s qaim hbl final report
TRANSCRIPT
-
7/30/2019 S Qaim HBL Final Report
1/87
PREFACE
After studying so much about management, accounting and banking
theoretically, one always develops a desire to work in a bank. After
completion of my course-work , I had a chance to work as an internee at
Habib Bank, Main Branch Punjabi Bazaar Kurram Agency Parachinar.
Banking is both a sacred and sophisticated profession. In Pakistan Habib
Bank has always been in the forefront of this profession.
During my stay at Habib Bank I tried my best to acquaint myself with the
operations of the bank and as a result learned a lot. What I have learned
during my stay at the bank is being presented here for the reader.
Banking industry has always played a vital role in the success of
economies. The practice is carried out since primitive ages. Multinational
banks are now dealing in money and are laying the foundations for
countries to stand on their own feet. The internship proved to be extremely
helpful in learning about the functions and operations of a bank and how
different kinds of procedures at bank are carried out. Although eight weeks
internship is not enough time to know delicately about every aspect, but
somehow it had the initial touch of being in a practical world.
I owe very much too so many people whose help and support at different
stages of my work enabled me to write this report. First of all I would like
to thank Mr. Muhammad Habib whose help made it possible for me to
have an internship in HBL Main Branch Punjabi Bazaar Kurram Agency,
Parachinar. I am also grateful to my supervisor Mr. Mussarat Hussain who
always taught and corrected me in very loving manner whenever I needed
him.
SAYED QAIM
i
-
7/30/2019 S Qaim HBL Final Report
2/87
ACKNOWLEDGEMENTS
Most humbly I express my thanks to the supreme
Ruler, the ALLAH Almighty, the most Benevolent, ever
Merciful, Whose divine helped me to complete my
Internship and this report Successfully.
I am also thankful to the staff of HBL Main Branch
Punjabi Bazaar Parachinar Kurram Agency, for their co-
operation during the collection of required data.
In the end I am more than grateful to my parents
whose prayers, moral and financial support is always
with me as guiding lights in the struggling ways of my
life.
SAYED QAIM
ii
-
7/30/2019 S Qaim HBL Final Report
3/87
LIST OF CONTENTS
PREFACE...................................................................................i
Acknowledgements....................................................................ii
list of contents...........................................................................iii
LIST OF ACRONYMS...........................................................vi
EXECUTIVE SUMMARY......................................................vii
CHAPTER 1..............................................................................................................1
Introduction................................................................................1
1.1 BACKGROUND OF STUDY..........................................................................1
1.2 PURPOSE OF THE STUDY............................................................................1
1.3 SCOPE OF STUDY..........................................................................................2
1.4 RESEARCH METHODOLOGY......................................................................2
1.5 LIMITATIONS.................................................................................................3
1.6 SCHEMEOFTHESTUDY...........................................................................................3
CHAPTER-2 ................................................................................................................5
Evaluation of Banking...............................................................5
2.1 FORMATION OF BANKING.........................................................................52.2 BANKING IN PAKISTAN..............................................................................7
2.3 HISTORYOF HABIB BANKLIMITED..........................................................................8
TENTH PHASE/PRESENT.....................................................10
2.4 ROLE OF HABIB BANK IN PUBLIC SECTOR DEVELOPMENT...........10
2.5 ROLE OF HABIB BANK LIMITED IN PRIVATE SECTORDEVELOPMENT.................................................................................................11
2.6 FUNCTIONS OF HABIB BANK LIMITED.................................................12
2.7 DISCOUNTING BILL OF EXCHANGE......................................................14
2.8 AGENCY SERVICES TO CUSTOMER.......................................................14
CHAPTER-3...............................................................................................................17
OBJECTIVES AND POLICIES..............................................17
A. MISSION..............................................................................................................17
B. OBJECTIVES...........................................................................................................17
3.1 OBJECTIVES OF HABIB BANK LIMITED................................................17
3.2 POLICIES OF HABIB BANK LIMITED......................................................18
3.3 VARIOUS SCHEMESAND PRODUCTSOF HABIB BANKLIMITED ..................................21
CHAPTER 4............................................................................................................26
ORGANIZATIONAL STRUCTURE......................................26
4.1 FORMAL ORGANIZATIONS......................................................................26
iii
-
7/30/2019 S Qaim HBL Final Report
4/87
Sohail Malik.............................................................................29
Zafar Aziz Osmani...................................................................29
Jamil Iqbal................................................................................29
Sima Kamil..............................................................................29
Nauman K. Dar........................................................................29
Abid Sattar...............................................................................29
Mudassir H. Khan....................................................................29
Faizan Mitha............................................................................29
Salim Amlani...........................................................................29
Aslam.......................................................................................29
Tulu Islam................................................................................29
Mirza Salim Baig.....................................................................29
Kashif Shah..............................................................................294.2 ORGANIZATIONAL CHANGES IN HABIB BANK..................................30
CHAPTER 5............................................................................................................34
FUNCTIONS OF HABIB BANK LIMITED..........................34
5.1 FUNCTIONS OF CENTRAL OFFICE..........................................................34
5.2 DOMESTIC OPERATIONS..........................................................................36
CHAPTER -6 .............................................................................................................39
GENERAL BANKING AND departmentation........................39
6.1 DEPOSIT DEPARTMENT.........................................................................................39
6.2 CLEARING DEPARTMENT.........................................................................43
6.3 INLAND REMITTANCE DEPARTMENT...................................................45
6.4 BILLS DEPARTMENT..................................................................................47
6.5 ADVANCES DEPARTMENT.......................................................................48
6.6 CASH DEPARTMENT..................................................................................50
6.7 CD DEPARTMENT.......................................................................................51
CHAPTER-7...............................................................................................................52
ANALYSIS OF HABIB BANK LIMITED.............................52
7.1 SWOTANALYSISOF HABIB BANKLIMITED ..............................................................52
7.2 ANALYSIS
OF
KEY
AREAS
OF
HABIB
BANK
LIMITED
...............................................567.3 ANALYSIS OF ORGANIZATIONAL STRUCTURE..................................57
iv
-
7/30/2019 S Qaim HBL Final Report
5/87
7.4 BRANCH LEVEL ENVIRONMENTOF HABIB BANKLTD...............................................59
7.5 PROCEDURAL ANALYSIS.........................................................................60
CHAPTER-8...............................................................................................................62
FINANCIAL ANALYSIS ......................................................628.1 INDEX ANALYSIS OF HBL............................................................................63
8.2 COMMONSIZEANALYSIS.......................................................................................63
8.3 RATIO ANALYSIS........................................................................................64
8.4 HABIB BANKLTD. BALANCE SHEET FORTHE YEARENDEDDEC, 2009, 2010...........65
8.5 HABIB BANKLTD. INCOME STATEMENT FORTHE YEARENDED DEC, 2009, 2010.....65
8.6 HABIB BANK LTD. BALANCE SHEET, INDEX ANALYSIS, FOR THE YEAR ENDED DEC,2009- 2010............................................................................................................66
8.7 HABIB BANK LTD. INCOME STATEMENT, INDEX ANALYSIS, FORTHE YEARENDED DEC,2009, 2010.............................................................................................................67
8.8 HABIB BANK LTD. BALANCE SHEET, COMMON SIZE ANALYSIS, FORTHE YEAR ENDED
DEC, 2009-2010.....................................................................................................678.9HABIB BANK LTD. INCOME STATEMENT, COMMON SIZE, FOR THE YEAR ENDEDDEC, 2009-2010.....................................................................................................68
8.10 FINANCIAL RATIO..............................................................................................70
8.11 LIQUIDITY RATIOS.............................................................................................70
8.11.1 CURRENT RATIO...............................................................................70
8.12 LEVERAGE RATIOS.............................................................................................70
8.12.1 DEBT-TO-EQUITY..............................................................................71
8.12.2 DEBT-TO-TOTAL-ASSETS..................................................................71
8.13 PROFITABILITY RATIOS.......................................................................................72
8.13.1 NET PROFIT MARGIN........................................................................72
8.13.2 RETURNON EQUITY...........................................................................73
CHAPTER 9............................................................................................................74
conclusion and RECOMMENDATIONS ...............................74
9.1 CONCLUSION...............................................................................................74
9.2 RECOMMENDATIONS ............................................................................................74
References ...............................................................................78
Bibliography ...........................................................................79
v
-
7/30/2019 S Qaim HBL Final Report
6/87
LIST OF ACRONYMS
A/C Account
ATM Automated Teller Machine
DD Demand Draft
DFIs Developmental Financial Institutes
FCY Foreign Currency
FTS Funds Transfer System
HBL Habib Bank Limited
IBTS Inter Branch Transaction services
LCY Local Currency
MDI Management Development Institutes
MT Mail Transfer
RF Running Finance
SSC Special Savings Certificate
SBP State Bank of Pakistan
SVP Senior Vice President
SME Small & Medium Enterprise
TT Telephonic Transfer
US $ United States Dollar
vi
-
7/30/2019 S Qaim HBL Final Report
7/87
EXECUTIVE SUMMARY
Habib Bank is the largest and oldest bank among Pakistani Banks.Founded in 1941 it emerged as a Muslim Bank in undivided India. In
1947, when Pakistan came into being Habib Bank shifted its operations
from India to Pakistan. Since then it is carrying on its operations with more
than 1459 local and 52 foreign branches.
