Chapter 1 Introduction

1.1

Back Ground of Study

Banking sector plays an important role in the economy of any country by providing financial services to meet the growing demand of all sectors in the economy.

Soneri bank limited which was established on September 28 1991, to cater to the banking requirements of small & medium sized entrepreneurs by providing them qualitative & competitive services with emphasis on encouraging exports in urban and rural areas of the country. SBL has brought new products in market to cater the needs of customers. Thus, it is playing key role in the development of economy.

1.2

Purpose of Study

The basic purpose of this report is to get some practical exposure of banking sector. Beside this, purpose of the study is: To know the practical side of management. To analyze an organization from financial prospective. To know how different operations are carried out in the bank. To bridge the gap between theory and practice

1.3

Scope of Study

In a limited time an internee can not cover every aspect of an organization. However this report covers study of different departments from financial prospective and operations carried out in these departments. The main focus is the credit facilities offered by Soneri bank.

1.4

Methodology of Study

For completion of this report the fountain head of information and knowledge was: 1.4.1 Primary Data

The primary data is collected through following means Discussions with staff Through personal observation

1.4.2

Secondary Data

Secondary data is collected through following means Through consulting documents Annual reports Internet Books Journals 1.5 IMPORTANCE OF REPORT

First and most importance of doing internship in a reputed organization to complete and achievement of degree; as this is requirement of the degree of masters of business administration that, student has to serve as an internee for organization and he has to submit a report at the end. Secondly importance of the study is that the student has a chance to implement the knowledge that he gains in two years of his study. Another importance of the study is to get awareness about environment of the organization. Because a student has to make a career in future so it is help full for him to get exposure of the actual situation of the organization. I was interested in Customer Services of the bank after my specialization in finance. So I decided to choose bank for getting more practical and latest knowledge 1.6 LIMITATIONS OF REPORT seven weeks in a reputed

Time period of the seven weeks was very short and not sufficient to get all information or data of an organization.. Because this report focus on the most sensitive and confidential part of the organization (i.e) loans and advences.so bank management or bank authorities did not want or hesitated to provide important information to maintain business secrecy. Another limitation was bank authority was very busy for their bank tight schedule .so they could not give me enough time for discussion about various problems and non-availability of the required staff complete information could not be collected easily.

1.5 Scheme of Report This report includes Chapter 1 This section gives information about

 background of study purpose of study scope of study, methodology of study Importance of study Limitation of study Chapter 2 This section describes the comprehensive review of bank, which includes history, role and financial products of Soneri bank Gilgit Baltistan. Chapter 3 This section describes the products & services provided by SBL, and its Branch located in Pakistan. Chapter 4 This section includes financial ratios analysis, comparison of Soneri bank with industry and SWOT analysis. Chapter 5 . This section includes recommendations, conclusion and bibliography

Chapter 2 History of Soneri Bank Introduction

Soneri Bank was incorporated on September 28, 1991 and is listed on all the Stock Exchanges of Pakistan. The controlling stake in the Bank is held by the Feerasta family, owners of the Rupali Group whose primary activities are centered on the synthetic textile industry. The Bank commenced operations from its first branch in Lahore on April 16, 1992. Soneri is a fully accredited scheduled commercial bank providing a wide spectrum of retail and corporate banking services through its wide network of online branches in all major cities including Northern Areas of Pakistan. The Bank?s core activities are lending to corporate and SMEs with particular focus on trade finance. Soneri enhanced its services with the use of technology driven products like ATM network, telephone banking, debit card, cheque free banking etc and offers consumer financing products such as auto finance, mortgage lending, personal finance and asaaish finance. One of Soneris core strengths is its loyal customer base. This has been developed over a period of time as a result of Soneris strategy of emphasizing relationship management with its corporate as well as SME customers at all levels. Soneri has been able to reposition itself in line with the changes in the financial system of Pakistan by formulating and implementing strategies and technology driven products to maintain its market position. Soneris improving trend in growth and earnings over the years is indicative of the Banks successful strategic management. Going forward, Soneri plans on increasing its market share in the corporate and institutional client area by providing tailor made solutions. The Bank will continue to concentrate on its policy of maintaining a secure portfolio of advances, focusing on providing short to medium term advances and facilitation of foreign trade to various sectors of the industry with efforts to diversify lending in different sectors of the economy. Soneri has been rated as AA- (Double A minus) for long term rating and Al+ (A One plus) for short-term rating by the Pakistan Credit Rating Agency (Private) Limited (PACRA).[2]

2.1

Objectives of SBL

The essence of business philosophy is to cater the banking requirements of small & medium sized entrepreneurs, providing them qualitative & competitive services with emphasis on encouraging exports. [2] Source: [1, 2] www.soneribank.com/histery-objectives (Access at Nov.05 2012

2.2

MISSION STATEMENT

To developed Soneri bank Limited into an aggressive and dynamic financial institution having the capabilities to provide personalized service to the customers with cutting edge technology and a wide range of Products, and during the process to ensure maximum return on assets with ultimate goal of serving the economy and society We have more time for you Source: annual report 2011 soneri bank

2.3

VISION STATEMENT

to be recognized as a leader and brand synonymous with trust, highest standards of services of service quality, international best patristic as and social responsibility. To provide quality services to its customers through adoption of best practices and full exploitation of I.T advancement, culminating at a leading position amongst its peer banks Stronger banking relationships, increasing customer confidence.

2.4 Soneri Bank Abbottabad Branch

2.4.1Introduction and history After establishment of Soneri Banks allover Pakistan , it was felt necessity to establish branch in Abbottabad. according to the increase in number of customers. So keeping in view the number of customers in Abbottabad and near places Soneri Bank Abbottabad Branch was started in December 14, 2007. The purpose of this branch was to provide services to the people of Abbottabad and surrounding areas in their near place. The Bank started its operation properly in December 14 2007. The branch has facilities of banking. It is providing the same products and services to the people as given by other branches. There are five departments in the branch.

Cash department Remittance department Clearing

Credit and advances Account department

2.4.2 BRANCH STRUCTURE OF SONERI BANK ABBOTTABAD

Manager

Operational Manager

OG-3

BDO

Casher

Office boy

security guards

Souce: self made.

