank located at SCB, Mall Branch, Lahore. It

has been authorized in dealing with the priority customers in the corporate sectors.

The national and multi-national corporations, with high prestige are required to be

given specialized services and this department is there to fulfill this requirement.

Special privileges and services are provided to a few priority corporations matching

with their status.

Consumer Service Unit

Consumer Service Unit is the department placed in the Head office Karachi assigned

the responsibility of all the back office operations such as

• Govt. securities,

• Credit Cards

• Operations etc.

C & IB Trade Service

Consumer and Institutional Banking Trade service deals in the services to the general

consumer and institutions such as

Exports;

Export L/Cs

Export Collection/ Bills

Credit Bills Negotiated


185

Imports;

Import L/Cs

Trust Receipts

Shipping guarantee

In short, all the services with regard to import and exports are performed by this

department located at SCB, Mall branch, Lahore.

Consumer Banking Auto Loan

This department is located at the CB, Tufail Road, Lahore. This department provides

the loan for owing the car of ones liking by selecting the monthly payment plan

suitable for the current earing patterns of the borrower.

The further details have been provided in the section of “Departments at SCB, Tufail

Road Branch”


186

DEPARTMENTS AT SCB

TUFAIL ROAD BRANCH


187

The following departments are operating at Standard Chartered Bank, Tufail Road

branch, Lahore.

• Sales & Service Department

• Lending Department

• Government Securities

• Auto Loans

SALES & SERVICE DEPARTMENT

The Sales & Service department of the bank performs the following functions

categorized in the following heads;

• Account Opening Process

• Banking Service Unit

• Cash Department

• Lockers

• Direct Sales

ACCOUNT OPENING PROCESS

ACCOUNT SERVICE UNIT

This department located at Head Office Karachi performs all the work necessary for

opening of accounts. All the account opening forms, scanned or unscanned are mailed

to this department from all 21 online branches for opening of various accounts for

different categories of the customers such as individual, sole proprietorships,

partnerships and Joint stock companies. All the accounts are opened and maintained at

head office Karachi. All the information has to send to Karachi on daily basis.

Account opening documents are further classified into two categories

1. Account Opening Documents-Urgent


188

are scanned by making files and then mailed before 4:00 p.m. to

Karachi where the new account is activated in less than 24 hours.

2. Account Opening Document-Normal

are sent unscanned by TCS and it generally takes 24 hours or more in

activating the new account.

Till the opening and activation of the new account, the amount deposited, if any, in

the account is kept in the suspense account.

For opening an account, it’s beneficial for the customer to open the account on the 1st

of the month. If he opens the account at any time after the start of the month, no profit

will be credited to him for the time period the amount deposited till the start of next

month.

ACCOUNT OPENING DOCUMENTS

The following forms are necessary to be filled up while opening a new account

1. Account opening Form

i. For Individual Account

ii. For Sole Proprietor Account

iii. For Partnership Account

iv. For Company Account

2. Account Opening checklist

3. Cheque Book Request

4. Know Your Customer Form

5. Specimen Signature Card

6. Phone Banking (if required)

7. Letter of indemnity from the customer who signs in language other than

English with infirm/shaky handwriting.

8. ATM Card Request (if required)

ACCOUNT OPENING REQUIREMENTS


189

The following conditions are necessary for opening an account at any branch of SCB;

FOR INDIVIDUAL ACCOUNT

The following information is required for opening account of any individual.

Full name

Joint name in case of joint account

Telephone number/Fax number

Occupation/employer

Complete address

Account opening date

Type of account

Currency name

Attested copy of CZ-50 attached if Zakat not applicable

Non-Muslim declaration submitted

Cheque Book Required

Clear Operating Instructions (signing authority specified in case of Joint

Account)

PFC/ Segment/ P. Mail Codes mentioned

Statement Frequency

Other services /terms and Conditions signed by all the parties (Hold

Mail/Fax/TIN)

Link Account to be signed by all the account holders and signature verified

I.D. copy /passport copy attached

Copy of birth certificate/ B form for minor accounts

FOR PARTNERSHIP

NIC copies


190

Request letter

NTN certificate

(Reg.) Partner deed

FOR COMPANY ACCOUNT

Request Letter

NTN Certificate

Certificate of Commencement (Public company only)

NIC copies of all signatories

Audited Balance Sheet of the company (for listed company only)

List of directors

Names of the secretary and other officers of the company

Board resolution

Certificate of incorporation

Memorandum & Article of Association

The company is required to communicate in writing any change that may take place in

any or all of the information given above. These resolutions are required to be

communicated to the bank and shall constitute the Company’s Mandate to remain in

force till revoked by notice in writing to the bank signed by

o the Chairman or

o any director or

o the Secretary acting or purporting to act on the behalf of the Company

FOR SOLE PROPRITERSHIP

NIC copies

Letter of introduction

Power of attorney


191

NTN certificate

Proprietor declaration

FOR TRUST/ASSOCIATION

NIC copy

Request letter

Legal opinion

Trust deed (reg.)

Resolution from of Trustee / Authorized Personnel

The names and signatures of any of the following authorities must be present on the

account opening forms alongwith the signature of the branch manager:

o Personal Financial Consultants (PFC)

o Customer Relationship Manager (CRM)

o Direct Sales Assistant (DSA)

o Area Relationship Manager (ARM)

MINOR’S ACCOUNT

According to Pakistani law

“A person is regarded as minor who has not attained the age of 18 years.

Under section 3 of majority act, 1875, if a competent court of law appoints a guardian

of his person or property or both before age of 18 years, the majority extends to the

age of 21 years.”

ACCOUNT OPPENING PROCEDURE

The natural guardian who signs both account opening form and S.S card can open

account in the name of the minor.


192

TITLE OF THE ACCOUNT

The title of the account should clearly indicate the name of the minor and guardian in

the following manner:

Special Instructions:

The guardian will continue to operate the account even if minor attains the age of

majority

Documents:

• National identity card of guardian

• Form “B” OF MINOR

• In case the guardian is appointed by the court of law then attested copy of

guardianship certificate be obtained on record.

Special care

• The age of minor should not be recorded either in account opening form or

any other document.

• In case the account has been opened under the directives of court, operations

should strictly be allowed in accordance with the clauses of guardianship

certificate.

• No overdraft is allo0wed I minor’s account.

ACCOUNT OF ILLITERATE PERSON

Before opening such account such persons should be informed that he/she cannot

issue cheques in favour of any other person

ACCOUNT OPENING PROCEDURE


193

Title of account

Name of account holder should be written in blocked form.

Special instructions:

Personal withdrawal

Documents:

Two attested photograph to be obtained one for pasting on AOF form and other on

S.S card.

Thumb impression:

Male left hand thumb impression

Female right hand thumb impression

Special care:

• Before opening such account illiterate person should be informed that he /she

cannot issue cheques in favor of any other persons.

• It should be ensured that that illiterate person should not be allowed to operate

the account unless he/she personally comes to the branch and put his /her

thumb impression in the presence of bank officials.

• Accounts of persons signing in raw hand must also be treated as accounts of

illiterate persons.

• Accounts of illiterate “Pardah Nisheen” ladies not willing to give photograph

should not be opened.

INTRODUCTORY REFERANCES FOR OPENING THE ACCOUNTS

As soon as a person opens an account with the bank, the banker customer relationship

is established. In such situation this is advisable the banker should not open new


194

accounts of unknown persons unless references regarding the integrity and

responsibility of the purposed persons are obtained from respectable parties. Failure to

exercise this care may result in serious consequences not only for the banker

concerned but also for the other bankers and general public.

It is not sufficient to obtain the reference but its genuineness must also be verified.

Omission of this may have serious consequences. In practice the bank see that there is

tough competition among bankers for procurement of deposits, so to press a

prospective new customer to find the desired reference may offend him, yet he is to be

welcomed by the banker as a source of fresh deposits. But these practical difficulties

have to be handled tactfully because the risk involved carrying out this requirement

partially or wholly may lead to undesirable results.

PRECAUTIONS TO AVOID FRAUD:

If preliminary necessary steps mentioned above are not taken and account is opened,

it is possible that an undesirable person is provided with a cheque book to defraud

innocent people or the person being an undercharged bankrupt may put the banker in

difficult situation.

1. SAFEGUARD AGAINST UNINTENTIONAL OVERDRAFTS:

Sometimes due to misreading of the balance an account may be inadvertently

overdrawn or the credit entry of customer is placed into the account of another person

by mistake who happens to have withdrawn that amount.in all such cases the amount

can only be realized if the person is man of integrity.

2. INQURIES ABOUT CUSTOMERS:

The bank should conduct inquiries about the financial positions of a new customer

and the information generated as the result of these inquiries are beneficial not only

for the same bank but for any other bank who has asked the former bank about the

financial opinion regarding the same customer.


195

3. PROOF FOR REASONABLE CARE AND INQUIRY:

Section 131 of negotiable instrument act, 1881 provides protection to a collecting

banker provided he collects the cheques of his customers in good faith and without

negligence. But if the banker fails to make preliminary inquiries he may be deprived

of statutory protection, being guilty of negligence.

KNOW YOUR CUSTOMERS (KYC)

The objective of knowing a customer is to have a fair idea about the identity, financial

resources, and general information about the customer at the time when the

relationship is established. A banker must have following information about the

customer:

Customer Name :

The documents should contain complete name as mentioned in original ID card /other

business documents.

Nature of business /profession:

In case the customer is of salaried person, enter his/her employer’s name. If the

customer is a businessman, enter the business name.

Address:

Enter the complete business/residential address. Prominent address identification

marks can also be used for ease of physically locating the address.

Contact Numbers:

Enter home, official, mobile, fax number and e-mail address (if available). Bank can

verify the number by giving the customer a courtesy call or by sending him a e-mail.


196

Other/ secondary/ mailing address:

Some customer may volunteer their parents or siblings’ addressor second home

address or a mailing address other than a permanent address.

Special instructions:

Clear-cut special instructions must be obtained from customers. If the customer has

not given any special instruction specified column must be cancelled by drawing a

line, as this column must not be left blank in any circumstances.

Existing/other bankers:

Almost most all the bankers usually have a banking relationship with another bank. In

case of customer who does not have an existing banking relationship, or does not want

to disclose the existing relationship, then it is strongly recommended that at least for

some time this particular account must be kept under observation.

Refer reject:

Customer’s instruction Neither a debit nor a credit.

Convertible Account:

Those accounts held in PKR currency from which demand drafts or pay orders can be

issued in dollars are called convertible accounts.

For having this facility, a requirement of minimum PKR 20 million in the current

account so that the bank can also take the benefit of larger deposits and further

lending. Usually this facility is provided to NGOs as they enjoy special rights.

OTHER FUNCTIONS

Other functions performed by this department are

• Provision of Bank Statement


197

• Provision of Balance Certificates

• Closure of the accounts

• Amendments in the existing accounts

• Processing Transfer of Funds from one account to the other

• Preparation of reports for the management

• Providing guidance for the customer

• Processing stop payment instructions

• Solving various queries of the customer

BANKING SERVICE UNIT

(BSU)

They most common functions of BSU are

Collection

Clearing

Internal Transfers (Inputs & Outputs)

Draft (Printing)

Pay Orders

Scanning

Cheque Books Issuances

Stop Payments Instructions

Standing Order Instructions

Traveler Cheque Issuance

COLLECTION

These are the cheques that are drawn on the branches of other banks outside Lahore.

These cheques are sent for collection.


198

Following procedure must be adopted for collecting these outstation cheques::

• Collection stamp

• Crossing stamp to make the cheque property of SCB.

• Stamp of “Payee account will be credited” on the backside of the cheques

• Received stamp on the Deposit Slip

For collection we should consider some points i.e.

• Cheque should not be postdated

• Account number and title of account should match

• Amount in figures and words should match

While collecting a cheque for its customers, the bank may come across two different

situations. First situation is that in which there is cheque drawn on a branch of some

other bank located in the cities where there is no branch of SCB while second

situation is of cheque of the cities where there is a branch of SCB.

COLLECTION IN THE AREAS WITH NO SCB BRANCH:

This is the first situation that might arise in case of collection cheques.

Step # 1

All the collection cheques are properly stamped and verified as discussed above.

Step # 2:

The collection cheques are mailed to CMO (Cash Management Operations)

department located at Head Office, Karachi.


199

Collection Cheques Sent to

Head office, Karachi

Sent to

If the Cheque is dishonoured If the cheque is

honoured


200

SCB Tufail Road

CMO, SCB Karachi Branch

NBP Branch located in the area specified in the cheque where it is presented in local clearing

Returned Back to SCB Karachi Branch

Credit SCB and Debit the respected Bank on which the cheque is drawn

Credit the depositor’s account

Returned Back to SCB Tufail Road Branch

Step # 3:

From there all the collection cheques are sent to National Bank of Pakistan

(NBP) in that certain city. NBP acts as a correspondent bank on the behalf of

SCB. The bank is required to pay certain commission to NBP.i.e.0.30% of the

amount of the cheques collected on behalf of SCB.

Step # 4:

NBP performs the same function as is required to be performed in case of

clearing of the cheques. Clearing process is discussed ahead.

Step # 5:

If the cheque deposited for collection is honored, NBP will credit SCB with

the same amount after deducting its commission charges. In case of

dishonouring of the cheque, NBP will sent the cheque back to SCB for further

inquiry.

Step # 6:

In case of honoring of the cheque, SCB will credit the amount in the favour of

the depositor. If the cheque is returned dishonor then no credit entry is passed

in the favour of the customer. Customer account will be credited after

confirmation of clearing.

COLLECTION IN THE AREA HAVING A SCB BRANCH

This is the second situation that might arise in case of collection of cheques.

Step # 1:

All the collection cheques are properly stamped and verified as discussed

above.

Step # 2:


201

The collection cheques are mailed to COU (Cash Operations Unit) department

located at Head Office, Karachi.

Step # 3:

This is the final step in which SCB, Head office, Karachi performs the work of

clearing discussed ahead

Collection Cheques sent

To Head office, Karachi

Sent to

If the Cheque is dishonoured If the cheque is

honoured


202

SCB branch located in the area specified in the cheque where it presents the cheque in local clearing

Returned Back to SCB Karachi Branch

Credit the depositor’s account

Returned Back to SCB Tufail Road Branch

SCB Tufail Road

COU, SCB Karachi Branch

.

Step # 4:

In case of honoring of the cheque, SCB will credit the amount in the favour of

the depositor. If the cheque is returned dishonor then no credit entry is passed

in the favour of the customer. Customer account will be credited after

confirmation of clearing

PRECAUTIONS

Cheque should not be post dated or out dared in any transaction. Cheque is valid only

for six months. Bank should not honor post dated due to certain reasons i.e.

• There may be possibility that balance become nil on that date

• May be customer stops the cheque

• May be the customer become deceased and the account of deceased person

cannot be operated without instructions from the court.

CLEARING

“ A system by which banks exchange cheques and other negotiable instruments drawn

on each other within a specific area and thereby secure payment for their clients

through the Clearing House at specified time” in an efficient way.

TYPES OF CLEARING

Inward Clearing

The cheques received from the representatives of other banks for payment are called

inward clearing.


203

Outward Clearing

The cheques delivered to the representatives of other banks for clearing are outward

clearing.

OUTWARD CLEARING AT SCB

SCB, Tufail Road sends those cheques for clearing, which are drawn on the branches

located in Lahore and are to be presented for the local clearing.

PRECAUTIONS

Certain points are checked in clearing. These are as under:

• Check the account number and title of account in which the account is to be

credited.

• Make sure that the amount in figures and words are same.

• Cheque is not post dated

• Signature of the drawer appears on the face of the instrument.

• Instrument is not mutilated.

• There should not be any material alteration, if so, it should be properly

authenticated.

• If order instrument suitably indorsed and the last endorsee’s account being

credited.

• Endorsement is in accordance with the crossing if any.

• The amount of the instrument is same as mentioned on the paying-in-slip and

counterfoil.

• The title of the account on the paying-in-slip is that of payee or endorsee (with

the exception of bearer cheque).

An instrument is in order if;


204

• Clearing stamp is affixed on the face of the instruments and should be clear.

• Pay-in-slip and counterfoil (The receiving stamp is affixed in such a manner

that half appears on counterfoil and paying-in-slip).

• Pay-in-slip should be properly stamped

• The instrument is stamped “Payees A/C only” at the back.

• Payee’s account credited on the back side of the cheque.

• The instrument along with pay-in-slip is retained by the bank.

• The counterfoil is given to the customer duly signed.

A list of the cheques presented for clearing is presented and all the cheques launched

in the clearing are sent to SCB, Mall Branch on the same date. On the very next day

these cheques are sent to State bank’s department called NIFT. NIFT make the

clearance of cheque. The whole clearing process is performed there.

In case the cheque is honoured, the Mall branch credits the customer’s account. In

case of return of the cheque due to any reason the cheque is returned to SCB, Tufail

Road branch. The entry of the instrument returned unpaid is made in Cheques

returned Register. If the instrument is not to be presented again in clearing then a

covering memo is prepared. The covering memo along with returned instrument and

objection memo is sent to the customer who sent the same to his account.

NOTE:

A bearer cheque does not require any discharge. Similarly an instrument in favor SCB

need not be launched in the local clearing.

INWARD CLEARING PROCESS:

The inward clearing process of the cheques is performed by the Mall branch only and

the drawer’s account is credited by the same branch. SCB, tufail road branch has

nothing to do with the inward clearing of the cheques.


205

Outward cheques returned unpaid:

These are the cheque returned unpaid by us in inward clearing due to some objections.

Inward cheques retained unpaid:

These are the cheques retained unpaid which were lodged by SCB in Outward

Clearing.

Return of cheques after clearing house:

Suppose all cheques received in the inward clearing are passed and later on it is found

that a cheque should have been returned, in such cases, we contact the collecting

branch and request them not to make payment against the proceeds of the cheque

which was not returned unpaid by us in due time. The cheque with objection memo

along with a covering letter is sent to the collecting branch, making request to issue a

payment order in SCB favour.

CLEARING HOUSE

It is a place where representatives of all banks sit together and interchange their

claims against each other with the help of controlling staff of State Bank of Pakistan.

Where there is no branch of State Bank of Pakistan, the designated branch of National

Bank of Pakistan act as controlling member instead of State Bank of Pakistan

Rules and regulations of Clearing House:

• Timing: Monday through Saturday

i. 1st Clearing at 10:00 a.m.

ii. 2nd Clearing at 2.30 p.m.

• Each bank will send competent representative to exchange the cheques.


206

• Each bank is required to insure that all cheques and other negotiable

instruments are properly stamped and suitably discharged

• An objection memo must accompany each and every cheque when return

unpaid duly initialed.