The purpose of this report is to evaluate the performance of Habib Bank
Limited (HBL), Main Branch Punjabi Bazaar Kurram Agency Parachinar.
The internship experience in the form of an internship report also carries
an attempt to explain domestic as well as international banking operations of
Habib Bank.
The report aims at appraising the working of Habib Bank Limited, its
functions and operation and also attempts to assess its performance.
Certain recommendations are presented for the potential areas of
improvement. An implementation plan of the recommended steps is given
at the end of the report.
Habib Bank Limited is the oldest & the first bank in Pakistan. Its name is
generally considered for quality and reputation. It offers a broad range of
products to target different market segments.
Main problems identified during the course of internship are as following
a) Absence of proper information technology tools
b) Lack of efficiency of employees.
c) Presentation styles of bank especially at retail level are not good.
d) Management style is centralized.
vii
-
7/30/2019 S Qaim HBL Final Report
8/87
The recommendations are as follow:
a) Establishment of Data bank at Zonal office, so that information can
be obtained in time.
b) Proper designing of the jobs should be performed similarly clear-
cut division of work to increase efficiency.
c) Special attention should be given to exterior/interior layouts,
cleanliness and office furniture.
d) Decentralization of authority at different level to fasten the
decision making process.
viii
-
7/30/2019 S Qaim HBL Final Report
9/87
Chapter 1 Introduction of the Report
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF STUDY
esides the bookish knowledge, every student especially a
student of management must have an understanding that how
theory is practically implemented. Hailey institute of
management studies university of Peshawar requires every student of
master of public administration to undergo an internship Program of Eight
Weeks in a recognized organization. The internship is to serve the purpose
of acquainting students with the practice of knowledge of the discipline of
business administration.
BFor this reason I carried out my internship at Habib Bank Limited,
Main Branch Punjabi Bazaar Kurram Agency Parachinar. I prepared this
report on the basis of knowledge, which I previously had, and especially
from working in HBL during my internship. Habib Bank Limited is the
premier bank of the country, established in 1941. Its registered head office
is in Karachi. Habib Bank played a memorable role in credit handling at
the time of independence.
Habib Bank was nationalized in 1974, but now the Government has
privatized the bank again.
1.2 PURPOSE OF THE STUDY
The main purpose of the study is to increase my knowledge and
skill in preparation of report and collection of relevant data and
information about Habib Bank Limited to compile internship report more
completely, precisely and more effectively.
Internship Report on HBL 1
-
7/30/2019 S Qaim HBL Final Report
10/87
Chapter 1 Introduction of the Report
Other purposes are listed below:
To observe, analyze and interpret the relevant data completely and
in a meaningful manner.
To judge my abilities and skill.
To gain experience.
To apply my theoretical knowledge.
To work practically in an organization.
To improve my communication skills.
1.3 SCOPE OF STUDY
Habib Bank Limited being an established busy and big
organization it was difficult to cover all the departments in such a short
period of time. Being a HR student, I chose to work in HR related
departments, including record keeping,asistant record, accounts/deposits,
account opening, Remittances, and to some extent CD Department.
Various other functional areas of Habib Bank Limited are also
covered in this report.
1.4 RESEARCH METHODOLOGY
For the completion of this report, I used both primary and
secondary sources. Formally developed Questionnaire, interviews and
discussion with bank personnel and my co-internees helped me greatly
while preparing the report.
i. Primary Data
Personal observation
Interviews
Questionnaire
Discussion with my co-internees.
ii. Secondary Data
Annual reports
Internship Report on HBL 2
-
7/30/2019 S Qaim HBL Final Report
11/87
Chapter 1 Introduction of the Report
Magazines
Manuals
Journals
Various HBL publications
1.5 LIMITATIONS
During the internship, I had faced certain limitations and problems,
first being the time duration; only two months are not sufficient to
understand the functions of all the departments of the bank. Another
problem was scarcity of written material and the element of secrecy, due to
which; I could not get access to all areas. Lastly the busyness of bank
personnel they used to be so busy in their official work that they could not
had time for us to make us understand on certain phenomenon. Although
they were very helpful but still I faced great hardship in gathering
information and understanding of procedures. For this purpose I studied
few previous reports on HBL to complete my report.
1.6 SCHEME OF THE STUDY
The scheme of the report is as follows:
Section I
In this section background of the study, purpose of the study, scope
of the study, methodology performed, limitations and scheme of
the report are given.
Section II
In this section there are five chapters that contain detailed material
regarding the Evaluation of Banking, Introduction and History of
Habib Bank Limited, Role of HBL in Public and Private Sectors,
Functions of HBL, Objectives and Policies, Organizational
Structure some features of the branch in which I made my
internship and Departmentation are discussed.
Internship Report on HBL 3
-
7/30/2019 S Qaim HBL Final Report
12/87
Chapter 1 Introduction of the Report
Section III
This section of the chapter consists of two chapters, first one is
about the Critical Analysis of Key Areas of HBL and SWOTanalysis, second chapter of the section is all about financial
analysis of HBL.
Section IV
It contains few recommendations and conclusion for the betterment
and improvement of HBL.
Internship Report on HBL 4
-
7/30/2019 S Qaim HBL Final Report
13/87
Chapter-2 Evaluation of Banking
CHAPTER-2
EVALUATION OF BANKING
2.1 FORMATION OF BANKING
The history of banking can be traced back to the early days of
recorded history when goldsmiths used to store the valuables of people in
their safe custody. People use to store their valuables because of the
danger of theft of money being transported or stored.
In the 17th century, English goldsmiths provided the model for
contemporary banking. Gold was stored with these artisans for
safekeeping, and was expected to be returned to the owners on demand.
The owners of these valuables became the first depositors of the banking
history.1
i. Issuance of NotesThe goldsmiths soon discovered that the amount of gold actually
removed by owners was only a fraction of the total stored. Thus,
they could temporarily lend out some of this gold to others,
obtaining a promissory note for principal and interest. In time,
paper certificates redeemable in gold coin were circulated instead
of gold. Consequently, the total value of these bank notes in
circulation exceeded the value of the gold that was exchangeable
for the notes.
ii. Fractional Reserve Banking
The second stage in banking history was the birth of the concept of
fractional reserve banking through which goldsmiths were
transformed from mere custodians of valuables into bankers.
Internship Report on HBL 5
-
7/30/2019 S Qaim HBL Final Report
14/87
Chapter-2 Evaluation of Banking
According to this system the bankers were allowed to keep only a
fraction of the valuables actually deposited with them and the rest
could be lend out
This system continued to exist because it was to the advantage of
both the goldsmiths and public. The public was convinced that the
fractional reserve system is to the mutual benefit of both. The
banker provided safety, convenience, ease of transfer, and
bookkeeping services at a little or no charge to the public.
iii. Money Lenders
Third stage in the development of modern banking was that the
banker was allowed to use the public deposits as reserves against
lending activity. As is the case in most communities of interest, a
way to achieve their mutual advantage was found. Any moral or
ethical implications of holding less than 100% reserve in order to
increase profits have been rationalized.