Explanation of Chart 2.4.2

The organizational hierarchy of SBL Abbottabad branch is shown in the figure . The manager is at the top of hierarchy who is responsible for managing branch and reports to area vice president (AVP), followed by operational manager. The third in hierarchy is OG3 who maintains account of branch and reports to operational manager. Fourth in hierarchy is business development officer. who is responsible for develop business of bank. The head casher is deals with cash department and reports to operational manager. Office boy is responsible to maintain files of bank while are responsible to look after the bank.

2.5 Organizational Structure

A well-developed and properly co-ordinate structure is an important requirement for the success of any organization. It provides the basic framework within which functions and procedures are performed. This chapter describes the organizational structural of Soneri Bank limited. At present the bank operates through one central and one head office, six provincial head quarters, thirty five circle offices, ninetyseven zonal offices and 187 branches, all over Pakistan. The affairs of the bank are looked after by the President and Executives Committee. Each provincial head quarter is headed by a Provincial Chief and assisted by Regional Managers. The provincial head quarter controls the branches in their area. The functions of head office & branch levels are given below.

2.6 Management structure of Soneri bank

Table: 2.6.1 Mr. Alauddin Feerasta Mr. Mohammod Aftab Manzoor Mr. Inam Elahi Mr. S. Ali Zafar Mr. Nooruddin Feerasta Mr. Shahid Anwar Mr. Manzoor Ahmad Mr. Mohammod Rashid Zahir Mr. Mohammod Altaf Butt Source: annul report 2011 soneri bank Chairman Chief Executive Officer Director Director Director Director Director Director Company Secretary

2.6.2Audit Committee

Table 2.6.2 Mr. Nooruddin Feerasta Chairman

Mr. S. Ali Zafar Mr. Inam Elahi Mr. Mohammod Altaf Butt

Member Member Member / Secretary

Source: Annual Report 2011 Soneri Bank 2.6.3 Auditors

KPMG Taseer & co Chartered accountants 2.6.4 Legal Advisor

Manan Associates, Advocates 2.6.5 COMPANY SECRETARY Mr. Muhammad Altaf butt

Source: annual report 2011 soneri bank

2.7

Functions of Head Office

Head office performs the following functions: The head office provides leadership and guidance to the field force. The head office also implements the policies of the state bank and Pakistan Banking Council. It ensures co-ordination between circle office, zones and branches. The central office prepares planes and targets for different business areas of targets for deposit profits, opening of main branches etc. It ensures efficient and cottoned service to the customers. It also monitors the performance and service to the client. To motivate the field force and other staff for achieving the allocated targets by giving incentives. It also tries to build the image of the bank within and outside Pakistan.

2.8

Functions of the Branches

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All the actual banking functions are carried out in the branch. Thus the function of the branch includes the following: The primary function of the branch is collection for deposits, which are the lifeblood of a bank. The branches also channel the deposits into productive investment through the sanction to the proper authority. The branches deal with the public courteously and efficiently. The branches are carrying out all the banking function etc.

2.9

Branches Net Work in Pakistan

SBL is operating with 187 branches spread all over in Pakistan. The region wise branches net work is as fallows.

Table: 2.9.1 (Branches Net Work in Pakistan) Region Karachi Lahore Gujranwala Faisal Abad Peshawar Sialkot Mir Pur, Azad Kashmir Sheikhpura Multan Suhkkur Quetta Gilgit Hyder Abad (Sindh) Wazir Abad Islamabad Sahiwal No. of Branches 57 30 1 3 3 2 5 1 6 1 4 2 7 1 7 1

10

Hunza Skardu Rawalpindi Gahkuch Lodhran Bahawalpur Rahim Yar Khan Gwadar Abbottabad Okara Sargodha Sadiqabad Hub Chowki Golarchi Bohara Gujar Khan Jehlum Khanewal Booni Burewala Jatwi Town Hafizabad Wasa Sawabi Talhar Tando Allah Yar Sultanabad Sanghar Chitral Deh Sonhar Matyari Danyor

2 2 7 1 2 2 2 2 1 2 1 1 1 1 1 2 1 2 1 1 1 1 1 1 1 1 1 1 3 1 1 1

11

Muzaffargarh Kharian Nankana sahib Main channu depalpur Kharoor pacca sambrial vehari ranipur taxila chakwal Total

1 1 1 1 1 1 1 1 1 1 1 186

Source: Annual Report 2011 Soneri Bank

2.10 Zonal Divisions of Soneri Bank Soneri bank limited is divided in to two zones. Southern zone Northern zone Southern zone includes Sindh province and Baluchistan, plus Gilgit, Chitral, Sakurdu, and Mir Pur Azad Kashmir.

12

Northern zone includes KPK, Tribal Area and Punjab. Two G.Ms named Mr. Syed Farukh Hussain Rizvi is the in charge of Northern zone and Mr. Nasir ud-din is the in charge of Southern Zone.

2.11 Pattern of Share Holding, of sbl. Table: 2.11.1 Categories of Shareholders No. of Shares Held 181599 .18 %age

S/holders Directors, CEO & their Spouse & Minor Children NIT and ICP Banks Insurance Companies Modarbas & Mutual Funds Share holders Holdings % and above General Public (Local) General Public (Foreign) Others Company Total Source: Annual Report 2011 Soneri bank 6 11 9 10 6 5846 1342 80 7323 13

23822149 1109804 3009123 577481 43902677 15887147 1651369 11612088 10175347

23.42 1.09 2.95 .57 43.15 15.62 1.63 11.39 100

2.12 SBL, Organizational Chart

Share Holders

Chairman /

BOD

President

13
SEVP Audit & Investigation SEVP Corporate & Investment Banking

Source: Annual Report 2011 Soneri Bank

Explanation of Chart 2.12

Soneri bank is headed by president followed by Board of Directors. The Board of Directors elects the president of SBL. There are six members of BOD along with the president. Chairman of SBL follows the BOD and heads. The executive committee which has ten members who are known as senior executive vice president (SEVP), the president is also member of executive committee. Executive vice president (EVP), reports to the executive committee and supervise the senior vice president (SVP) followed by vice president (VP), grade I, II, III and clerical staff is supervised by area vice president (AVP).

14

Chapter 3

15

Financial Products of SBL

Soneri Bank Limited offers a full range of corporate, treasury and retail banking services with emphasis on trade-related activities.

3.1

Soneri Car Finance

With increasing demand for auto mobiles in Pakistan SBL has offered to its customers, Soneri car finance at lowest markup rates to cater the crying need of customers in year 2002. The maximum finance amount is Rs. One million for brand new unregistered cars. Repayment period is one to five years in equal monthly installments inclusive of markup.

