final internship report usama[1]
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ACKNOWLEDGEMENT
I would like to thank Allah Almighty for blessing me with his divine
support throughout the course of my internship. My deep sense of
gratitude to my supervisor, Ms. Shaista Iqbal, for all her support,
encouragement and kind guidance during my internship. I am
very thankful to Mr. Saleem Ahmad for teaching me the procedure
of account opening. I also like to express my gratitude to Mr.
Sabir Habib who has given me great help and guidance in
Clearing department. I would like to extend my thanks to my
fellows for constructive criticism and valuable suggestions.
Finally I like to convey my thanks to my family for their
moral, unconditional and selfless support throughout the course of
intership.
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About Allied BankAllied Bank Limited was the first bank to be established inPakistan. It started out in Lahore by the name Australasia Bankbefore independence in 1942; was renamed Allied Bank ofPakistan Limited in 1974 and then Allied Bank Limited in 2005.
In August 2004, because of capital reconstruction, the Banksownership was transferred to a consortium comprising Ibrahim
Leasing Limited and Ibrahim Group.
Today, with its existence of over 60 years, the Bank has built itselfa foundation with a strong equity, assets and deposit base. Itoffers universal banking services, while placing major emphasison retail banking. The Bank also has the largest network of over800 online branches in Pakistan and offers various technology-based products and services to its diverse clientele.
VISIONTo become a dynamic and efficient bank providing integratedsolutions in order to be the first choice bank for the customers.
MISSION
To provide value added services to our customers
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To provide high tech innovative solutions to meet customers'
requirements
To create sustainable value through growth, efficiency and
diversity for all stakeholders
To provide a challenging work environment and reward
dedicated team members according to their abilities and
performance
To play a proactive role in contributing towards the society
CORE VALUES
Integrity
Excellence in Service
High Performance
Innovation and Growth
ORGANIZATIONAL STRUCTURE
Commercial & Retail Banking Group
The Commercial & Retail Banking Group is the core business arm
of the bank generating a major share in income. It caters to the
needs of the customers from almost every segment of life
including Individuals like salaried persons, students, senior
citizens, house wives and Businesses from small shops and
cottage industries to middle / large size organized businesses.
CRBG offers full range of Deposit and Advances products from
general to specific & tailor-made solutions to meet the customer
needs. This includes various deposit products, Commercial & SME
Loans, Agriculture Loan, and Trade Facilities, Banc assurance,
online banking including instant transfer of funds within the entire
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banking network. The Group is driven by the ambition to continue
contributing as the leading Business, serving our 2.5 million
longstanding customers with candid and reliable banking services.
The Commercial & Retail Banking group is organized under fourgeographical territories consisting of 28 regions and over 800
branches (100% online) spread across the country for providing
quality banking services to the customers.
CRBG has always been focusing to establish Allied Bank as market
leader by proactively identifying needs of its customers and
satisfying those needs in true spirit. Accordingly innovative and
unique business products were offered from the platform of CRBG
including Allied Advance Profit Scheme, Allied Business Account,Allied Business Finance and Agriculture Finance Products & Banc
assurance products which significantly contributed to our
customer convenience. As a matter of fact Allied Advance Profit
Scheme was first of its kind in the banking history of Pakistan. In
terms of commercial assets, focus was laid on various sectors of
economy and large number of customers was brought to the fold
of the bank from different sectors, such as, Rice, Cotton,
Pesticide, Wheat, traders and exporters.
CRBG at ABL continued with its commitment to facilitate existing
customers and expanding its reach with a comprehensive plan for
branches & ATM network expansion.
Consumer
In line with the Banks aim to provide a host of products andservices to its customers, substantial ground work has been done
to establish a strong consumer banking business. Furthermore, to
achieve this objective, professionals from across the industry
have been recruited into areas of product development, sales,
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credit policy, research, consumer analytics, call centers and
service quality departments.
The consumer portfolio, comprising the debit card, credit cards,
auto loans, personal loans and mortgages will be establishedphase by phase. However, we are confident that our strengths,
together with our largest network of online branches, a superior
technology platform and a big customer base, will take the Banks
profitability to new heights.
Corporate
The Corporate Investment Banking Group (CIBG) holds the Banks
loan portfolio and enjoys a leading position in corporate lending inthe country. It offers a wide range of financial services to medium
and large sized public and private sector entities. These services
include, providing and arranging tenured financing, corporate
advisory, underwriting, cash management, trade products,
corporate finance products and customer services on all bank
related matters.
The Bank has played a key role in the countrys economic growth
by providing a vast amount of funds to large industrial andcorporate sectors of the economy. And because it has played a
big part in major investment and corporate banking transactions,
Allied Bank is considered one of the top investment banks in the
country today.