Two characteristics of this fractional-reserve banking remain the
basis for present-day operations. First, the banking systems
monetary liabilities exceed its reserves. This feature was
responsible in part for Western industrialization, and it still remains
important for economic expansion, though a risk of creating too
much money is a rise in inflation. Second, liabilities of the banks
(deposits and borrowed money) are more liquid that is, more
readily convertible to cashthan are the assets (loans and
investments) included on the banks balance sheets. This
characteristic enables consumers, businesses, and governments to
finance activities that otherwise would be deferred or cancelled; at
the same time, it opens banks to the risk of a liquidity crisis. When
depositors rush to request for payment, the inability of a bank to
respond because it lacks sufficient liquidity means that it must
either renew on its promises to pay or pay until it fails.
Internship Report on HBL 6
-
7/30/2019 S Qaim HBL Final Report
15/87
Chapter-2 Evaluation of Banking
2.2 BANKING IN PAKISTAN
At the time of independence, the areas, which now constitute
Pakistan, were producing only food grains and agricultural raw material
for Indo-Pakistan subcontinent. There were practically no industries, and
whatever raw material was produced was being exported from Pakistan.
However, commercial banking facilities were provided fairly well here.
There were 487 offices of scheduled banks in the territories now
constituting Pakistan.
As a new country without resources it was very difficult for
Pakistan to run its own banking system immediately. Therefore, in
accordance with the provision of Indian Independence Act of 1947, an
Expert Committee was appointed to study the issue. The committee
recommended that the Reserve Bank of India should continue to function
in Pakistan until 30th September 1948, so that the problems of time and
demand liability, coinage, currencies, exchange etc are settled between
India and Pakistan. It was also stipulated that Pakistan would take over the
management of public debt and exchange control from Reserve Bank of
India on 1st April 1948, and that Indian Notes would continue to be legal
tender in Pakistan till 30th September, 1948 following the announcement of
Independence Plan in June 1947, the Hindus residing in the territories now
comprising Pakistan started transferring their assets to India. Moreover,
the banks including those having their registered offices in Pakistan
transferred them to India in order to bring a collapse of the new State. By30th June 1948, the number of offices of scheduled banks in Pakistan
declined from 487 to only 195.
Consequently the governor-general of Pakistan and the Father of
the Nation, Quaid-i-Azam Mohammad Ali Jinnah, inaugurated the State
Bank of Pakistan on July 1, 1948, after the State Bank of Pakistan Order
was promulgated on May 12, 1948. Thus a landmark was made in the
history of banking when the State Bank of Pakistan assumed full control ofbanking and currency in Pakistan.
Internship Report on HBL 7
-
7/30/2019 S Qaim HBL Final Report
16/87
Chapter-2 Evaluation of Banking
As the Central Bank of the country, the State Bank addressed itself
with the equally urgent task of creating a national banking system. In
order to attain this goal it provided every help and encouragement to Habib
Bank to expand its network of branches, and also recommended to
Government the establishment of a new bank which could serve as an
agent of the State Bank. As a result, The National Bank of Pakistan came
into being in 1949 and by 1952 it became strong enough to take over the
agency function from the Imperial Bank of India.
In order to develop sound banking and weeding out weak
institutions, the Banking Companies (Control) Act was promulgated in
1949, empowering the State Bank to control the operations of Banking
Companies in Pakistan, including preparation of the required trained man-
power. Further, the State Bank restricted the opening of new branches by
foreign banks in port towns or in big cities from where trade was being
carried out with foreign countries, where Pakistani banks were allowed to
open as many branches as possible within the country.
2.3 HISTORY OF HABIB BANK LIMITED
Habib Bank is a commercial bank according to the definition given
by Professor Dr. Harts a bank can be defined as A banker is one who, in
the ordinary course of his business, receives money which he repays by
honoring Cheques of persons from whom or on whose account he received
it.
Four Habib brothers, Mr. Ahmad Habib, Dawood Habib,
Muhammad Ali Habib and Ghulam Ali Habib formed Habib Bank.
In 1941 the bank had only Rs.1.03 core by way of advance and
invested Rs.12 lacs in government securities. But with the passage of time
and by the efforts of Habib brothers Habib Bank Limited grew in size and
its deposits increased to 2.40 crore by the end of 1942.
Due to certain difference between the Governments of India and
Pakistan, when India withheld the transfer of funds in 1945, Habib Bank
Internship Report on HBL 8
-
7/30/2019 S Qaim HBL Final Report
17/87
Chapter-2 Evaluation of Banking
readily came forward and subscribed heavily to the Government of
Pakistan, to overcome the crisis. The loan to the Government was made at
a very nominal rate of interest.
The history of Habib Bank can be divided into different phases.
FIRST PHASE
The first phase in the history of Habib Bank Limited comprises
seven years from 1941 to 1947 it was the most crucial time with a
humble beginning, the bank mastered a formidable challenge and
overcame depredate prejudices against business talents of the
Muslims of South Asia.
SECOND PHASE
This phase in the history of Habib Bank was a new beginning when
the bank shifted its head quarters in Bombay to Karachi according
to the wishes of founder of the nation in order to meet new
responsibilities and to face great challenges.
THIRD PHASE
This phase in the history of the Bank is characterized by setting
certain standards of services such as increasing of facilities,
extending banking hours and improving the physical appearance of
the branches. These steps popularized banking among people from
all walks of life.
FOURTH PHASE
This phase marked by the tremendous achievement of the
construction of banks first head office building at Habib square,
Karachi along with continued solid business and profitability.
FIFTH PHASE
This phase witnessed the consolidation and the beginning of
mechanization and modernization of branches.
Internship Report on HBL 9
-
7/30/2019 S Qaim HBL Final Report
18/87
Chapter-2 Evaluation of Banking
SIXTH PHASE
This was the year of silver jubilee celebrations. It has a tremendous
impact on the common man that the bank emerged throughout
Pakistan and wherever its branches operated abroad, with a new
image of a Best example of better service.
SEVENTH PHASE
On the occasion of its 30th anniversary marked the shifting of head
office from Habib Square to Habib Bank Plaza.
EIGHTH PHASE
This phase was generally characterized by heralded nationalization
of Pakistani banks on 1st January 1974. The whole concept of
commercial banking in Pakistan was changed to offer all the
necessary help to small industrialists, traders and farmers.
NINTH PHASE
This phase begins with the 50th year of its existence totaled Golden
Jubilee year, it is the largest Pakistani bank operating round the
globe with a great futuristic outlook and planning recognized and
acclaimed both nationally and internationally at highest levels.
TENTH PHASE/PRESENT
Currently the bank has been privatized by the government and
Agha Khan has taken most of the share. Now Habib Bank has more
than 1400 branches and operating in more than 36 countriesinternationally.
2.4 ROLE OF HABIB BANK IN PUBLIC SECTOR
DEVELOPMENT
Habib Bank is playing very important role in the public sector.
Immediately after partition, the first major association of Habib Bank with
the government was the sponsoring of the Pakistan Finance Corporations
Internship Report on HBL 10
-
7/30/2019 S Qaim HBL Final Report
19/87
Chapter-2 Evaluation of Banking
Ltd., jointly with the central and provincial governments for financing of
cotton industry. Furthermore, the bank not only provided capital but also
provided technical advice for different projects. Some of which are large-
scale projects such as Warsak Dam Project, WAPDA, Thal Development
Authority, by providing finance and other facilities.
2.5 ROLE OF HABIB BANK LIMITED IN
PRIVATE SECTOR DEVELOPMENT
Habib Bank can also be considered as the first to open branches all
over Pakistan in order to provide finance and other facilities to the
business community.
During the half century of its existence, Habib Bank has proved to
be leader all the way in many respects, which have been introduced for the
first time in the history of commercial banking sector in Pakistan. It was
the first commercial bank to import the electronic machines to have made
it easier for the bank to cope with its expanding business and fast growing
clientele.
Another innovation introduced by Habib Bank is the evening
banking cash long after the crossing of normal banking hours.
The Habib Bank have also the first in making available such new
facilities as Gift Cheques, Rupee Travelers Cheques, Credit Card System,
Short term and Long term Schemes for small businessmen. For the benefit
of investors it publishes weekly stock exchange price averages. It also
issues monthly publication with a title of Business News Service. It also
brings out a House journey. We of Habib Bank with superb research
data and facilities at its command, Habib Bank is fully geared to monitor
the nations economy and play its due role in its brining prosperity to the
country.