• Each bank is required to maintain sufficient funds in the principal account

with SBP to meet the payment obligations.

• The State Bank of Pakistan debit the account of each member of the clearing

house with the proportionate working expenses incurred on the operation of

clearing house. These expenses are very nominal.

Working of Clearing House:

All the banks, which are the members of the Clearing House, maintain an account

with the State Bank of Pakistan by debit and credit to which the clearing

statements are made. If on a particular day a bank delivers cheques and other

negotiable instruments worth more than the total amount of cheques received by it

that banks account with State Bank of Pakistan will be credited with the

differential amount. If on the other hand the totals amount of cheques and other

negotiable instruments drawn on a certain bank by other banks is more than the

total amount receivable by it from other banks, then this bank’s account will be

debited on the day.

The State Bank of Pakistan maintains two major books for clearing house purpose.

House Register

In which the amount and number of cheques received and delivered by each bank is

noted down.

House Balance Book:


207

In which the amount and number of cheques received and delivered by each bank as

well as the amounts which are to be received and paid to respective banks through

their accounts by State Bank of Pakistan is written down.

THE WORKING OF CLEARING HOUSE

The clearing house works in the following manner:

1. The instruments are delivered to the respective banks.

2. The instruments drawn on our bank are received from other banks.

3. The amount and number of received of instruments are entered in the House

Book from the main schedule of respective banks.

4. The amount of instruments delivered, received and the difference is written on

a figure slip provided in the clearing house and the slip is returned to the

supervisor.

5. The instruments are arranged branch-wise.

6. Schedules are detached and kept safely.

SPECIAL CLEARING

In addition to the normal clearing function at Clearing house it is mutually

agreed to hold an extra clearing at the clearing house on the particular day and

time which is known as “special clearing” It is arranged due to the rush of

work arising out of say ,more Holidays declared by the Central Govt. at a time

, but normally special clearing is held on last working day of half yearly and

yearly closing i.e. 30th June and 31st Dec. every year.

INTERNAL FUNDS TRANSFERS

Internal transfers are used to transfer funds from one branch to the other branch of the

same bank. These are the cheque of standard Chartered Bank (of which branch it does

not make any difference). All we have to do is to


208

• Cheque the account number

• Verify the signature

• Title of account and pass the entry for i.e. Debit the customer account

(drawer) and credit the customer account (drawer) according to case.

Codes are assigned to debit (Dr) and credit (Cr) i.e.

602 to Dr.

515 to Cr.

EXTERNAL FUNDS TRANSFERS

DEMAND DRAFT

It is an instrument payable on demand for which value has been received, issued by

the branch of the bank drawn i.e. payable at some other place (branch ) of the same

bank. In case of agency arrangements, Demand draft can also be issued by one branch

of the bank payable to other branch of the other bank.

PROCEDURE

It is the order of the bank to pay rupees on the demand of the customer presented in

someother city of Pakistan.. For printing drafts and pay orders we will first check the

balance of that person who has requested for demand draft or pay order i.e. it is

covering the charges or not.

• Fill in the application form for Demand Draft.


209

• Fill in all information such as name of the beneficiary, place where the DD is

drawn, amount, mode of payment ,cash / cheque / debit authority ,signature

with name and address.

• Check the application form .

• Charge commission as per schedule of charges.

• Recover excise duty and withholding tax as per application rates.

• Get the exemption form filled in if the customer has NTN number.

• Get voucher from cash department after the customer has made payment by

cash /cheque.

• Prepare the demand draft (security stationery).

• The issuance of DD is computerised and the amount is automatically protect

graphed during printing, for avoidance of forgery.

The procedure for drafting leads to three situations.

Drafts for cities where SCB branch exists

Drafts for cities where SCB branch does not exists

1. Drafts out side the country

First situation: Where SCB branch exists

Lahore where there is a branch of SCB

If a customer wanted to draw draft from MCB Sialkot and has asked for a DD at SCB,

tufail road branch. Tufail road Dr. the customer account and credit to MCB while

MCB Sialkot Cr. customer account and debit SCB.


210

SCB, Lahore Tufail road

MCB,Sialkot

Dr. Customer a/c Cr. Customer a/c

Cr. MCB Dr. SCB

Second situation- where there is no SCB branch

Draft on Multan where there is no branch of SCB

SCB has to deal in a large number of transactions for Multan but it has no branch

there. So National Bank of Pakistan (NBP) works as correspondence bank for SCB

and certain charges are deducted by MBP for providing this facility.

In this case draft can be draw from Soneri bank.

SCB, Lahore Branch Dr. Customer account and

Cr. NBP

NBP, Multan Branch Dr. SCB and

Cr. Soneri bank

Soneri Bank Dr. NBP and

Cr. Customer Account.


211

Lahore SCBDr.Customer a/c

Cr.NBP

MultanSoneri

Dr. NBPCr. Customer a/c

Draft Draft

SCB has a large number of DDs drawn on the banks located in Multan but not is the

same case in Mian Chunnu. So if there is any DD for Mian Chunnu , then NBP first

confirms either by fax or phone the genuineness of the transaction and then makes the

payment on behalf of SCB.

Third situation-SWIFT/TELEX

An organization located in Belgium has originated the system of Swift. This

organization is responsible for the organization of international transactions in which

foreign currency is involved.

Suppose a customer has asked for draft of x amount from ACB bank, situated in

China. The process is done through swift. It is an advance form of telex.

USA (New York) Have file for Pakistan SCB.

In Pakistan,

SCB, Lahore Branch

Dr. Customer Account

Cr. SCB, New York


212

Multan NBP

Dr. SCBCr .Soneri

Where as in China

ABC Bank

Cr. Customer Account and

Dr. SCB New York

.

Singals

Signals

Through Signals

Swift has assigned codes to all the banks that deal in foreign currency.

SCB code is GRNDPKXXX

Beside this they have set certain rules:


213

Pakistan SCBDr.Customer a/c

Cr. SCB New York

SWIFT (as foreign

currency is involved)

China XYZ bankCr.customer a/c

Dr. New York SCB

USA (New York)Dr. SCB

Cr .ABC China

USA (New York)Dr. SCB

Cr .ABC

• Dollar Transactions will be reported in USA New York

• GBP Transactions will be reported in UK London

• Euro Transactions will be reported in Frankford Germany

Swift takes minimum 36 hours to complete processing and transfer the funds at the

desired location outside the country. The whole business runs smoothly as there is

high level of security and the banks don’t consider checking the genuineness of the

transaction. That is why; the processing time has been decreased to a great extent.

PAY ORDER

Pay order issued from one branch only be payable from the same branch. It is

normally issued for payment in the same city. It is normally referred as Banker's

cheque. It is the order of the bank to pay to specific person in whose favors Pay order

is issued. Pay order has no expiry date. In pay orders, the amount is credited first and

then processed, opposite to what happens in cheques.

• Get the application form.

• Issue pay order after recovering cheques.

• Do necessary vouchering.

• Make entry in PO issue register.

• All pay order shall be crossed "Payees account only".

Issuance of Pay Orders, Drafts & T.Ts.T.Ts Customer Rs. 500 + telex ChargesT.Ts non-Customer Rs. 1500 + telex chargesDrafts Customer Rs. 500Drafts non-Customer 0.2% min. Rs. 1000Drafts & T.Ts drawn on NBP (customer) 0.3% min. Rs. 1000Drafts & T.Ts drawn on NBP (non-customer)

0.3% min. Rs. 2000

Cancellation Of Draft Rs. 500Telex/Telephone Charges Rs. 500 per telex, telephone callPay Orders Cutomer Rs. 300Pay Orders Non-Customer Rs. 1200Cancellation of Pay Orders Rs. 500


214

SCANNING

As discussed earlier, the primary process for account opening is performed at the

branch itself, but after completing the whole documents, these are mailed to head

office Karachi where the back office operations are completed and a new account is

activated in less than 24 hours.

• The DSAs, PFCs, ARMs, or CRMs, after completing the whole

documentations hand these over to BSU.

• These accounts are already assigned an account number from the Master File.

• The accounts which are urgent, in case huge amount been deposited in the

new one are scanned.

• All the scanned documents are put in files and mailed to Head Office Karachi

before 4:00 P.M. daily.

• The department located at SCB, Karachi operates the account within a few

hours time.

• A list of all the scanned and mailed documents is prepared at the end of the

day.

• Another list is prepared for all the unscanned documents and is attached to the

folder of unattached documents

• A copy of the scanned and mailed files is kept by the branch itself.

• All the documents whether scanned or unscanned are sent by courier to Head

office Karachi.

• Both the branches have continuous contact by way of mails, telephone calls

and faxes.

• This system ensures that the customers’ accounts are opened efficiently

enhancing customers’ satisfaction.

• Apart from account opening documents, other requests such as

• Cheque book request,

• Funds Transfers Request from one account to the other,


215

• Change in Address, telephone, e-mail address,

• Change in specimen signatures, etc all follow the same pattern.

CHEQUE BOOK ISSUANCE

All the cheque books are issued by head quarter Karachi. The following procedure is

followed while issuing new cheque books for the customers:

• Customers bring in their cheque book request on the form provided by the

bank.

• A list of all the requests is prepared by the branch.

• These requests are sent to Karachi by courier on daily basis.

• In case the request is urgent, the request form is scanned and mailed to Head

office Karachi.

• Head Office Karachi prepares the required cheque book and sends them

through courier on daily basis.

• All the cheque books received are entered into the cheque book register.

• These are also tallied with the sheet prepared for the requests.

• Acknowledgements are received before delivering the cheque books to the

customers.

• Cheque books are delivered after the verification of signatures.

• Head office issues cheque books of 25 & 50 leaves.

• 10 leaves of cheque books and single cheque are issued by the branch it self.

Cheque Book Issuance Charges

1. Rs. 5 per leaf

2. Rs. 10 per leaf for Flex account

3. (First 25 leaf cheque book is free)

4. Rs. 500 per cheque book for customers not maintaining minimum

balance requirement.


216

5. Charges are waived up to 50% if requested through ATM or Phone

Banking.

STOP PAYMENT

It is the order of the customer to the bank to stop certain cheque, all the cheque or

even all the transactions of his account. Only if he verifies the transaction then his

account would be operated. Generally these types of instructions are given by the

customers when they have lost a bearer instrument.

The bank deducts the following charges for stop payments;

• Stop payment of cheques Rs. 500 per cheque

• Stop payment of blank cheque book lost Rs. 1000 per cheque book

• Stop payment of FCY draft US $ 25 or equivalent

PKR

per draft plus

correspondent

bank charges

• Stop payment of LCY draft Rs. 500 per draft

STANDING ORDER INSTRUCTION

It is the order of the customer to make certain payments (monthly, yearly, quarterly or

on certain dates) out of his account.

The bank charges for standing instructions are;

1. Charge per transaction Rs. 500 per transaction + usual charges

on

remittances

2. Amendment Rs. 100 per amendment

3. Default due to lack of funds Rs. 500


217

CHEQUE RETURN PROCESS

If any cheque is returned back, the bank makes an entry in “Cheque Return Register”

Cheque may be returned due to many reasons :

• Due to banks fault

o Absence of proper stamping

o The stamps may not be clear

o The branch may not be the one specified in the cheque.

o A collection cheque may have been launched in local clearing.

• Due to customer’s fault

o Insufficient Funds: Sometimes a cheque is returned due to the fact

that there are insufficient funds in the account of the drawer

o Refer the Drawer: At times the bank doesn’t disclose the reason for

return as it wants to keep the trust and credibility of the drawer or the

drawer himself has placed the instructions in this regard. The drawee is

advised to refer to the drawer and get the reason for return.

• Due to other reasons

o Present It Again: If a person wants to withdraw a big amount from the

bank without giving a prior notice, the bank specifies this reason for

return. Generally bank does so when it doesn’t have liquid funds to

honour the cheque when it is presented. Sometimes due to crossed

cheque transactions, the account of a person is yet to be credited, so the

bank asks the presentor to present it again.

o Effects Not Clear: In case a person deposits a cheque drawn on a bank

locate at some far off place and issues a cheque for the same or less

amount at the same date and that cheque is presented for payment

before the bank the same day or the very next day, the bank places this

reason for return. The reason is that collection takes 3 to 5 days to


218

complete and his account might not be having the amount for further

withdrawals.

o Multilated, Torn & Damaged Cheques: in case of a mulilated, torn or

damaged cheques, the bank does not honour the cheques and return

them back with this reason.

o Cheque Issued In The Name Of A Company: A cheque issued in the

name of the company cannot be cashed on the counter but is to be

deposited in the bank account of the company. No matter the cheque is

crossed or not.

o Instructions Not Complied With: If the specific instructions regarding

the operation of the account have not been complied with, the bank

will return the cheques. Such instructions are provided in case of a

joint account, a partnership account, a company account etc.

o When the Drawer Has Deceased: if the cheque is presented after the

death of the drawer, the bank will not make any payment. The bank

will make the payment from the account of the deceased without any

Succession Certificate or when the bank has received an indemnity

from a person who ha an amount more than that of deceased in the

deposit with the bank.

If it is banks fault so it is banks responsibility to sent it again for clearance

CONVERSION OF DOLLAR ACCOUNT

INTO PAK RUPEE ACCOUNT

If any customer wants to convert his/her dollar account in to rupee account he has to

fill a request form specifying the purpose behind his action. He has to mention the

following

• Source of income


219

• Purpose of conversion

• Amount

• Account number

For the conversion of Dollar accounts into PKR accounts, anyone of the following

forms (varying from situation to situation) are used:

o R Form

o M Form

o T-1 Form

LEDGER FEE

It is the fee charged by the bank for maintenance of account of customer .If the

account of the customer falls below the minimum requirement then bank charges a

nominal amount as ledger fee for administration and paper work.

The bank deducts the following amounts as ledger fee

FCY accounts $ 15 or equivalent in other foreign currency per month

Fee is levied separately on frozen and extension accounts.

Balance requirements:

USD 10,000

GBP 10,000

EURO 10,000

JPY 1,000,000

COUNTER CHEQUE

These cheque are issued according to the instructions of the customer e.g

If he forgot his cheque book at home then counter cheque are issued @ Rs.200/- per

leave but this can be issued up to only the amount of Rs 50000/-


220

LOSS OF CHEQUE BOOK

In case of loss of the cheque book, a new account of that customer will be opened. All

the documentation will have to be transferred in to his new account.

LOCKERS

During my six week internship program, I did not work in the Lockers. So I am giving

a brief overview of this department.

For having the facility of lockers one should have an account in this bank. Beside this

he/she has to fill a “locker rental application form”. A customer has to deposit an

annual rental fee. Annual fee will double if customers are not maintaining a minimum

balance of Rs.25000.

There are four types of lockers available in Tufail road branch of Standard Chartered

Grindlays Bank. These are

TYPE Cubic Feet Annual Rent

Small lockers > 0.25 Rs. 1000/-

Upper row medium lockers 0.75-0.90 Rs. 3500/-

Medium lockers 1.0-2.0 Rs. 4200/-

Large lockers > 2.00 Rs. 5000/-

Locker purchase fee is Rs. 2000 per locker waived for Priority

Customers on lockers issued w.e.fr. 01-07-02 till

31-12-02)

Breaking charges Actual or minimum Rs. 5000 per locker

Late payment fees 25% of the applicable annual locker rent per

quarter

REQUIREMENTS FOR RENTAL APPLICATION


221

• Name

• NIC copy

• Address

• Occupation

• Telephone no.

• Account number

LENDING DEPARTMENT

ADVANCES

A bank is a profit seeking institution. It attracts surplus balances from the customers at

low rates of interest and makes advances at a higher rate of interest to the individual

and business firms.

Advance made by commercial banks are mainly of three types;

• Overdrafts

• Cash Credit

• Advances against moveable properties such as

Pledge

Hypothecation

LOANS

A loan is an advance made by a bank to the borrower in a lump for a period exceeding

one year from the date and the credit extended is for meeting the long term capital

requirements of the borrower. Loans made by the banks are generally against

immovable property such as

Mortgage

Advances and loans granted by the bank are the most important assets for the bank as

these accounts for a large fraction of the bank’s earnings.


222

Guiding Principal Of Lending

Lending forms a very important portfolio for the commercial banks. The deposits are

mobilized for the purpose of making advance. Deposits are said to be the lifeblood of

commercial banks but if there is no lending, then it would be n expense and very risky

for the banks to survive.

LENDING DEPARTMENT AT SCB (CUN)

Lending Department at SCB, tufail road is termed as Credit Unit North. Asif Habeeb

(Team Leader) and his team in CUN have been delegated the authority to deal in the

lending operations of all the ten north branches of Standard Chartered Bank.

The branches include

• Lahore Mall Branch

• Lahore Tufail Road

• Lahore Gulberg

• Lahore Defence

• Lahore New Garden Town

• Sialkot

• Faisalabad

• Peshawar

• Islamabd

• Rawalpindi

Standard Chartered Bank provided the following credit facilities to its customers;

Fund based

Overdrafts

Non-Fund Based

Letter of Credit

Financial Guarantees


223

Provided to the banks in the foreign countries such as Dubai,

United Kingdom, etc. such as HSBC, SCB

OVERDRAFTS

Lending department at SCB, tufail road branch deals in the fund based facility only

I.e. Overdrafts. I pent last week of my internship program in this department. So I am

going to give a glimpse of what happens while preparing a Credit Proposal Line for

the customer.

Overdraft is the right given by SCB to his customer to draw in excess of his current

account upto a fixed limit. The facility to overdraw by cheques is allowed only in

current account. The customer is given by the option to overdrawn his current

balances either in installments or in lump sum upto the limit fixed by the bank. The

interest is charged only on the negative balance in the customer’s account.

The bank does not provide the facility of overdraw on checking accounts to all of its

customers. The bank

scrutinizes the applications,

examines the credit worthiness of each borrower and

then approves the upper limit to overdraw the current account with security.

The granting of overdrafts to the customers is advantageous to both the parties, the

bank and the customer:

The bank

Earns income by making advances which are mostly secured against.

The Customer

Gets the temporary amount in lump sum or in installments and

also has the facility of repayment in installments. The interest is

charged only on the debit balances.


224

How To Judge The Safety Of Advances

Before advancing the credit facility, the bank conducts a 7 C’s analysis proposed by

Clemens, of the customer willing to enjoy the facility.

This 7 C’s analysis consists of

1. Character

2. Capital

3. Capacity

4. Cover

5. Collateral

6. Country Risk

7. Currency Risk

1. Character

Character refers to the general reputation enjoyed by the borrower judged on the basis

of the past records of the borrowings by the customer.

