faisal bank 1111111
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Faysal Bank Ltd.
Supervised By: Miss Nafees Akhtar
Submitted to: Miss Nafees Akhtar
Submitted By:
Name. Sajida Hafeez
Roll No. 39
Class. Msc Applied Psychology
Session. 2010-2012
Date. 01-10-2012
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Faysal Bank Ltd.
Sr. No. Contents Page
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Faysal Bank Ltd.
Internship training programme provides a chance to students to make
themselves Familiar with the actual business environment. It also provides an
opportunity to study the theories of book in practice. This is the reason why the
students of IMS are required to complete internship programme at any recommended
organization. After completing the internship, it is required to write an internship
report, covering all aspects of that organization
This report is written on Faysal Bank Limited, which is divided into seven
parts covering all the working and behavior of organization
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Faysal Bank Ltd.
By the grace of Allah the almighty, who has enabled me to do this entailinghard work. It is a matter of great pleasure and privilege for me to write this internship
report on Faysal Bank Limited, Chistian Branch., I am pleased to acknowledge the
help which I received in write this report. I express my special thanks to following
persons, working in Faysal Bank Limited, Chistian Branch for their kind cooperation
in completing this report.
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I am also to acknowledge Miss Nafees Akhtar -, the Director of
our internship program, has always patronized the internship training programmes &
without his inspiring teaching & guidance, I would not have been able to write this
report. I am indebted to my class fellows who gave their Valuable suggestions at the
time when they were most needed.
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Faysal Bank Ltd.
WHAT IS BANK?
In Simple words we can say that bank is a pipeline through which money moves into
and out of circulation. Bank accepts deposits and repays cash to its customers on
demand. The bank borrows money at a lesser rate of interest and lends it to the
borrower at a higher rate.
At the time of independence, there were 487 offices of scheduled banks in the
territories now constituting Pakistan. Following the announcement of independence
plan in June 1947, the Hindus residing in the territories now comprising Pakistan
started transferring their registered offices in Pakistan, transferred them to India in
order to bring a collapse of the new state. By 30th June 1948, the number of offices of
scheduled banks in Pakistan declined from 487 to only 195.
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Faysal Bank Ltd.
Pakistan has indeed unique banking history commencing as were from scratch at the
time of Pakistan of this subcontinent. However it soon comes over its extra ordinary
banking problems and by grace of Allah we have a stable banking sector.
INTRODUCTION
Faysal Bank Limited (Bank) was incorporated in Pakistan on October 03, 1994 as a
public quoted company listed on Karachi & Lahore stock Exchanges. The six
Pakistan branches of Faysal Islamic Bank of Bahrain E.C. amalgamated with the
Bank when it commenced business operations effective January 01,1995.
The year 2002 is the 15th year for Faysal Bank serving the Pakistani economy and
market. Similarly, Al Faysal Investment Limited was incorporated in Pakistan in 1991
as the investment arm of the group and make valuable contributions in the public and
private sectors based on Shariah approved modes of funding.
As of January1,2002, the two entitles of the group in Pakistan, Faysal Bank Limited
and Al Faysal Investment Bank Limited, merged into one and today only Faysal Bank
Limited remains as a larger, stronger and much more versatile institution among
private banks in the country. In fact it is amongst three largest in terms of quality,
which after the merger stands at over Rs.4.0 billion. The total balance sheet size of
Faysal Bank after the merger is in excess of Rs. 40 billion
SHAREHOLDERS
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Faysal Bank Ltd.
The Bank has been incorporated with an authorized share capital of Rs. 1.5 billion of
which Rs.1.1 billion is issued and paid-up. As 31st December, 1995 the Bank share
capital was held by:
Faysal Islamic Bank of Bahrain E.C.(FIBB) including its nominee directors
NIT, general public and employee
FIBB is a Bahrain based bank; established in 1982 and is a subsidiary of Dar Al-Mal
Al Islamic (DMI), Geneva with H.R.H.Prince Mohammad Al Faisal Al Saud as its
chairman
OVERALL VISION
Faysal Bank derives its mission statement from its principals Shamil Bank Bahrain
E.C and its holding company DMI Trust. The overall mission being:
The introduction of a just and equitable financial system by being a world class
multi-purpose financial institution, providing a range of specialized services, working
on Shariah principles.
VALUES
Training the spirit of Shariaa into modern financial products and
services
Maintaining a high reputation for prudence in the financial community
Reflecting high standards of integrity, propriety, goodwill and teamwork
in its conduct, within the family and its marketplace.
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Faysal Bank Ltd.
Faysal Bank Limited as incorporated as a public limited company under the
Companies Ordinance,1994 on October 3,1994 in Lahore vide Certificate of
incorporation No,LO7391 of 1994-95 with an authorized capital of Rs.1,500 million
ordinary shares of RRRs.10/-each.The Ban has been established by Faysal Islamic
Bank of Bahrain E.C.,pursuant to the federal Government permission/sanction letter
no.F 8(23) Bkg.IV/92-5443 dated April 7,1993 ,as amended, for establishment of a
commercial bank
The state Bank of Pakistan-SBP, vide its letter no . BRD (NBFI)676/625-E-93 dated
September 16, 1993 has also agreed in principle to the setting up of the Bank in term
of the governments aforementioned permission letter. SBPs said letter also contains
interalia, its agreement in principle for they merger (amalgamation) with the Bank of
the existing branches of Faysal Islamic Bank of Bahrain E.C. (hereinafter referred to
as FIBB- Pakistan Branch) subject to meeting with the requirements of the law, in
particular section 48 of the Banking companies Ordinance, 1962 & on the condition
that the transfer of assets &liabilities shall be on the basis of the break-up value or
net- worth of the FIBB-Pakistan Branch as per the books. The FIBB- Pakistan branch
will merge with the Bank on a going concern basis.
The entire under taking of FIBB in Pakistan scheme of amalgamation are as follows:
The entire undertaking of FIBB in Pakistan, including all it s assets &
liabilities & all the rights & obligations, etc as at the effective data (data of
approval of the scheme by the state Bank), shall with out any future act, action or
deed, stand transferred to, & vest in the Bank . As a consequence, the FIBB
Pakistan branch shall stand merged with the Bank.
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Faysal Bank Ltd.
A consideration for the transfer, the Bank shall pay to FIBB, a sum equal to
the non-worth of its branches in Pakistan, as per the books, as on the
amalgamation date, the net-worth will be certified by the auditors of FIBB-
Pakistan Branch.
Notwithstanding the effective date, the cut-off date i-e the date as of which the
amalgamation of FIBB- Pakistan Branch with the Bank shall be deemed to have
taken place as envisaged to be the close of business on December 31, 1994.
After approval by the shareholders of FIBB &the Bank the scheme would be
presented to the SBP for approval in terms of section 48 of the banking
companies ordinance, 1962.
Bank was incorporated as a public limited company. Its shares are quested in
Pakistan. 60% of the capital is held by Faysal Islamic bank of Bahrain E.C & 40%
by the general public. The Faysal Islamic Bank of Bahrain E.C merged into the
Bank when it commenced business operations on January 02, 1995.