Internship Report on HBL 11
-
7/30/2019 S Qaim HBL Final Report
20/87
Chapter-2 Evaluation of Banking
2.6 FUNCTIONS OF HABIB BANK LIMITED
There are two most important and basic functions of any
commercial bank. Being a commercial bank, Habib Bank also performs
these two functions which are listed below:
a. Accepting deposits
b. Making Loans and Advances.
a. Accepting Deposits
The primary function of Habib bank is to accept and receive
surplus money from the people, which they willingly deposit with
the bank. Like all other banks Habib bank also tries hard to attract
as much deposits of the people as it can. It is therefore it offers
different types of deposit schemes to its clients, which includes the
following types.
i. Current Deposits
Current deposits are those deposits on which bank offers no interest
but it allows the account holders to withdraw their money at any
time they want without giving any prior notice to the bank. This
type of account is often maintained by the business community,
which requires large sums of money very often for their business
transactions.
ii. Profit and Loss Sharing Account (Saving)
Saving deposits or PLS is those accounts on which bank offer a
lower rate of interest and on such deposits, the bank pays very low
interest to its customers. After the Islamization of the banking
system in the country it has been given the name of PLS saving
account. The bank undertakes to repay deposits on demand up to a
certain limit.
Internship Report on HBL 12
-
7/30/2019 S Qaim HBL Final Report
21/87
Chapter-2 Evaluation of Banking
iii. Fixed Deposits
Fixed deposits are those which can be withdrawn only after the
maturity of the account. In this type of deposits the bank allow highrate of interests depending on the time period of deposits. The
shorter the period of deposits, the less will be the interest and vice
versa.
Currently HBL has offered a new type of fix deposit called Habib
bank munafa scheme. Its summary is
Deposit from 10,000 to 1, 00,000 interests at the rate 7%
Deposit from 100,000 to 10, 00,000 interests at the rate 7.5%
b. Making Loans and Advances
The second most important function of HBL is to provide financing
facility to its clients. These loans and advances are usually made
against document of title to goods, marketable securities, and
personal securities of borrowers. Habib Bank charges different
interest rates on these loans and advances depending on the terms
and conditions settled with the customers. Following types of loans
and advances are made available to the clients.
i. Demand Finances
Demand finance are those finances, which are given to the
borrowers for specified period and can be called back without any
prior notice demand. It is a single transaction. It can be long term,
medium term and short term. Mark up is also charged. Here the
amount can be withdrawn once at the time of disbursement.
ii. Running Finances
Habib bank provides such loans against the security of current
assets like shares, bond, cash crops like cotton and other cashable
commodities. The borrowers account is opened with the bank with
the amount of the total loan provided or allowed to the borrower.
The borrower is allowed to withdraw any amount from his account
Internship Report on HBL 13
-
7/30/2019 S Qaim HBL Final Report
22/87
Chapter-2 Evaluation of Banking
within the specified limit and interest is charged only on the
amount actually withdrawn.
iii. Over Draft
Over draft is a kind of facility given to the account holders of the
bank. This type of facility is given usually to very loyal type of the
customer. This allows them to withdraw over and above the
amount held by them in their accounts. And interest is charged only
on the amount, which is withdrawn in excess of the amount
actually held in their account.
2.7 DISCOUNTING BILL OF EXCHANGE
Discounting bills of exchange can also be considered as a type of
form of loan because it allows the holder of the bill to get the bill encashed
before the maturity of the bill. A bill of exchange is usually issued by the
importer of goods to the exporters, which allows them to be paid in their
own currency after three months time. If the exporter needs the money
before the maturity of the Bill of Exchange he can get his money from the
bank by discounting the bill of exchange. The bank utilize their surplus
funds by discounting the bills of exchange at their market worth i.e. they
pay to the holders of the bill on amount equal to their face value after
deducting interest at the current rate for the period of the bill to mature.
2.8 AGENCY SERVICES TO CUSTOMER
Habib Bank also provides agency services to its customer. Some of
which are as follow:
i. Collection of Cheques
Habib bank pays and collects Cheques on behalf of their
customers, and for this it receives commission from their account
holders.
Internship Report on HBL 14
-
7/30/2019 S Qaim HBL Final Report
23/87
Chapter-2 Evaluation of Banking
ii. Collection of Dividends
The bank provides a very useful service by acting as an agent for
its account holders. It arranges for the collection of dividends onshares and securities held by its account holders. The customer is
simply to inform the issuer of the securities that the interest on the
securities is to be credited to his account in the bank. Bank charges
commission for the collection of the dividends on behalf of account
holders.
iii. Purchase and Sale of Securities
Habib bank if authorized by the customers also makes purchases
and sale of securities on the behalf of its account holders. Bank
charges commission for the purchase or sale made by it on behalf
of its customers.
iv. Transfer of Funds
HBL also transfer funds of the customers from one bank to another
bank. If the transfer is within one station. They dont charge anycommission and even if they charge, they charge on reduced rates.
v. Acts as an Agent
HBL also acts as an agent, correspondent or representative of his
customers at home and abroad.
General Utility Services
HBL also performs a number of generally utility services to hisclient which are as follows:
1. Foreign Exchange Business
HBL transacts foreign exchange business by discounting
foreign bills of exchange and thus provides facilities for
financing the foreign trade.
Internship Report on HBL 15
-
7/30/2019 S Qaim HBL Final Report
24/87
Chapter-2 Evaluation of Banking
2. Acts as a Referee
Habib bank provides a useful service to its customer by
acting as a referee for his credit worthiness. Theinformation is supplied in utmost secrecy and is based
financial standing of the client.
3. Acceptance of Bills of Exchange
HBL also undertake acceptance business connection with
bills of exchange and thus enable its customers to obtain the
desired credit.
4. Issue of Travelers Cheques
Habib Bank also issues travelers Cheques. These Cheques
can be issued to anyone whether an account holder or not
and charges no commission on issuance of such Cheques.
Habib bank also recently introduced Muhafiz Rupee
traveler Cheques with enhanced features.
5. Collection of Utility Bills
Electricity, telephone and other such bills can also be
deposited with HBL.
6. Locker
HBL also provides locker facility to its clients where
valuables of peoples can be kept.
Internship Report on HBL 16
-
7/30/2019 S Qaim HBL Final Report
25/87
Chapter 3 Objectives and Policies
CHAPTER-3
OBJECTIVES AND POLICIES
A. MISSION
Mission is the organizations reason for existence. The mission
describes the organization values, aspirations, and reason for being. The
formal mission statement is a broadly stated definition of basic business
scope and operations that distinguishes the organization from others of
similar type. The contact of mission statement often focuses on the market
and customers and identifies desired fields of endeavor. The mission of
Habib Bank Limited can be obvious from its engagement in the business in
which it is engaged.
B. OBJECTIVES
Objectives are the ends towards which organizational and
individual activities are directed or it can be defined as the specific short-
term target for which measurable results can be obtained. The goal of
every manager is to create a surplus and a clear and verifiable objective
facilitates the measurement of the effectiveness and efficiency of
managerial actions.
Objective state the end desired, and major objectives are supported
by sub objectives. Thus, objectives form Hierarchy as well as network.
3.1 OBJECTIVES OF HABIB BANK LIMITED
Following are some of the main objectives of Habib Bank Limited.
i. To earn profit for the bank itself and for its shareholders.
ii. To promote and boost business sector inside the country.
iii. To provide employment opportunities to people.
Internship Report on HBL 17
-
7/30/2019 S Qaim HBL Final Report
26/87
Chapter 3 Objectives and Policies
iv. To help in development and industrialization of the country.
v. To provide loan and advances to help in self-employment
schemes.
3.2 POLICIES OF HABIB BANK LIMITED
Policies are general guidelines for decision making throughout the
organization. Policies serve as a link between the formulation of strategy
and its implementation. Now all policies are explicit statements they are
often implied from the actions of managers.
Policies define the area, which in a decision is to be made, and
ensures that the decision will be consistent with, and contribute to an
objective. Policies help decide issues before they become problems; it
makes it unnecessary to analyze the same situation every time it comes up
and unify other plans. Thus policies provide opportunity to managers to
delegate authority and still maintain control over what their subordinates
do. Policies limit an area within which a decision is to be made and
assure that the decision will be consistent with and contribute to
objectives
Some of the policies of Habib Bank are described below.
i. Managerial Policies
Affairs of Habib Bank Limited are controlled through president
and members of Executive Committee who are normally Senior
Executive Vice President of the bank based at head office. Each
province has a provincial headquarter headed by Provincial Chief
and assisted by regional General Managers. Each provincial
headquarter controls branches in their area of their jurisdiction
through circle offices. Each circle office supervises various zones
headed by Zonal Chief comprising 25-40 branches in each zone.
ii. Requirement and Selection Policy
The bank advertises the vacancies available to be filled through
press under the Pakistan banking and finance services commission.