3.1.1 Markup Rates

Finance repayable with in one year 7.90% p.a Finance repayable in more than one year but with in five years 9% p. a. Down payment is 15% of car price.

3.2

Soneri Ghar Finance Scheme

SBL provides easy and affordable credit facility to those who desire to have an own home or make repairs / renovation to home already owned through Ghar financing scheme. Maximum individual finance amount Rs. 2.5 million for pre constructed residential property, and repayment period for this facility is up to 20 years. Maximum individual finance amount Rs. 1.0 million or 1/3rd of the value of the property whichever is lower for repairs / renovation. And the repayment period is up to 5 years.

3.2.1 Markup Rates

Repayable with in 1 year 6% p.a Repayable in more than 1 year but within 3 years, 7% p.a

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 Repayable in more than 3 years but within 20 years, 0.50% above prevailing SBP discount rate and minimum 8% p.a

3.3

Soneri Personal Finance

To meet the expenses for medical, travel, education and advance rent SBL offered easy and affordable credit facility to their customers through personal finance scheme. Maximum individual finance amount Rs. 0.30 million or 3 times of borrowers gross salary, whichever is lower. Repayment period is up to 3 years. 3.3.1 Markup Rate The maximum mark up for this facility is 13% p.a. Security Hypothecation of borrowers house holds effects. Loan insurance policy.

3.4

Rupee Travelers Cheques

The customers prefer to carry secured way to Cash. In this regard the bank issues RTCs of Rs. 5000 and en cashable free of any service charge (Govt. Taxes / Duties applicable) through all branches of Soneri Bank Limited, also payable through Local Clearing System. When bank issues RTCs it credits the head office account and debit is made when RTCs are presented for encashment. It also offered foreign currency travelers Cheques.

3.5

Inland and Foreign Remittances

Remittances are the transfer of funds from one place to another through network of branches. SBL offered full range of services to their customers through their Network of branches in Pakistan It also transfers funds to outside country through foreign correspondents around the globe.

3.6 Soneri ATM Service

Soneri Bank ATM Cards provide self service banking 24 Hours a day, and offers following services at touch of a button from Soneri ATMS. 3.6.1

Cash withdrawal
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Customer can withdraw cash from his/her account(s) up to Rs. 20,000 per day in multiples of Rs.100, Rs. 500, and Rs.1, 000 currency notes. 3.6.2 Balance Request Customer can see the available balance in his/her account displayed on the screen or obtain a printed advice.

3.6.3 Mini-Statement
The ATM provides customer with an instant mini-statement of his ATM linked accounts listing ten last transactions in the account(s). 3.6.4

Cheque Book Request

Request for fresh Cheque book may be made through the ATM. The Cheque book may be collected from customers branch after three working days against surrender of duly signed Cheque book requisition slip.

3.6.4 PIN Changing Facility

Customer may change his/her Personal Identification Number (PIN) through ATMs any number of times.

3.6.6

Eligibility

Soneri Bank ATM Card is available to customer if he/she maintains a Resident Rupee Savings or Current Account with any of Soneri bank on-line branches. Joint Account holders may also have their individual Soneri Bank ATM Card provided either of the two signatories, are authorized to operate the account. The second joint accountholder, in this case, shall be provided with supplementary ATM Card.

3.7

Soneri Debit card

Soneri ATM Card held may be used in addition to Soneri ATM Service, for making payments against purchases made from sales outlets and payments to Petrol Pumps displaying acceptance of Soneri bank Who May Use Debit Card SBL provide the following facilities in debit card:

3.7.1 All Soneri ATM Card holders

How to Pay For Purchases: Simply swipe Soneri ATM Card through Point of Sale (POS) Terminals available at the outlets, enter the ATM (PIN) and amount of Purchase made and the account

18

linked to Soneri ATM Card shall be automatically debit with the amount of purchases subject to availability of sufficient withdraw able funds in the account. POS Terminal shall generate receipt for amount charged to account. 3.7.2

Per Day Limit For Purchases

Subject to availability of sufficient withdraw able balance in account(s) linked to Soneri ATM Card, will pay a maximum amount f Rs. 300,000/- per day for purchase against Debit Card. What is more, the per day cash withdrawal existing limit from ATMs may also be utilized. 3.7.3

Service Charge

The convenience of using Soneri Debit Card is available at a negligible annual fee of Rs. 500/ or the prevailing fee as published in schedule of Bank Charge.

3.8

Lockers
The Lockers can be operated outside of banking hours late in the

Specially designed lockers of various sizes are offered by SBL to meet the needs of individuals. evenings.

3.9
3.9.1

Departments at Abbottabad Branch Cash Department

SBL Gilgit has grouped their activities in the following manner.

Cash department is working under the supervision of head cashier, who and his team is responsible for disbursement and receipt of cash from customers. The department is fully equipped with modern computers, they pay and receive cash entering transaction through special accounting software (SonaWare). by The the

transactions are also maintained manually on cash register and at the closing of

daily business they compare both computer and register. Finally they send daily cash report to head office Karachi duly signed by manager and head cashier. 3.9.2

Deposits Department

Soneri Bank Limited offers a full range of corporate, treasury and retail banking services with emphasis on trade-related activities. The saving schemes which are offered by the bank are as fallow. 3.9.2.1

Current Account

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C.D account is usually maintained by businesses and traders, where the holder of the account can deposit and with draw from the account at any time. This account offer and return to the client. The minimum amount for opening this Rules for current account are as fallow. Current account can be open by any member of the public. Entities, corporations. Request for opening current account must be made on Banks standard opening form. Account holders can only withdraw sums from their account by means of Cheque supplied to them by the bank for that particular account. Cheque should be signed as per specimen of signature given to the bank. does not

account is Rs. 500.