CONFORMITY TO ISLAMIC SHARIAA
The Holy Quran outlines for Muslims a complete code of life for dealing individually
or collectively. This is future amplified by saying and practice of Holy Profit(May be
upon him) From these guidelines , an Islamic economic system can be elaborated
upon, aimed at creating a socially, economically and politically viable and just
environment supporting the universal well being of humanity
In this context all functions of the bank are performed in strict adherence to the
principles of Islamic Shariaa. In order to ensure such conformity of Shariaa, the
Bank operations are checked and monitored by its Religion Supervisory Board to
whom the management reports periodically. In case of new operations and activities
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Faysal Bank Ltd.
prior approval of Religious Supervisory Board is invariably obtained by the bank
management.
The Religious Supervisory Board of the bank itself comprises eminent scholars of
Islamic Shariaa from Bahrain, Egypt, Saudi Arabia, Turkey, and Pakistan possessing
in-death knowledge of the conditions in which the Bank operates. The Groups
Religion Board, composed also of many internationally renowned Islamic Scholars,
provides advice from time on issue that pertain to Group level implementation
ACTIVITIES OF THE BANK
Its activities include act as a manager, on a trustee basis of a series of Modaraba
investments funds and private portfolio investments accounts in accordance with
Islamic laws and principles particularly with regard to the prohibition of receiving or
paying interest.
SOUND MANAGEMENT
Its sources are largely due to the management style and polices of senior manager.
It sees Modaraba syndications as a major growth area and there are possibilities that
the bank will arrange such syndications for corporations and companies in these
countries especially in the high growth economics of South East Asia in particular
Malaysia and Indonesia.
There have been suggestions that this type of specialist facility could be intended to
other regions such as the Middle East, North Africa and the Muslims Central Asia
Republics where commodity export and import finance is in big demand.
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Faysal Bank Ltd.
SYSTEMS DEVELOPMENT
Faysal bank ltd. (FBL) provides a unique mix of services to its customers. That is why
off the shelf software packages and third party vendours are not successful in
providing a complete range of software packages to fully meet the operational needs
of its wholesale and retail banking operations, customers services support and
sophisticated MIS. The Bank has succeeded in completing in house development of
software for meeting all of its requirements. This results in interlining all the
operational units of the Bank to allow fast exchanges of data and information.
PURPOSE OF OPERATIONS IN PAKISTAN
The following are the main objectives of the establishments of FBL in Pakistan.
1. To extend Islamic financial services to the people of Pakistan.
2. To enhance trading relations between Islamic countries.
3. To support market opening in Pakistan by diversion and mobilization of
surplus funds available from within and from other Islamic nations.
SERVICES OFFERED
FBL offers a wide range of banking services to public and private sector corporations,
partnerships, individuals, professional, and expatriate Pakistan working abroad .
These services include:
Deposits
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- Current Accounts
- Profit and loss sharing deposit
- Saving account
- Call/notice/term deposit accounts
Foreign Currency
- Current and saving accounts
- Call/notice/term deposit accounts.
Documentary Credits/Guarantees
- Import letter of credit
- Negotiation and collection of export documents
- Issuance of letters of guarantee
- Performance bonds, etc.
Financing
Short Term
- Modarba (Financing resale of goods)
- Working capital
Short/medium term
- Syndicated financing
Medium/long term
- Modaraba
- Moshakara
- Ijara
Other Services
Remittances
Demand drafts, pay orders, telegraphic and mail transfers.
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Foreign exchange bearer certificate
NIT units.
Foreign exchange and travelers cheques.
SOURCES OF FUNDS
The banks main sources of funds are:
a. Demand deposits (current accounts balances)
b. Investment deposits (funds under management)
Within theses two basic categories, the bank is able to offer differently
structured accounts to provide a range of deposit series such as
current, saving, call term, modaraba etc.
SHARIAS IMPLEMENTATION
Bank continues to meet the liquidity requirements by making investments in
Shariaa compatible instruments. Steps have been taken to bring operations of the
bank in greater conformity with Shariaa operations are under review to evaluate their
compatibility with the shariaa and to refine them in consolation with Maulana
Mohammad Taqi Usmani, Deputy Chairman, Islamic Fiqah Academy (OIC).
H.R.H Prince Mohamed Al Faisal Al Saud Chairman
Mr. Farook Bengali President & CEO
Mr. Khalid Abdulla Janahi Director
Dr.Said Saad Al-Martan Director
Mr. Mahmood A. Faruqui Director
Mr. Nasir Ali shah Bukhari Director
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Faysal Bank Ltd.
Mr. Ziad H.Rawashdeh Director
Mr. Tariq Iqbal Khan Director
EXECUTIVE COMMITTEE
Mr. Khalid Abdullah Janahi Chairman
M. Farook Bangali Member
Mr. Ziad H. Rawashdeh Member
MANAGEMENT
Mr. Farook Bangali President&CEO
Mr. Khalid Tirmizey Country General Manager,
Commercial Banking
Mr. M. K. Hoti Country General Manager,
Investment Banking
Mr. Bashir A. Sheikh General Manager Commercial
Banking Central
Mr. Mohammad Saleem Head of Country Operations
& Information Technology
Mr. Ahmed Kamran Regional Manager, Corporate
Banking
Mr.Mansoor Hamdani Head of Internal Audit
Mr. Arif Hasan Khan Head of Human Resources&
General Services
Mr. Ejaz Rahim Deputy General Manager,
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Faysal Bank Ltd.
Investment Banking
Mr. Zubair Gilani Area Manager, Investment
Banking North
Mr. Hasan Imam Country Risk Manager
Mr. Mohammad Iqbal Head of Finance
Mr. Mohammad Siddique Memon Company Secretary & legal
Advisor
Mr. Sohail Nawaz Area Manager, North
Mr. Richard Rath Area Manager, Southern
Branches
Mr. Saleem Shafi Head Corporate Communications
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Faysal Bank Ltd.
ANALYSIS OF ORGANIZATIONAL BEHAVIOUR
Some of the characteristics of the bureaucracy are present in the organizational
structure of FBL. These include
1. Positions arranged in hierarchy.
2. In all the departments, excluding the Credit Marketing and Accounts,
comparatively higher degree of the set procedures and rules exist.
VERTICAL ANALYSIS
1. Centralization Versus Decentralization
Geographical
FBL has its branches in main cities and countries of the world show that it is
geographically decentralized.
Functional
and procedures All the seventeen branches of FBL have their own personal
Departments. But, at the same there is a personnel Departments of all other branches
in Pakistan
Within Multan branch, there is centralization to a greater extent. Up to the level of
Assistant Vice President and Grade 2 officers (only in the Credit Marketing
Department), there is decentralization and there is too within the rules, polices, of the
State Bank ofPakistan and Head Officers of the Bank in Bahrain.
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2 Flat Versus Tall Structure
The structure of the organization is tall with a few members at each level. As a result
there is a narrow span of control and supervisors have close control over their
subordinates
HORIZONTAL ANALYSIS
1. Departments
FBL has a functionally departmentalized structure. As the organization chart shows,
various functional departments are further departmentalized on the basis of their
services.
2. Line and Staff Concept of Organization
Persons at the management level (Senior vice President, Assistant Vice President, and
Regional Vice Presidents) are in line while others persons are in staff.