Internship Report on HBL 18
-
7/30/2019 S Qaim HBL Final Report
27/87
Chapter 3 Objectives and Policies
The requirement for the selection depends upon the post to be
filled.
iii. Promotion PolicyPersons career is a highly personal and extremely important
element of life. Both productivity and morale are facilitated if these
personal decisions are based on objective assessments of present
and potential capability. Promotion is a term which covers a
change calls for greater responsibilities and usually involves higher
pay and better terms and conditions of service and therefore, a
higher status or rank. The purposes of promotion are:
To provide satisfaction to the employee who are working
hard
To improve training, skill and experience ability
To provide organization with a competent worker
To find out the most competent and suitable candidate
Promotion is based on personal performance of an individual, the
evaluation of overall performance comprises of the following
elements.
Educational qualification
Professional qualification
Service in grade
Operating performance
Experience in different disciplines
Posting faraway placed
iv. Training
The staff college curses receives junior most officers for further
training in banking, the courses lasting from six to nine weeks with
about twenty five candidates in each course. The college is
Internship Report on HBL 19
-
7/30/2019 S Qaim HBL Final Report
28/87
Chapter 3 Objectives and Policies
residential one and provides a measure of the collegiate
atmosphere, which helps to impart a sense of camaraderie, which is
of great value. It is also of great interest to record that the staff
colleges receives trainees from abroad as well as helps to create
worthwhile reference to banking business.
The staff college courses are designed not to impart technical
instructions, but to develop qualities of judgment, decision,
leadership and management. The college is one of the most
important institution setup by the bank, students are likely to be
drawn those men who may expect to rise to the senior most
executive position the bank has to offer. It is the business of the
staff college to keep in touch with all that is going on in the world
of banking and finance and to raise its instructions as to keep pace
with the developments in Pakistan and with changes in the world
outside. The methods, procedures, routines and even outlook
change so much in banking and the staff college must be able to
turn out men trained with up-to-date knowledge and thoroughly
modern approach.
v. Marketing Policy
Marketing is a business function that identifies customer needs
and wants, determines which target market the organization can
best serve, designs appropriate product, services and programs to
serve these markets and call upon everyone in the organization to
think and serve customers. From a social viewpoint market linksa societys material requirements and its economic pattern of
response. Thus, marketing is a key factor in business success.
Habib bank also adopts certain marketing techniques to enhance
the image of the bank. Most of the marketing takes place through
various mobilization of deposit schemes and there is more
emphasis on offering efficient service to the clients in order to
better satisfy them, so that they recommend the bank to their
friends and relatives.
Internship Report on HBL 20
-
7/30/2019 S Qaim HBL Final Report
29/87
Chapter 3 Objectives and Policies
vi. Operational Policy
The Operational policies of Habib Bank Limited deal with the
method of provision of better services to its customers. Through
the introduction of new schemes as means of satisfaction for their
customers. The operational policy of Habib Bank can be divided
into two sectors.
a. Domestic operations
b. International operations
a. Domestic Operations
Habib bank is quite successfully operating its domestic business.
Facilities at the door step across the length and breadth of the
country also in conformity with the governments socio-economic
objectives. The number of domestic branches totaled 1459.
b. International Operations
Habib banks overseas branches are continuously rendering
satisfactory services and are also contributing to the channeling
home remittances of Pakistanis working abroad. HBLs
international network comprises of 60 offices in 26 countries,
operating in USA, Europe, UK, Middle East, Asian Pacific Region
and Africa. It is also the largest banking in financial services
Provider in Pakistan.
In order to improve the operations, the bank has introduced various
schemes and services. Which are listed in the following.
3.3 VARIOUS SCHEMES AND PRODUCTS OF
HABIB BANK LIMITED
i. Tele-printer Service
Introduced in 1952, this system helped the bank to improve its
services
Internship Report on HBL 21
-
7/30/2019 S Qaim HBL Final Report
30/87
Chapter 3 Objectives and Policies
ii. Rupee Travelers Cheque
It was introduced in 1957. Here the customers were provided the
facility of encashment of their travelers cheque through anybranch of the bank.
iii. Evening Banking Services
After launching evening banking service system in 1959 customers
were enabled to deposit their money at evening in specified
branches of the bank.
iv. Small Factory Owner Scheme
In 1959 the bank offered loans to small scale producers under the
small factory owner scheme in order to boost the economy of
Pakistan.
v. Foreign Teleprinter Service
It was introduced in 1961. The idea behind this scheme was to
provide quick and prompt banking services to customers in foreigncountries.
vi. Gift Cheque Schemes
It was launched in 1962. Under this scheme, the bank provided
customers with pre-printed cheque of various denominations which
could be used to sent gifts to their loved one on various occasions.
vii. School Banking This scheme was introduced in 1962 to provide banking services to
children in a number of schools throughout the country.
viii. Drive in Banking
Habib Bank Limited established Drive in branches in 1962 at
various major cities of the country where the customer could avail
banking services without getting down from their vehicles.
Internship Report on HBL 22
-
7/30/2019 S Qaim HBL Final Report
31/87
Chapter 3 Objectives and Policies
ix. Mobile Banking
It was introduced in 1962. The feature of this scheme is to provide
banking services to the customers residing in the rural areas.
x. Night Safe Scheme
In 1962 the bank offered facility to their customers to deposit their
valuables at night in specified branches of the bank.
xi. Computer Accounts
In 1962 the bank introduced computer accounts through which
most of the accounts in head office were computerized.
xii. Computer Prize Bond
It was introduced in 1966. It is a scheme through which prize could
be declared for prize bond scheme.
xiii. Credit Card Scheme
It was introduced in 1966 through which customers could get
certain sum of money from specified branches. Many business
organizations accepted payments through valid credit cards.
xiv. Infant Saving Scheme
In 1968 the bank offered infants to open saving accounts operated
by their parents/ guardians.
xv. Courtesy Card
It was launched in 1968 through which the customer could be
introduced to other branches in the country.
xvi. Foreign Currency Accounts
It was introduced in 1973.
xvii. Deposit Growth Certificate
This scheme was introduced in 1975 with increase rate of interest
Internship Report on HBL 23
-
7/30/2019 S Qaim HBL Final Report
32/87
Chapter 3 Objectives and Policies
xviii. Special Five Years Deposit Certificate
This scheme was introduced in 1975 where the major emphasis is
on increased rate of interest.
xix. Dollar Traveler Cheque
Introduced in 1976, the scheme was more helpful and safe for the
travelers than carrying foreign currency notes.
xx. Haj Accidental Death Scheme
Introduced in 1983, according to this insurance scheme, if a Haji
who has submitted his Haj application through Habib Bank
Limited died while he was away for performing Hajj, his family
was to be provided a certain sum of money.
xxi. Auto Cash Teller Machine
Auto cash machine were installed in 1988 at various branches
which allows customers to withdraw cash round the clock and on
all days of the week.
xxii. Transport Finance SchemeIn 1989 the bank in order to decrease unemployment in the country
introduced owner, driver taxi finance and scooter loans. According
to this scheme they were provided loans on soft terms.
xxiii. Gold Card System
In 1991 HBL introduced the scheme with the features of offering
card holders to get up to Rs.10,000 at a time.
xxiv. Muhafiz Rupee Traveler Cheque
It was introduced in 1998. A cheque available in denomination of
Rs.10,000, 25,000, 50,000 and 100,000, with the advantage of
100% free purchase and encashment.
Distinct Properties of Muhafiz
a. It can be issued from more than 700 branches all over
Pakistan.
Internship Report on HBL 24
-
7/30/2019 S Qaim HBL Final Report
33/87
Chapter 3 Objectives and Policies
b. Muhafiz provide the facility of payment in all branches of
HBL
c. There is no commission and fee charge for purchase ofMuhafiz. Habib Bank keeps alive the tradition of Serve you
better charges nothing for the purchase and sale of Muhafiz.
xxv. Habib Bank Flexi Loan
HBL had introduced a unique loan system for the middle income-
serving people in various public sectors. It is basically meant for
those in service people who earn more than Rs. 5,000 per month.