3.9.2.2 Profit and Loss Saving Account

The main objective of this account is to encourage and mobilized savings of the people. The rate of return is 2.00% p.a, it does not require minimum balance and the profit is paid annually. Rules for PLS account are as fallow. The account can be opened with a minimum balance of Rs. 100. The account can be opened in the name of individuals; minor (to be operated by guardian) limited companies, firms, educational institutions etc. Account holder can only with draw cash form his/her account through Cheque supplied by the bank. The account holder can with draw cash from PLS account only eights times in a calendar month and for total amount should not exceed Rs. 15000. 3.9.2.3 Soneri Saving Account Saving accounts are opened on proper introduction with sums of credit balance within certain limit for individual (single, joint) institutions, companies, educational institutions etc. SBL has introduced various schemes under saving a/c are following: Soneri Bachat Account Soneri Jari Account Soneri Meaadi Account Soneri Munafa Account

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 Soneri Ikhtiyar Account

3.1.2

SONERI BACHAT ACCOUNT

Profit & Loss Sharing Soneri BACHAT Account may be opened by individuals, partnerships, Joint Account holders, Companies, Corporate, Trusts e.t.c, on the basis of Shariah Principles of Musharaka with the following unique facilities. Minimum amount for account opening Rs. 100/=. Profit calculated on monthly average and distributed on quarterly basis. Weightages declared at periodically intervals to be announced on the web-site, and will be displayed on notice board. Fund utilized by the bank in accordance with Shariah Principles under the supervision of proficient Shariah Advisor Telephone banking, *E-Banking, *GSM Banking, *Web Banking, On-line Banking, ATM Card / Debit Card and Utility Bills Payment. Hold Mail Instructions. Personal Financial Consultancy Services for Islamic Banking Products.

3.1.3 SONERI JARI ACCOUNT

Soneri Jari Account, on the basis of Qardh may be opened by individuals, partnerships, Joint Account holders, Companies, Corporate, Trusts e.t.c, with following unique facilities: No limit for minimum or maximum balance. No limit for minimum or maximum withdrawal amount within the available balance. Country wide cash deposit / withdrawal facility. Personalized Cheque book facility with no restriction on number of transaction. Hold Mail Instructions. Personal Financial Consultancy Services for Islamic Banking Products.

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3.1.4 SONERI MEAADI ACCOUNT

Profit & Loss Sharing Soneri BACHAT Account may be opened by individuals, partnerships, Joint Account holders, Companies, Corporate, Trusts e.t.c, on the basis of Shariah Principles of Musharaka with the following unique facilities. Minimum deposit Rs.10,000/= for a fixed period of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years and 5 years. Profit payment at the option of client i.e., monthly, quarterly, half yearly, yearly or on maturity. Profit declared quarterly. Net profit (after deduction of expenses & management fee) to be shared on the basis of weightages. Weightages on the basis of tenor and option of profit payment will be announced quarterly. Some of the facilities for Jari account are also applicable here.

3.1.5 SONERI MUNAFA ACCOUNT

No Minimum amount for account opening. Profit will be calculated on daily products. Profit calculated on the basis of Weightages for different tiers to benefit higher balance with higher return. Extra premium on deposits of Rs. 10 Million and over. Weightages declared at periodically intervals to be announced on the web-site, and will be displayed on notice board Soneri Munafa account with special operational facilities of Current Account. No limit for minimum or maximum withdrawal amount within the available balance. Country wide cash deposit / withdrawal facility. Personalized Cheque book facility with no restriction on number of transaction. Fund utilized by the bank in accordance with Shariah Principles under the supervision of proficient Shariah Advisor Pay orders and demand drafts payable country wide.

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Telephone banking, *E-Banking, *GSM Banking, *Web Banking, On-line Banking, ATM Card / Debit Card and Utility Bills Payment. Hold Mail Instructions. Free Statements of Account after every six months. Personal Financial Consultancy Services for Islamic Banking Products.

3.1.6 SONERI IKHTIYAR ACCOUNT

Ikhtiar current is a non profit account, flexible account with a great convenience and Multiple FREE Services for individuals (in single or joint names), minors (to be operated by the guardian), charitable institutions, autonomous corporations, limited companies, firms, associations, educational institutions, etc. Ikhtiar current account may be opened with minimum amount of Rs. 50,000/-. To avail free facilities maintenance of balance on or above Rs. 50,000/- is mandatory. Ikhtiar Current Account entitles account holder to avail amazing facilities such as: Chequing Account facility with no limit on a number of transactions Free Cash Deposit and Withdrawal facilities through any bank branch Free Clearing facility to deposit cheques of other banks within the city Free issuance of Pay orders Online Funds Transfer through Cheques to any account across Pakistan through your bank branch Remittance facilities such as Payment Orders, Demand Draft, Telegraphic Transfers Rupee Travelers Cheque through your bank branch Import, Export and other business transactions Standing Orders facilities Safe Deposit Locker at designated branches

This scheme is introduced to attract the customers as well as to encourage savings. It does not require minimum balance. The account holder can operate this account frequently as in case of current account, Profit paid on monthly basis. Table showing rate of returns is as under.

Table: 3.9.3.3 23

Balance Up to Rs. 1.0 Million Over Rs. 1.0 Million to 20.0 Million Over Rs. 20.0 Million to 100.0 Million

Rate of Return p.a 1.25 %. 1.75 %. 2.50 %.

Source: Brochures of SBL 2011,

3.9.3.4 Capital Growth Certificate Scheme

Bank pays interest on this account half yearly. The profit is paid on principle as well as on interest i.e. on compound interest basis. This account can open by any type of customer.

3.9.3.5

PLS Term Deposits

The PLS term deposits are accepted for any duration of one month, three months, six months and one year to five years. The PLS term deposits would be eligible for sharing profit and loss with the bank at the rate to be determined by the bank and is determine by the bank at the end of each half year. PLS term deposits are accepted by the bank from individuals, firms, limited companies, associations, local bodies and educational institutions etc. With drawls before maturity will lose the right to share profit. But TDRs encashed after seven days but before completing thirty days will earn profit at seven days rate. TDRs enchased after one month but before completing one year will earn profit at PLS saving rate. TDRs encashed after one year but before maturity will earn profit at six months will earn profit at six months rate.

Table: 3.9.3.5 Term 1 month 3 months Rate of Return p.a 2.00 %. 2.25 %.

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6 months 1 year 2 years 3 years 4 years 5 years

2.50 %. 3.00 %. 3.25 %. 3.50 %. 4.00%. 5.00 %.

Source: Brochures of SBL 2011

3.9.4

Remittances Department

This department transfers funds from one place to another place and charged different rates on the basis of amount transferred. SBL offers the following kinds of remittances.