Every customer has two types of characters

Moral Character

Moral character throws light on the ethical aspects of the

borrower’s personality. These moral values have an indirect

impact on the sanctioning of the funds.

Business Character

refers to the financial credit ratings of the customer and has a

direct impact while deciding upon the credit proposal.

2. Capital

Capacity refers to the financial resources which the borrower is willing to invest

into the new project. In case no capital is brought in by the borrower, it would

undermine his capacity to borrow funds.


225

3. Capacity

Capacity of the borrower has two aspects.

a. Managerial capacity

Whether the borrower has the ability to utilize the funds

disbursed efficiently and effectively.

b. Repayment Capacity

Whether the borrower has so much of potential pay back the

principal amount alongwith the mark ups as and when they are

due.

4. Cover

Cover refers to accessing the financial risk coverage in disbursing the funds to

the customer.

5. Collateral

In the employment of his funds a bank generally attaches great significance to

the consideration of security. Banker largely discounts on borrowed funds i.e

deposits; therefore, he cannot afford to take undue risks. He guards his

interests by taking securities.

6. Country Risk

The bank accesses the national conditions of the country before advancing any

amount to the client. He considers the various aspects such as

Economic conditions

Political conditions

Social Factors

Legal Aspects

Technological Advancements

Governmental Regulations


226

After a depth analysis of the above given factors, the bank is in a position to

decide upon the credit proposal.

7. Currency Risk

It refers to the impact on the repaying capacity of the borrower owing to the

fluctuations in the foreign exchange rates. This factor is considered in case the

borrower is engaged in export and import of raw materials or finished goods.

This & C’s analysis of the customer helps the bank in forming decision as whether to

finance the short term financing requirements of the borrower or not.

Acceptable Securities

The bank grants overdraft to a few selected customers having high credit worthiness.

Bank gives loans on the basis of securities such as:

• Government securities (whether issued by SCB or any other bank)

Defence saving Certificates (DSCs)

Special Saving Certificates (SSCs)

Special US$ Bonds

• Deposits

Foreign Currency Deposits

Local Currency Deposits

The corporate sector gives loan on the basis of inventories, (pledged in some others

bank) and so on. It advances loans against the securities in the form of inventories

such as cotton bales. These cotton bales are also pledged at some other place.

PARTICULARS OF OD FACILITY


227

Facility Approval Limits

The lending officer has been authorized to approve the facilities upto a certain limit. If

the facility demanded exceeds that limit, the case is referred to the higher authorities.

Asif Habib, the team leader at the lending department can approve the facility

upto Rs. 1 million .

The facilities falling between PKR 1 million to PKR 2 million are approved by

the area manager, Aalesheen Zaidi.

The facilities above PKR 2 millons are referred to the head office Karachi for

approval.

Safety Margin/Cushion for the bank

The bank advances the overdraft facility against the government securities or the

deposits maintained with any bank. While advancing the funds, the bank retains a

certain percentage of the realizable value of the security as safety margin or cushion.

Loans are not justified on the basis of the securities but these are the last recourse for

the bank in case of default by the client.

• As per regulation imposed by the State Bank of Pakistan, the banks are

required to advance funds up to 75% of the realizable value of the securities

thus retaining a safety margin of 25%.

• The bank lending policy allows the lending officer to lend up to 90% of the

value of the securities.

• The facility of 15 %, exceeding the allowed limit is secured against the

hypothecation of households and stocks of the customer resulting in

compliance with the SBP’s regulation as well as greater benefits for the client.

• However this advantage is available to only those customers who have good

credit standings and strong banking relationship. The credit officer has been

vested discretionary powers in this regard.

• The limit for the OD facility is revival on the request by the customer during

the credit term.


228

• During the term period, the bank has the discretion to reduce or increase the

limit once assigned.

CIB Report

On the receipt of the loan application, the first source of getting information regarding

the credibility of the customer is CIB (Credit information Bureau) report from SBP.

This is credit information and a default showing report issued by the SBP about any

customer who is already engaged in the credit taking activities with the banking

institutions.

All the banks are required to obtain CIB report while disbursing a credit facility of Rs.

500,000 or more thus safeguarding the rights of the bank in case of the default of the

customer. However if the limit is below Rs. 500,000, the lending officer has the

discretion to go for the report.

Particulars of CIB report

1. Full name of the borrower with complete address and NTN number

2. Full name of the proprietors/ partners/ directors with father or husband names

3. NIC number of the proprietors/ partners/ directors

4. Nature of the business

5. Amount of the facility outstanding

6. New facility applied for

If the CIB report shows satisfactory results about the client, only then the bank can

lend the funds to the customer.

Markup Charges

The rate of mark up charged by the bank depends on two things;

• Nature of the securities

• Size of the securities


229

Generally the bank charges a rate between 13% and 15 % but in some cases it can go

upto 70% even. The newer the customer is the greater will be the rate of return and

the older the banking relationship, the lower are the charges. However, the bank is not

rigid in its credit policy as these rates are negotiable. If the credit facility is of Rs.1

crore or more, the lending charges may go down to 11%. However if the facility is of

a relatively small amount, and the customer is new, the bank may charge a mark up

rate of 17%. The reason is that the bank does not have any information regarding the

business character of a new client as he has just entered the borrowing arena. To cover

the risk of negotiating with a new client, the bank charges a high return for the funds

sanctioned.

Marking of Lien

Lien is the right of the bank to retain the securities of the borrower till the debt due

from that person is recovered in full.

The bank marks the securities under lien as it safeguards the bank’s right against the

default by the customer. The customer cannot encash the securities unless these are

marked “Lien Removed” by the same bank.

• The customer must properly endorse the securities provided as it gives the

right to the bank to liquidate them in case of nonperformance by the customer.

The bank doesn’t accept any security provided it is properly endorsed by the

borrower.

• If the securities provided are the government securities issued by SCB, the

Government Securities Officer puts a triangular stamp of “Securities Under

lien” on these securities.

• However in case the securities are issued by some other bank, the customer

writes an authority letter requesting that particular bank to mark lien on the

said securities in favour of Standard Chartered Bank. This letter which is

known as “Lien Notation Consent Letter” is then handed over to the lending


230

officer who makes the arrangement of sending this letter along with the

relevant securities to the issuing bank for the marking of lien.

• At the maturity of the facility, the customer is authorized to get back the

possession of the securities provided he has paid back the facility attained

along with the mark up charges. The bank removes the lien and returns the

securities to the customer.

Mark Up Payment

Like the revival of the limit, the rate of mark up once decided by the credit officers

can be revived before the expiry of the credit term. This means that normally, mark-

up will be charged at the same rate till the date of expiry unless otherwise changed by

the bank. While reviving the facility, the lending officer may continue with the same

rate unless otherwise provided by the terms of the review.

The mark up is charged on the utilized part of the assigned limit calculated on daily

basis but is collected by the bank after three months. A separate account is opened for

the markup expense and the amount is debited to that account. This is done to avoid

compounding of markup.

At the end of each quarter, a reminder notice is served to the customer stating the

amount of mark-up to be paid for that particular quarter. If within 10 days of serving

the notice, the customer does not pay the outstanding amount due, the Bank reserve

the right to adjust the outstanding amount by liquidation of adequate amount of the

underlying securities, without giving any notice to the customer.

Correspondence

The banks deal in the documents. Each and everything must be communicated in the

written form and properly approved by the customer and the bank as the case may be.

The lending officer prepares a file of those documents, which act as a communicator


231

between the bank and the client. This file contains all the communication between the

customer before and after the disbursement of the facility. If a customer wants to

instruct a bank about anything, he can do so through letters and bank keeps all these

records in the customers’ files in order to avoid unfavorable circumstances in the

future.

REQUIRED DOCUMENTATIONS

While preparing for providing the required facility, the lending officer prepares two

different types of documents.

Transaction Documents

These are the written evidences of the transactions between the bank and the

customer relating to the matters such as Offer Letter, mark up agreement,

Quarterly mark up payment authority, and o on.

Security Documents

These are documentary evidences of the type and value of the securities

submitted with the bank against the overdraft facility. The documents such as

Letter of Lien, Letter of Hypothecation, etc. come under this head.

The following documents are prepared by the lending officer while providing an

overdraft facility to the customers;

• OD Facility Checklist

• SBP Regulations

• Demand Promissory Note with Rs. 100 stamp

• KYC (Know your customer)

• Facility Advice Letter (FAL) or Offer Letter

• Loan Application


232

• Basic Fact Sheet

• Asset Liabilities Statement

• Income Tax Return

• Quarterly Markup Payment Authority

• Letter of Lien

• Letter of Hypothecation

• Markup Agreement

• Copies of Securities

The credit officer, after proper verifications and checking, approves the overdraft

facility to the customer. In case the facility is beyond the powers designated, all the

above given documents are forwarded to the head office Karachi for approval.

Now let’s discuss briefly each and every document and the very specific purpose they

are used for.

OD Facility Checklist

OD Checklist acts as a precautionary measure or reminder to the lending officer that

all the necessary information regarding the customer have been taken before

disbursing the loan. It checks whether all the steps have been performed while

deciding upon the credit disbursement.

Prudential Regulations by SBP

There are some regulations o be followed while disbursing funds to various borrowers

named Prudential Regulations by State Bank of Pakistan.

A bank has to maintain liquidity with central bank, i.e. 25 %of

its total deposits.

Total financing facilities by a bank to any single person shall

not at any point of time exceed 30% of the bank’s assigned


233

capital maintained under Section 13 (3) of the Banking

Companies Ordinance, 1962.

The maximum outstanding against fund base financing

facilities can’t exceed 20% of the bank’s assigned capital or

Rs. 12 million, whichever is higher.

No financing facility, fund based or non-fund based alike, shall

be made for a sum exceeding Rs. 100,000 to any individual

person without obtaining realizable securities of the value not

below the outstanding amount.

While granting any facility, the bank shall ensure that the total

facility availed by the borrower from banks/financial

institutions does not exceed 10 times of the capital and

reserves of the borrower as disclosed in the Audited Accounts.

Debt and Equity ratio must be kept at 60:40

A bank can not invest all of its funds otherwise it will be difficult to meet urgent

needs. Before sanctioning the loan, the bank has to follow firstly the various

regulations given above, secondly the policies formed by the top management and

finally a complete analysis of the borrower resulting in the Credit Line Proposal to

be offered.

Demand Promissory Note

It is a legal document with a Rs. 100 stamp containing a promise on the part of the

customer to return the amount withdrawn on the demand of the bank. This is a safety

measure adopted by the bank at times of low liquidity.

Know Your Customer

KYC form performs more or less the same purpose as in case of account opening. It

contains all the information about the customer such as name, addresses, occupation,

purpose of the facility and so on.


234

Loan Application

The person willing to avail the credit facility is required to fill in the Loan

Application specifying the value of the facility required to obtain.

On the receipt of the application, the lending officer performs the 7C’s

analysis of the customer as mentioned already.

It must be approved by the lending officer, or the area manager as the case

may be.

It is prepared at the time of the approval of the facility.

It contains the points such as

• Name of the client

• Father/Husband name

• Occupation

• Mark up rate

• Proposed limit for OD

• Existing limit if any

• Maturity Date

• The nature of the securities

The loan application must be signed by the customer.

Facility Acceptance Letter (FAL):

FAL, also called offer letter is prepared by the lending officer and must be signed by

the customer .After the CM is approved, the next step in the lending process is that of

preparation of an acceptance letter by a bank.

An offer letter/FAL contains the details such as

• Facility Limit

• Review/Repayment Date


235

• Mark up rate

• Nature of securities

The customer, by signing the offer letter undertakes to comply with all the terms and

conditions written on it such as;

• The facility has been granted at the sole discretion of the bank and is subject

to such credit restrictions as may be laid down from time to time by the State

Bank pf Pakistan.

• The bank reserves the right to alter the terms and conditions, rates of mark up,

commission, fees, and charges or cancel the facility at any time. In such a

case the borrower will be required to discharge the total outstanding amount

alongwith the mark up due .

• The bank will be reimbursed all the costs incurred (such as litigation charges,

legal fees) in recovering any amount from the borrower through litigation or

otherwise.

• The bank charges will be levied in accordance with the schedule of bank

charges applicable at that time.

• Government levy, if any imposed from time to time will be recovered from

the customer.

Basic Facts Sheet

The core objective of this document is to obtain references from the customer

while approving the facility. No facility is approved without obtaining references

from the client.

Assets Liabilities Statement


236

In case the facility proposed is greater than Rs. 500,000, the customer must submit

his Assets and Liabilities statement throwing light on his financial worth at that

point of time.

Income Tax Return

A copy of income tax return is also attached with the documents as required by the

State Bank of Pakistan.

Quarterly Mark up Payment Authority

As already mentioned, the mark up is calculated on daily basis but the payment is

made on quarterly basis. This document specifies the mode of mark up payment

desired by the bank. Generally the customers make the payment themselves but in

case they don’t make the payment the bank has the authority to deduct the mark

up due from his account.

Letter of Lien

Letter of lien is a legal document obtained for the purpose of marking lien on the

securities from the owner of the securities.

• In case the securities offered against the facility are owned by the person

actually utilizing the facility, he must sign the document.

• Where the owner of the securities is someone different from the one who

has applied for the facility, the owner must sign the legal document.

• In case of joint ownership of the securities, all the parties to the securities

must sign the letter of lien otherwise it would not be enforceable.

• This letter shows the approval of the owner in providing the securities

against the facility.

• A stamp paper of Rs. 25 is used for this purpose.


237

Letter of Hypothecation

As mentioned above, the bank can provide a limit up to 75% of the value of the

securities. In case the customer wants to obtain a facility beyond this limit, he has to

bring in additional security in the form of hypothecation of stocks and households.

Hypothecation is defined as a legal transaction whereby goods may be made available

as security for debt without transferring property or possession to the lender. The

advance of loans against goods without taking any possession is very risky on two

main grounds. One, as the goods are in the possession of the owner, the borrower may

take out the goods without informing the bank. Secondly, the bank does not have a

legal claim as it does not have a valid charge over the goods. That is why the bank

offer this facility to those customers only who have good track record and strong

business relationship with the bank.

F-229/2-In case OD facility granted against deposits

As discussed above, the customers can obtain the overdraft facility against two type of

securities; one is Govt. Securities. And the other one is Deposits in local or foreign

currency. This document is used if the customer, instead of providing securities or

goods for hypothecation, offers his fixed currency deposit on which the Bank marks

its lien. A different form of this document is used for local and foreign currency

deposit offered as security. However, this document is not frequently used as in 90%

of the cases; customers offer government securities and/or household goods.

Once the customer has signed all the above-mentioned documents, then till the time

the limit assigned to the customer remains the same or in case it decreases, these

documents will remain valid. This document becomes useless at the time when the

limit assigned is increased.

Mark Up Agreement


238

It is the fourth and final legal document specifying the rate of mark up charged by the

bank on the facility actually availed by the customer not the one assigned. It must be

duly signed stamped and signed by the customer.

Copies Of Securities

In case the credit facility has been provided by the bank against the government

securities, a copy of all the securities duly signed and attested by the retail lending

officer must be kept alongwith the other documents.

The reason is that all the original securities are kept in the respective branches from

where these were issued and the lending officer retains a copy of these only. Secondly

in case the approval is to be granted from the head office consumer banking, Karachi,

only a copy of the securities is to be forwarded and no need to send the original

certificates..

LODGMENT OF DOCUMENTS AND SECURITIES

The last step in the OD granting procedure is the lodgment of all the above mentioned

documents and the securities.

Once the lending officer accepts the loan application, three different files are

maintained for the facility provided to the customer

1. Credit File

2. Loan documents

3. Securities

And all the documents regarding the new facility are placed in these three files.

Credit File

This file contains all the documents such as

• Offer Letter (containing the terms and conditions),

• CIB Report


239

• Quarterly Mark up Payment Authority and so on.

Loan Document

The documents placed in this file are

• Loan Application

• Asset Liabilities Statement

• Income Tax Return and so on

Securities File

It contains the securities provided by the customer against the facility of overdraft.

All these three files kept in safe custody, as these are the valuables against which

customer has availed financing from the Bank and in most of the cases the value of

the securities amount to Rs. 1 million and more. So it is necessary that proper

lodgment of the securities and the documents is done.

OTHER FUNCTIONS PERFORMED BY CUN

A part from granting the loan, the following functions are also performed by the

Credit Unit North;

• CREDIT MONITORING REPORT• ACCESSSES FOLLOW UP• EXTENSION & REDUCTION IN THE LIMIT• PAYMENT IN DEMAND• SECURITY REPLACEMENT• PROFIT TRANSFER OF THE SECURITIES• REVIEW/RENEWAL OF THE LIMIT• REVIEW OF THE MARK UP RATE• RISK MONITORING

Let us now discuss each and every function briefly.


240

CREDIT MONITORING REPORT

A credit monitoring report is prepared by the CUN branch wise containing the

particulkars such as

1. Name of the Customer2. Account No.3. Title of the Account4. Limit Assigned5. Limit Utilized6. Mark Up Rate7. Mark Up Due8. Expiry Date

This report is prepared with the objective of keeping an eye on the performance of the

customer regarding the discharge of his liability.

Access Follow Up

At times, the amount withdrawn by the customer is in excess of the limit assigned by

the bank. This situation can arise due to the following two reason;

1. On the request of the customer, the bank allows to withdraw in excess of

the limit assigned uptil a certain extent. But this favour is given to only a

selective number of customers.

2. Due to the collection of the mark up from the loan account.

However, this facility is provided for a certain number of days and at the expiry of

these grace period, the excess amount must be submitted by the customer in the

relevant account.

Extension and Reduction in the Limit

The lending police of the bank is quite flexible as the limit assigned by the lending

officer is negotiable.

Payment on Demand


241

The department ac send a notice to the customer for the payment of the utilized funds

if the bank is faced with strict liquidity position. Demand Promissory Note provides

this authority to the bank.

Security Replacement

CUN also performs the function of replacement of the securities if the new securities

have a realizable value equal to or more than the previous ones.

Profit Transfer of the Securities

During the credit term the customer may authorize CUN to transfer all the profits

(whether o government securities or deposits) in his/her account.

Review/Renewal of the Limit

The OD facility is provided by the bank for one year starting from the date written on

the Loan Application .But this facility is renewable at the expiry of the term. The

renewal of the facility depends on the lending officer, the performance of the

borrower while discharging his liability and the banker customer relationship.

The limit for OD facility remains the same until the customer gives a request to

enhance or reduce it. Generally a higher limit is assigned to the customer while

renewing the older facility as the lending officer has build up his confidence in the

customer’s creditworthiness. In case the customer has not given any request for

changing the limit, the facility will automatically get renewed with the existing limit.