This loan meets the petty requirements of the salaried class. Sincethe introduction of this scheme Rs. 6 billion is advanced
throughout the country. The maximum limit of this loan is
Rs.3,00,000.
Internship Report on HBL 25
-
7/30/2019 S Qaim HBL Final Report
34/87
Chapter-4 Organizational Structure
CHAPTER 4
ORGANIZATIONAL STRUCTURE
4.1 FORMAL ORGANIZATIONS
For the smooth and successful operations of any organization, a
well-developed and properly coordinated structure is an extremely
important requirement. It provides the basic framework within which
functions and procedures are performed. This is not the end in itself, rather
a mean with which to achieve certain objectives. The organizational
structure of HBL is descried bellow:
At present, the bank operates through four provincial head quarters,
26 circle offices, 77 Zonal offices, and more than 1450 branches all over
Pakistan. The affairs of the bank are controlled through president and
members of executive committee who are normally senior vice president
of the bank based at Karachi Head Office (HOK). Each province has a
provincial head quarter headed by provincial chief and assisted by regional
general manager. Each provincial head quarter controls branches and their
area of jurisdictions through circle offices. Each circle office supervises
various zones headed by zonal chief comprising 25 40 branches in each
zone.
Internship Report on HBL 26
-
7/30/2019 S Qaim HBL Final Report
35/87
Chapter-4 Organizational Structure
Chart 1: ORGANIZATIONAL CHART
Table 1: Board of Directors
Name Designation
Sultan Ali Allana Chairrman
Zakir Mahmood President and CEO
Iain DonaldCheyne Director
Ahmad Jawad Director
Mushtaq Malik Director
Sajid Zahid Director
Source: Habib Bank Annual Report 2010
Internship Report on HBL
Chief ExecutiveOfficer
Corporate
Banking Group
RetailBanking Group
InternationalBanking Group
Asset RemedialManager
SEVP SEVP
SEVP SEVP SEVP SEVP
Credit PolicyAudit andFinance
27
-
7/30/2019 S Qaim HBL Final Report
36/87
Chapter-4 Organizational Structure
Chart-2: Organizational Hierarchy in Habib Bank Limited
Internship Report on HBL
President
Senior Executive
Vice President
Executive VicePresident
SeniorVice President
VicePresident
Assistant VicePresident
OfficerGrade-III
OfficerGrade-II
OfficerGrade-I
28
-
7/30/2019 S Qaim HBL Final Report
37/87
Chapter-4 Organizational Structure
Table 2: Management Committee
Name Designation Functional responsibilities
Zakir Mahmood President and CEO
Khaleeq Kayani S.E.V.P & group executive International and overseasbanking
Khayyam Mahmood S.E.V.P & group executive Information Technology
Sohail MalikS.E.V.P & group executive Risk Management
Zafar Aziz OsmaniS.E.V.P & group executive Human Resource and
organizational Development
Jamil Iqbal General Executive Chief compliance Officer
Jamil A. Khan General Executive Administration and servicesgroup
Afsheen Ahmad Company Secretary& head Law division
Sima KamilGroup Executive Corporate Banking
Nauman K. DarGroup Executive International Banking
Abid Sattar
Group Executive Retail And Consumer
Banking
Mudassir H. KhanGroup Executive Global Operations
Faizan MithaGeneral Executive Global Treasurer
Salim AmlaniGeneral Executive Audit, BRR&Investigation
AslamGeneral Executive Asset Remidial Managment
Tulu IslamGeneral Executive I.T. and System
Mirza Salim BaigGeneral Executive Communication Banking
Kashif ShahGeneral Executive Investment banking
Source: Habib Bank Annual Report 2010
Internship Report on HBL 29
-
7/30/2019 S Qaim HBL Final Report
38/87
Chapter-4 Organizational Structure
4.2 ORGANIZATIONAL CHANGES IN HABIB
BANK
In 1997, the Banks Nationalization Act amended with a view to
inculcates a commercially oriented culture. In the nationalized commercial
bank, two major changes brought about by amendment were the
introduction of an independent board of directors by federal Government,
with total representative from the private sector and of professional senior
management. This change was a break from the past and was carried out
recognize that the Government owned bank need to be run based on
commercial and market driven parameters, to improve the operations and
to prepare the bank for privatization in the shortest possible period of time.
In September 1997, the bank recognized its domestic and overseas
operation on functional line creating desecrate business groups, to focus
against the customer profile available to the bank. Through this process the
following business groups have been created;
i. Retail banking group
ii. Corporate banking group
iii. Asset remedial banking group
iv. International operation management group.
v. Finance and audit group.
i. Retail Banking Group
The creation of business group has allowed the bank to focus and
develop products within these business groups for its customers. In
the retail, banking group the bank successfully launched five
different products which are:
a. Muhafiz Rupee Traveler Cheque
b. Crore Rupee Saving Account
c. Crore Pati Deposit Certificate
d. P. M Small Business Loan Scheme
e. New Foreign Currency Accounts
Internship Report on HBL 30
-
7/30/2019 S Qaim HBL Final Report
39/87
Chapter-4 Organizational Structure
ii. Corporate Banking Group
The corporate and institutional banking group have been successful
in establishing significant relationship with some of the top ten
industrial groups and various multinationals, which includes Engro,
Alkaram, Siddique Sons, Gul Ahmad, Nestle, Level Brothers and
ICI.
iii. Asset Remedial Banking Group
As the bank was facing problems in addressing the recovery of
classified portfolio, an asset remedial management group was
created (ARM). The total classified portfolio has been consolidatedunder this group including these loans that were incorrectly
rescheduled or restructured in the past. This unit has been staffed
with some best executive within the bank and its primary goal is
speedy recovery and resolution of classified portfolio.
iv. International Operations Management Group
The overseas operations have been consolidated under international
operation group. During the year, local market in the larger
operations, e.g. UK, Oman, and U.A.E were reviewed and the
country specific strategies have been put in place, in order to build
these important franchises. In addition, emphasis has been placed
in improving the bank operation in important money centers, e.g.
New York, London, Hong Kong, Singapore, and Bahrain.
The finance and audit group is independents of business groups and
looks after the financial, regulatory and management reporting of
the bank. The audit process is being improved taking into
consideration the nature, sophistication, and level of risk within the
business groups.
Historically the risk management, which includes approval of
credits, was being carried out through an executive committee.
This approval process lacked the very basics of accountability andthis committee was therefore immediately disbanded and replaced
Internship Report on HBL 31
-
7/30/2019 S Qaim HBL Final Report
40/87
Chapter-4 Organizational Structure
by credit until process, which is widely used by international
banks. Credit initials are given to those experienced bankers, who
have adequate credit training and credit experience. Furthermore it
was essential that the centralized approval process was delegated to
ensure greater efficiency, responsibility and accountability at
various level of management. Within this aspect of mind, approvals
of credit were delegated down to heads of corporate centers,
regional chief executive and zonal chiefs.
In order to further straighten risk management procedures, and
separate credit policy group and industry specialist have been
introduced which now oversea and provide independent input and
expert knowledge to the credit process. Furthermore at the
corporate center level credit administration is being introduced.
v. Finance and Audit Group
The main functions of finance and audit groups are:
a. Develop and introduce financial controls and procedures on
a bank wide basis based on internally accepted accounting
and banking standards and practice.
b. Establish financial groups for all business groups in order to
ensure an acceptable return to shareholders.
c. In consultation with the business groups, develop and
monitor the banks annual and long-term business plan for
each business.
d. Provide the management and the board of directors on a
periodical basis, the banks business plan together with
various Analysis.
e. Develop and implement an independent audit structure with
focus on activities, which provide senior management
timely and proactive information, in order to protect the
Internship Report on HBL 32
-
7/30/2019 S Qaim HBL Final Report
41/87
Chapter-4 Organizational Structure
bank incurring losses of frauds, forgery, defalcations,
penalties, etc
f. To carry out planning of the bank and manage it tominimize incidence of taxation for the bank.
g. To assist the persistent in managing the regulatory affairs of
the bank in Pakistan overseas.
h. As corporate secretary, meet all legal requirements of the
bank under the company law ordinance 1984 and banking
companies ordinance 1962 and to assist the chairman and
the board of directors in preparation for the conferring of
meeting so the board and other statuary meetings in an
orderly.