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TYPES OF MANAGEMENT
POLICIES
The following main types of managerial polices have been discussed here:
1. Personnel Policies
Personnel polices cover the major problems of providing and maintaining anefficient
work force.
2. Marketing Policies
Marketing polices deal with the problems of planning for sales activities .
3. Financial Policies
Financial polices are concerned with the problems of providing and handling capital
That is required for the business.
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.
1. HOURS OF WORK
Timing of the Job
9.00 a.m to 5.00 p.m with one hour break for lunch and Zuhar prayer
Days: 5 days a week
2. VACATIONS
AfterCausal leaves: 15 per anum
Privilege leaves: 30 per anum
Privilege leaves are given to the employees for relaxation and recreational purposes
after continuous work. Such leaves help the employees in mental and physical
relaxation. During one month of privilege leaves, employees are also given the pay
for that month so as to compensate for the recreational charges he has to bear during
that period.
Employees are encouraged to take the leaves allowed to them by the Bank so that they
can get some time out of their busy routines. This practice has shown that the
employees feel more fresh, enthusiastic, and energetic when return to their jobs
vacation.
Medical leaves are also provided to the employees if an employees is not feeling fit
and needs for getting well properly. Bank also reimburses the medical expenses and
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their dependents i.e. Bank pays 100% medical free payables on thebehalf of its
employees.
3. WORKING CONDITIONS
Working conditions both physical and environment is very crucial for employees
working in any organization since it is the organization where they spend most of
their day. Working conditions can both motivate and de-motivate the employees
depending upon whether proper or improper working conditions have been provided.
From the environment maintained in, even a person FBL who enters the Bank for the
first time can realize that the management of Bank is well aware of the important
impact of working conditions on the efficiency and morale of employees.
4. SAFETY
Safety is the main concern for manager, officers and employees. The money and other
valuables in vaults and lockers in banking business are more then any other business.
Therefore, management of FBL has taken special measures to safeguard the life and
property of both their employees and the customers. Many of these measures were
decided and taken at the time of the construction of the building while others short
term decision were taken after the bank started proper functioning. Some of the salient
features of such safety measures are discussed here:
a) The walls of the lockers area and the cash vault are made up of concrete which
makes them non-drillable. Moreover the lockers and the vault are made up
fire-proof steel. These measures help preserve the loss and cash either by some
human being or by an accident such as fire.
b) Two gunmen have been appointed at the entrance that makes sure that no
suspicious person enters the Bank. These are responsible for safeguarding the
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life and property of Banks employees and customers. One guard is also
present at each floor. Shifts of guards change with time. After banking hours,
one guard remains in the Bank over night.
c) Doors are made up of heavy wood so that it becomes difficult for a running
person both to enter and leave the Bank. This makes sure that in case of
robbery, the person to open the door quickly.
d) In order to safeguard against fire, special alarm system has been installed in
the Bank. Smoke detecting instruments, present on the roof, start ringing the
alarm bell whenever they detect smoke. In case of fire, this system will help
saving the life of the persons in the Bank who can leave the Bank immediately
through special exit door.
5. PHYSICAL CONDITIONS
The following physical facilities have been provided by the Bank:
a) Light
There is a proper arrangement of light in the Bank. The whole bank is illuminated
with lights, which makes the working conditions pleasant. Moreover, there is also
suitable arrangement for daylight in the entire building.
b) Temperature
Central heating/cooling system ensures the moderate temperature necessary for proper
working of the employees.
Some other facilities provided to the customers include: calm and quit working
environment, modernly designed washrooms, fully carpeted.
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Faysal Bank Ltd.
SOURCES OF CAPITAL
Deposits are the major source of capital for FBL. Deposits are mostly obtained from
customers. However, Head Office also invests a certain amount of money as deposit
from time to time to earn money on his investment.
MONEY AT CALL
In case the Bank needs capital and deposits with it are not sufficient to its
requirements, the Bank goes to the inter Bank market for finances. From this local
market Bank can obtain both long and short term finances. Such money is called the
Inter Bank Call Money and is obtained at Inter Bank Call rates decided by the SBP.
Investment
Another source of obtaining capital for the Bank is the profits which it earns on
Investment Portfolio
The amount invested in various projects.
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Faysal Bank Ltd.
SERVICE FACILITIES
Faysal Bank continues to strengthen its position in consumer banking. For extending
quality service to retail customers, the bank offers attraction local and foreign
currency deposit schemes. FBL launched its first branded liability product Rozana
Munafa Business Account in July 1995, targeted toward large corporate and personal
business. The bank has also redesigned and refurbished most of its branches, having a
constant identity in terms of design, dcor and colour.
FBL realizes the importance of customer found services. That is why it has
commenced evening banking at all seventeen branches. FBL is divided in to
following departments, which provide different facilities to different customers:
Customer Service Department
Documentary Credit Department
Credit Administration Department
Credit Operations Department
Corporate Banking Group Department
Accounts & general Services Department
Customer Service department is further divided in to two sections which include
Account Opening section and Cash dealing section To provide better and accurate
service the Bank has computerized the bank accounts which results in saving the time
along with greater speed, accuracy and neatness in accounts.
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Faysal Bank Ltd.
MANAGEMENT INFORMATION SYSTEM
Information system is the life blood of any firm especially the financial institution. In
FBL, managers make use of it to formulate polices, make decisions, and resolve
problems. Management and other employees of FBL together with the use of
sophisticated computers and carefully planned and designed procedures are able to
achieve the maximum pay-offs for the Bank within the special goals.
Information is the major ingredient of the success of the bank especially in the credit
department where the credit officers get all the pertinent data, organize it in a form
suitable for the managers and to obtain necessary information and to base their
decisions upon some logical and sound footings.
In FBL management Information System is the responsibility of the Account
Department. All the information generated in various departments is routed to the
Accounts Department where it is presented in a form usable for the managers at
different levels and other users of information.
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SOURCES OF INFORMATION
Patterns of communication exist to ensure that the manager get right information at
right time. Some sources of getting information include; telephone, personal
communication with employees, public, etc. other banks, and clients. Upper
management is also one important means of providing information to the credit
officers who organize these into useful form.
Location
Keeping in view the customer group, target market, and resources of the Bank, it has
the possible location (so far as Multan branch is concerned). FBL is neither a saving
bank nor it has a very huge target market consisting of all types of customers from
small to large, therefore, the present location i.e. at Abdali road a very clean and
open area of Multan is more than suitable for the Bank. Beautifully designed and
decorated building with neat and clean surroundings, and pleasant colour combination
in the interior just matches the tastes and appeals of its customers. Area surrounding
the bank is also inhabited by those people who fall under the target market of the
Bank.
Distribution
Most of the offerings other Bank are of an intangible nature. As a result of the lack of
a physical product, there is no need for the distribution and the middlemen. The bank
has its ten branches in Pakistan where services are created and offered to the
customers without the intervention of any middlemen.
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Faysal Bank Ltd.
SBP has an important role to play in formulating policies regarding the commission
rates, charges to be taken, tax to be deducted, etc. from the customers. All the
commercial banks have to operate within in those prescribed limits and FBL is no
exception. It follows and charges the rates as issued by SBP from time to time.