3.9.4.1 Telegraphic Transfer

T.T is a message, which is transferred through on line banking (internet), telephone, and fax etc. to another branch of same bank or any other branch of another bank. The customer has to fill an application form which contains all the information like transfer amount, place of transfer, name and account number of transferor, name and account of transferee and the name of branch to which the money is going to transfer etc. after this process the relevant officer entered the transaction in to computer and send credit advice to concern bank.

3.9.4.2 Demand Draft

The bank on request of customer issues demand draft. It is in written foam which contains the name of payee, his/her branch and account number etc. The payee could not credit his/her account until this slip is presented to the payees bank.

3.9.4.3 Rupee Travelers Cheques

The customers prefer to carry secured way to Cash. In this regard the bank issues RTCs of Rs. 5000 and en cashable free of any service charge (Govt. Taxes / Duties applicable) through all branches of Soneri Bank Limited, also payable through Local Clearing System. When bank issues RTCs it credits the head office account and debit is made when RTCs are presented for encashment.

3.9.5

Bills Department
25

This department is responsible for collection and payment of bills, which include outward bills for collection (OBC) and inward bills for collection (ICB). For OBC the bank charges some commission.

3.9.6

Human Resource Department

This department is responsible to manage workforce of the bank in effective and efficient way, so that it can achieve its objectives.

3.9.6.1 Human Resource Management

The term Management with in most organizations considerable thought is given to the effective and efficient use of financial resources, this is called Financial Management similarly Operations Management concerns itself with the effective utilization, storage and distribution of material resources. So the term Human Resources Management is concerned with the effective and efficient use of the organizations human resources. HRM is responsible for the people dimensions of the organization. It is responsible for getting competent people, training them, getting best out of them, motivating them and achieving loyalty for the organization.

3.9.7

Advances Department

3.9.7.1 Commercial Credit Facilities The vast majority of commercial banks deposits tend to be short term; the average life of these deposits usually ranges twelve to eighteen months. As such commercial banks can invest them only in assets with similar life spans avoiding a tenor mismatch with the risk assets created out of them. Financing facilities extended by the bank to support the trading activities of business and industry. 3.9.7.2 Principle of classification Financing and trade facilitation have been designed keeping in view the commercial banking needs of business and industry, the aim is to reach out to the Widest spectrum of business concerns thereby ensuring that the risk assets portfolio of the bank is well spread out and serves the country in the beat possible manner.

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3.10 OTHER PRODUCT / SERVICES

The privatization process for the expansion and diversification of economic activities in the country also demanded the introduction of new banking products. SBL took initiative in this direction and for the first time SBL devised and markete d new products and services with brand names to enter the varying requirements of its diverse customers. SBL currently have following products or services in banking sector that are making it more prominent in the banking sector: Consultancy Services Tele Banking Fax Utility Utility Bills Collection

3.10.1CONSULTANCY SERVICES In the process of privatization of public sector units, prospective buyers need professional assistance and SBL, with its expertise, offers to them specialized service for valuation of the market value of the industrial unit, preparing bid documents and arranging finance for the purchase of the unit.

3.10.2

SELF SUPPORTING SCHEME

For the benefits of genuine worker/borrowers who are poor and needy and for small entrepreneur the bank as evolved a self supporting scheme: maximum amount of loan Rs.25000 and minimum Rs.5000 per individual. Loan will be totally free of mark-up

3.10.3

FAX PRESS

This product was first of its kind introduced by using modem technology of The Fax Machine. It facilitates speedy transfer of funds within Pakistan. The service guarantees transfer of from one city to another, within an hour.

3.10.4 TELE BANKING SERVICE

27

Soneri bank ranks customer convenience first and to achieve this objective it provide round the clock tale banking facilities free of charge. Soneri Round-the-clock Telebanking provides the service at 24 hours a day and 365 days a year. Here some feature of the Tele Banking

3.10.5

UTILITY BILLS COLLECTION

With the aim of extending this service to wider range of customers, the number of SBL branches collecting Utility Bills more than 900.

3.10.6 SBL SMS MOBILE

Banking at your fingertips. Soneri bank started sms services for Atm/visa card holder customer.Dial in anytime to get information regarding balance and mini statements. 3.11 ACCOUNTS TYPES Though in theory there many types of accounts but commonly account operators can be classified in one of the following categories, each have different documentation requirements: Individual Partnership Joint

3.11.1 INDIVIDUAL Only one person can operate this account. An individual who can fulfill the requirement of bank can open this account. We can call it a personnel or individual a /c. 3.11.2 PARTNERSHIP For partnership account, along with the application form signature card. Other documents are also needed such as Registration certificate

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Agreement among partners Commencement of business

In case of addition or withdrawal of any partner a new agreement will be required

3.11.3 JOINT
In case of joint a/c applicant mentions that how much person will operate the a/c. Instruction are given for joint a/c such that the account shall be Any one of us or survivor Any two/all of us jointly

In first case if one of the a/c holders died then the other partner cant operate this a/c individually without having the permission from court. 3.12 CLOSING OF AN ACCOUNT There are No of reasons of closing an account. Some are listed below. If customer desires to close his account In case of death of one account holder Bankruptcy of the account holder If an account contain nil balance or not up to the requirement of rules Before closing any account, bank send letter to the account hold for informing him that his account is going to be closed. There is need an approval form higher authority to close any account. i. Verification of entry of voucher ii. Preparation of Soneri bank extracts which show daily position of fund transfer from one branch to another. iii. Drafting daily position statement of banks, which show the overall position deposit, finance and number of account opened on a certain date. iv. Preparation of daily statement of affairs which show all the asset and liability on a particular date. v. Expanse voucher making and procedure involved.

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3.13 Agriculture Financing

Following agriculture finance facilities are provided by Soneri Bank Limited at its selected branches. Production loans are offered to meet the input and other working capital requirements for farming, orchards and nursery, tunnel farming, storage of raw material, transportation marketing grading and packing etc., by farmers. Development loans are offered for the purchase of tractors, trolley, thrashers, ploughs, cultivators, laser levellers, combine harvesters, processing machinery, transport for delivery of dairy, poultry, fisheries. Installation of tube-wells, turbine, land levelling, soil improvement, land reclamation, seed processing units and for godowns, silos and cold storages. To meet the fixed cost and working capital requirements for cattle farming, cattle feed units, dairy farming, poultry farming; poultry feed units and fish farming. Repayment Period Principal amount of Finance plus mark-up thereon is repayable depending upon nature of business ranging from one to five years. Revolving facility is also available under specific terms.