Chart-3: Financial and Audit Group
Internship Report on HBL
Financial ControlDivision
AuditDivision
Pak.Reconciliation
Division
Investigation Division
CorporateDivision
RegulatoryUnits
PlanningUnits
BusinessFinance
Control
Business RiskReview
InternationalAudit
CorporateAudit
33
-
7/30/2019 S Qaim HBL Final Report
42/87
Chapter 5 Functions of Habib Bank Limited
CHAPTER 5
FUNCTIONS OF HABIB BANK LIMITED
Offices can be divided into five levels according to the functions
performed by them.
5.1 FUNCTIONS OF CENTRAL OFFICE
Central offices perform the following functions:
a. Central office provides leadership and guidance to the
field force.
b. Implements the polices of State Bank and Pakistan Baking
Council.
c. It ensures co-ordination between central officer, Circle
Office Zones and branches.
d. It performs the function of planning side in management.
e. Makes sure the efficient and continued service to
customers.
f. Motivates the field force and other staff.
g. Try to build the image of the bank inside and out of country
at international level.
i. Functions of Provincial Head Quarter
Provincial head quarter performs the following functions.
a. Processing and monitoring of project financing by project
appraisal department.
b. Post sanctioning of finances approved by circle office.
c. Critical analysis of information received from the field and
comparative analysis of facts and figures.
Internship Report on HBL 34
-
7/30/2019 S Qaim HBL Final Report
43/87
Chapter 5 Functions of Habib Bank Limited
d. Approves finances according to the powers delegated to it.
e. Controlling and supervising of branches and working sure
its smooth functioning.
f. Supervision and implementation of the policies.
g. Keeping contacts with Government and notables of the
areas.
ii. Functions of Circle Office
The functions of the circle offices include:
a. Control and supervision of branches and field offices.
b. Sanctioning advances within its powers.
c. Scrutiny and comment on various periodical statements
received from the Zonal Chief.
d. Reporting and compiling of reports to Zonal head quarters
are well as to head offices.
iii. Functions of Zonal Offices
The functions performed by zonal offices are as follows.
a. Controls the operation of branches within their
jurisdiction.
b. Advances to the extent of delegated powers.
c. Consolidates the periodical reports regarding the branches
and other field offices and reports to Zonal Chiefs.
vi. Functions of the Branches
All the actual banking functions are performed by the branches of
the Bank, which includes the following.
a. To accept deposits.
b. Channelizes the deposits into productive channels through
the sanction of proper authority.
Internship Report on HBL 35
-
7/30/2019 S Qaim HBL Final Report
44/87
Chapter 5 Functions of Habib Bank Limited
c. It deals with public matters regarding the provision of
financial services to them.
d. And finally deals all General banking functions.
5.2 DOMESTIC OPERATIONS
Habib Banks Limited Comprises the following division through
which it conducts the domestic operations.
i. International Division
It controls and supervises the operations of various overseas
branches all over the world and also monitors the performance of
the subsidiaries of Habib Bank.
ii. Project Appraisal Division
This division is to look into the feasibility of various projects on
behalf of their clients.
iii. Financial Division
This division monitors the fiscal and financial polices of the Bank.
iv. Advances Division
It looks after various advance portfolios of the bank.
v. Personnel Division
This division takes care of matters related to Human Resource
Development.
vi. MIS Division
The main aim of MIS Division is the computerization of the daily
banking in various branches.
vii. Recovery Division
This division takes care of bad debts and takes essential steps torecover it.
Internship Report on HBL 36
-
7/30/2019 S Qaim HBL Final Report
45/87
Chapter 5 Functions of Habib Bank Limited
viii. Agriculture Finance Division
The basic function of this division is related to the matters
regarding the provision of financial support to Agriculture sector..
ix. Cash Investment Division
This division explores the ways and means for investment
opportunities.
x. Sports Division
Sports divisions encourage sports inside the country and contribute
the talent of its own players to National teams.
xi. Law Division
This division is mainly concerned with the legal aspects of Banks
operations its documents and other papers related to the bank.
xii. Customer Service Division
This division is responsible to introduce new schemes.
xiii. Maintenance Division:
Its responsible for the maintenance of the building owned by Habib
Bank Limited. This division comprises of technical staff and
engineers.
xiv. Auditing and Inspection Division
This division is charged with the responsibility of the auditinginspection of domestic and international branches.
xv. Haj and Zakat Cell
This division deals and supervises the policies of the government
relating to Haj and Zakat.
Internship Report on HBL 37
-
7/30/2019 S Qaim HBL Final Report
46/87
Chapter 5 Functions of Habib Bank Limited
xvi. Investigation Division
Investigation division supervises the mall practices within the bank
and also investigates any frauds and forgeries within the bank.
xvii. Publicity and Public Relation Division
The main aim of this division is the publicity of the bank and
replying contacts with the masses through print and electronic
media.
xviii. Printing and Stationary Division
Provides the branches with necessary paper and stationary for their
routine business.
xix. Training Division
Training division arranges and imparts the basic and specialized
training to the staff of Habib Bank Limited.
xx. Market and Business Division
The main aim of this division is to develop business and attract
depositors.
xxi. Micro Enterprises Division
This division deals with small enterprises and is responsible for
provision of advances to small and medium size enterprises for
their development and encouragement.
xxii. Organization and Method Division
It develops new methods and techniques for the improvement of
bank.
xxiii. Syndicated Loan Division
It deals with provision of advances and banking services to
specialized types of clients.
Internship Report on HBL 38
-
7/30/2019 S Qaim HBL Final Report
47/87
Chapter-6 General Banking and Departmentation
CHAPTER -6
GENERAL BANKING AND
DEPARTMENTATION
General banking means the day-to-day business of bank, under the
supervision of Vice President, Zonal Head Office of the main branch.
General or day-to-day banking of HBL consists of various departments,
which are explained below.
1. Deposit Department
2. Clearing Department
3. Inland Remittances Department
4. Bills Department
5. Advances Department
6. Cash Department
7. CD Department.
6.1 DEPOSIT DEPARTMENT
The basic function of a bank is to accept the surplus of individuals,
public sector, and public institution and to honor Cheque drawn upon
them.
How to Open an Account
The applicant is provided with a copy of rules and an application
form along with the KYC to open an account. The applicant in a manner
prescribed and duly singed by the applicant fills this form. An existing
account holder of the bank must introduce the application. A copy of ID
card is attached with the specimen signature card. The application is
presented at the branch with the initial amount of deposit for credit of hisaccount. Minimum amount to open an account is Rs. 1000. The amount is
Internship Report on HBL 39
-
7/30/2019 S Qaim HBL Final Report
48/87
Chapter-6 General Banking and Departmentation
entered in the passbook and is singed by the responsible officer of the
bank. The documents are sent for scrutiny to main office and ID card to
NADRA. After approval of the documents account opener fills another
form for chequebook. Printed chequebook is allotted to him within one
week. He can withdraw money using this chequebook. Online branches
also fill a separate form for credit card if the customer demands.
Classification of Deposits
The deposits can be classified under three main heads.
i. Current Account
ii. Saving Account
iii.Fixed Deposit
i. Current Account or Demand Deposits
Current account or demand deposit can be withdrawn by Cheque or
transferred to someone else by the depositor at any time without prior
notice to the bank. This account can be opened with a minimum ofRs.1000/. In such case the bank does not allow any interest on it, because
such deposits are meant for short period and can be withdrawn without any
prior notice. Current account best suits with businessmen. Current account
can be opened by or through.
a. Partnership
b. Limited Companies Account
c. Welfare Accountd. Individual Account
a. Partnership Account
The assets of partnership are held partners of the firm, or by one of
its member acting on behalf of all members as trustees for all of them. A
partner has an implied power by law to open an account on behalf of his
partnership firm, but not on his individual name. The bank only honors
that Cheque which confirms to the mandate given to it by all the partners.
Internship Report on HBL 40
-
7/30/2019 S Qaim HBL Final Report
49/87
Chapter-6 General Banking and Departmentation
Procedure and Requirements for Opening Partnership Account
a. Names of all partners are taken with their specimen
signature.
b. Instructions for operation are obtained from each partner.
c. Signature of authorized partner is obtained.
d. A letter of partnership, signed by all partners is obtained.
e. In case all partners now authorize a partner who was not
authorized to operate the account. Thus the authority letter is
obtained.
b. Limited Companies Account
Before opening an account for a limited company the following
documents are obtained.
i. The true copy of the certificate of incorporation.
ii. True copy of the certificate of commencement of business
(only in case of public limited company).
iii. Three copies of the memorandum and article of Association.
iv. True copy of the resolution of the Board of Director regarding
conduct of the account.