There are, however, certain services for the provision of which SBP has given
maximum and minimum limits to be charged from the customers. In such situation,
FBL does offer confessional rates to certain customers for competing in the market.
The above discussion makes it clear that there are not very significant changes in the
prices of services offered by FBL and other bank.
FBL does not charge anything to the customers for their statements. Customers can
come to Bank many times in a month and can get their statements within minutes.
This is the additional edge that the Bank has over many other Banks.
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Faysal Bank Ltd.
Customers satisfaction is the major policy of the Bank along with many other
policies. It is because of this policy that Bank provides best services, best6
environment, and courteous behaviour to its customers. As a result, customers not
only themselves remain loyal to the Bank but also speak good to others about the
bank. Since a satisfied customer is more powerful means of promotion than both
advertising and personal satisfaction, therefore, FBL pays more attention for the
satisfaction of the customers. The Bank. thus, do not need to spend huge amount on
promotional medias.
Sales Appeals
Sales appeals used by the bank primarily consist of promptness and accuracy of
services. Other things that help the bank in establishing itself in the market are quality
of services, personality and ability of officers, and sincere attitude for the well being
and financial help of the customers.
Sales Promotions
FBL uses newspapers, journals and magazines for advertising purpose with the
objective of telling public about the services provided by the Bank. The share of
advertisements in total expenditures is, however, very less. The reason is that the bank
management believes in promoting the good name through personal solicitation.
Moreover, for existing set up, a satisfied customer and a happy employee are
sufficient for necessary promotion.
Effect of Incorporation
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The Bank has gone in to public from January 1995, so managers have, therefore,
planned to increase the expenditures for advertisements. Advertisements will become
important because general public want to know and hear about the company in which
they invest or plan to invest money.
The accounting system followed by Faysal Islamic Bank is completely tailored to its
own individual needs and to the needs of modern banking. Accounting system has
been designed not only to record post facto information but also to cope with the
needs of forward- looking decision making. A good information system should be
capable of generating all information for planning, organizing and controlling the
activities of an organization from a common database.
Quite clearly no meaningful plan can be established without the fullest possible
information. An efficient costing system is needed so that the cost of different
services and of running different parts of the system can be established as precisely as
possible. Accuracy of accounts is desirable and essential for the success of the Bank.
Bank neither buys nor sells goods and commodities. It renders certain services to his
constituents, the cost of which it finds out in order to see whether or not a certain
customer account is a paying one.
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Bank keeps accounts not only for the purpose of finding the cost of an article, or
certain services, but also for finding the exact amounts owing to and by industrial and
commercial concerns. In this regard, FBL is very careful because failure to keep
proper accounts not only affects its credit, but it may also land it in difficulties.
Sometimes even businessmen depend upon their bank records in the matter of their
financial dealings. Bank cannot afford to be careless in the, matter of accounting, and
therefore, this department has been placed under a competent senior officer of the
Bank.
The chief objects with which bank accounts are kept, are the following:
To have a chronological account of all transactions done by the Bank, as it must be
able to produce sufficient proof of what it does from day to day. These running
accounts are very important.
To know the exact amounts owing to and by the Bank. Unless the Bank knows what
are exact amounts due from various customers, it cannot possibly make demands
upon them. Similarly, unless a Bank knows what are the amounts owing by him to his
customers, it cannot honour their cheque and make other payments required by them.
To know its exact position at all times and, thus, to find whether or not the business is
making progress.
Main functions of record keeping, in system term are the provision of information and
implementation of control.
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Faysal Bank Ltd.
BAD DEBTS
Multan branch does not have any bad debts. Accounts Department has, however,
created a general provision for bad debts.
CURRENT ACCOUNTS
Under the Islamic financial system as governed by the glorious Sharias, clients
wishing to deposit funds with an Islamic financial institution and seeking their
guaranteed return do not receive any income or benefit. Such funds are indicated as
current accounts and Bank treat these as loans from the customer to the Islamic
financial institution repayable on first demand. Bank chooses to make use of such
funds for investment purpose on its own risk. Current account funds are treated as the
Banks liability and are reported above the line in the Banks balance sheet.
DEPOSITS ACCOUNT
An investor can deposit his amount in the Deposit Account in FBL if he wants to
receive benefits, if accruing, from the investment of his funds. The depositor assumes
all the risks inherent in the investment of such funds. Faysal Islamic Bank guarantees
the return of the principal only not profit. Only in the case of grossnegligence on the
part of the Bank, which is proved as such, the Bank is liable for making good losses
incurred owing to such proved gross negligence.
BASIS OF ACCOUNTING FOR CASH
FIFO basis is used for the cash in the main safe.
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ACCOUNTING CONVENTIONS
Bank record of savings accounts shows all deposits, withdrawals, and dilly balance in
account. Rank record of current accounts shows all deposits and withdrawals.
CAPITAL EXPENDITURES
Separate budget is made for capital expenditures on which only depreciation can be
charged. Estimated cost for the purchase of capital asset is included in the budget and
depreciation is also charged to the asset to show the exact value of the assets after
certain period.
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REVENUE EXPENDITURES
Proper budgeting of each and every revenue expenditure is done. For example, an
important item in the overhead charges is the employee cost. To prepare the budgeted
figure of this expenditure, the bonus that is expected to be given to employees, any
increment that is expected to be given to the employees, and the pay of the employees
for that year are added together to find the employee cost. Moreover, any chances of
increases or decreases in the employee cost, depending upon the plan, to hire new
employees or to terminate an employee are also taken into consideration while
making budgets, likewise, each item of expenditure and income is taken into
consideration to find out the budgeted figure of it. Theses amounts are then presented
in the form of profit and loss account to calculate the net income for the years.
POLICY
Any expenditure-capital or revenue is treated as revenue expenditure if it is up to Rs.
5,000. Above this level, capital expenditures are treated in capital account.
REVALUATION
Heavy expenses are amortized over the period for which these will remain in use.
ENTERING RATES INTO SYSTEM ON DAILY BASIS
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New rates are fed into the computer on daily basis. These rates are then used for
finding the daily position of balances. Whenever a new rate is fed, an evaluation entry
is generated that automatically debits or credits the accounts (according to the
increase in FCY rates) to keep the total balance according to new rates.
ACCRUAL REVERSE
Bills of electricity, gas, etc. consumed during a month come next month. Therefore,
provision for taxes are kept for the month. At the time of receipt of actual bill, entries
made are reversed and entry for actual expense is entered.
Mr. Kamran Ashraf is the head of this department.
Customer Services Department of Faysal Bank Ltd. Can further be divided into
following sections:
Customer Services Section
Cash Dealing Section
It started its function on the very first day of operation of the bank in Multan. Mr.
Kamran Ashraf is operating this department.
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Mr. Kamran Ashraf is dealing with this department.
In customer services section, the customers are provided the following services:
Opening the Accounts
Special Deposits
Remittances
Collections
Issuance of Travelers Cheques (T/CS).
Issuance of Foreign currency (USD, Pound, DM)
Receipts of T/CS.
Receipts of Foreign currency.
Some of these are described below:
ACCOUNT OPENING
It is the most important department of bank
Mr. Kamran Ashraf deals in this department. Following procedure is adapted for this
purpose.