Review of the Mark Up Rate

The department has sole discretion in reviewing, increasing or decreasing the mark up

rate either at its own or at the request of the customer.


242

Risk Monitoring

CUN keeps on monitoring the loan facility sanctioned. The mark up is considered

over due after 180 days from the withdrawal of the funds. The bank marks

the customer default after the expiry of 365 days.

CENTERLIZATION PROCEDURE-LENDING

1) New Lending of Rs.500, 000/- and above.

2) Preferably, customer will be required to visit the lending officer, who would

reduce the customer’s turnaround time and the lending officer will follow the

existing procedure.

3) All Bearer securities to be sent through Brinks and charges to be recovered

from the customer. Otherwise, customer is required to deliver these securities

directly to lending officer.

4) All renewals/encasements/closure for facilities below Rs.500, 000/- to

invariable is through visit to the lending officer and in no case the branch

should send those documents.

Turnaround time to inform the customer:

Government security backed facility -5 days

Cash backed facility -3days

This is subject to availability of C.I.B. report with in this time period.

Documents to be referred/ taken from the customer by the Branch.


243

• Pricing grid

• Basic fact sheet

• Copy of income tax return in case of facilities of individuals

• Copy of financials/Board resolution/List of directors

• Lending Application

• Government securities duly discharged by the customer (Registered securities)

• Account opening forms (in case of new customer) and related documents. To

be verify through B.S.U. to C.S.D.


244

NEW FACILITYS/OVERDRAFT/LG FACILITY

PROCESS FLOW


245

PFC will prepare PC based LA at customer request for credit facility after referring the existing pricing grid.

PFC to forward the LA to BSSM. BSSM will forward the LA through e-mail with recommendations to lending officer. The basic fact sheet filled and securities to be taken and discharged by customer.

Basic fact sheet and (registered) securities to be sent to through branch mail. The confirmation of receipt of securities by lending officer should be taken to branch.

Documents/securities to be checked and securities lodged by lending officer, CIB request &lien marking request to be sent. LA to be approved or forwarded to consumer credit, if not within lending officer DOA.

Lending officeActivity

Branch activity

Branch activity

Branch activity


246

After approval by consumer credit, documents to be filled and sent to the branch to be signed by the customer.

Branch will get verified customer and pledgors’ signature on each page of all documents along with legitimate witness and send them back to lending officer.

Upon receiving CIB report, lien marketing on sec. and enclosing internal documents, copies of all doc. And securities to be send by lending officer to consumer credit for review and approval of limit.


Branch activity



247


248

RENEWALS OF EXISTING FACILITIES

LENDING OFFICER ACTIVITY


249

Credit Monitoring report to be checked every month.

C.I.B. request for the facilities>500,000/-sent.

Customers & Branch to be informed, one month in advance for renewal.

After approval for renewal by consumer credit, Lending officer will fill the documents and call customer to visit and sign all documents.

Upon receiving C.I.B. report, lien marking on securities and enclosing internal documents, copies of all documents and securities to be sent by lending officer to consumer credit for review and approval of limit.

CLOSURE OF FACILITY

IF SUFFICIENT BALANCE IS AVAILABLE TO ADJUST THE

FACILITY PLUS MARKUP.


250

PFC forwards to lending officer a verified customer request for closure of facility.

After checking appropriate balance in BBS the lending officer will forward the copy of customer request to consumer credit for limit cancellation.

Lending officer will hand over the securities to customer after limit cancellation and lien removal.

CLOSURE OF FACILITY-

BY SECURITY/ COLLATERAL PROCEEDS

LENDING OFFICER

ACTIVITY


251

Customer gives two instruction to the PFC for closure of facility & encashment of securities or deposit. PFC sent them to lending officer.

Consumer credit will cancel the limit upon proceeds are credited I facility account.

Lending officer will send encashment request to securities deptt. for credit to the account. Facility cancellation request will be provided and markup will be cancelled.

Lending officer will send

deposit request to liability

operations. A copy of facility

cancellation to be sent to

Consumer Credit. Lending

officer to co-ordinate with

operations and Consumer Credit

for synchronization of

transaction.

OVER DRAFT ALM PROCESS

ALM PROCESS:

ALM (Assets Liabilities Migration) Process refers to the bank’s specific

operation of transferring all the assets (such as Overdraft Accounts) and the

related liabilities (such as Deposits) amounting to PKR 2 million and above

held in a PLS account at any branch of Standard Chartered Grindlays or

Grindlays Bank to the SCB branch.

OD ALM PROCESS:

Overdraft ALM process is one component of the ALM process. All the

overdraft accounts equal to or above PKR 2 million or above secured against

the deposits or securities are migrated to SCB branch alongwith the deposit

accounts pledged as security.


252

ALM PROCESS

OVERDRAFT ALM ASSET ALM

OVER DRAFT ALM PROCESS

FLOW

1.

2. 3.

If limit is expired or

to be expired by

30-02-2002

4. If Facility is current

5.


253

Lending Officer (LO) will prepare list of OD a/cs equal to or above PKR 2 million limit alongwith PRPPA a/cs & deposit a/c numbers if secured by deposit. This list should only contain OD a/cs secured by deposit or securities. Securing deposit a/cs will also be migrated therefore pledgor will also need to sign borrowing documents as in normal facility renewal.

LO will sent OD migration letter, signed by Distribution Manager, to see customers (Issued in duplicate – 1 copy for customer and 1 copy signed by the customer to be retained by the bank.)

LO will prepare and obtain facility renewal documents from customer on SCB documents since facility will be migrated to a SCB branch within the Hub. (If securities are issued by other than SCG branch, Grindlays Indemnity should also be in place.)

LO will obtain following ALM documents from customer whose OD limit is current beyond 01-05-2002. These doxs will be on PKR 100/- stamp paper.

a. Sup. Ltr of Set-off (secured by deposit)b. Sup. Ltr of Lien (for securities- 1st party and 3rd party)c. Novation Agreementd. Grindlays Indemnitye. Board Resolution –if a company

If above documents have been obtained LO will inform BSSM via email with copy to Consumer Credit that account may be migrated. Email must contain associated Masters (PRPPA & securing deposit master if any).

6

Note:New signed SCB AOF’s are not required for the migration of current OD facility accounts. However, they are required for the migration of all expired OD facility accounts (where the Novation Agreement is not obtained) and for the migration of all liability accounts that are under the same master as the OD facility account.


254

Upon LO’s email BSSM to proceed with migration of listed accounts as per regular liability migration procedure.

GOVERNMENT SECURITIRS DEPARTMENT

There is a Government office in Standard Chartered Bank where sale and purchase of

government securities takes place. I spent one and a half week in this

department learning about the various procedure followed for issuance,

cancellation and reinvestment of various securities as well as payment of

profit coupons as and when they are due.

There are two types of securities dealt in by the bank

Special Saving Certificates (SSCs)

Defense Saving Certificates (DSCs)

SSCs carry a maturity period of 3 years where as DSCs are issued for a long term of

10 years. However it does not mean that the investor needs to hold these securities till

their maturity. He can encash these securities at any time before the maturity but in

that case he will not be entitled to any profit due if it is for less than six months.

After every six month profit is due and credited to the customer either by transferring

that amount to his/her account or in cash in case of no account with SCB. After

maturity date one can enchased his securities and can reinvest them.

THE PROCEDURE

The following procedure is followed for the purchase, encashment and reinvestment

of securities as well as for the encashment of profit coupons.

PURCHASE OF SECURITIES

•


255

• For the purchase of securities, an application form “Purchase of Government

Securities” has to be filled up by the customer willing to make investment in

the government securities.

• The physical presence of the investor is necessary as he is required to sign the

form which would be taken as specimen signature while verifying future

transactions.

• The investment can be made in the name of Single person or Joint persons.

• A copy of NIC/passport is required.

• Taxes and Zakat will be applicable according to the government of Pakistan’s

regulations.

• In case of non-deduction of Zakat, one has to submit an affidavit and a letter

for non-deduction of Zakat. (In case of Fiqa Hanfia).

• Zakat is not applicable on Fiqa Jafaria and non-muslims.

• The purchase form contains the information such as

The type of security whether DSCs, SSCs, or others

The worth of the security to be purchased

The account no. with SCB(any branch)

The title of account

Date of application

Name or Names in case of Joint Persons

Addresses

Telephone numbers /Mobile No.

Signatures

Nominations (maximum three and minimum one) in case of the

death of the investor and their respective shares.

Declaration of Zakat whether applicable or not must be

acoompanied by the signatures of the purchaser.


256

The denominations of the securities intended to be purchased.

Securities with the face value of Rs.500, Rs. 1000, Rs. 10,000,

Rs. 50,000, Rs. 100,000 and Rs. 500,000 are issued by SBP. If

the investor does not specify the denomination, the bank has

the discretion to issue the securities with any denomination.

Generally the customers prefer the securities with the face

value of Rs.10,000 to Rs. 100,000. Holding the securities with

a value less than Rs. 10,000 will become cumbersome for both

the customer as well as the bank. Where as the securities of

more than Rs.100,000 means the customer will have to encash

the whole instrument in case of need of even a few amount.

• After checking the form, the bank employee stamps each leaf of the form and

the acknowledgement slip is handed over to the purchaser specifying the date

on which the securities will be ready for delivery. Generally a date of three

days after is given.

• The bank does not sell the securities for cash. The purchaser must have an

account with the bank. In case he is not a depositor of the bank, he is required

to open a new deposit with the bank. The amount deposited in the new account

should not be less than the value of the securities intended to be purchased

plus the minimum balance requirement.

• In case amount left in the account is less, the customer will be charged for not

maintaining the min. balance requirement.

• However the bank does not always follow the same rigid policy. If the

customer intends to purchase the securities of huge amount, the bank might

accept the cash as consideration. The reason is that the bank gets a very

nominal commission from the government for providing these services i.e.

0.5% of the amount of the securities purchased and re-invested. If the amount

of the security purchased is less, it means more administration expenses and

fewer earnings (commission) for the bank. So it would not be profitable for the


257

bank to deal with the customers willing to make payment in cash. However if

the customer purchases securities of huge amount, it would result in more

earnings (commission) and less expenses for the bank. That is why the bank is

willing to accept cash payment in case of big purchases.

• The Securities officer completes formalities like stamping and signature, keeps

the original copy for record keeping, and sends the rest of the application

forms to Mall branch.

• The Mall branch completes the required formalities and sends the demands to

State Bank of Pakistan from where these securities are to be issued.

• SBP issues the new securities and sends to SCB, Tufail Road branch.

• These certificates contain the name of the purchaser, the registration number

of the securities, the Certificates numbers and the date of issuance. This date is

the same as written on the application form.

• On the receipt of the demanded securities, the Securities Officer makes entries

in the books such as Registration numbers, Securities numbers, and puts their

initials.

• On the presentation of the acknowledgement slip, the bank gets the signatures

of the purchaser on the form and delivers the securities.

• At times, the customer signs this form at the time of filling the purchase form.

In such a case anyone with the acknowledgement slip in his hands can get the

delivery of the securities.

ENCASHMENT OF PROFIT COUPONS

SSCs yield a six monthly profit. Six profit coupons are affixed with the SSCs

Certificates. These profit coupons carries

1. Numbers from1-6; 1 for the first six months profit, 2 for

the next six months profit and so on.

2. The amount of profit due


258

3. Due date of profit coupons

SBP keeps on revising the profit rates from time to time. Then the profit is calculated

on the basis of the revised rates issued by the bank. The profit coupons are reprinted

with the new amount calculated on the basis of the revised rates.

• A form for the “Encashment of the profit coupons” is required to be filled in

by the customer who has come up to receive the yield of his investment.

• The customer must bring the certificates or the profit coupon it wants to

encash.

• The securities officer first checks the maturity date of the profit coupon. If the

date of the maturity has not arrived yet, the payment cannot be made. The

encashment of the profit coupons cannot be done before even a single day.

• In case the customer comes after one year or more, profits coupons will be

encashed on the compound rate.

• The encashment from contains the following information;

The name of the purchaser

Contact Number

Date of encashment

Amount of the profit due

Face value of the security

Account Number (in case the amount of profit is to be

transferred to the account kept at SCB)

Registration number

Certificate Number

Signatures of the purchaser (in case of the joint holders, anyone

of the two can sign)

• Once the form is completed by the customer, the securities offices checks the

form, attaches the profit coupon due with the form, puts the received stamp on

the form and hands over the duplicate copy to the customer.


259

• The next step is to make entries in the books kept for this purpose. All the

purchase forms contain a column at the back for marking the payment of profit

coupons. These forms are traced back on the basis of the R No. (registration

number).

• While making the entries in the registers, make sure that the signatures on the

encashment form tally with the ones taken on the purchase form. This step

ensures that the payment is being made to the right person. In case there is

some doubt, the bank will postpone the further processing till the verification

of the signature.

• It is not necessary to make the payment in the same account from whom the

amount was withdrawn at the time of the purchase. The customer can transfer

the profit in any account provided it is held at SCB branch.

• In case the customer wants the profit in cash form, the whole verification

process is to be done on the spot. It is essential as in case of payment to wrong

person and of wrong amount, the recovery will be very difficult.

• While making the payment of the profit in cash form, the securities officer

after proper verifications prepares a voucher for the customer encashable at the

bank’s counter.

• A list of all the applications for the encashment of the profit coupons is

prepared and is send to Mall branch where the further processing is done.

All the applications are send to Mall branch twice in a day; firstly near 1:00 p.m. and

then again near 4:00 p.m. All the encashment applications are processed at Mall

branch and it takes hardly 2 to 3 hours in transferring the amounts in the accounts of

the customers.

ENCASHMENT OF THE SECURITIES

SSCs and DSCs are issued for 3 and 10 years respectively. However the purchaser can

encash these even before the expiry of the term if he is in need of funds.


260

In case of SSCs,

The customer is entitled to the principal amount of the certificate plus

the profit due provided it is not for less than ix months.

In case of DSCs,

The customer is entitled to the maturity value specified at the

certificate at that particular time period.

The whole procedure for the encashment of securities is the same as given above.

REINVESTMENT OF THE SECURITIES

SSCs and DSCs can be reinvested at the maturity of the term.

For reinvestment an application for reinvestment of Govt. securities has to be

filled by the customer.

This form contains the same information as is needed in case of the purchase

of the securities.

The previous matured certificates are attached with the reinvestment form.

The rest of the procedure is the same as in case of purchase of the securities.

Not only the securities but also their profit can be reinvested in the new securities.

SPECIAL US$ BONDS

Apart from SSCs and DSCs, this department also deals in Special US$ Bonds. These

bonds are issued by the Government of Pakistan for various terms such as 3 years, 5

years and 7 years. Dollar bonds are completely exempt from tax for a period of six

years.


261

Formerly, there were FCBC (Foreign Exchange Bearer Certificate) issued for a term

of 5 years. The profit on FEBC was exempt from tax provide encashed before 15th

June, 1995 and after that date their yield was subject to a nominal tax rate of 1% only.

Now all the FCBC has elapsed and Dollar Bonds have taken their place.

After the atomic explosion in 1998, all the foreign currency accounts were freezed.

After one week of this operation, the government makes an announcement that all the

frozen accounts can be converted into PKR accounts. One month after, the

government came up with another proposal that dollar bonds can be issued out of

these frozen foreign currency accounts with a six monthly profit in dollars. The

government announced a bonus of 5% if the encashment of the profit coupons during

September 2001 to December 2001 is made into Pak rupee and not in dollars. After a

few days another amendment came which extended the limit till the end of March,

2002. After March, 2002, no bonus was to be given on the encashment of the profit

coupons in PKR instead of cash.

OTHER SERVICES

Apart from the above mentioned services, this department also performs the functions

such as

Marking Under Lien

Stop Payment

Marking Certificates Lost

Encashment of Wapda Bonds and Profit coupons

Certificate regarding encashment of government securities

Certificate regarding collection of profit coupons

Certificates regarding encashment of Special US$ Bonds

Certificate regarding Zakat deduction


262

Certificate regarding Tax Deduction

In case of issuance of duplicate securities SSCs, DSCs, NITs & NDCs etc.Rs.2000per

registration is required. The bank charges Rs. 500 per scrip for marking stop payment

and Rs. 2,000 per registration for amendment cases. The bank charges Rs. 500 for

issuance of various certificates.

This department of the bank can be considered to be the most efficient one in terms of

customers’ satisfaction and efficiency. National Savings Centres are the core places

for the purchase and sales of various government securities but still one month sales

of this department are nine times higher than NSCs or any other bank providing these

services. This fact shows the standard and quality of the services provided by this

department. The securities officers work non-stop from 9:00 a.m. till 6:00 p.m. I had

my personal experience of working there and I enjoyed working there more than in

anyother department.

AUTO LOANS

“Across Pakistan, owing the car of your dream is as easy as 123.”

Standards Chartered Grindlays auto loans make a car ownership as easy as 123. At a

time when car prices have shot up, they have further reduced rates, documentation and

processing fees so owing the car to one dream is now affordable, simple and easy.

However this facility is available to the employees of approved companies only. List

of the approved companies is given at the end of this section.

LOW DOWN PAYMENTS


263

Standards Chartered Grindlays auto loans offers a low down payment of only 10%.

One can borrow any amount up to maximum of PKR 1,500,000 for a new car with a

minimum loan amount of Rs. 150,000.

PROCEDURE

Step # 1

• Select the car one wants to buy

• Call auto loan hotline

• Fill out the application form and

• Provide all the necessary documentation.

Step # 2

• Make the down payment of only 20%

• Sign the offer letter and legal documents.

Step # 3

• Take the purchase order to any of the authorized dealers.

ELIGIBILITY

For the customer applying for auto loan:


264

• The age must be ranging between 23 to 62 years.

• Should have a minimum of one-year full time working experience and

• In case of salaried person, must have a net monthly salary of Rs.12000 or

above

• In case of self-employed, one must have a minimum age of business or

practice of one year, and reside in Pakistan.

REPAYMENT OPTIONS

• One can finance his/her dream car for upto seven years depending on the

engine size of the new car.

• Select a monthly payments plan that allows continuing with the life style and

puts no additional burden on the customer.

• One just has to calculate the minimum PKR amount one can put aside every

month without disturbing his/her cash flows and selects the repayment plan

accordingly.

• Repayment of the loan can be made either through post-dated cheque (PDS) or

automatically through standing instructions in an account with the bank

INSURANCE

Standards Chartered Grindlays bank’s Auto Loans automatically qualify for

preferential rates for insurance coverage.