3.14 SME Finance

Soneri Bank Limited, arguably at the forefront of commercial excellence, has strengthened its product profile by introducing the following cost effective innovative tailor made small and medium enterprises (SMEs) financing options on flexible terms to its most discerning customers need. The Market segment for this business is primarily SMEs and the bank stands committed to contribute in the process of national development with an explicit focus in providing quality finance solutions. SONERI SARMAYA SCHEME SONERI AASAN SCHEME SONERI TEJARAT SCHEME Fund & Non Fund Based Facilities. For fixed Asset Financing

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 For Working Capital Financing For Trade Financing Fund & Non Fund Based Facilities.

Individuals Proprietorship Partnerships Limited Companies Salient Features of SBLs SMEs Products.

Competitive Rates Tailor made need based Products Quick Processing Time Cash Flow Based Lending Flexible Repayment Period

Chapter 4 Financial statement Analysis

4.1

Introduction

Financial statement analyses are the principal means of reporting the financial condition and results of an organization. Financial analyses are carried out for the purpose of identifying the financial strengths and weaknesses of an organization by establishing relationships between the balance sheet and the income statement items. This analysis helps various parties in decision making who are interested in the activities of business. To improve the quality of decision making proper analysis of these statements helps a lot. Different methods are used to evaluate the position of an organization. In order to know the financial position of an organization we used financial statement analysis. We evaluate financial position of an organization by using three approaches. There are three broad categories of the statement analysis

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Horizontal analysis Vertical analysis Ratio analysis

In horizontal analysis we compare the quantities on one year with other various years; one is taken base year and different quantities are compared to these base year figures. In this ways we come to know to what extent the changes occur in different heads from year to year. Vertical analysis is another approach to analyze the financial condition of an organization. In vertical analysis we compare the figures of income statement and balance sheet with their sums. In income statement we take the net sales as base and compare other components of income statement wit net sales. In balance sheet we take total assets, total liabilities and total equity as base and compare the components of balance sheet with their respective heads. Ratio analysis is another approach to analyze the financial position of an company. These ratios are called either income statement or income statement / balance sheet ratios. Income statement ratios compare one flow item from the income statement to another flow item from income statement. Income statement / balance sheet ratios compare a flow (income statement) item in the numerator to a balance sheet item in the denominator. In order to evaluate the financial position of SBL, I used three approaches that are vertical analysis and horizontal analysis and ratio analysis to find the position of the bank. 4.2 VERTICAL ANALYSIS of balance sheet

2009(%) Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax asset TOTAL ASSETS Bills payable 6.71 4.827 4.927 17.354 58.751 3.861 0.155 3.149 100 1.549

2010(%) 6.789 1.570 2.890 30.990 51.124 3.497 3.021 0.113 100 1.871

2011(%) 6.704 1.295 2.342 32.362 50.576 3.154 3.208 0.355 100 1.718

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Borrowings from financial institutions Deposits and other accounts Subordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities TOTAL LIABILITIES Share capital Reserves Inappropriate profit Surplus on revaluation of assets Total EQUITY Total Liabilities and Equity

10.424 76.113 1.479

9.847 77.167 1.256

11.442 75.86 1.1075

1.649 0.553 91.215 5.080 2.490 1.030 0.181 8.784 100

1.691

1.614

91.832 5.266 2.102 0.166 0.652 8.187 100

91.741 5.571 1.876 0.304 0.496 8.211 100

4.3

Vertical Analysis of Income Statement Rupees in 000 2009(%) 2010(%) 100 70.71 29.29 14.05 4.249 3.440 0.276 0.002 4.527 _ 17.49 11.8 0.024 14.16 15.55 0.455 2011(%) 100 70.27 29.73 3.70

Mark Up / Interest Earned Mark Up / Interest Expensed Net Mark Up / Interest Income Provision against Nonperforming Loans Provision for diminution in the valve of investment Bad debts written off directly

100 46.073 53.928

Net Mark Up after Provisions Non Mark Up / Interest Income Fee Commission & BrokerageIncome

49.679

3.12 8.982

3.58

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Dividend Income Income from Dealing ForeignExchange Other Income Total Non Mark Up/ Interest Income Total income Non Mark Up / Interest

0.170

1.4 4.08

1.45 2.29

7.092 10.778 4.01 12.51 13.550 27.023 24.30 27.53 4.39 11.98

Expenses Administrative Expenses Provision against Other Assets Other Charges Profit Before Taxation Provision for taxes Profit after Taxation 29.167 0.005 0.066 10.533 0.131 7.747 22.63 0.17 0.52 2.01 0.48 1.55 25.59 0.12 0.44 1.37 0.146 1.22

4.4 HORIZONTAL ANALYSIs of balance sheet

Assets Cash with treasury banks Balance with other banks Lending to financial institutions Investments Advances Total current assets Investments Fixed assets Defferred assets Other assets Total long term assets Total assets

2009(%) 100 100 100 100 100 100 100 100 100 100 100 100

2010(%) 114.59 38.30 69.05 210.18 102.42 107.74 210.18 106.62 86.16 112.93 212.78 117.70

2011(%) 128.35 35.82 63.45 248.95 114.92 97.26 248.95 110.93 305.66 133.74 180.59 133.50

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Liablities Bills payables Borrowings Deposits and other accounts Total current liabilities Subordinated loans Liabilities against assets Deffered tax liabilities Other liabilities Total long term liabilities Net assets Share capital Reserves Unappropriated profit Surplus on revalution of assets Shareholder equity 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 140.56 111.18 119.32 134.92 99.95 120.71 118.47 109.70 122.00 99.35 18.96 422.01 109.70 148.09 146.54 133.06 118.73 99.91 130.70 134.28 125.37 146.39 100.60 39.43 364.10 125.37

4.5 horizontal analysis of income statement

PARTICULAR Markup interest earned Markup interest expensed Net markup interest income Provision against loan,advances Provision for diminution in value of investment Bad debts written off directly Net markup income after provisions Non markup/interest income Fee,commission,brokerage income Dividend income

2009(%) 100 100 100 100 100

2010(%) 119.35 135.34 92.86 105.75 128.48

2011(%) 131.03 147.66 103.46 113.26 168.70

100 100

65.59

134.73 94.98

100 100

81.35 48.74

102.53 55.64

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Income from dealing in foregin currencies Gain/loss on sale of securities Classified as held for trading Other income Total non markup income Total income after interest income Non markup/interest expenses Administrative expenses Other provision Against off B/S obligations Other charges Total non markup expenses Profit before taxation Taxation Net profit after taxation Unappropriated profit brough forward Surplus on revalution Profit available

100

136.60

84.23

100 100 100 100 100

453.99 117.03 95.26 78.12

672.56 140.51 100.18 97.17

100 100 100 100 100 100 100 100 100 100 100

126.29 12.21 100.00 111.77 106.52 19.97 17.87 20.73 349.55 106.05 104.12

156.78 9.65 103.92 137.44 14.73 5.95 17.89 66.28 213.28 36.33

4.6 Ratio analysis 4.6.1 Current ratio This ratio is used to measure the firms ability to pay short term debts from its current assets. Current Ratio = Current Assets / Current Liabilities.