PROCEDURE OF ACCOUNT OPENING
It is very simple and quick procedure. A person who wants to open FBL provides the
facility of opening the accounts according to open an account must has the
introduction of banks staff or any existing account holder of the bank. The customer
is required to fill an opening form. AOF is very standard and up to the mark which
contains almost all information about the customers. Customer is guided to fill to fill
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all columns of AOF.All formalities and requirements are completed and verified, and
all supportive documents are taken and checked according to the nature of account. If
any formality is incomplete, cheque book is not issued until it is fulfilled.
Account number is allotted to the customer and all particular such as nature of
account, opening date, initial deposit, title of accounts are written in register
Account is opened in the system by putting all the particulars of the customer in the
system. The letter of thanks is sent to the customer for confirmation of address. After
complete procedures finally the manager of the Bank signs the AOF and these forms
are filed in proper sequence.
TYPES OF ACCOUNTS
There are following types of accounts:
Individual Account
Any individual or proprietor of a business can open an individual account at FBL
Following requirement has to be fulfilled for this account.
Signature of the customer
Name of the customer
N.I.C photocopy attached
Name and account no of the introducer
Verified sign of the introducer
Joint Account
When more than one person opens a single account it is called it is called joint
account. The names of persons are written on title of A/C
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Joint A/C cannot be opened by single person. Both persons have to sign on cheques.
Following requirements has to be fulfilled for this account
Sign of both customers on the back of AOF
Sign on joint A/C # mandate
NIC copies of both members
Mode of operation
Name and account number of introducer
Third Party Mandate
In this type of account A/C holder can authorize any person to draw his account. He is
authorized to run that title of account. Title of account will be in the name of account
holder.
Following are the requirements for this type of account:
Copy of NIC
Power of attorney
Company Account
In order to open an account of accompany there are following requirements:
An up-to-date copy of the companys memorandum & articles of association
The companys certificate of incorporation
The Companys certificate to Commerce Business (Public company only)
Also following documents are required:
Copy of certificate of Incorporation
Memorandum & articles association
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List of directors
Copy of board resolution
Certificate to Commerce of business (if required)
Signature cards
Copy of NIC
CLUB, SOCIETY, ASSOCIATION OR TRUST
The opening of this account require:
Copy of NIC of all society or Trustee members
Stamp of society or club
Certified copy of resolution
Copy of rules
List of office Bearers
Partnership Account
Account title will be the name of the partnership firm.
Following are the requirements for opening this account:
Sign of customers on back of AOF
NIC copies of all partners
Partnership deed (certified copy)
Partnership mandate (prescribed format)
Companies rubber stamp
Foreign Currency Account
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For opening of this type of account
Copy of NIC
Copy of Passport
Closing Of Account
When a customer wants to close an account he has to give a hand written application
to the head of the operations department to close his account plus remaining leaves of
check book.
The manager first verifies the sign of A/C holder then closing is done from the
register on the computer where the account was opened. In the File of the A/C holder
his account opening form is crossed.
Cheque Book Issuance
When the account is opened, then the customer is given a customer is given a cheque
book sign upon and encash money. It proceeded as included:
PROCEDURE
The account opening formalities must be completed before issuance of check book.
Particulars of the check book requisition should be completed containing title of
account, account number, type of currency and signature of the customer Signature of
the customer are verified on the requisition.
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The check book is taken from safe/locker. It is assured that series of check. Particulars
are entered in the cheque book issuance register. Account number is stamped on every
leave of the check book and those leaves are counted. Name of the account holder is
written on the cover of the cheque book. And requisition on the check book for
further issuance is properly filled, stamped and signed by office of the bank.
Cheque book is delivered to the customer and his signature are taken on cheque book
issuance register. Check book serial number entered in the system. Stock of cheque
book are balanced at the end of each day and kept under safe custody.
FBL issues the following cheque books
Saving account25 leaves
Current account - 50 leaves
TYPES OF ACCOUNTS
FBL deals with the following types of accounts:
Faysal Sahulat Account (Current)
Rozana Munafa Account
Rozana Munafa Plus
Faysal Premium Account
FCY Saving
FCY Current
Faysal Sahulat Account
TYPES OF CUSTOMERS
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FBL open accounts for the following types of accounts depending on the type of the
customers:
Individual Personal Account
Joint Account
Sole Proprietorship Account
Partnership Account
Public Limited
Private Limited
Association, Clubs, Charitable Institutions, etc. Account.
Attorney Accounts
Autonomous Accounts
DORMANT ACCOUNT
Current and Saving Accounts, which remain inactive for the following periods are
classified as Dormant Accounts:
Current Accounts L.CY. 06 months
Current Accounts F.CY. 12 months
Savings Accounts F.CY. 06 months
Savings Accounts F.CY. 12 months
PROCEDURE
The EDP unit provides daily a list of those accounts, which did not have any
customer, oriented transaction for the last six months and have now been transferred
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to Dormant section. The ledgers of such accounts in marked as CAUTION-
DORMANT ACCOUNT.
The specimen signature cards of Dormant accounts are taken away from Tellers area
and are kept in the custody of the officer who has been designated to approve
operations in the Dormant accounts.
When an account has been placed on Dormant status, a letter is sent to the account
has been inactive for sometime and it is appreciated if he continues to use it.
Upon reclassification of the Dormant account, the accounts are transferred to active
are with the prior approval of the incharge of the Customer Services Department.
Mr. Manjoka deals with this department.
Cash section of FBL works under the operation department. This department is given
the complete responsibility of cash, as result of transaction in touch local and foreign
currencies. It is also responsible for safe custody of cash.
This department performs the two main functions:
Cash Receipts
Cash Payments
CASH RECEIPTS
Mr. Manjoka deals cash receipts in this department depositor uses deposit slip for
depositing the amount in to their accounts. The officer cheeks if the deposit slip is
properly filled up containing title of account, A/C number, date and amount in words
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and figures and figures. Detail on both counter files and cash receipt voucher should
be the same. Cash is receipt by cash receipt officer, twice counted and matched with
the deposit slip. The cash details are written on the back of the deposit slip and also
entered in the cash receiving register. Cash received stamp is affixed on the face of
the deposit slip along with the signatures of the cash receiving officer. Deposit slip
and cash receiving register is given to the officer in the cash.
PAYMENT OF CHEQUE
Mr Manjoka deals with the payment of the cheques .First the cheque is presented by
the customer or holder to the cash payment officer. He confirms that it is drawn on the
same branch and particulars of the cheque are properly filled in. One signature of the
holder is taken on the back of the cheque. Cheque is handed over to the officer of the
cash department. For scrutiny where the officer checks the amount in the words,
figure, date, payees name crossing if any account number cheque serial no and
signature of the customer. It is posted in the System And posting stamp and number is
affixed on it.Cheque is handed over the cash payment officer for the payment and the
cash paid stamp is written on the back of the cheque. Enteries passed in the cash
payment register
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SPECIAL DEPOSIT INCLUDE
a) CDR (Call Deposit Receipt)
These Deposits operated on no profit no loss basis. Money deposited with the bank
this head is exempt from Zakat. Customers who deposit their money under this head
can get money when they need it. CDR can be made Open as well i.e. the person
who deposits the money does not need to do signature for getting the deposited money
back.