Procedures and requirements for opening a Limited Company
Account
i. The certificate of incorporation and commencement certificate
of business should be called in original which are returned after
inspection.
ii. The specimen signature of the director named in the resolution
authorized should be obtained on specimen card.
iii. In case the company is taken-over by the Government fresh
instruction are obtained from the managing director appointed by
the government.
Internship Report on HBL 41
-
7/30/2019 S Qaim HBL Final Report
50/87
Chapter-6 General Banking and Departmentation
c. Welfare Account
The Associations and welfare unions open such accounts.
Requirements for Opening Welfare Account
No registration certificate is needed but only a paper containing
registration of the Association is sufficient.
d. Individual Account
Any individual can open individual account. Following are some
requirements to be fulfilled by the individual in order to be able to open an
account with a bank.
Requirements for Opening an Individual account:
i. National ID Card
ii. Introducers reference
iii. Rs.1000/- as initial amount to be credited to his account.
Procedure is the same as explained earlier in this chapter.
ii. Saving Account
In saving account the basic purpose is to mobilize the saving trend
in the lives of people and to enable people to draw money within certain
limits.
In saving account all HBL the customers are not allowed to draw a
big amount at once without any notice. The customer is bound to follow
the rules and regulations of the bank. Saving account can be opened with a
minimum amount of 1000. Saving accounts can be opened in following
shapes.
Individual account
Joint account
Internship Report on HBL 42
-
7/30/2019 S Qaim HBL Final Report
51/87
Chapter-6 General Banking and Departmentation
iii. Fixed Deposit Account
In case of fixed deposit account the time period of the account is in
accordance of the different fixed deposit schemes offered by the bank and
according to wishes of the customers. The customers cannot withdraw
money from his/her account in accordance and compliance of terms
decided by the bank and the customer.
Currently HBL is offering two types of fix deposit accounts. These
are called Habib bank munafa certificates. These are divided into two
types on the basis of income groups
1) Deposit of Rs.10, 000 to1, 00,000 @ 7% per anum
2) Deposit of Rs.1, 00,000 to10, 00,000 @ 7.5% per anum
6.2 CLEARING DEPARTMENT
Clearing
Every bank performs the function of paying and collecting. The
cheque drawn on other bank by the customers of the bank is collected by
the bank for or without charging fee is called clearing. The bank through
the clearinghouse (State Bank of Pakistan) performs the function of
clearing.
Clearinghouse
A clearinghouse is a place where the representative of all banks get
together to settle the payment and receipts of Cheques drawn on eachother.
Functions of Clearing Department in Branch
i. To accept transfer, transfer delivery and clearing Cheques from
the customers of the branch and to arrange for their collection
ii. To arrange the payment of Cheque drawn on the branch and
give Cheque for collection to any other branch of Habib Bank Ltd.or any other member or sub-member of local clearing house.
Internship Report on HBL 43
-
7/30/2019 S Qaim HBL Final Report
52/87
Chapter-6 General Banking and Departmentation
iii. To collect amounts of Cheques drawn on members of local
clearing house sent for collection by Habib Bank Ltd. branches, not
represented at the local clearing house.
Types of Clearing
a. Outward clearing
b. Inward clearing
OUTWARD CLEARING
It includes those Cheques and other instruments which are sent by
the bank to other banks for payment on behalf of its own clients.
Cheques are sent to clearing house through local main branch.
Procedure for Outward Clearing
(i) Account number of payee/endorsee is written on
backside of the Cheques.
(ii) The investment and paying-in-slips are separated.
(iii) The instruments are sorted bank wise and branch
wise.
(iv) Schedules are prepared.
(v) Jottings of all the schedules are taken in the
clearinghouse statement. Amount of Cheques is written in
delivered and to pay columns.
(vi) After balancing the outward clearing, the pay-in-
slips are released to the C.D. Department.
(vii) After balancing a transfer debit voucher is prepared.
(viii) The instruments, schedules etc. are delivered to the
message from the main branch.
INWARD CLEARING
This includes the cheques drawn on the bank presented by other
banks for payments.
Procedure of inward clearing at the Drawer Branch
Internship Report on HBL 44
-
7/30/2019 S Qaim HBL Final Report
53/87
Chapter-6 General Banking and Departmentation
(i) Numbers of instruments noted in the schedule are verified
immediately on receipt.
(ii) The amounts of all the instruments are jotted down and totaled. It
should be equal to the amount mentioned in the IBDA from the
local main branch.
(iii) The IBDA is responded crediting the account in the IBDA from the
main local branch.
(iv) The IBDA is responded crediting the account of the main branch.
(v) The amounts are released to the concerned department.
Types of Cheques Collected by Clearing Department
Transfer Cheques
These are the cheques, which are collected and paid by the same
branch of Habib Bank. For example Mr. A is a customer of Habib Bank,
Turi Bazar Branch and draws a Cheque in favor of Mr. B who is also the
customer of the same branch.
Transfer Delivery Cheques
The Cheques that are collected and paid by two different branches
of a bank situated in the same city. e.g. a person draws a Cheque on Habib
Bank Ltd. Punjabi Bazar Branch, Parachinar in favor of another person
who maintains an account in Turi Bazar Branch, Parachinar.
Clearing Cheque
When the payee/endorsee and the drawer of the Cheque maintain
account with different banks, the collecting bank can receive the amount of
cheque from the paying bank in any of the following manner.
a. The bank can maintain an account with paying banks.
b. The Cheques can be exchanged in clearing house through
their representatives.
6.3 INLAND REMITTANCE DEPARTMENT
Internship Report on HBL 45
-
7/30/2019 S Qaim HBL Final Report
54/87
Chapter-6 General Banking and Departmentation
Inland remittance can be defined as the transfer of money payable
at certain place within the country. Inland remittances can be classified
into following.
(i) Within locality
(ii) Outside locality
i. WITHIN LOCALITY
When a branch situated in Parachinar is required to send draft to
other branches within the same city, the process is known as within the
locality.
ii. OUTSIDE LOCALITY
Out side locality means the transfer of money payable outside the
city. For example some Parachinar branch sends a draft to Kohat branch.
This can be done through following means.
(i) Telegraph transfers T.T.
(ii) Mail transfer MT.
(iii) Demand Draft DD.
i. Telegraphic Transfer (T.T.)
In T.T. the order to pay is sent by cable.
a. Government draft
b. Bank draft
a. Government Draft
It is concerned with the government business and only authorities
can issue such type of draft.
Internship Report on HBL 46
-
7/30/2019 S Qaim HBL Final Report
55/87
-
7/30/2019 S Qaim HBL Final Report
56/87
Chapter-6 General Banking and Departmentation
person to whom it is addressed to pay on demand or at a fixed or future
determinable future time, a sum certain in money to the order of a certain
person or to bearer.
Bills of Exchange are of two types:
i. Inland Bills
ii. Foreign Bills
i. Inland Bill:
These are generally used inside Pakistan. Inland can be further
divided into two:
(a) Out ward bills collection (OBC)
(b) Inward bills collection (IBC)
a. Outward Bill:
Outward bills are sent to the banks outside the city.
b. Inward Bill:
Inward bills are those that other bank sent to any Habib Bank Ltd.
ii. Foreign Bills for Collection (FBC):
This type of bills are related to foreign drafts these are first sent to
foreign exchange branch which collects these instruments from the
concerned branches and banks are then valued in foreign currency.
6.5 ADVANCES DEPARTMENT
This department is mainly concerned in dealing with loans given to
people/customers on their request. These customers can get loans in a
specified manner. The loan can be of any domination and nature in
accordance to the request made by the customer.
TYPES OF ADVANCES (LOANS)
Advances can be classified into three types.
Internship Report on HBL 48
-
7/30/2019 S Qaim HBL Final Report
57/87
Chapter-6 General Banking and Departmentation
(i) Overdraft
(ii) Cash credit
(iii) Demand loan
(i) OVERDRAFT
The over draft facility is given to the already existing worthwhile
proven loyal customers. This is actually a facility that allows the
account holder to draw over and above the amount, which he
maintains in his account. The duration of this facility provision is
up to one year, which can be extended. This facility requires nosecurity to be placed with the bank.
(ii) CASH CRED