The insurance premium

• for the first year is taken upfront along with the down payments, and

• for the subsequent years the amount is added to the monthly contributions.


265

TOATL MONTHLY INSTALMENT (TMI)

Total monthly installment equals:

TMI = Monthly Contribution + Insurance payments.

Note that the last year of financing doesn’t include insurance payments.

PROCESSING FEE

One time processing fee of Rs 4000 is charged to cover operational and

documentation expenses.

DOCUMENTS REQUIRED

For salaried individuals

a copy of NIC

a letter of confirmed employment

salary slip

For self-employed individuals

a bank statement for the past six months

a copy of NIC

APPROVED COMPANIES

List of Approved Multinational Companies

S.No. Name of Company1 3M Pakistan Pvt. Limited2 A.D.Marker (Pvt.) Limited3 A.F.Ferguson4 Abbott Laboratories (Pak) Limited


266

5 ABN Amro Bank6 AEG Pakistan Limited7 Aga Khan Hospital & Medical College8 Alcatel Pakistan Limited9 Alstom Pakistan PVT Ltd. 10 American Express Bank11 Anglo French Drug Co.12 Anjum Asim Shahid & Co.13 ANZ Grindlays Bank PLC14 APL Agencies (Pvt.) Limited15 AT&T16 Atlas Honda Motorcycle17 Bank Al-Falah Limited18 Bank of America19 Bank of Tokyo Mitsubishi Limited20 Barret Hodgson21 BASF22 Pharma (Pvt) Ltd.23 BOC Pakistan Limited24 Bristol Myers Squibb25 Burshane Pakistan Limited26 Caltex Oil (Pakistan) Limited27 Chemdyes Pakistan Ltd.28 Citibank29 Coca Cola 30 Colgate Palmolive Ltd.31 Credit Agricole Indosuez32 Cynamids Pakistan Ltd.33 Descon Engineering34 Deutsche Bank35 Eli Lilly36 Emirates Airlines37 Emirates Bank International38 Ericson Telecom39 Faysal Investment Bank Limited40 Faysal Islamic Bank Limited41 Ghandhara Nissan Diesel Ltd.42 Gillette Pakistan Ltd.43 Glaxo Welcome Laboratories (Pakistan) Limited44 Gulf Air


267

45 Hoechst Pakistan Limited46 Honda Motor Cars47 Hongkong & Shanghai Banking Corporation48 HUBCO49 ICI Pakistan Limited50 Indus Motors Ltd.51 Interpak Shaving Products Ltd.52 IUCN53 J & P Coats Pakistan Pvt. 54 Johnson & Johnson Pakistan (Pvt.) Limited55 Johnson & Philips 56 KLM Airlines57 KPMG 58 Lasmo Oil Pakistan Ltd.59 Lever Brothers (Pakistan) Ltd.60 Lufthansa Airlines61 Mackinnon Mackenzie & Co. of Pakistan (Pvt.) Ltd.62 Marubeni Corporation63 Merck Sharp and Dohme of Pakistan Limited64 Mitsubishi Corporation65 Muller & Phipps Pakistan (Pvt.) Limited66 Nestle Milk Limited67 Novartis (Pvt) Ltd. Formerly Ciba-Geigy 68 Occidental of Pakistan Inc. Ltd.69 Orthopaedic Medical Institue (OMI)70 Packages Limited71 Pakistan Cables72 Pakistan Petroleum Limited73 Pakistan Services Limited74 Pakistan Tobacco Company Limited75 Parke Davis 76 Pepsi Cola International (Pvt.) Limited77 Pfizer Laboratories Limited78 Philips Electrical Industries of Pakistan Ltd.79 Proctor & Gamble Pak.(Pvt.) Ltd.80 Rafhan Best Foods81 Reckitt & Coleman Pakistan Limited82 Rhone Poulene (Pvt.) Ltd.83 Roche Pakistan Ltd.84 Sandoz (Pakistan) Ltd.


268

85 Schlumberger86 Sealand Shipping Agency87 Shell Pak. Ltd.88 Siemens Pakistan Engineering Co. Ltd.89 Smith Kline & Beecham of Pakistan Ltd. (SK&B)90 Societe Generale91 UNICEF92 Union Texas Pakistan Inc.93 Upjohn Pakistan (Pvt.) Limited94 Volkart Pakistan (Pvt) Ltd.

LIST OF APPROVED LOCAL COMPANIES1 Adamjee Insurance Co. Limited 2 DHL Pakistan 3 Indus Motors Company Limited 4 Jahangir Siddiqui & Co Limited 5 Karachi Sheraton Hotel6 Khadim Ali Shah Bukhari & Co. Limited 7 OTSUKA Paksitan Limited 8 Pak Suzuki Motors Company Limited

Monthly Repayment AmountLoan 1 Year 2 Years 3 Years

50,000 4,632 2,545 1,858100,000 9,263 5,090 3,716150,000 13,895 7,634 5,575200,000 18,527 10,179 7,433250,000 23,159 12,724 9,291300,000 27,790 15,269 11,149

2 Monthly Instalments Plan for Local Company Employees

Monthly Repayment AmountLoan 1 Year 2 Years 3 Years


269

50,000 4,680 2,594 1,910100,000 9,359 5,188 3,819150,000 14,039 7,782 5,729200,000 18,719 10,376 7,638250,000 23,399 12,970 9,548

The Instalment amount will change if payment will be made though Post Dated

Cheques instead of Salary Transfers.


270

B A L A N C E S H E E T

& I N C O M E S T A T E M E N T


271


BALANCE SHEET AS AT 31ST DECEMBER, 1998-2001 (Rupees in 000)

Rs

2000Rs

2001

ASSETS:

Cash and balances with treasury bank 3,376,100 6,980,293

Balances with other banks 1,974,241 5,653,482

Investments 2,724,265 5,172,377

Lending to financial institutions Investments 2,616,623 1,149,492

Advances 22,557,236 16,598,631

Other assets 2,149,411 2,300,029

Operating fixed assets 199,229 317,359

Total Assets 35,597,105 38,171,663

LIABILITIES:

Bills payable 160,024 123,690

Borrowing from financial institution 3,938,337 1,351,887

Deposits and other accounts 27,337,250 32,809,299Liabilities against assets subject to finance lease

141,694Other liabilities 569,238 568,811

Total Liabilities 32,004,849 34,995,381

Net Assets Represented by: 3,092,256 3,176,282

Head office capital accounts 2,426,013 2,521,236

Capital reserve 15,018 15,018

Unremitted profits 635,139 603,673

3,076,170 3,139,927

Surplus on revaluation of fixed assets 9,456 9,456

Surplus on revaluation of securities 6,630 26,899

3,092,256 3,176,282

Contingencies and commitments

272


273


PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED DEC. 31, 1998-2001

Figures in '000'

1998 1999 2000 2001RS RS RS RS

Mark Up/Return/Interest Earned4,974,81

7 3,861,4373,394,09

8 3,520,724

Mark Up/Return/Interest Expensed3,427,95

8 2,626,7872,005,64

4 2,292,074

Net Mark Up/Interest Income1,546,85

9 1,234,6501,388,45

4 1,228,650Provision against non-performing Loans & Advances 156,454 103,149 501,977 152,974

Net Mark Up/Interest Income after provisions1,390,40

5 1,131,501 886,477 1,075,676Non-Mark Up Interest Income Fee, Commission and Brokerage Income 517,103 528,075 71,787 525,148Dividend Income 20,823 22,506 25,387 48,591Income from dealings in foreign currencies - - 159,730 167,839Other Income 257,342 183,548 92,536 20,360Total Non-Mark Up/Interest Income 795,268 734,129 849,440 761,938

2,185,673 1,865,630

1,735,917 1,837,614

Non-Mark Up/Interest ExpensesAdministrative Expenses 808,517 833,172 942,085 923,821Other Provisions 17,379 1,493 1,997 -Other Charges 2,190 143,972 16,917 128Total Non-Mark Up/Interest Expenses 828,086 978,637 960,999 923,949

1,357,587 886,993 774,918 913,665

Integration Cost 407,061

Profit Before Taxation1,357,58

7 886,993 774,918 506,604Taxation Current 820,500 512,846 -549,377 465,377

Profit After Taxation 537,087 374,147 225,541 41,227Unremitted Profit brought forward as previously reported 919,101 1,106,188

1,198,013 751,959

Reversal of Indemnity from ANZ Group 116,820

Restated Unremitted Profit 919,101 1,106,1881,198,01

3 635,139

Profit Available for Remittance1,456,18

8 1,480,3351,423,55

4 676,366Reversal of provision for diminution in the value of investment 15,816

1,456,188 1,480,335

1,439,370 676,366

Profit Remitted 350,000 282,322 -804,231 -72,693Unremitted Profit carried forward 1,106,18

8 1,198,013 635,139 603,673274

F I N A N C I A L A N A L Y S I S


275

FINANCIAL ANALYSIS

Finance can be defined as the science and art of managing resources especially

money. Virtually all the organizations earn or raise money and spend or invest money.

But this area is extremely important in context of the banking concerns.

Body of information describing even the smallest firm is enormous, spanning the

company’s internal operations and its relations with the outside world. Financial

statement analysis is very helpful in this respect because it highlights company’s

strengths and weaknesses.

Compliance With The Laws Applicable

All the financial statements have been prepared in accordance with the laws

applicable in Pakistan;

• Companies Ordinances 1984

• International Accounting Standards

As per circular No. 36, dated October 1, 2001 by BSD, State Bank Of Pakistan, all the

financial statements have been reclassified.

All the figures presented in the financial statements are comparable.

I am presenting trend analysis of a few selected items from balance sheet on account

of non-availability of the required financial information.


276

A N A L Y T I C A L T O O L S

T R E N D A N A L Y S I S

C O M M O N-S I Z E A N A L Y S I S

R A T I O A N A L Y S I S


277

T R E N D A N A L Y S I S


278

TREND ANALYSIS

Trend Analysis, also called Horizontal Analysis of the financial statements is one directional- upward or downward analysis and involves the computation of the percentage relationship that each statement item bears to the same item in the base year.

FINANCIAL SUMMARY OF BALANCE SHEET

AS AT DEC, 31, 1998-2001

Rs. in ‘000’

1998 1999 200 2001Deposits 28,495,209 22,074,053 27,337,250 32,809,299Cash & Balances with treasury 5,291,458 6,088,201 3,376,100 6,980,293Balances with other banks 87,812 1,029,469 1,974,421 5,653,482Advances 15,568,271 18,135,804 22,557,236 16,598,631Operating Fixed Assets 203,973 176,597 199,209 317,359Bills payables 211,488 200,874 160,024 123,690Deposits and other accounts 28,495,209 22,074,053 27,337,250 32,809,299

TREND ANALYSIS


279

Using 1998 as Base Year

Figures in %

Year 1999 2000 2001Deposits 77.46 123.84 120.02Cash & Balances with treasury 115.06 55.45 206.76Balances with other banks 1172.38 191.77 268.36Advances 116.49 124.38 73.58Operating Fixed Assets 86.58 112.80 159.30Bills payables 94.98 79.66 77.29Deposits and other accounts 77.47 123.84 110.02

TREND ANALYSIS

Using Moving Base Year

Figures in %

Year 1999 2000 2001

Deposits 77.46 95.94 115.14

Cash & Balances with treasury 115.06 63.38 131.92

Balances with other banks 1172.36 2248.26 6438.17

Advances 116.49 144.89 106.62

Operating Fixed Assets 86.58 96.76 155.59

Bills payables 94.98 75.67 58.49

Deposits and other accounts 77.47 95.94 115.14

TREND ANALYSISPROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DEC. 31, 1999-2001Using 1998 as Base Year

figures in %1999 2000 2001

Mark Up/Return/Interest Earned 77.6197 68.2256 70.77092


280

Mark Up/Return/Interest Expensed 76.6283 58.5084 66.86412Net Mark Up/Interest Income 79.8166 89.7596 79.4287Provision against non-performing Loans and Advances 65.9293 320.846 97.7757Net Mark Up/Interest Income after provisions 81.3792 63.7567 77.36422Non-Mark Up Interest Income Fee, Commission and Brokerage Income 102.122 110.575 101.5558Dividend Income 108.082 121.918 233.3525Income from dealings in foreign currencies - Other Income 71.3245 35.9584 7.911651Total Non-Mark Up/Interest Income 92.3122 106.812 95.80896

85.3572 79.4225 84.07543Non-Mark Up/Interest ExpensesAdministrative Expenses 103.049 116.52 114.2612Other Provisions 8.59083 11.4909 Other Charges 6574.06 772.466 5.844749Total Non-Mark Up/Interest Expenses 118.181 116.051 111.5765

65.336 57.0805 67.30066Inergration CostProfit Before Taxation 65.336 57.0805 37.3165Taxation Current 62.5041 66.9564 56.71871Profit After Taxation 69.6623 41.9934 7.676038Unremitted Profit brought forward as previously reported 120.355 130.346 81.81462Reversal of Indemnity from ANZ Banking Group Restated Unremitted Profit 120.355 130.346 69.10437Profit Available for Remittance 101.658 97.7589 46.44771Reversal of provision for diminuition in the value of investment

101.658 98.8451 46.44771

Profit Remitted 80.6634 229.78 20.76943Unremitted Profit carried forward 108.301 57.4169 54.57237

REND ANALYSISPROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DEC. 31, 1999-2001Using Moving Base Year

figures in %RS RS RS

Mark Up/Return/Interest Earned 77.6197 87.8973 103.731Mark Up/Return/Interest Expensed 76.6283 76.3535 114.281


281

Net Mark Up/Interest Income 79.8166 112.457 88.49057Provision against non-performing Loans and Advances 65.9293 486.652 30.4743Net Mark Up/Interest Income after provisions 81.3792 78.3452 121.343Non-Mark Up Interest Income Fee, Commission and Brokerage Income 102.122 108.278 91.8433Dividend Income 108.082 112.801 191.401Income from dealings in foreign currencies - 105.077Other Income 71.3245 50.4152 22.0022Total Non-Mark Up/Interest Income 92.3122 115.707 89.6989

85.3572 93.0472 105.858Non-Mark Up/Interest ExpensesAdministrative Expenses 103.049 113.072 98.0613Other Provisions 8.59083 133.758 Other Charges 6574.06 11.7502 0.75664Total Non-Mark Up/Interest Expenses 118.181 98.1977 96.1446

65.336 87.3646 117.905Integration Cost

Profit Before Taxation 65.336 87.3646 65.3752Taxation Current 62.5041 -107.12 84.71

Profit After Taxation 69.6623 60.2814 18.2792Unremitted Profit brought forward as previously reported 120.355 108.301 62.7672Reversal of Indemnity from ANZ Banking Group Restated Unremitted Profit 120.355 108.301 53.016Profit Available for Remittance 101.658 96.1643 47.5125Reversal of provision for diminution in the value of investment

101.658 97.2327 46.9904Profit Remitted 80.6634 284.863 9.03882

Unremitted Profit carried forward 108.301 53.016 95.0458

Interpretation of Trends:

Trend percentage analysis is most valuable when various related trends for a number

of year are compared and interpreted.

The following favorable and unfavorable tendencies may be noted in SCB’s financial

growth over the last four years.


282

The liquidity position is essentially important for the bank as it must have all the time

sufficient funds to meet the demands for the money that may be made on it. It is the

protection against the risk that losses may develop if banks are forced to sell or

liquidate creditworthy assets in an adverse market. ). The current liquidity position of

the bank has improved as indicated by the percentages shown in the above table.

The improvement in the liquidity position is also indicated by the fact that the

deposits, both short as well as long term, have increased, but at a slightly lower rate in

comparison with the current assets (cash and balances with the treasury. As the

liquidity position of a commercial bank must be related to the demands made upon

them for funds over the period of time. An overview of the deposits portfolio of the

bank indicates that the bank is having almost 75% of its total deposits creation in

current or PLS accounts which means requires more liquid funds at hand and this is

what the bank has done over the last year. It reveals a growing financial strength and a

greater safety for the depositors.

A very important factor in analyzing the liquidity position of SCB is the extent to

which it has advanced loans against the deposits raised. The holder of sizable deposits

balances and the customers who borrow in substantial amounts influence the liquidity

needs of the bank to a degree that is directly related to their size. Trend observed in

the loans and deposits reveals that at times when the deposits of the bank have

increased by 15 to 20 % in the current year, the loans and advances made by the bank

have decreased by 26% as compared to the previous year. A great decline has been

observed in the credit sanctioning in comparison with the year 2000 when the loans

and advances increased by almost 25% (45% if compared with the base year.) The

main reason for this tremendous decline appears to be

• the economic crisis our country is faced with,

• absence of democracy,


283

• insecure economy for the investors,

• unprofitable businesses.

The internal factors resulting in the decline in the advances by the bank are

• high rates of mark up charged by the bank,

• strict lending policies,

• and grant of the advances to selected customers with good track record.

Owing to such uncertain circumstances, any bank in the world would be reluctant to

advance credit as there is doubt about the future recovery of the funds disbursed.

The foregoing data shows that Bills Payable by the bank is on a continuous decline.

They have decreased to half the amount if we consider the figures in 1998. It is a good

sign as there would be less pressure on the current assets of the bank which is very

important to stay in the banking business.

Operating fixed assets have increased from Rs. 203,973,000 to Rs. 317,359,000 at a

rate of 156% and during the same time, the deposits of the bank have increased by

107%. The bank acquired fixed assets in the current year. The source of capital used

for the expansion of the assets during the period under review included a finances

lease with a down payment of nearly 12%.

Now comes the income statement positions during the last four years.

First and far most important item in the income statement of a bank is the mark up

earned by the bank. Presently it is showing a declining trend. It is supported by the

fact that the loan disbursements by the bank have also declined in relation to previous

years’ performances. There is a direct relationship between mark up earned and the

loans advanced by the bank. However despite the decrease in the advances, the mark


284

up earned is showing a slight improvement in the current year. This improvement may

be due to the fact that the bank raised its mark up charges resulting in rupee increase

in the mark up earned.

But this increase in mark up income when compared with the mark up expenses and

the operating fixed assets of the bank, don’t indicate favorable condition. Although

the mark up earned by the bank has increased slightly over the last year but the

increase in mark up expenses is more abrupt. As the mark up income has increased

from 88% to 104%, the mark up expenses incurred by the bank has decreased at a

higher rate i.e. from 76% to 114 % in the current year. The bank is unable to maintain

the mark up expenses at the same level while providing the financing facilities.