USES
CDRs are used by the customers for making the payments of bills.
2) DRs are used for keeping the money temporarily in the Bank without involving the
procedure of writing cheques because cheque is a legal document of the money
deposited by the customer, which he has to show to the tax authorities
NDR (NOTICE DEPOSIT RECEIPT
The following are the period for which these terms deposits are issued:
07 days
30 days
Profits are given on theses deposits and Zakat is also deducted from these deposits.
TDR (TERM DEPOSIT RECEIPT)
The following are the period for which these terms deposits are issued:
1 month
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2 month
3 month
6 month
1 year
2 year
3 year
FUNDS TRANSFER APPLICATIONS
For the transfer of funds the following applications are required here:
Telegraphic Transfer (local/foreign)
Pay Order
Demand Draft (local/foreign)
SBP check
PAY ORDER
Pay order is issued for local station. Application form is given to the customer to fill.
Two signatures are taken on the form .One for request and otter for receiving the
instrument. All the particulars of the application form are checked and bank
commission charges and with holding tax is written on the top of the application. If
the customer is maintaining his account with the branch he can give cheque for the
total amount of instrument plus bank charges. Cheque and application form is then
given to the officer cash department for payment ,post the cheque and signs the
application .If the customer wants to pay cash, cash is deposited on cash counter Cash
receiving officer receives cash on the application form along with the bank charges
and withholding tax. Application form is given to the remittances incharge for
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issuance of instrument. He enters all the particular of the application form in the
system and computer gives the auto control number to the instrument.
DEMAND DRAFT
Demand draft is issued for some outside station. It is the instrument that is used to
transfer amount from one city to another city. It can be made on cash as well as on the
cheque. If it is made through cheque, then it is necessary that the person must be
account holder. While in the case of cash, it consist of the three copies.
Original copy which is given to the account holder
DD advice is sent to the central branch
Copies for reconciliation. Its photocopy is kept with bank while original is sent to the
head office for reconciliation.
PROCEDURE
The client who wants to transfer his funds from one city to the other fills a form
requesting the bank to prepare a DD.DD application form contains columns requiring
information for the preparation of DD. e.g.
Beneficiary name
Applicants name
Address
Amount to be sent etc
Bank deduct charges against DD.
TELEGRAPHIC TRANSFER
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It is another mode of transfer of the funds. It is the quickest mode of the transfer of
funds from one city to the other city. For TT, client has to submit the application on
prescribed form of the Bank. Client can deposit money in the bank or can request the
bank to deduct the amount. Against the TT along withy the charges against the
issuance of TT from his account. The charges against the issuance of TT charged by
Faysal Bnak.
Call Deposit
When the party wants to give payment itself to another party then it makes call
deposit. The bank keeps it with itself unless it does not receive instruction from other
bank. Normally it is made on cash and goes on party account.
PAY SLIP
It is used when Bank itself pay for any type of transaction e.g. purchase of stationary.
COLLECTIONS
All the cheques under collection are called cheques under collection in FBL.There
are two types of bills for collection:
Outward Bills for Collection
Inward Bills for Collection
Outward Bills for Collection
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All the cheques are received on one counter along with the paying slips duly filled in
properly containing particulars of cheques and account holder. Counter folio of
paying slip is handed over to the customer by putting stamp for cheque received for
collection of FBL on it duly signed by officer. Theses cheques are scrutinized and
cheques for local clearing are separated from OBCs. Cheques for local clearing are
entered in clearing register, whereas cheques for collection are entered in OBCs
register and handed over to the bills department for Collection. OBC number is
allotted to the cheque from OBC register. Special crossing and Bank endorsement
stamps are affixed to the main branch of that city for collection.
RESERVE CASH
Cash left with the Bank at the end of the day is known as the Reserve Cash.
Reserve cash is divided in to two parts:
CASH IN HAND
It is the cash which is not kept in vaults but is kept in special boxes. There are two
tellers in the Bank and each of them has a separate box for putting cash in hand. As
per policy, Cash in hand should not be greater than Rs. 1500000 . Any amount greater
than this amount is transferred to the vault at the end of each day.
CASH IN VAULT
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Any amount (in whole numbers not in paisas) greater than the Cash in hand and
which cannot be kept in tellers boxes is placed in vaults.
CREDIT DEPARTMENT
The credit department comprises of following three departments in FBL.
Credit operations
Credit Administration
Corporate Banking Group
Mr. Kazmi deals with this department.
It also started its function from the very first day of the bank. Following facilities are
accommodated by this department.
1) FUNDED FACILITIES
LPO (Local Purchase Order)
Ore-shipment
Post shipment
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T/R (Trust Receipt
PAD (Payment against Documents)
2) NON- FUNDED FACILITIES
a) Sight LC
b) Guarantees
DOCUMENTS AND FORMALITIES FOR APPROVAL
OF FACILITY
Following are the documents and formalities, which are to be submitted by the
customer in favour of FBL
Request Letter
Board resolution
Signature of customer/partner /director
Visiting card
NID card (NIC)
Certificate of incorporation
Certificate of commencement of business
Import/Export Registration Number
Financial of last three years + Audit reports
Commitment if required
In case a new customer comes to FBL and asks for approval of facility (Project
Financing), the concerned bank officer asks him, to submit following documents to
him.
Request Letter
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Feasibility Report
Background Information sheet
And all other documents which he thinks must be submitted. In Feasibility report, the
concerned bank officer observes the following points before he makes the decision
of FAF.
INTRODUCTION
Sponsors
Project cost details
Debt Equity ratio
Implementation or construction schedule
If the (officer) is satisfied he will make the proposal of facility.
A) LOCAL PURCHASE ORDER
Definition
It is a short term provided by the bank through its own sources to the customers for
the following purposes:
To purchase the stock of raw material
To meet expenses of production
To meet the expenses other than production
Rate
Profit is charged on it after 90 days or quarterly
Rate of profit is different for different customers
Period
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PAF of LPO is available for only one year
After one year if the customer wants to renew this facility, bank will see if the
(customer) had fully utilize the credit facility in the previous year. If he has fully
utilize the credit facility and paid the profit satisfactory, he will be given this facility
again. But if he has made satisfactory repayment of profit but has not fully utilized his
credit facility, he must give solid reasons acceptable to the Bank if he wants to renew
his credit facility for the new year
Bank will either hypothecate or pledge the stock of the customer
Bank is more secure in case of pledge because items pledged are placed in covered
godowns, watchman is appointed by the Bank, Banks Board on godown, and register
record is maintained for amount of items containing in or going out of godown.
In case of hypothecation, goods may be placed in uncovered godowns, So Bank is not
very much secure.
b) Equitable Mortgage property
(i.e. customer cannot sell property or rent it, if the Bank does not agree).
c) Personal Guarantee of Directors
B) PRE-SHIPMENT (OWN SOURCE)
A customer comes to bank and asks it to provide him credit facility so that he can
produce items which he can ship (export).
Securities (For PAF)
1. Personal guarantee of directors
2. Charge on Export bill sent in collection
3. Lien on property. (Sometimes)
4. Hypothecation
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Rate
Different rate of profit is charged on this credit facility, from different customers.