Table: 4.6.1 Years 2011 2010 Amounts(Rs.) 100841446/97442509 88988025/85914989 Current Ratio 1.03 1.03

Graph: 4.6.1

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Interpretation The graph shows that the current ratio has been same 1.03 in financial year 2011 as compare in financial year 2010. Further interpretation of this ratio is that, if the bank has Rs. 1 in current liabilities they have Rs. 1.03 in year 2010 and Rs.1.03 respectively in current assets to pay these debts.

Source: Annual Report 2011 SBL 4.7 Financial Leverage / Debt Ratios

Ratios that shows the extent to which the firm is financed by debt

4.7.1

Debt to Equity Ratio

This ratio tells us to which extend the firm is finance by debts. Debt to Equity Ratio = Total Debts / Share holders Equity

Table: 4.7.1 Years 2011 2010 Amounts (Rs.) 99188005/8381360 87507071/7181577 Debt to Equity Ratio 11.83 12.18

Graph: 4.7.1

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Interpretation The debt to equity ratio has been decreased by 11.83 as compare to previous financial year of 12.18, further more it shows that debt decreases in 2011 as compared to financial year 2010.

Source: Annual Report 2011

4.7.2

Debt to Total Assets Ratio

This ratio highlights the relative importance of debt financing to the firm by showing the percentage of the firms assets that is supported by debt financing. Debt to Total Assets Ratio = Total Debts / Total Assets

Table: 4.7.2 Years 2011 2010 Amounts (Rs.) 99188005/108105678 87507071/95310272 Debt to Total Assets Ratio 0.91 0.92

Graph 4.7.2

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Interpretation This ratio highlights the relative importance of debt financing to the firm by showing the percentage of the firms assets that is supported by the debt financing. Thus 92% of the banks assets are financed with debts in financial year 2010 and 91% in financial year 2011.

Source: Annual Report 2011

4.8 Profitability Ratios Profitability ratios show the ability of the firm to generate earnings.

4.8.1 Net Profit Margin The net profit margin measures the firms profitability of sales after taking account of all expenses and income tax. Net Profit Margin = Profit after Tax / Interest Income X 100

Table: 4.8.1 Years 2011 2010 Amounts (Rs.) 125440/1228431 145355/1168193 Net Profit Margin 10% 12%

Graph: 4.8.1

Interpretation

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The graph shows that the profitability of firm against sales has been decreased by 10% in financial year 2011 as compare to 12% in financial year 2010. It shows that the firm is unable to generate high revenue and profit as well.

Source: Annual Report 2011 SBL

4.9 Return on Assets This ratio measures the firms ability to utilize its assets to create profits by comparing profits with the assets that generate the profits. Return on Assets = Net Income after Tax / Total Assets X 100 Table:4.9 Years 2011 2010 Amounts (Rs.) 125440/108105678 145355/95310272 Return on Assets 0.11% 0.15%

Graph: 4.9

Interpretation Return on assets measures the banks ability to utilize its assets to create profits by comparing profits with its assets. Thus the bank is generating 0.11% in financial year 2011, as compare to 0.15% in financial year 2010, it means that bank is unable to utilize its assets in financial year 2011 and this is negative sign for the bank.

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Source: Annual Report 2009, SBL .

4.10 Return on Total Equity This ratio measures the return to both common stock and preferred stock shareholders. Return on Equity = Net Profit after Taxes / Share holders Equity X 100

Table:4.10 Years 2011 2010 Amounts (Rs.) 125440/8381360 145355/7181577 Return on Equity 1.50% 2.02%

Graph: 4.10

Interpretation This ratio tells us the earning power on share holders book value investment. The above graph shows that the return on equity has been decreased up to 1.50% in financial year 2011, as compare to 2.02% in financial year 2010. It means that SBL is unable to generate return on both common stock and preferred stock.

Source: Annual Report 2011, SBl

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4.11 Gross Profit Margin This ratio shows the firms profitability after deducting cost of goods sold and directs expenses from sales. Gross Profit Margin = Gross Profit / Sales X 100

Table: 4.11 Years 2011 2010 Amounts(Rs.) 3046652/10250494 2734505/9337284 Gross Profit Margin 29.72% 29.28

Graph: 4.11

Interpretation The above graph shows that gross profit margin has been increase by 29.72% in financial year 2011, as compare to 29.28% against sales in financial year 2010. So we can say that firms ability to generate profitability (after deducting cost of goods sold and directs expenses from sales) is high.

Source: Annual Report 2011, SBL

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4.12 Equity to Total Assets A ratio used to help determine how much shareholders would receive in the event of a company-wide liquidation. Equity to Total Assets = Equity / Total Assets

Table 4.12 Years 2011 2010 Amounts (Rs.) 8381360/108105678 7181577/95310272 Equity To Total Assets 7.75% 7.53%

Graph 4.12

Interpretation This ratio shows the ownership of the bank. In soneri bank the owner in 2011 is increase while in 2010 its become decrease showing a positive sign for the SBL because the equity should increase in 2011 as compared to 2010

Source: Annual Report 2011s, SBL

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4.13Advances to Deposits Ratio This ratio measures the lending of firm against their deposits. Loans Deposits Ratio = Advances / Deposits

Table: 4.13 Years 20010 2010 Amounts (Rs.) 54675721/82016811 48727103/73548226 Advance Deposits Ratio 66.66% 66.25%

Graph: 4.13

Interpretation The graph shows that the advances deposits ratio has increased by 66.66% in financial year 2011 as compare to 66.25% of deposits in financial year 2010.