An upward trend in deposits accompanied by a downward trend in advances and mark

up revenues means in effective credit policies, inefficient credit collection resulting in

unhealthy financial development. But there are two points satisfying this adverse

trend; one is the increase in the liquidity position which is extremely important for

any commercial bank and second is the fact that the bank has increased its lending to

the financial institutions in the recent years which are more secured disbursements in

the face of financial crisis of the economy.

The trend in the provision for non performing loans is highly satisfactory. It shows the

efficiency of the credit department to have reduced the amount of provisions by 70%

in the current year. The reasons for this improvement may be

• Careful scrutinizing of all the documents

• Intelligent corresponding with the customer

• True 7 C’s analysis of the customer such as his business and moral character

• Granting facility to selected customers who rate well on the selected criteria

for loan disbursement.


285

This improvement is extremely large if we compare it with the figures of 1999. The

amount of provisioning was 487% of the figure of 1998 and this might be the reason

for the substantial decline in the amount of advances over the years.

The foregoing data reveal that the non mark up earnings of the bank has decreased by

10% in the current year. The main factor attributable to this decline is decline in the

others incomes in the form of bad debts recovered, frauds recovered etc. In view of

this trend, the bank has become more selective in disbursing the funds.

In contrast to the trend observed in the mark up expenses, the performance of the bank

in controlling its non mark up charges is quite satisfactory. These charges have

decreased by nearly 10 % in the current year. The bank is able to keep its non mark up

expenses at almost the same level. One obvious factor is the substantial decline in the

other charges such as penalties. SCB was imposed penalty by State Bank of Pakistan

as a result of late submission of returns and short fall in maintaining statutory liquidity

result. It seems that the bank has learned from the last years experience as this figure

has been reduced to a very low amount this year. This argument is further

strengthened by the improvement in the liquid assets of the bank.

Taxation charges imposed on the banks have decreased from 67% to 57% owing to

the decrease in the overall taxation rates imposed by the government on the banking

organizations.

Last comment is on the profit for taxation trend. This figure stands at just 18% of the

last year’s figure. But it does not mean that the bank is not performing well. If we at

profit and loss account items, we find out that the bank has to incur huge integration

costs as a result of the acquisition of ANZ Grindlays in the 2001. Although presently

these costs are distracting the net profit figure but the bank will definitely reap the

benefits in the future.


286


287

C O M M O N S I Z E A N A L Y S I S

COMMON-SIZE ANALYSISPROFIT & LOSS ACCOUNT

FOR THE YEAR ENDED DEC. 31, 1998-2001

Figures in %

1998 1999 2000 2001

RS RS RS Rs

Mark Up/Return/Interest Earned 100 100 100 100

Mark Up/Return/Interest Expensed 68.91 68.03 59.09 65.1

Net Mark Up/Interest Income 31.09 31.97 40.91 34.9


288

Provision against non-performing Loans and Advances 3.14 2.67 14.79 4.34

Net Mark Up/Interest Income after provisions 27.95 29.3 26.12 30.55

Non-Mark Up Interest Income

Fee, Commission and Brokerage Income 10.4 13.68 16.85 14.92

Dividend Income 0.42 0.58 0.75 1.38

Income from dealings in foreign currencies - - 4.7 4.77

Other Income 5.17 4.75 2.73 0.58

Total Non-Mark Up/Interest Income 15.99 19.01 25.03 21.64

43.93 48.31 51.15 52.19

Non-Mark Up/Interest Expenses

Administrative Expenses 16.25 21.58 27.76 26.24

Other Provisions 0.35 0.039 0.059 -

Other Charges 0.044 3.73 0.5 0.004

Total Non-Mark Up/Interest Expenses 16.65 25.34 28.31 26.24

27.29 22.97 22.83 25.95

Inergration Cost - - - 11.56

Profit Before Taxation 27.29 22.97 22.83 14.39

Taxation Current 16.49 13.28 16.19 13.22

Profit After Taxation 10.8 9.69 6.65 1.17Unremitted Profit brought forward as previously reported 18.47 28.65 35.3 21.36

Reversal of Indemnity from ANZ Banking Group 3.32

Restated Unremitted Profit 18.47 28.65 35.3 18.04

Profit Available for Remittance 29.27 38.34 41.94 19.21Reversal of provision for diminution in the value of investment 0.47

29.27 38.34 42.41 19.21

Profit Remitted 7.04 7.3123.6949

8 2.0647174

Unremitted Profit carried forward 22.24 31.03 18.71 17.15


289


BALANCE SHEET AS AT 31ST DECEMBER, 1998-2001 (Rupees in 000)

Rs

2000Rs

2001

ASSETS:

Cash and balances with treasury bank 9.62 18.29

Balances with other banks 5.62 14.81

Investments 6.63 13.55

Lending to financial institutions Investments 7.45 3.01

Advances 61.2 43.48

Other assets 0.57 6.03

Operating fixed assets - 0.83

Total Assets 1 1

LIABILITIES:

Bills payable 0.45 0.32

Borrowing from financial institution 11.22 4.54

Deposits and other accounts 0.78 85.95Liabilities against assets subject to finance lease

- 0.37Other liabilities 1.62 1.49

Total Liabilities 91.19 91.68

Net Assets Represented by: 8.81 8.32

Head office capital accounts 6.91 6.60

Capital reserve 0.042 0.039

Unremitted profits 1.81 1.58

8.74 8.23

Surplus on revaluation of fixed assets 0.026 0.025

Surplus on revaluation of securities 0.019 0.070

8.81 8.32

Contingencies and commitments

290

Common –size Analysis, also called Vertical Analysis, or Component Percentage, or

100 percent Statements as each statement is reduced to the total of 100 and each

individual item is stated as a percentage of the total of 100.

Common size Analysis of Standard chartered Grindlays Banks, shown above reveal

the relationship of each item to its perspective total.

BALANCE SHEET EVALUATION

The assets side of the common size analysis is revealing the relationship of each item

to the total assets.

The foregoing data shows that 33% (more than double) of the bank’s total assets have

been invested in cash and marketable securities as compared with the previous year’s

figure of 16%. At the same time the lending to the financial institution has increased

from 6% in the previous year to 14% in the current year. All these measures have

strengthened the bank’s position to discharge foreseeable and unforeseeable liabilities

as they come due.

On one hand the lending to the financial institutions has increased and on the other

hand, the investment made by the bank has decreased from 7.4% to 3%. Advances

have also increased from 43% in the previous year to 64% in the current year which

means the bank is utilizing the funds raised in the other activities primarily lending to

the financial institutions as it is the most secure source of financing available in the

economy. A favorable indication is the increase in the operating fixed assets of the

bank under a finance lease agreement.


291

Liabilities side of the common size analysis reveals the following facts about banks’

financial position.

Bills payables are showing a decline in proportion to the total liabilities. There

contribution in the total liabilities of the bank has decreased from 0.45% to 0.3% in

the current year. However its impact on the overall gearing position of the bank is

very insignificant.

If we look at the borrowing to the financial institutions, we find that it has decreased

to a greater extent i.e. to 4% from 11.2% in the previous year. On the other hands, the

borrowing to the financial institutions is on a continuous increase resulting in more

borrowing potential for the bank. So the bank has changed the structure of resource

allocation from advances to the lending to the financial institutions.

The bank’s management seems to have adopted a very effective marketing policy as

the deposits of the bank constitute 86% of the total capital employed by the bank. In

the last year, this figure stood at 78% of the total resource. This shows the high level

of products and associated services provided by the bank.

Now comes the capital employed by the bank. Presently the proportion of the assets

funded by the bank’s capital is sufficient. It contributes to nearly 9 % of the total

resources held by the bank.


292

INCOME STATEMENT EVALUATION

It shows the percentage of the revenue absorbed by each individual cost or expense

item and other incomes earned by the bank.

The most important component of any profit and loss account of a banking concern is

its mark up expenses it has to pay for servicing the depositors. The foregoing data

shows that the mark-up expenses absorbs 59% of the revenues (a favourable position)

as a successively smaller amount of the mark up earned was absorbed. This

favourable operating position is also reflected by the net mark up percentage of 41%

as compared with the last year’s figure of 35%. It shows that the bank has been

successful in

• Selling larger volumes of higher profit items.

• Increasing economy in procurement

• Adopting other effective and more profitable deposit raising policies at a lower

lost.

The most favourable item in the profit and loss account is the decrease in the

provision for non-performing loans and advances. It has got down to just 4% in the

current year from 15% in the last year. Although it shows the better asset management

by the bank but we should not ignore the fact that the decrease in the loans and

advances might be a contributing factor in decreasing the provisioning required

against the default of the advances.

Non mark up income previously stood at 25% in relation to the total revenue

generated by the bank in the form of mark up. However in the current year, this figure

has decreased slightly and has reached at 22. It shows that the bank is focused more in


293

generating revenues from it score operations and relies less on other sources of

revenues.

The bank seems to have increased control over its operating expenses, i.e. non-mark

up expenses as these now absorb 26% of total revenues. Previously the non mark up

expenses absorbed 28 paisa for each rupee of mark up earned.

In the net shell, it would not be wrong to say that the bank has improved its financial

position and operating efficiency over the last years.


294

R A T I O A N A L Y S I S


295

LIQUIDITY RATIO

The liquidity position of a bank is like a reservoir. It may be adequate, although

nearly depleted, just before the start of the rainy season. Or it may be inadequate,

although three quarters full just before the summer drought.

Liquidity can be defined as the bank’s ability not only to meet possible deposit

withdrawals but also to provide for the legitimate needs of the economy as well.

CURRENT RATIO

Formula = Current Assets

Current liabilities

2001 = 35,891,555 = 1.36

26,337,445

2000 = 27,555,173 = 1.15

23,874,712

Calculations:

Current Assets 2001 2000Rs. in ‘000’

Cash and balances with treasury banks 6,980,2939 3,376,100Balances with other banks 5,653,482 2,974,241Lending to financial institutions 5,172,377 2,224,265Investments 1,149,492 2,616,623Short term advances 14,635,882 15,214,533Other Assets 2,300,029 2,149,411Total Current Assets 35,891,555 27,555,173


296

Current Liabilities 2001 2000Rs. in ‘000’

Bills payable 123,690 160,024Burrowing from financial institutions 1,351,887 3,938,337Deposits and other accounts (short term) 24,861,868 19,776,351Total Current Liabilities 26,337,445 23,874,712

Interpretation:In case of Standard Chartered bank, we witness quite a strong current ratio in 2000

and 2001. It indicates that the bank has substantial capacity to solicit more deposits.

There is an increase in almost all the current assets of the bank except for investments.

On the other hand, the bills payables and borrowing from the financial institutions

have decreased resulting in a strong current ratio. Although deposit have increased as

compared with the previous year’s figure, but the increase in the current assets of the

bank is more than the increase in the deposits creation.

As a result, we observe more liquidity which means greater ability to meet the credit

demands that may be made on the bank from time to time. If we go through the notes,

we find out that the bank was charged penalty for not meeting the liquidity statutory

requirement. These charges have decreased to a greater extent in the current year

indicating the focus of management activeness, attention and concern for

improvement in the liquidity position of the bank. That is why the bank’s liquidity

position has increased in the current year.

ADVANCES TO DEPOSITS RATIO

Formula = Advances

Total Deposits


297

2001 = 16,598,631 = 50.56%

32,809,299

2000 = 22,557,236 = 82.51%

27,337,250

Interpretation:

It demonstrate the degree to which bank has already used up its available resources to

accommodate the credit needs of its customers.

This ratio, a comparison of funds generation and its funds mobilization, indicates the

total loans sanctioned by the bank in relation to total amount of money deposited with

the bank stands at 50.56% as compared with the last year figure of 82.51%. This

shows that the bank has greater potential to advance additional loans. Total loanable

funds roughly measured by the deposits are sufficient to enable the bank to make

additional loans without recourse to more or less continuous borrowing. At present,

the bank has got a relatively small amount of advances as compared with its deposits

raised. One reason for fewer advances is the cautious and selective approach on the

part of the management while deciding upon credit proposals.

QUICK ASSETS TO DEPOSITS RATIO

Formula = Quick Assets

Total Deposits


298

2001 = 13,736,736 = 41.87 %

32,809,299

2000 = 7,920,433 = 28.97 %

27,337,250

Calculations:

Quick Assets 2001 2000Rs. in ‘000’

Cash and balances with the treasury 6,980,2939 3,376,100Balances with other banks 5,653,482 2,974,241Investments:

Federal Govt. Securities

Federal Investment Bond

Federal Govt. Loan

Listed securities

First Grindlays Modarba

National Investment Unit

956,630

46,042

79,800

20,489

2,242,852

247,220

55,763

24,257Total Quick Assets 13,736,736 7,920,433

Interpretation:

The ratio of advances to total deposits reveals little, however the bank’s other assets

available for conversion into the funds with which to meet withdrawals or make

additional loans. The ratio of quick assets to deposits is more significant for this

purpose.

The bank’s quick assets constitute 42% of its deposits, which means the bank has the

ability to accommodate the withdrawals of deposits up to 42% of its total deposits (a

situation which hardly happens). It also indicates that the bank has great potential to

meet the demand for new credit approvals. The liquidity position is quite sound in


299

view of not only the deposit withdrawal possibility but also unforeseen cash/funds

demands faced by the bank in the future.

FINANCING TO DEPOSITS & BORROWED FUNDS

Formula = Total Financing

Total Deposits

2001 = 21,771,008 = 66.36 %

32,809,299

2000 = 24,781,501 = 90.65 %

27,337,250

Financing 2001 2000Rs. in ‘000’

Lending to Financial Institutions 5,172,377 2,224,265Advances 16,598,631 22,557,236Total Financing 21,771,008 24,781,501

Interpretation:

This ratio highlights the relationship between the deposits raised by the bank and their

obligations in the form of advances and loans to financial institutions.

As indicated above, this ratio for the bank has decreased from 91% to 66% in the

current year. Again the reason is the same; the desire of the bank’s management to

attain high/good liquidity to safeguard the interest of the depositors. It also indicates

low level of advancements being made by the bank in the current year. Although it

sounds ineffective to held cash today the funds needed to make loans two years from


300

now. But this is the demand of the economy today. As our economy is passing

through rough patches, the advancements made by the banks are less, as these are

insecure. However the bank has adopted a more secure means of utilizing the funds

raised through deposits and this source is heavy lending to the financial institutions

with less chance of becoming bad. Although the financial institutions pay less rate of

mark up as compared to the ordinary borrower, but for a bank, liquidity is overrides

the profitability aspects.

FINANCING TO DEPOSITS & BORROWED FUNDS

Formula = Total Financing

Deposits & Borrowed Funds

2001 = 21,771,008 = 63.73 %

34,161,186

2000 = 24,781,501 = 79.24 %

31,275,587

Deposits & Borrowed Funds 2001 2000Rs. in ‘000’

Deposits 32,809,299 27,337,250Borrowed Funds 1,351,887 3,938,337Total Deposits + Borrowed funds 34,161,186 31,275,587

Interpretation:

This ratio takes into consideration not only the deposits liabilities but other liabilities

as well i.e. borrowed funds.


301

If we look at SCB, its assets to deposits ratio is 61% and financing to deposits and

borrowed funds ratio is 63% showing a decline from 79% in the previous year. This

shows the ability of the bank to meet other liabilities such as borrowed funds along

with the deposits withdrawals. The bank’s management is efficient as it has taken

significant measures to safeguard against not only the withdrawals but also the

repayments of the borrowed funds.

DEMAND DEPOSITS TO TOTAL DEPOSITS

Formula = Demand Deposits

Total Deposits

2001 = 24,861,868 = 75.78 %

32,809,299

2000 = 19,776,351 = 72.34 %

27,337,250

Demand Deposits 2001 2000Rs. in ‘000’

Customers

Saving

Current

Margin

18,055,308

6,634,564

47,981

15,259,792

15,259,203

148,202Financial Institutions

Non-remunerative 124,015 122,154Total Demand Deposits 24,861,868 19,776,351

Interpretation:


302

All the deposits raised by the banks require some level of liquidity. However this level

varies from deposit to deposit depending on its type and purpose. The bank requires

more level of liquidity for the demand deposits and less for the fixed deposits. This

ratio indicates the required level of liquidity for the bank.

This ratio for SCB is nearly 76% of the total deposits held by the bank. It highlights

the fact of why the bank is having a large degree of current assets in its assets

structure. The deposits held by the bank are very volatile. The management is quite

effective as it has already taken actions to successfully meet any deposit withdrawal.

BORROWED FUNDS TO TOTAL FINANCING

Formula = Borrowed Funds

Total Financing

2001 = 1,351,887 = 6.21 %

21,771,008

2000 = 3,938,337 = 15.89 %

24,781,501

Interpretation:

It shows the extent to which borrowed funds have been utilized in advancing loans

facility.

The ratio for SCB is 6.21 % showing that the management relies less on the borrowed

funds for advancing credit facility to the customers. Most of the advances are granted

against the deposits and the capital funds. Since these funds add up the pressure on the

bank’s current resources, a decline in the ratio from 16% to 6.21% is quite

encouraging.


303

DUE TO BANKS TO DEPOSITS

Formula = Due to banks

Total Deposits

2001 = 1,351,887 = 4.12 %

32,809,299

2000 = 3,938,337 = 14.406 %

27,337,250

Interpretation:

This ratio is an indicative of the proportion of the lending from the financial

institutions in relation to the total funds raised by the bank in the form of deposits.

This ratio for SCB is 4% in the year 2001. There has been a significant decline in this

ratio as previously the bank depended slightly more on the borrowings from financial

institutions. It shows that the bank is concentrating on raising funds from depositors

and relies less on the borrowed funds.

• It is a favorable indication in the sense that the bank has large potential to ask

for borrowed funds in the phase of tight liquidity position.

• Further more, it shows the efficiency of the marketing department to have

created so much of deposits that the bank does not need to look at the financial

institutions for help in improving its liquid position.

• There is another favorable aspect of this declining tendency. The rate of

interest offered to the depositors is very low in comparison with the interest to

be paid to the financial institutions for their funds. A decline in this ratio

means less mark up burden on the bank resulting in less financial risk for the

bank.


304

DUE FROM BANKS TO DUE TO BANKS

Formula = Due from banks

Due to Banks

2001 = 5,172,377 = 382.6 %

1,351,887

2000 = 2,224,265 = 56.48 %

3,938,337

Interpretation:

It shows the relationship between what the bank owes from other banks and what is

due to it. A tremendous improvement has been observed in this ratio in the current

year showing the fact that the bank has to seek fewer funds from the financial

institutions owing to the strong liquid financial position. On the other side of the

picture, the bank is continuously increasing funds allocation in this sector causing

further rise in the ratio. This ratio is favorable from another perspective. In the phase

of economic instability, the bank’s management is efficient to access the risk involved

in lending and that is why it has chosen to provide support to the banking and

financial institutions more in the year 2001.