Usually 16-20%
Period
Maximum period for which this loan can be provided is 180 days but PAF is prepared
for 1 year and can be renewed each year.
DOCUMENTS: Required from Customer
LC or Contact
Request letter
Demand promissory note
C) POST SHIPMENT (OWN SOURCE)
This is the credit facility required by the customer after he has made shipment and
needs funds for carrying on his production of goods.
Documents Required from Customer (By C.O Dept)
LC or Contact
E
Bills of Lading
Bill Exchange
Invoice
Other documents
SECURITIES
Required for Proposal raising or PAF
Personal guarantee of Directors
Lien on Export Bills sent in collection
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Property under lien
Rate
This credit facility is provided at different rates to different customers. Usually 10-
14%
Period
It can be provided for maximum of 180 days but PAF is prepared for 1 year (it can be
renewed each year).
D) CREDIT FACILITY AGAINST SIGHT L/C
1. Trust Receipt (very near to LPO)
When a customer has imported goods but cannot make payment against the Draft Bill
of Exchange then Bank his signature on T.R documents and pays for imported goods
on customer behalf. Then Customer must pay the amount for which goods were
imported on the date as agreed as well as Profit to the Bank on T.R facility.
2. Securities
All those securities as per LPO.
If Credit operations Department prepares PAF under sight LC
Bank retains a certain amount of CASH MARGIN on imported goods amount (Not
less than 30% under new policy).
Lien on imported goods.
E) CREDIT FACILITY AGAINST USANCE LC
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Acceptance
Customer signs an acceptance in favour of Bank that he will make payment of
imported goods up to a certain date, so bank pays the amount of imported goods.
Securities required
Lien on imported goods.
NON-FUNDED FACILITIES
F) BANK GUARANTEES
Customer obtains bank guarantees to give to different institutions e.g Sui Gas
Corporation.
Securities
Cash margin of guarantees
Personal guarantee of the director
Equitable mortgage of required value of property
G) FINANCIAL GUARANTEES
When the Bank(e.g FBL)is not in a position to give credit facilities to the customer it
will issue a financial guarantee to customer.
LONG TERM CREDIT FACILITIES
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It means FBL provides long term finance to the project. Project financing facility is
normally given in case when new project has to be set up. All its details are given
below:
Securities
All the stocks, properties and assets are in the charge of the bank, i.e Bank advances
finance on the security of whole project.
Period
This PAF is prepared or renewed every year.
Profit Rate
Profit rate is different for different customers.
Types of Project Financing
Foreign Currency Credit facility (for import of machinery)
LMM (Credit for Local Machinery Manufactured)
FAPC (Finance Against Packing Credit)
Most of the Banks (Foreign) avoid giving credit facilities to the customer and also
FBL does not prefer to offer these credit facilities.
Period
5 to 10 years but PAF renewed every year.
LEASING
FBL makes two agreements with the customer.
Lease Agreement
Sale and Lease Back Agreement
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Procedure
Customer opens LC for the import of machinery but the Bank pays for it. Then Bank
acts as the lesser and the Customer as a lessee, and machinery is given to Customer
under lease agreement.
Bank calculates and notes the following:
Principal amount of item to be leased. Say 50,00 Million.
Residual value (say 10%)(at the start of lease period) 5.00 Million.
Documentation fee Suppose Rs. 300.
Front-end fee (1% of principal amount) Rs.500, 000.
Then concerned Bank officer prepares Authorization Schedule.
Name of the customer is (single party or customer or company is mentioned on the
top of the page.
Background
Date of registration
Authorization Capital + experience
Chief executive name +experience
Line of business
Nature
PAST PERFORMANCE
Availability of Facilities: Facilities sanctioned and if under utilized then solid
reasons for utilization.
Nature of facilities
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Adjustment of facilities: How much of facilities has been adjusted or satisfied
Operation of current account: What is the average balance, minimum balance
(maintained or not)
Profitability: Banks earning on customers current account during previous
year
Expansion of business
Charges in corporate set up
DOCUMENTARY CREDIT DEPARTMENT
Mr. Zaidi deals with this department.
TYPES OF FACILITIES
There are two types of facilities:
Non-funded Facilities
Funded Facilities
NON FUNDED FACILITIES
FBL gives guarantees on the behalf of its customers to pay the principal in case of any
mis- happening on:
Customer Guarantees
Sui Gas Guarantees
Wapda
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Excise
Financial Institution
When one client goes to a financial institution for loan, that institution does not
believe on customer and demand for Bank guarantee. Then financial institution gives
his guarantee to another financial institution.
There are non funded facilities in which Banks own finances are not utilized. Other
non-funded facilities include:
Letter of Credit
L/c at Sight
L/s Usance
FUNDED FACILITIES
Funded Facilities are those which are related with the flow of Finances. In funded
facilities Banks own finances are involved. Theses are of many types:
Export Facilities
Pre Shipment
Post-Shipment
Long Term Financing
Import Financing
Financing Against Imported Merchandise (FIM)
Trust Receipt
Foreign Bills Purchased
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Provision of non funded facilities is the responsibility of Documentary Credit
Department, while the provision of Funded facilities is the task of Credit Operation
Department.
DETAILS REQUIRED ON GUARANTEE
FBL generally asks for the following details on guarantee:
Name and address of the applicant
Name and address of the beneficiary
Currency and amount of guarantee
Terms of guarantee
Expiry date of guarantee
ENTRY IN GUARANTEE REGISTER
A separate register known as guarantee register is maintained for recording
guarantees issued by the Bank. Date, letter of guarantee number, name of the
applicant, name of the beneficiary, commission, amount of LG and date of expiry are
recorded in it and a running serial number is allotted to the guarantee there from.
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Pricing And Distribution of Export Forms:
FBL maintains a complete record of all export forms printed by the Bank and of their
distribution to their branches and customers. For this purpose, it maintains a Stock
Register which shows branch-wise distribution of the export forms.
MAINTENANCE OF PARTY WISE RECORD OFCERTIFIED EXPORTS FORMS
Bank maintains another for recording therein the particulars of export firms issued
and certified by it in respect of each exporter. In this register it records against each
form, the date of submission the export documents when shipments have been made.
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Mr. Nadeem deals with this department.
Accounting department is the running blood of the Faysal Bank. It handles almost all
the problems occurring in the bank.
The important activities preformed by accounts department are as follows :
TREASURY
A special officer in FBL performs a portion of this operation .
CLEARING
Mr. Liaqat Ali deals with clearing.
Before discussing it is necessary to what is clearing?
The process by which cheques exchanged between the collecting and paying bank
and the ensuring financial settlement is called clearing
This is facility is provided by the state bank of Pakistan for offsetting of cross
obligations between the different banks. Clearing is of two types.
Inward Clearing
When cheques drafts, etc, of our branch presented to us for clearing by the SBP.
Cheques to be honored be bank.
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Outward Clearing
The cheques of other banks which the account holder deposits in their accounts are
send for collection.
Clearing process (inward/outward).