Branches & ATMs
Online Banking facilities are available to customers maintaining
accounts at all online branches across the country. The following
facilities are available:
Cash Deposit for immediate credit to a remote branch.
Remote Cheque Encashment from any online branch.
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Instant Funds Transfer between any 2 online branches.
Remote Balance Inquiry and Statement of Account.
Fields of Activities
Account Opening
Receiving of deposits is the primary function of any commercial
bank. Deposits are regarded as the oil for bank operations. Allied
Bank Ltd has offered numerous Accounts at competitive interest
rates to bring the deposits.
Types of accounts offered
The Accounts offered by Allied Bank Ltd are as follows:
1. Current Account
2. PLS deposit
3. Monthly Income
4. Foreign Currency
Nature of accounts
Individual account
In individual Accounts, single person operates Account. This type
of Account is usually opened by salaried class. Just copy of
national card is sufficient to open individual Account.
Joint account
As evident from the name these accounts can be
jointly opened by any number of persons. The minimum
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number of persons required to open a joint account is two
but there is no maximum limit.
All of them have to sign the application form and
specimen signature cards
Mandate for joint Account is also got signed by all
the Account holders so that in case of death of any of the
member the other person can operate the account.
The options available to operate the account are
1. Either or Survivor.
2. Jointly3. Any one of us
Account of partnership firm
The partnership firm can open Account of any type offered by
Allied Bank Ltd. The documents required are
1. Partnership Deed, Certified Copy (Form C)
2. Registration Certificate3. Photocopies of National ID card of all partners
4. Partnership Mandate (Prescribe Format)
Accounts of limited Companies
A lot of documentation is required in case of these Accounts. The
following documents are required
1. Copy of Certificate of Incorporation
2. Certificate of Commencement of Business
3. Memorandum of Association
4. Article of Association
5. Copy of Resolution of the Board (Prescribed Format)
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6. List of Directors (Form 29, Latest Copy)
7. Stamp of Company, which is to be affixed on the
account opening form.
8. NIC copies of Directors
All Documents must be verified by the Chief Executive of
the company.
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Account of illiterate
These accounts can be opened individually or
jointly
For men right hand impression is taken on account
opening form
For women left hand impression is taken on
account opening form
The customer has to come to the Bank himself in
order to withdraw any amount of cash.
The following documents are required
1. Photocopy of NIC of Account holder
2. A Passport size photograph
Account of Minor
The name of guardian is written in title
of account
The account can be opened in any one
of the schemes
Signatures of guardian are always used
to perform any transaction
The following documents are required
1. Birth certificate of minor
2. Photocopy of NIC of guardian
Procedure of account opening
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Step 1
First of all after inquiring from the customer about what type of
account he wants to open, the account opening form is got filled
from the customer and is also got signed. The accounts opening
form contains the following information
1. Currency in which the account is to be opened
2. Type of account
3. Title of account
4. Address
5. Individual/joint account
6. General information about the customer
7. Name of applicant
8. Fathers/husbands name
9. Occupation
10. Nationality
11. Country of residence12. NIC number
13. Passport number
14. Date and place of issue (it is required for account of non
resident)
15. Next of Kin (this is required so that in case of death of
account holder nominee gets the authority to operate Account)
16. Type of organisation (this option is filled in case a
corporate Account is opened, in order to have information
whether business is a limited company, partnership, club/society
or a sole proprietorship)
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17. References
Step 2
After the necessary verifications laid down in Allied Bank policies
and basic precautions, CRO takes two signatures on SS (signature
specimen) card and get it scanned in computer for future
reference.
Step 3
Afterwards, CRO gets the signature of Introducer on application
form. This is very important part of account opening procedure,
without this account cannot be opened. The main purpose of
introduction is to ensure that the client is a suitable person to be
entrusted with cheque books, which are not issued before all
formalities are filled.
Introducer can be
Anyone from the staff members
A well reputed customer of the bank
Another bank of good repute, which can
be consulted about the business practice of the
client.
Customers employer if he is of good
repute
Step 4
Afterwards, a requisition slip is also got signed by the customer so
that the cheque can be issued to the customer. Two signatures
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are taken from the customer on this slip. Cheque book is issued
after two days of receiving the requisition slip.
After giving the account number to the customer, a deposit slip of
the amount with which the customer wants to open the account is
filled and got signed by customer and is deposited at cash
counter.