DUE FROM BANKS TO TOTAL ASSETS

Formula = Due from banks

Total Assets

2001 = 5,172,377 = 13.55 %

38,171,663


305

2000 = 2,224,265 = 6.34 %

35,097,105

Interpretation:

It is an indication of SCB’s funds management policies. The funds allocation to the

financial institutions has increased to a great extent despite the fact that still it holds a

small proportion relevant to the total resources raised by the bank. It is a positive

indicator in the sense that the financing to the banks are the most secure ways of

lending. Considering the economic conditions of the country, it seems to be the best

alternative available to the bank.

GEARING RATIOGearing ratios show the extent of debt in the bank’s resources.

Debt to Total Assets Ratio

Formula = Total DebtTotal Assets

2001 34,995,381 = 91.67 %38,171,663

2000 = 32,004,849 = 91.19 %35,097,105

Interpretation


306

This ratio indicates the bank’s strategic risk of financial failure i.e. how much

company owes in relation to its size. The above given ratio indicates that SCB is

utilizing nearly 92% of the external funds in its business operations. For a banking

concern, this ratio is quite acceptable as the whole structure of banking is based on the

funds provided by the depositors.

If we consider the bank’s liabilities excluding the depositors funds, the situation

would be like this;

2001 2,186,082 = 5.72 %38,171,663

2000 = 4,667,599 = 13.30 %35,097,105

It shows the true picture of the gearing. Excluding the bank’s core function i.e.

Deposits Creation, the bank seems to be relying less on the borrowings to support its

operations. In the year 2000, this figure stood at 13.30% but the bank has further

decreased this ratio to just 5.72% in the year 2001. This shows the efficiency of the

bank’s management. There is another positive aspect of this ratio; the banks and other

potential lenders will be willing to advance further funds

This decrease in gearing can be attributed to a no. of factors. Firstly, the acquisition of

ANZ Grindlays in the year 2001 has resulted in a large no. of deposits for the bank.

Due to this fact, the bank does not have to resort to outside funds causing decline in

the ratio. Secondly, the marketing and sales department of the bank is so efficient to

raise so much of deposits that the bank is self-sufficient to discharge its obligations at

the right time without getting the support of lending institutions.

Provision For loans to Total Loans Ratio

Formula = Provision for loans


307

Total Loans

2001 = 152,974 = 0.92 %16,598,631

2000 501,977 = 2.27 %22,557,238

Interpretation

This ratio has decreased in the year 2001 as compared to year 2000 resulting in a

more favorable picture.

COVERAGE RATIO

Coverage ratio measure the capacity of the bank to cover its interest charges, which

are the main obligations on the bank.

Interest Coverage Ratio

Formula = Earning before int. & Tax

Interest Exp.

2001 = 2,798,678 = 1.2 times

2,709,181

2000 = 2,780,562 = 1.39 times

2,005,644

Interpretation


308

It shows whether the bank is earning enough profit before mark up charges to be paid

to the financiers and the taxation obligations due to the government in order to remain

solvent.

The above figure shows the less capacity on the part of the bank to cover its interest

payments. It has declined as compared with the last year. The bank cannot afford it to

decline further as it would mean no benefit for the capital providers. But this is a short

term perspective of the bank’s financial position. In view of the long run financial

perspective, this ratio is good for the bank. The reason is the huge integration costs

incurred by the bank on the acquisition of ANZ Grindlays going to yield tremendous

benefits for the bank in the future.

PROFITABILITY RATIO

Profitability ratios are a measure of reasonable rate of return and adequate profits

turnover.

Return on Capital Funds

Formula = Net mark up Received

Capital Funds

2001 = 41,227 = 1.313 %

3,139,927

2000 = 225,541 = 7.33 %

3,076,170

Interpretation


309

This ratio relates the net profits to the amount of capital funds that have been

employed in making that profit.

The above given ratios suggest that the profitability of the bank has decreased very

sharply in the year 2001 indicating less profitable operations of the bank. While

discussing the trend analysis, I mentioned that the mark up charges have increased in

a large proportion that the mark up earned by the bank resulting in decline in the

profit available on the capital funds employed. However, the situation is not as intense

as revealed by the above given ratios. Since the bank has incurred huge cost in the

acquisition of ANZ Grindlays resulting in less profit margin on the capital funds.

Return on Investment

Formula = Net income after taxes

Total Assets

2001 41,227 = 0.108 %

38,171,663

2000 = 225,541 = 0.6426 %

35,097,105

Interpretation

This ratio indicates the profit earned by the bank on the resources employed.

As far as SCB is concerned, we observe a decline in the efficient utilization of the

resources. It has decreased to 0.108 % in the year 2001 from 0.6426 % in the year

2000. The reason for this low profitability is the same given above; the increase in the


310

mark up expenses relative to mark up earned and incurrence of huge integration costs

which is good in view of long term profitability.

Return on Risk Assets

Formula = Net income after taxes

Total Risk Assets

2001 41,227 = 0.248 %

16,598,631

2000 = 225,541 = 1.0 %

22,557,236

Interpretation

This ratio, with a minor fluctuation in 2000 came down from 1.0% in 2000 to 0.248 %

in the year 2001. It is indicating less active utilization in the form of advances. The

bank is finding it difficult to keep the level of its expenses less in proportion to the

advances it has disbursed. Lending, no doubt is the core function of a banking

concern. But the bank should find out effective ways of credit provisions affecting

less on profitability of the operations. Non mark up revenues should also be increased

in the face of lower credit disbursements resulting in more returns for the bank.

Return on Deposits

Formula = Net income before taxes

Total Deposits


311

2001 506,604 = 1.54 %

32,809,299

2000 = 774,918 = 2.8 %

27,337,250

Interpretation

This ratio indicates to what extent deposits which represent funds mobilization on the

part of the bank contribute towards income generation. Apparently, this ratio is giving

negative remarks on the part of the bank’s profitability and efficient utilization of the

deposits. But a review of the profit and loss account indicates that the bank has

performed well in keeping its overall expenses low. As the above calculations include

the integration expenses incurred in the year 2001 by the bank which was not present

in the last year.

Operating Expenses to Net Revenue

Formula = Operating Expenses (excluding integration cost)

Net Revenue

2001 = 923,949 = 85.89 %

1,075,676

2000 = 942,085 = 106.27 %

886,477

Interpretation

This ratio signifies the proportion of the revenues that is used to cover the operating

expenses of the bank. The ratios calculated above gives a poor picture of the bank’s


312

operations. Although this ratio has decreased in the year 2001 from 106 % to 86% but

still it is giving a dismal picture of the profits for the bank. The reason for this low

profitability is high level of liquidity attained by the bank as there is trade off between

these two concepts. The bank has increased its liquidity at the expense of its

profitability.

In short, the bank in an attempt to maintain at a good level of liquidity, has a low level

of profitability but there is a continuous push in the profits and there are chances that

the bank will reach at a point of high liquidity and profitability in the near futures.

CAPITAL ADEQUACY RATIOS

Capital Adequacy/Leverage ratios indicate bank’s capacity to meet its short and long

term obligations.

Capital adequacy is very important as the bank’s depositors as well as the supervisors

as his representative, favor maximum amount of capital as protection against the risk

inherent in the banking operations.

Capital Funds to Deposits Ratio

Formula = Capital Funds

Total Deposits

2001 = 3,139,927 = 9.57 %

32,809,299

2000 = 3,076,170 = 11.25%

27,337,250


313

Interpretation

This is the first and widely used ratio to measure the capital adequacy of a bank.

Ideally this ratio should fall near 10 %. So the bank is quite up to the mark as far as

the protection of the depositors is concerned. However the bank has decreased it from

11.25% in the year 2000 to 9.57% in the year 2001 keeping in view the short range

profit maximization to operate with as much of capital funds as is sufficient in order

to gain average leverage in earnings from the employment of the depositors’ funds but

still it is not in conflict with the interest of the depositors. The bank’s management is

quite concerned about its public images i.e. the capital providers to assume more risk.

In this regard the bank’s management is efficient in combining the profitability and

safety because in the longer run, their investment will become more profitable only if

the bank stays in business. In order to maintain the confidence of the public

(depositors current and potential), the bank has tried to hang around 10% as public

trust and confidence is vital ingredient in the success of a bank.

Capital Funds to Total Assets Ratio


Total Assets

2001 = 3,139,927 = 8.23 %

38,171,663

2000 = 3,076,170 = 8.76 %

35,097,105

Interpretation

This ratio indicates the extent of the funds employed by the bank in the total resources

as shown in the balance sheet. It shows that for ever rupee invested in the assets, 82


314

paisa is attributable to the owners. Although this ratio has decreased in the current

year, but still it is good enough to satisfy the general public.

Capital Funds to Risk Assets Ratio


Risk Assets

2001 = 3,139,927 = 18.92 %

16,598,631

2000 = 3,076,170 = 13.64 %

22,557,236

Interpretation

This ratio takes into account the difference between cash and marketable securities

and other kind of assets. Cash and marketable securities, which are riskless items, are

excluded to find out the true picture of the capital adequacy. A ratio of one rupee of

capital to five rupees of quick assets is considered sufficient. In case of SCB, this ratio

is near 20 % which is sufficient to ensure the public that the bank is in a position to

withstand what ever strains may be placed on it. As the bank has decreased the

advances in the year 2001, the result is the improvement in the risk coverage from the

perspective of the depositors. Previously it was quite low i.e. 13.64%. It shows that

the bank is concerned about its public image regarding risk absorbance.

Capital Funds to Total Financing Ratio


Total Financing


315

2001 = 3,139,927 = 14.42 %

21,771,008

2000 = 3,076,170 = 12.41 %

24,781,501

Interpretation

This ratio gives more or less the same picture as given by the above one. It calculates

the risk absorbed by the owner in both types of financing; borrowing to the financial

institutions and debtors. Although the lending to the financial institutions does not

involves the same level of risk, so this ratio is calculated from a conservative

perspective. An increase in this ratio from 12.41% in the year 2000 to 14.42% in the

year 2001 favors both

• the depositors as their money is safe and

• the potential borrowers as they have the confidence that the bank is in a

position to give genuine considerations to their credit needs.

INTERNAL ANALYSIS

Internal analytical tools are used by the management of the organization to have a

look at the performance of the bank from various perspectives which ultimately leads

towards the development of effective strategies and policies.

Two widely used techniques for internal analysis of an organization are

• External Factors Evaluation Matrix


316

• Competitive Profile Matrix

Now after giving the external analysis of SCB, let us have a quick look at the internal

analysis of the bank against one of the leading banks in the market; Bank Alfalah.

External Factors Evaluation (EFE)

The external factor evaluation is the process that allows strategists

to summarize and evaluate economic, social, cultural, demographic,

environmental, political, governmental, legal technological and

competitive information.

EXTERNAL FACTORS EVALUATION MATRIX


The External Factors Weight Rating Weighted score

OpportunitiesUplift in exports 0.075 4 0.3Increase in GDP growth 0.05 3 0.15De-escalation 0.025 3 0.075Technological advancement 0.025 4 0.01


317

Change in taxation rates 0.045 2 0.09Co-operation among competitors 0.05 4 0.2Market development 0.05 3 0.15Flexible product mix 0.05 3 0.15Global reach 0.1 3 0.3Revival of Lending rates 0.03 3 0.09ThreatsAlliance of religious-political

parties0.15 2 0.3

Rise in stock market operations 0.09 2 0.18Level of domestic tranquillity 0.025 3 0.075Location &severity of terrorist activities 0.03 2 0.06Technology management (BBS) 0.09 3 0.27Riba free banking 0.025 2 0.05Slow industrialization 0.025 3 0.075Privatized banking operations 0.025 4 0.10Bush Administration 0.015 2 0.03Bad media impression 0.025 2 0.05Total 1.00 2.705

OPPORTUNITIES

UPLIFT IN EXPORT

Presently, a revival has been observed in the economy of Pakistan. A significant

indication is the uplift in the export volume of the country. This represents an

opportunity for Standard Chartered bank (SCB) as it will be negotiating more letter of

credit and earning more commission fee. Rating 4 has been given to this opportunity

as the bank’s L/C department is well efficient and trained to capitalize on this.

INCREASE IN GDP RATE & SAVINGS

GDP growth rate has improved from 2.5 % last year to 3.5 %. This is a significant

size as the result of which people will be having more savings with them. To

capitalize on this opportunity, a no. of different schemes like Super Save, Flex


318

Privilege has been introduced by SCB. A rating of 3 shows that SCB is utilizing

proper strategies to reap this opportunity.

DE-ESCALATION

The de-escalation of army troops from the international border of

Pakistan and India has removed the threats of expected war. People

within the country and from abroad are expected to respond toward

this action by stating new projects. The financial requirements of

these projects will be definitely be fulfilled by the banks, so this

section will have a significant effect on the business of the banks.

TECHNOLOGICAL ADVANCEMENT

Effective use of advance technology represents a major opportunity to an organization

to achieve a corporative edge over its rival. It has been a policy of SCB to adopt up-

to-date technology in all its operations, which have helped in efficient servicing,

erased limitations of traditional geographical markets, and has saved time and energy.

Use of telecommunication, computers, data access and storage devices, fax machines,

on line data base and software show that SCB capitalizing properly on this

opportunity.

CHANGE IN TAXATION RATES

The federal govt. has revised the taxation rates from the year 2002-2003. the banking

companies will be required to pay at the rate of 50 % instead of 58% which has

encourage the banking sectors a lot. As the result of this amendment, the bank has

become more focused and committed in its services (being a moral boast).


319

CO-OPERATION AMONG COMPETITORS

Now days a trend has generated among the competitors to join hands in order to reap

large profits. Strategies that stress co-operation among the competitors are used

frequently. SCB’s acquisition of Grindlays Bank on 16th July 2000 is a right step in

this direction which has made the bank oldest one in this region.

MARKET DEVELOPMENT

An organization offering its products in large number of markets is in a better position

to ensure the better inflow of the economic benefits. Our economy shows huge

opportunities in different territories of the country. SCB has 21 branches in 8 different

cities of the country and is continuing open new branches not only in big cities like

Lahore & Karachi but also in small cities like Faisalabad, Sialkot. MNET a

collaboration with MCB, has enabled the customers of SCB to us its ATM cards on

MCB,s ATM’s machine as well.

FLEXIBLE PRODUCT MIX

Our society comprises of different classes of the people. Each clan of people need

specific product according to their specific life style. In order to satisfy each clan of

the society, SCB is offering the flexible product mix. Different products like current

A/c, super save A/C, high yield saving A/c, and privilege account are suitable for

different classes of the society.

GLOBAL REACH


320

No doubt, world today has become a global village. So a bank having global reach

and recognition will have an edge on competitive advantage. SCB, through its round

the clock online banking provide global reach to its customers. They can operates

their accounts from 750 offices in 56 different countries of the world without any

trouble.

REVIVAL OF LENDING RATES

The state bank of Pakistan has declared to reduce the lending rates

of the banks after the complaints from the borrowers of charging high

interest rates. Due to high interest rates they were reluctant to

borrow money on such high charges, but after the declaration the

borrowers inclination towards the taking of loans has been increased

which ultimately will upgrade the business of the banking companies

including Standard Chartered Bank.

THREATS

ALLIANCE OF RELIGIOUS-POLITICAL PARTIES

The present govt. of religious-political parties is considered by the investors as having

rigid principles perhaps, which would not be feasible for them, and probably they

would think that they will have the same kind of strategies as the Taleban had. So they

will be reluctant to invest in such environment. Actually they are more centered

towards Islam. The foreign investors unfortunately, have some misunderstanding

about them, which will lead to low foreign investments in the country having a

negative effect on the business of the banks.


321

RISE IN STOCK MARKET OPERATIONS

Pakistan’s markets are very small so is the investing climate. The same few people are

seen investing in banks and in stock exchanges. Presently the banks are paying low

mark up that’s is why the investors have shifted to stock exchange market, which has

resulted in boast in stock exchange market but representing threat for the banks.

LEVELS OF DOMESTIC TRANQUILITY

Pakistan during the last few decades is facing poor level of tranquility. People are not

taking bold steps to start new projects which have been resulted in fewer advances by

the banks.

LOCATION & SEVERITY OF TERRORIST ACTIVITIES

Terrorist activities, a major issue September 11, 2001, has bring the bad media

impression for Pakistan as neighbouring country has always been trying to prove

Pakistan as a terrorist country. Scared due to the terrorist attacks, foreigners are not

willing to come to Pakistan and make investments which are having bad impacts on

our economy.

TECHNOLOGY MANAGEMENT

Not only adopting the technology is crucial but also technology management can be

testing one. SCB is currently using computer based BBS (basic banking system) to

conduct its day to day operations which is very slow in processing and often gets


322

stuck resulting in wastage of precious time of employees as well as customers. It

needs to be improved.

RIBA FREE BANKING

This issue of riba free banking has become more severe after the tremendous success

of religious parties in election 2002. Riba free banking represents a threat for banks

but bank can avoid this threat by modelling their products in Islamic forms.

SLOW INDUSTRIALIZATION

Poor industry financial position has darkened the future of huge advances by the

banks. In view large sick units, the banks don’t risk extending loans to the existing as

well as new projects which would result in inefficient utilization of its deposits.

PRIVATIZED BANKING OPERATIONS

The govt. is privatizing all its holdings and the privatization of UBL is a past of this

process. This has resulted in increased competition among the banks. The banks have

to exert more efforts to maintain their current positions.

BUSH ADMINISTRATION

The happiness and unhappiness of the supreme power is very crucial

for sub-powers. As the elected govt. in Pakistan is more Islamic

which is unbearable for Bush administration because of their thinking

that this govt. will be similar to the Taleban, therefore, Bush

administration will try to impose such restrictions, which will

decelerate the economy. As a result in order to keep our economy on


323

the track we will accept the ideas of this administration, which will

be definitely not public friendly.

BAD MEDIA IMPRESSION

After the incident of 11th September, the Muslim community of the

entire world is considered as terrorist. Even though Pakistan has

played a front line role for the elimination of the terrorism by

cooperating with USA but we are indulged in the bad media impression

of terrorists, because of being Muslim. That is the reason that the

investment activities in the region are very slow as people are

afraid of investing such country.

INTERPRETATION OF EFE

SCB’s total weighted score comes out to be 2.705 which is the little above the average

score of 2.5. It shows that the Bank’s strategies are in line with the existing

opportunities and threats. Bank is responding to the external factors but still there are

better strategies to be followed in order to exploit the opportunities more efficiently.