Here the local cheques are received that are drawn on FBL. All the cheques are
received on one counter along with the paying slips duly filled in properly containing
particulars of cheques and account holder. Counter folio of paying slip is handed over
to the customer by putting stamp for cheque received for collection for Faysal bank
limited on it duly signed by officer. These cheques are scrutinized and cheques for
local clearing are separated from OBCs. These are then entered in clearing register
and cheques for collecting are entered in OBC register and handed over the Bills
Department of Collection. Clearing officer checks and verifies titles of all the cheques
deposited by the customer to confirm the good title of the cheques. Cheques are
scrutinized proper and paying slips are separated from cheques. Special crossing,
endorsement and clearing stamps are affixed on the cheques. Cheques of each bank
are sorted and arranged branch wise. All the cheques are then entered into the clearing
system of bank. Print out of the clearing is taken and details are attached.
With the cheques of each bank. Details of these banks are then entered into the
clearing schedule containing number of cheques presented and their total amount
against the name of each bank. Then total number of cheques presented to all banks
and their total amount is written on the foot of the schedule, which is tallied with the
clearing register.
Next morning these cheques are delivered to the respective banks in clearing house of
the SBP between 9:00 to 9:30 AM. In the same manner, other banks present their
clearing drawn on Faysal Bank. Total number of cheques and their amount delivered
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to other banks are received from them are written on the clearing House schedule and
handed over to the Officer Clearing House SBP. Cheques/DD received in clearing are
given to the Officer Cash Department of the branch for their payment. After proper
scrutiny of cheques, verification of signatures and confirmation of balance in the
account Officer Cash Department pays these cheque by canceling and posting them in
the system.
ADVANTAGES TO FBL
Foreign currency is purchased at a certain rate. During the period if rate increases to a
higher rate, the difference between the two rates is the source of income for Bank.
In case of any mis-happening, Banks risk is minimum because foreign deposits are
backed up by SBP.
Receipt of Foreign Currency
By law, the branch of any bank cannot keep foreign currency. It has to sell this
currency at spot rates to its Head Office. Therefore, whenever the Bank receives
Foreign Currency through cheques, it sells this amount on the same day to Karachi
branch.
BUDGETING
Accounts department in the bank is responsible for making all the plans for the bank.
These plans range from yearly to daily plans.
Five Yearly Budget
Bank first of all makes a plan for five years. This plan include the budgetary figure for
five years, new avenues to search, new customers to find, etc. Such a plan gives only
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the broad guide to mark the direction in which the bank wants to move in the near
future.
Yearly Budget
Next step is that the account head makes a very accurate yearly budget incorporating
all factors like increase in tariff rates, rules and regulations of SBP, dollar fee, charges
in profit rates, etc. The annual budget is made for the year on quarterly basis. The
budget, this shows the targets for the bank, e.g. target deposits to be achieved, targets
expenditures, target profit, etc. After the approval of the budget by the top
management, it is communicated to all levels.
Comparison
Bank employees, management, etc. try their best to achieve the targets. After each
quarter to access the performance of the bank in terms of established objective, the
actual figure for income, expenditure and profits are compared with budgeted figures.
The quarter-wise analysis is done for control purpose. It helps in finding out whether
the expense have increased beyond the targets and whether the objectives set by the
management have been achieved. The answer to these questions help in finding out
the areas wherever the performance was not up to the desired level.
Revised Budget
Revised budget is sometimes necessary in order to incorporate the new policies
introduced by SBP or to show the effect of new changes in rates, etc. Budgets made
by the accounts department are flexible budget to readily incorporate the rates of
uncontrollable factors.
Monthly Review
Officers in accounts department makes profit and loss accounts both at the end of the
each quarter and at the end of each month. The advantages of monthly review is that
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the management comes to know about any deficiencies which are hindering the way
of achieving the targets and then can try to overcome these in the subsequent months.
For example, if the income earned from the investments made by the bank falls below
the budgeted figure, the bank management can start looking for new avenues so that
the gap between the budgeted and actual figures can be minimized during the
subsequent months.
The advantages of these budgets is that at the end of the year, management has the
annual, quarter-wise as well as monthly figures for review purpose.
Variances
Any variances resent in the actual amount and budgeted amount is probed into all the
factors; internal, cultural, social economical and political are taken into consideration.
If for example, the expenditure increases as compared to budgeted figure as it
happened last year when the printing expenditures had increased because of increase
in the cost of paper, the true causes of the increases are found out. If the causes are out
of control as in the above mentioned case and are expected to prolong, appropriate
adjustments are made in the budgets. If , however, the causes are in the control, then
the appropriate policies are made to encourage the employees and the concerned
persons to curtail the expenditures
SWOT ANALYSIS
STRENGTHS
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Faysal Bank Ltd.
Faysal Bank limited has strong belief on customer services
Manager and EVP Mr. Safdar Qureshi has good coordination with staff members
The environment of Faysal Bank Limited is very friendly
FBL is Fully computerized, each department has its own PC
The products of FBL are very excellent
Customers are allowed to give suggestion for the improvement of Bank and these
suggestions are listened carefully
WEAKNESSES
Faysal Bank Limited has no ATM facility
Faysal Bank Limited has no Credit card facility
The building of FBL is small
OPPORTUNITIES
Information technology
Credit card facility
ATM card facility
Establishing foreign branches
THREATS
There is great competition in the market
Faysal Bank Limited is the first bank which has come under listing in Pakistan. Faysal
Bank Limited has been active in Pakistan since the last seven years and has been in
the forefront in Islamic mode of financing. Faysal Bank Limited has a clear advantage
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over other new banks as the bank did not have to start from scratch, it has access to
already established international network and has mobilized sizable deposits.
Faysal Bank Limited is successful in employee retention, customer satisfaction and
high profit generation because of good services. Happy employees help create happy
customers, which, in the next cycle, reinforce the happy employees, and so on.
Faysal Bank Limited is more than satisfied with its customers. The track record of the
customers is excellent and the repayment procedure is satisfactory. The bank is fully
aware of the financial strength as well as the market repute of all of its customers.
Much of the good reputation of Faysal Bank Limited, is because of the good behavior
and response of the employees of the bank. Good and friendly attitude on part of
workers is the result of excellent management of the bank who believe that people are
the central case of any organization, especially those engaged in providing services to
their customers. As a result of customer oriented policy of the management,
employees have been trained to behave in a very friendly manner with customers.
Environment of the bank also plays an important role in customers satisfaction.
Employees always talk very politely on the telephone because telephone, if not
used properly, can be a cause of spoiling the good name of the organization.
The entire environment of the bank gives the impression that customers are very
important to the bank. They are offered seats even when they come for very small
task.
However, there are some suggestions for improvement.
Establishment of more branches in Pakistan
More advertisement on electronic media.
Introduction of more credit schemes like Rozana Munafa.
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I observed Faysal Bank Limited a financially sound bank. Its profits are increasing
year by year. Its staff is very good and sincere with bank.
Faysal Bank views specialization and service excellence as the cornerstone of its
strategy. The people at Bank realize that innovation, creativity, reliability, customized
services and their execution are the key ingredients for their future growth
They are aware that they have stepped into 21st century and they must meet its
challenges by acquiring the highest level of technology. They will thus be
accelerating their technological advance to enable them to distribute their products
and services through most efficient and high technology means. Online banking
services and introduction of ATMs at strategic locations have been firmed and willbe
fully operational during the year 2003.
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