Step 5
After the account is opened A letter of thanks is send (the very
same day the account is opened) to the customer in order to
thank him for opening the account and ensuring that all the
information about his account will be kept confidential. After
issuing Letter of Thanks entry is made in Dispatch Register
which has the following columns
1. Date
2. Serial number
3. Address4. Destination
5. Subject (letter of thanks)
6. Initials
ClearingA process by which the counter-claims of bankers are offset and
balances are settled or cleared through the entries in the books of
the bank acting as clearing house.
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Clearing is done for within city transfers. The Clearing System is
very advantageous both for banks and customers at large. In fact,
it is an essential adjutant of a developed banking system.
In Pakistan, State Bank of Pakistan acts as Clearing House and
where there is no branch of this bank the Clearing House Function
is performed by the National Bank of Pakistan. All member banks
(only scheduled banks can be full-fledged members of the
Clearing House) have their accounts with the State Bank.
National Institutional Facilitation Technology
Clearing House of SBP has shifted a tiresome part of its work to a
private institution named National Institutional Facilitation
Technologies (Pvt) Ltd. NIFT collects cheques, demand drafts, pay
orders, traveller cheques,etc from all the branches of different
banks within city through its carriers and send them to the
branches on which these are drawn for clearing. After branches
approve the instruments drawn on them, NIFT prepares a sheet
for each branch showing the number of instruments and amount
in its favour and drawn on it and sends it to each branch. A similar
sheet for each bank is also sent to Clearing House of SBP where
accounts of banks are settled in the manner described in above
example.
The cheques deposited by the customers may be local oroutstation cheques. The local cheques are sent for the local
clearing but the outstation cheques are sent for collection.
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Internally, in banks following two processes of clearing are done:
1. Outward Clearing
2. Inward Clearing
Outward Clearing
In outward clearing, cheques , demand drafts, pay orders, etc.,
received by parties ( account holders) are processed at bank for
clearing i.e. bank collects their proceeds on the behalf of theircustomers.
The following steps are taken by the officer.
The customer deposits local cheque, PO etc alongwith deposit
slip. The officer makes the following verifications.
1. Whether cheque is post date or stale
2. Whether cheque is local or outstation
3. Tally amount in both figures and words
4. Signature
Inward Clearing
In inward clearing, bank receives the cheque drawn on it. A carrier
of NIFT brings these cheques along with the summary showing the
details of cheques, Pay Order, Demand Draft.
The following steps are taken by the officer
The officer makes the following verifications
1. Three stamps on cheques
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2. Whether cheque is post date or stale
3. Whether cheque is local or outstation
4. Tally amount in both figures and words
5. signature
6. Sufficient balance in Account.
Demand Draft
A Demand Draft is an instrument in writing drawn by one branch
of a bank on another branch of the same bank for a certain sum of
money; payable on demand to the order of the payee mentioned
therein.
Issuance of Demand Draft against cheque The following steps are taken to issue Demand Draft against
cheque.
Step 1
The customer deposits cheque along with Demand Draft
application form The application form contains the following
information
1) Date of issue of Demand Draft
2) Demand Draft number
3) In favour of i.e the person in whose favour
Demand Draft is issued
4) The amount of Demand Draft5) Name and address of applicant
6) Instrument against whom Demand Draft
issued
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7) Charges received against issue of Demand
Draft
8) Signature of applicant
Step 2
The officer makes the following verifications
1) Whether cheque is not post dated or stale
2) Amount in both figures and word tally
3) signature
Step 3
After making verifications the officer makes entries in computer
"Smart Program"
Dr Customer Account
Cr Demand Draft Account
(to deduct amount from Customer Account )
Dr Customer Account
Cr commission on remittance Account
(to deduct charges)
at the end of the day the following entry is made
Dr Demand Draft Account
Cr Head Office Account
Step 4 The officer prints 3 copies of Demand Draft. Original copy is
handed over to customer, 2nd copy is retained for record and 3rd
copy is send to head office for reconciliation.
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Issuance of Demand Draft against Cash
Step1
The customer deposits cash along with Demand Draft application
form to cash department.
Step 2
The cash department makes the following entry
Dr Cash in hand Account
Cr sundry creditor Account
Step 3
Afterwards cash department officer affix cash stamp on Demand
Draft form and forwards to remittance department.
Step 4
The officer in remittance department makes the following entry
in computer "Smart Program"
Dr sundry creditor Account
Cr Demand Draft Account
Cr commission on remittances Account
Pay Order
A Pay Order is an instrument in writing issued by bank for a
certain sum of money; payable on demand to the order of the
payee mentioned therein.