COMPETITIVE PROFILE MATRIX (CPM)

The competitive profile matrix identifies the firm’s major competitors and their

particular strengths and weakness in relation to sample firms’ strategic position. In

CPM both internal and external issues are included the success factor in CPM are not

grouped onto opportunities and threats. It provides important internal strategic

information.


324

This analysis gives the picture of the market standing of two competitor banks in the

banking sector i.e. Standard Chartered Bank vis-à-vis Bank Alfalah.

Critical success

factors Weight

s

Bank ALFALAH

STANDARD

CHARTERED BANKRating Score Rating Score

Market development 0.1 4 0.4 4 0.40Product mix 0.1 4 0.4 4 0.40Service mix 0.17 4 0.68 4 0.68Advertising 0.09 2 0.18 2 0.18Customer mix 0.05 3 0.15 2 0.10Market share 0.1 3 0.3 3 0.30Global reach 0.09 3 0.27 3 0.27Technology

management 0.1

4

0.4 2

0.20

Priority centres 0.03 4 0.12 3 0.09Social responsibility 0.05 2 0.10 2 0.10Call Centres 0.05 2 0.10 3 0.15Professional

Management

0.05 3 0.15 3 0.15

ATM facility 0.05 3 0.15 4 0.20Market Response 0.05 3 0.15 3 0.15Total 1.00 3.55 3.37

The score of both the banks are near to 4.which shows that market standing for both

the banks is pretty good. While comparing both the figures of 3.55 and 3.37 we

cannot say that Bank Alfalah is 0.18% better than the Standard Chartered Bank. These

are just the assumed figures and don’t give us the exact difference but only shows the

comparative upper hand.


325

SWOT ANALYSIS


326

SWOT ANALYSIS

An analysis indicating towards the organizations strengths, weaknesses, opportunities

and threat is termed as SWOT Analysis. Such an analysis is very important for the

management in retaining the strength, overcoming the weaknesses, capitalizing over

the emerging market opportunities, and carving ways to successfully tackle with the

threats and ultimately converting them in the strengths for the organization.

During six weeks of my stay at SCB, quail road, I have come across the following

SWOT analysis of the bank.

STRENGTHS

Largest Foreign Banking Network:

The Standard Chartered Bank is the largest foreign banking network in Pakistan with

21 online branches in eight major cities of the country. The acquisition of ANZ Grind

lays in the last year has given added further to the reputation enjoyed by the bank and

the positive results have started to appear.


327

Comprehensive Range of Money Transfer Options:

Through Standard Chartered Bank, one has at his disposal, a comprehensive range of

money transfer options including cashier's orders, drafts and telegraphic transfers. The

bank ensures its customers that whether it's local or foreign currency transfer to local

or overseas destinations, their money will reach its destination safely and quickly.

USD Clearing

The U.S. Dollar facilitates international trade. With the continued growth of inter- and

intra-regional trade, when the customers need someone responsive to their growing

needs and who can execute their transactions quickly and effectively, Standard

Chartered give the support needed for the growth of their business. SCB understand

the clearing process clearly and have the infrastructure and expertise to help in U.S.

Dollar clearing requirements around the world.

Automatic Operations:

The operations performed by the bank are highly automated that result in assurance

for the customers that their transactions are completed reliably, efficiently and

securely.

9 to 5 Non-stop Banking

One can avail the benefit of the services provided at the bank till 5:00 P.m. which is

highly useful for those customers who find it difficult to leave their officers in the

morning..

ATM Network


328

The bank, in collaboration with the Muslim Commercial bank, has the largest ATM

Network cross the country. The customers of SCB can withdraw access their funds

any time at more than 150 Sites with MNET Logo.

Customized Solutions

The management of the bank believes in customer focussed banking rather than the

product oriented banking. The products and services designed by the bank are

specifically tailored to the individual needs of its customers.

Priority Banking

The priority banking centres of the bank offer an unmatched where the customer

receives highly privileged services in a highly elegant environment. It gives the

chance of experiencing new standards in banking. Designed specially for those who

appreciate only the finest things in life, Priority Banking offers the very highest levels

of personalised banking to match customer’s unique status.

Electronic Banking

The revolution in the banking in the form of electronic banking operations have

opened avenues of excellent, efficient and quick services saving the time and costs of

the customers and fortunately SCB is among those few banks who are already reaping

the benefits of electronic transactions.

Technological Advancements

SCB’s management is quite prepared to adopt the latest advancements in technology

resulting in revolution in the banking operations such as check clearing process,

computer based teller equipment, automatic teller machines, and electronic funds

transfers among the others.


329

Phone Banking

Phone banking service is very attractive for those classes of customers who don’t have

time to personally come to the bank i.e. banking on the phone line thus saving the

precious time of the customers.

Attractive Facility Layouts

The layouts of the service sector are very important for achieving the client customer

goal of fats service. The fast service is supported by the automatic operations,

scanners etc. which are widely used by SCB. The use of ATM for banking operations

has ensured reduced costs and convenience for the customers as well as for the

management. SCB’s facility layouts are the physical expression of the technological

choices, the capacity utilization and the communication systems that interconnect the

processes.

Ethical concerns and Public Image:

The organizations showing concern for the people, ethics, and environment enjoy

good public reputation and are able to reap the benefits in the long run. SCB’s

management is quite sensitive to this issue. Recently, the bank conducted a walk in

the favour of clean environment that is why the name of this bank is continuously

going up day by day. People feel proud having attached to this organization in one

way or the other.

WEAKNESSES

In my opinions these are the points that might be detrimental to the efficiency and

profitability of the bank.

Low Job Satisfaction


330

Understanding and the effective management of the human resources is the most

difficult challenge faced not only by the bank but by all the organizations. Even

though the people have been sacrificed in the new organizational developments, it is

becoming clear that the true lasting competitive advantage comes through humn

resources and how they are managed. SCB seems to not focussing on this highly

critical issue as the job satisfaction level of the employees working at SCB, tufail road

was quite low. These are some of the possible reasons of this low morale based on my

personal judgement.

• Contractual Hiring

• Low Salary Package

• Job In security

• Sales Pressures

• No additional perquisites, facilities, allowances

• Management performance oriented and not employee oriented

• Centralized decision making and low empowerments

• Strict rules & regulations

• Delayed Promotions

• Lack of recreational facilities

Lack of specialisation

This famous and useful concept given by Adam Smith in 1776 seems to be missing in

the bank. The employees are constantly rotated from one job to another job of totally

different characteristic in the view of giving them the know-how of the working in all

the departments. But I think this is not a very good tactics used by the management.

Otherwise the situation might be like this ‘Jack of all and master of none.’

Basic Banking Service


331

The BBS software used by the bank in preparing pay orders and drafts is not as

efficient as it often gets low or stuck even resulting in arrogance and delay for the

customer. The job also becomes hectic for the employee.

Centralization

There is a high degree of centralisation in the bank. Almost all the decision-making is

in the hands of the upper management located in Karachi. But centralisation is

effective upto a certain level otherwise it becomes inefficient and at times costly too. I

personally observed that delay occurred in the operations of the employees only due

to the fact that they had not got any instructions from the head office.

Lack of training facilities

Presently there is no specific training program arranged for the new recruiters. They

have to learn based on their observations and also their mistakes. It takes a bit time for

the fresh one to learn the banking the result is huge amount of blunders, mistakes etc.

resulting in monetary and non-monetary losses for the bank. There is pressure not

only on the new learner but also on the person placed upon with this responsibility.

Ambiguity in Job Design

There is not a clearly defined set of activities for the employees of the bank apart from

a few. Generally the same Person is find working in Cash department and at some

other time in the Govt. Sec.

OPPORTUNITIES

Apart from the ones discussed in External Factors Evaluation Matrix, the following

threats and opportunities are being faced by the bank currently:


332

Wholesale/Corporate banking

The corporate bond market is still in its infancy in Pakistan. Few companies such as

Pakistan Telecommunications Ltd. (PTCL) and Water and Power Development

Authority (WAPDA) introduced corporate bonds for general public and received good

response but no similar initiative was taken by other companies. Market for corporate

bonds needs to be developed as it will offer greater opportunities to the bank.

Joint Ventures

In order to capitalize on the emerging market opportunities, joint ventures offer the

best strategy. Standard Chartered so far has just three joint ventures, one with MCB,

the other one with McDonalds and the last one with the Akbar Group of Companies.

But if we look at some of it competitors, we find out that they have formed a no. of

joint ventures such as Alfalah Bank with 42 and Prime Commercial Bank with 33. So

the bank should also undertake joint ventures in order to be successful opportunist.

THREATS

High Employees Turnover

As discussed above, the job satisfaction level of the employee is very low resulting in

high turnover which is bad for any organization as there are huge monetary and non-

monetary costs involved in the fresh recruitments.

High charges

The schedules of charges indicate that the fees charged by the bank on the various

services it provides are extremely high. It may result in decrease in the number of its

exiting customers. Further more, this could be very alarming situation for the bank in

case some of the competitors grasped the opportunity and lowered its rates. The result


333

would be either the lost of market share or decrease in the charges resulting in

lowering the bank’s income.

Less attractive rate of return

Commercial banks face considerable competition in attracting deposits from

individuals or small investors. In contrast, the Govt. of Pakistan national saving

scheme offers attractive rates of return (approx. 16 to 18 percent annually) on 10-15

year fixed accounts, which banks find difficult to match.

Stiff Competition

SCB is currently facing strict competition from the foreign banks especially the

American who banks enjoy a good market position. Collectively U.S. banks hold

approximately 9 percent of all commercial banks' assets. At present, three American

banks are operating in Pakistan: American Express Bank; Bank of America and

Citibank.

Less Experienced Staff

Owing to huge turnover of the employees, the no. of experienced and well trained

staff is very low. Majority of the staff working in the bank branches is quite young

and inexperienced. If the bank failed to bring down its high employees turnover, then

it would be lacking the most important resources of any organization i.e. the

experienced staff.


334


335

RECOMMENDATIONS

After spending six weeks at different departments of the bank, interacting with the

employees, getting their views, observing the organizational structure and design, I

have come up with the following suggestions that in my view, will definitely improve

a few weaknesses observed in the bank by me.

Flexible Policies

The bank should be adopt flexible policies, specially in the areas of the recruitment,

promotions, evaluation of the employees otherwise the high turnover observed in the

bank will continue to create problems for the bank now and in the future.

Job security

The employees in the organization should be insured job security so that there is no

pressure on the employees while performing their tasks.


336

Permanent Hiring

The fresh hiring should be made permanent so that they are secured of their future.

Further the allowances and perquisites attached with the permanent jobs will also

increase the motivation level of the employees.

Job Training Programs

The bank should place emphasis on the organization of effective training and

development programs for its new as well as existing employees so that these are

gradually updated regarding the recent developments in the field of banking.

Perquisites and Allowances

The number of allowances and perquisites for the employees should be increased to

ensure that they put their body and soul in the jobs assigned to them.

Revival of the Charges

The rates for the various charges provided by the bank should be brought down a bit

as it would result in increase in the number of customers of the bank.

Adoption of Effective technology

The current BBS system used by the bank is very slow in processing so my view is

that the bank should try to adopt some other but more effective form of technology in

order to provide comfort to the customers as well as the staff.

Decentralization

The higher authorities should form team-based management rather than centralized

management. It would result in improvement in uplifting the morale of the employees.


337

They will be more motivated and involved in all their operations resulting in overall

effectiveness of the organization.


338

MY INTERNSHIP EXPERIENCE

My Internship Experience

One of the most important aims of the student life is to express himself / herself

correctly and adequately. This was the believe in my mind when I first decided to go

to Standard Chartered Bank to complete my internship program.

Determined, Confident and Persistent in the pursuit of knowledge and learning, I was

on my way to Standard Chartered Bank , Tufail Road Branch in the early morning of

June 17, 2002. Just a day before, I had taken my last paper of final term 3rd semester.

Normally I wanted rest and recreation after the tiring exams but this time I was

anxiously waiting for the start of my internship.

I stepped up the branch with the passion for learning and full commitment. The first

thing that impressed me was the layout of the branch. . Apart from me, a no. of other


339

interns have also joined the bank for internship .I had my first introduction with the

floor manager. She assigned me and one of my juniors, who also joined the same

prestigious institution a tough assignment. We had to leave the bank as the work was

to be done in the Mall branch. Full of avidity and conviction, my colleague, Sunaina

Iqbal and me were on our way to the Mall branch. We were asked to meet Miss

Marraim Berq, a Govt. Sec. officer. Her politeness and humbleness inspired us a lot.

After a small discussion, she gave us the details of the work to be done by us. It was a

project based on the data of Government securities for the last two years starting from

July 1st, 2000 to February 2002. Apparently, we felt that it was a small assignment but

when we entered the vaults where the registers of all the SSCs and DSCs were placed,

all our assumptions proved to be wrong. However we were quite determined to

complete the project with in one week as both of us were keen to get back to the main

branch i.e. quail road. We worked there non stop from 9:00 a.m. to 5:00 p.m. After

completing the project in 7 days , we again joined the quail road branch.

After the completion of the first project quite efficiently, the floor manager Fareha

Ramadan, assigned us another project which was even larger than the first one.

However one more intern was included in our team. The job was to update the

previous account no. of 8000 deposits previously kept at ANZ Grind lays bank.

Then I joined sales and service department. Here I got the opportunity of working and

learning from personal financial consultant, Arshad Iqbal.

The first tasked assigned to me by him was the preparation of detailed schedules of

the PKR interest rates offered by different local as well as foreign banks operating in

the country. I was to obtain the information by calling in the banks and asking for the

required information pretending to be a potential customer for those banks. The banks

included the MCB, City Bank, ABM Amro, Agricole Credit, Faisal Bank, Prime

Commercauil bank and Union Bank. It served the purpose of keeping a close watch


340

on the offerings of the competitors and whether the bank was in line with those

offerings.

The second task he assigned to me was a study of all the products and services offered

by the bank and based on that study, the preparation of a comprehensive promotional

letter for the Standard Chartered Bank showing the world class portfolio and services

offered by the bank. The letter prepared by me has been attached at the end of this

term paper. After the preparation of this letter, the next step was to mail merge it to

800 or more advertising concerns in Lahore and outside Lahore.

I performed a no. of different tasks there as Account opening process, Know your

customers, issuance of bank statements, and so.

After working with the personal financial consultant, the next department I moved in

was the Govt. sec. Firstly I was not so eager to work there but now after having done

my internship there, near me it is the department I have enjoyed working a lot. I was

fortune enough to have learned from highly experienced and qualified people.

After spending one and a half week in the Govt. Securities Department, I joined the

BSU (Banking Service Unit). There I spend one week learning about the various

funds transfer processes such as demand drafts, pay orders etc.

The last week of my internship was spent in the lending department. I performed a no.

of tasks. I also prepared the Profile of Niaz Company, which has been given at the end

of the report.

Today when almost five months have passed since the completion of my internship,

when I look back at those days, I find each and every instance as fresh in my mind as

it has happened only a few days before. This tremendous experience composed of six

weeks has further elevated my desire of working in a bank I really enjoyed working in


341

such a dynamic environment and will always cherish those moments spend in the

bank through out my life.

THE PROBLEMS I FACED

Now at the end., when I am almost done with my internship report, I am going to tell

about the problems I encountered during my internship as well as while preparing my

internship report.

The first problem I encountered with was getting the annual financial statements of

the bank. Since a foreign bank, its annual report was not available with the branch I

was working in. For this, I am thankful to the Floor Manager of the bank, who

provided us with a copy of the financial statements of the bank.

Getting the report prepared was the hardest thing I have done in my life. When I have

almost completed my internship report just a few days before the dead line, the hard

disk me computer went corrupt resulting in a dismal situation for me. Fortunately, I

had sent almost 80% of the report in my e-mail accounts as a security measure. I am

thankful to my friends who gave this brilliant idea of saving the material in the e-mail

account. Now it was the most embarrassing moment for me, as I never checked my

mailing account that it contains the data sent by me. Fortunately every thing was

secure in my account. I have to complete the rest of the report in just two days. And I

know what I have to do in giving this final touch to the report.

Anyhow, it was a very learning experience for me that I will never in my entire life.


342

COMPANY PROFILE- NIAZ (PVT.) LTD.

NPL is engaged in the business of manufacture and sales of savory snacks foods. It is

a major nationwide player in the corn-based segment of the industry as it accounts for

more than 50% of the market share. Its key objective is the development of its market

share in the corn-based segment of the snack food industry.

Ownership structure comprises of

Mr. Shahid Niaz

Mrs. Lubna Shahid


343

Ms. Swaleha Niaz

NPL’s banking group includes three local banks MCB, HBL, and Prime Commercial

Bank. NPL is currently producing “TOP POPS” (launched ten years back) where as it

is planning to introduce a new product “PARTY PUFFS” in the near future. It

depends on the imported raw material mainly from Europe and Far East. Its target

market comprises of primary and secondary school children.

PROMOTIONAL LETTER


Respected Sir:

After 140 years of unmatched worldwide services, Standard Chartered Bank is proud

to be ranked among the best banks of the world. Our 21 branches from the largest

foreign banking network enable you to access your account from across the country.

The core reason behind our success is no doubt the trust you have placed in us by

giving us the opportunity to serve you. Our competent and friendly working staff

working in 21 branches in Pakistan, is committed to upkeep your trust. Our prime

goal is to serve you better than anyone else as we value your money, time and efforts.


344

Our World class portfolio of product and services is especially designed to cater your

needs and offer maximum benefit and convenience. Following is a synopsis of

exciting services that will be of particular interest to your organization;

• Earn high profits, without sacrificing liquidity through “HIGHYIELD” and

“PRIVILEGE” which offer you an unlimited transactions facility absolutely

free of any charges.

• “TIGARAT” especially designed for the business class, offers free Auto

Loans, Cash Pick Up service and Special Bonus Waivers.

• Free ATM card for all the account holders so that you may access your funds

at any time you wish to.

• Your ATM card will bring you exciting discounts across outlets included in

the bargain network.

• Auto Loan offers the lower mark up rate, enabling you to get your dream car

by selecting the payment plan that suits your earnings.

Just give us an opportunity to prove that we do what we claim. You will be pleased

with the dealing of our staff as our long life valued customer. If you have any query,

please feel free to contact the undersigned.

Looking forward to serve you and deliver complete satisfaction.

Yours Sincerely,

MohammadArshad Iqbal

Personal Financial Consultant

Standard Chartered bank


345

SOURCES

www.standard chartered.com

Bank Magazine; MESA


346

http://www.standard/

Brochures

Information provided by the employees

My observation


347