Issuance of Pay Order against cheque
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Step 1
The customer deposits cheque along with pay order application
form The application form contains the following information
1) Date of issue of Pay Order
2) Pay Order number
3) In favour of i.e the person in whose favour
Pay Order is issued
4) The amount of Pay Order
5) Name and address of applicant
6) Instrument against whom Pay Order issued
7) Charges received against issue of Pay Order
8) Signature of applicant
9) Signature of cahier and two authorised
officers
Step 2
The officer makes the following verifications
1) Whether cheque is not post dated or stale
2) Amount in both figures and word tally
3) Signature
Step 3
After making verifications the officer makes entries in computer
"Smart Program"
Dr Customer Account
Cr Pay Order Account
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(to deduct amount from Customer Account )
Dr Customer Account
Cr commission on remittance Account
Step 4
After making entries, officer post the transaction in Pay Order
register
The Pay Order register contains the following columns
1) Date of issuing of Pay Order
2) Number of Pay Order it going on sequence
wise
3) Payee i.e the person in whom favour Pay
Order is issued
4) Amount of Pay Order
Issuance of Pay Order against Cash
Step 1
The customer pay cash along with Pay Order application form to
cash department.
Step 2
The cash department makes the following entry in computer with
the amount of Pay Order plus charges
Dr cash in hand Account
Cr sundry creditor Account
The cash department after affixing cash stamp on the Pay Order
application form forwards it to local remittance department.
Step 3
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The officer in local remittance department makes the following
entry in computer
Dr sundry creditor Account
Cr Pay Order Account
Cr commission on remittance Account
Letter of Credit
Letter of credit abbreviated as LC stands at the centre of
international commercial transaction, issued by the bank at the
request by the importer. Letter of credit states that the bank will
pay a specified sense of money to a beneficiary, normally the
exporter on presentation of particular, specified document.
The importer applies to the bank, say, the allied bank limited
for the issuance of letter of credit. The Allied bank then
undertakes a credit cheque of the reporter if the bank is satisfied
with credit worthiness. It will issue a letter of credit However, thebank might require a cash deposit or some other form of collateral
from the customer in addition the bank charges the importer a fee
for the service typically this amount to between 5 percent and 2
percent of the value of letter of credit, Depending upon the
importers creditworthiness and the size of transaction.
Assume the Allied bank is satisfied with importers credit
worthiness and agree issue a letter of credit the letter stated that
the Allied bank will pay the Bangkok exporter for the
merchandizing as long as it is shipped in accordance with
specified instruction and conditions at this point the letter of
credit becomes a financial contract between the Allied bank
limited and The Bangkok exporter bank. The Allied bank then
sends the letter of credit to the Bangkok exporter bank, say, the
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Citibank tells the exporter that it has received letter of credit that
he can ship the merchandizes. After the exporter has shipped the
merchandisers, he draws a draft against Allied bank limited in
accordance with the term of letter of credit, attaches the required
document and presents the draft to his own bank, Citibank, forpayment. The Citibank then forwards the letter of credit and
associated document to the Allied bank limited. If all the terms
and conditions in the letter of credit have been complied with, the
Allied bank limited honor then draft and will send payment to the
Citibank. When the Citibank receives the funds, it will pay the
Bangkok exporter.
As for the Allied bank limited, Once it has transferred the
funds to the Citibank in Bangkok, it will collect payment from the
importer. Alternatively, Allied bank limited may allow the importer
sometime to resell the merchandisers before requiring payment.
The Allied bank limited will treat such an extension of the
payment as a loan to the importer and will charge an appropriate
rate of interest.
Bill of Exchange/Draft:
Bill of Exchange is the instrument normally used in international
commerce to affect payment. A draft is simply an order written by
an exporter instructing an importer, or an importers agent to pay
a specified amount of money at specified time. The person or
business initiating the draft is known as the maker. The party to
whom the draft is presented is known as Drawee.
Bill of Lading:
The third key document for financing international trade is the Bill
of lading. The bill of lading is issued to the exporter by the
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common carrier transporting the merchandise. It serves three
purposes: it is a receipt, a contract and a document of title. As a
receipt, the bill of lading indicates that carrier has received the
merchandise described on the face of the document. As a
contract, it specifies that the carrier is obliged to provide atransportation service in return for a certain charge. As a
document of title, it can be used to obtain payment or a written
promise of payment. Before the merchandise is released to the
importer.
Partys involved
1. Importer
2. Issuing bank
3. Exporter
4. Advising bank
Process of opening letter of credit
Mutual agreement:
First of all importer and exporter enter into a mutual agreement.
The importer who is in need of some commodities approaches an
appropriate exporter and asks for samples, price list and
quotation. When both the parties come into an agreement then
the importer places an order to exporter for the supply of certain
goods.
Performa Invoices:
Exporter then prepares an important document known as
Performa invoices. In performa invoice details about the contract
regarding name of product, its type, quality, brand, quantity, size,
color, price are stated specifically. Exporter sent it importer.
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Contacting the bank:
Importer contacts the bank and requests for opening L/C in favor
of exporter.
Filling formal application:
The bank examines the documents and asks the importer to file a
formal application for the L/C, which is prescribed printed form
Margin Requirements:
If the goods to be imported are subject to margin requirements
the importer will be asked to deposit the amount of the same. The
margin requirement is fixed by the State Bank and generally it isfrom 10 to 20 % of the total amount for which the L/C is opened. It
is a refundable amount.
Writing the L/C:
After complete processing of the application the bank opens the
L/C in the favor of exporter. The L/C is also a standardized printed
form. It contains almost all the details and conditions mentioned
in the application. Four copies are prepared (for its own use, forimporter, for exporter, for advising bank).
Dispatch of L/C:
Having completed the required copies of the L/C, the opening
bank dispatches it to exporter, usually through advising bank.
Shipment of goods and obtaining the documents:
After receiving L/C the exporter will arrange with a shipping
company for the goods to be carried to the port of importer
country. After the goods have been shipped the exporter will
obtain the Bill of Lading from the Shipping Company and will
obtain and prepare all documents specified in the L/C.
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Submission of draft and documents:
Exporter will submit draft and documents and pay the draft and
get it negotiated to itself.
Forwarding documents:
The negotiate bank will negotiate the draft (endorse in favor of)
the opening bank. The negotiating bank will forward it to the
opening bank.
Receipt of documents and advice to opener:
After receiving draft and documents the opening bank examines
them with care. The opening advice to the importer about the
arrival of the documents.
Obtaining of the documents:
The importer goes to bank and after paying the draft and other
documents obtains the Bill of lading and other documents.
Clearance of the goods:
Now importer can get the goods cleared through the clearing
agent.
Some of the Documents Called for under a LC
Financial Documents
Bill of exchange, Co- accepted Draft
Commercial Documents
Invoice, packing list
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Shipping Documents
Transport Document, Insurance Certificates, Commercial, Official
or Legal Documents
Official Documents
License, Embassy legalization, Origin Certificate, Inspection
Certificate
Transport Documents
Bill of Lading (ocean or multi-modal or charter party), Airway Bill,
Lorry/truck receipt, railway receipt, CMC other than Mate Receipt,
Forwarder Cargo Receipt, Deliver Challan..etc
Insurance Documents
Insurance policy, or certificates but not a cover note
The Letter of credit Application
The following information should be addressed when establishing
a letter of credit
1. Beneficiary
The seller should provide to the buyer its full corporate name
and correct address. A simple mistake here may translate to
inconsistent or improper documentation at the other end.
2. Amount
The seller should state the actual amount of the letter of credit.
One can request a maximum amount when there is doubt as
the actual count or quantity of the goods. Another option is to
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use words like approximate, circa, or about to indicate an
acceptable 10% plus or minus from the stated amount, For
consistency, if you use this wording you will need to use it also
in connection with quantity.
3. Validity
The seller will need time to ship and to prepare all the
necessary documentation. Therefore, the seller should ensure
that the validity and period for documentation presentation
after the shipment of the goods is long enough.
4. Sellers Bank
The seller should list its advising bank as well as a reimbursingbank if applicable. The reimbursing bank is the local bank
appointed by the issuing bank as the disturbing bank.
5. Type of payment availability
The buyer and seller may agree to use sights drafts, time
drafts, or some sort of deferred payment mechanism.
6. Desired Documents
The buyer specifies the necessary documents. Buyers can list,
for example, a bill of lading, a commercial invoice, a certificate
of origin, certificates of analysis, etc. the seller must agree to
all documentary requirements or suggest an amendment to the
letter of credit.
7. Notify Address
This is the address to notify upon the imminent arrival of goodsat the port or airport of destination. A notification listing
damaged goods is also sent to this address, if applicable.
8. Description of Goods
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The seller should provide a short and precise description of the
goods as well as the quantity involved. Note the comment in
step # 2 above concerning approximate amounts.
9. Confirmation OrderWith international arrangements, the seller may wish to
confirm the letter of credit with a bank in its country.
Some Types of LC:
Documentary Revocable Letter of Credit
Documentary Irrevocable Letter of Credit
Standby Letter of Credit
Special Letter of Credit
Back-to-Back Letter of Credit
Deferred payment (Usance) Letter of credit
Red Clause Letter of Credit
Revolving Letter of Credit
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