Source: Annual Report 2011, SBL.

. 4.14 Efficiency Ratios 4.14.1 Interest income Per Employee Income per employee looks at the ratio of operating income to the number of employees required to produce that level of income. Therefore income per employee

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measures management's ability to use their employee resources effectively to create profits for the company Interest income per Employee = Interest Income / Total No of Employee

Table4.14.1 Years 2011 2010 Amounts (Rs.) 1228431 / 10,215 1168193 / 10,215 Income Per Employee 120.25 114.36

Graph 4.14.1

Interpretation Interest income per employee in 2011 is Rs 120.25. , while in 2010, Rs. 114.36. The ratio increase in 2011, showing the favorable trend to the SBL, because SBL measures management's ability to use their employee resources to generate profit for the company is effectively.

Source: Annual Report 2011, SBL

4.14.2 Profit Per Employee This ratio indicates the average profit generated per person employed. Profit per Employee = Profit / Total No of Employee

Table 4.14.2

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Years 2011 2010

Amounts (Rs.) 125440 / 10,215 1,45355/ 10,215

Profit Per Employee 12.27 14.22

Graph 4.14.2

Interpretation Profit per employee in 2011 is Rs. 12.27, while in 2010 is Rs. 14.22. The ratio decreases in 2011, showing that the inefficient uses of SBL employees in financial year 2011.

Source: Annual Report 2011, SBL

4.14.3Business Per Employee Failure to make sales shows up as low Revenue per Employee, though, as the owner of your business, you will instinctively know when your sales are too low Business per Employee = Interest Earned / Total No of Employee

Table 4.14.3 Years 2011 2010 Amounts (Rs.) 10250494 / 10,215 9337284 / 10,215 Business Per Employee 1003.4 914.07

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Graph 4.14.4

Interpretation This ratio indicates the average interest earned generated per employee by SBL, which is increases in 2011 as compared to financial year 2010, showing the good management ability to use their employee.

Source: Annual Report 2011 sbl

4.15 Business Per Branch Business per Branch = Interest Earned / Total No of Branches

Table 4.15 Years 2011 2010 Amounts (Rs.) 10250494 / 187 9337284 / 187 Business Per Branch 54815 49932

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Graph 4.15

Interpretation The business per branch ratio high in 20010 as compared to in 2010, mean the average branches of SBL performing efficiently in 2011, showing a positive sign for SBL.

Source: Annual Report 2011 SBL

4.16 Comparison of SBL with Banking Industry

Table: 4.16 Ratios (Financial Year 2011) Current Ratio Debt to Equity Ratio Return on Equity Advances to Deposits Ratio Net Profit Margin Return on Assets Banking Industry 0.9 7.3 12.58% 44.45% 28.73% 1.98% Soneri Bank 1.03 11.83 1.50% 66.66% 10% 0.11%

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Graph: 4.16
Comparision w ith Industry

SBL Industry

Investment to Deposits Ratio Net Profit Margin

Return on Equity Advances to Deposits Ratio

Interpretation The above graph represents the comparison of SBL with the its industry, which shows current ratio of Rs. 1.03 as compare to Rs. 0.9 of industry, debt to equity ratio is Rs. 11.83 against Rs. 7.3, return on equity is 1.50% against 12.58%, advances to deposits ratio is 66.66% against 44.45%, net profit margin is 10% against 28.73% and return on assets is 0.11% against 1.98%. Thus overall performance of SBL is satisfactory except earnings per share and return on assets as compare to banking industry.

Source: www.soneribank.com (Access at 12 June 2011)

4.17

SWOT Analysis

SWOT analysis gives a review of an organization, which is comprised of organizations strengths, weaknesses, opportunities and threats. On the basis of SWOT analysis, one can analyze the present status and performance of an organization and can make conclusions and recommendations. 4.17.1 Strengths of SBL Strengths are the internal plus points that make an organization strong. Soneri bank has got a very good image in the society. Soneri bank mainly focuses on its customers. Soneri bank has got a very friendly staff. Because of the policies of Soneri bank employees are very much motivated and devoted to their work. 49

Debt to Equity Ratio Earnings per Share

Current Ratio

Return on Assets

 It has product innovation skills and resources. Its online banking facility to its customers has given Soneri bank a competitive edge over its competitors, ensuring fast and reliable banking transactions. Staff is young and rich in experience and working skills. It has got access to all parts of the world, thus also providing services to outside Pakistanis. The environment of all branches is friendly. Computerized and reliable service of inland remittances.

4.17.2 Weaknesses of SBL Weaknesses are the internal weak points, which every organization has. The lower level management lacks clear direction and is not having the managerial depth. Marketing skills of the bank are good but they have little presence at different media. Physical setup of the branch is not impressive. Customers having accounts with small amount are not given the same attention as compared to those with large amounts Most of the personnel are not qualified. 4.17.3 Opportunities for SBL An external situation, which an organization can benefit from, is called opportunities for that organization. Soneri bank should take interest in the new market segments like IT business and software business. Soneri bank should extend their branches network to other parts of Pakistan. Increasing credit facilities to lower income groups, thus reducing the risk of loss improving the image of the bank. Increasing need and potential of leasing in Pakistan provides SBL an opportunity to utilize its skills and efficiencies in leasing business as well. 4.17.4 Threats for SBL

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An external situation posed to harm organizations interest is regarded as threat to that organization. Increasing number of private / foreign banks in the country. Global technology advancement. Reducing the rates of savings in different segments of people. Deteriorating confidence of people in bank uncertainties of the investors.

Chapter 5 Conclusion and Recommendations

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5.1

Conclusion

Soneri bank Limited is engaged in banking service, and operate 186 branches in Pakistan. The bank operates in four segment corporate finance, trading and sales, retail banking and commercial banking. Within the span of 19 years, SBL has become the one of the largest private bank in the country Soneri bank limited is a well reputed bank in Pakistan. The bank is making profitable business through out the country and is well ahead in providing the banking facilities. Keeping in view the expansion of commercial areas, the bank have to plan for expanding its activities all over Pakistan.. The bank should focus on the development of human resources, as human resources are the asset of any organization; they need to be properly trained. They should be kept properly informed and updated about the recent changes that are taking place in the financial sector through proper training.

Recruitment policy of the bank is not clear. The bank never advertised for recruitment of new personnel, all the process is carried out internally and the bank management normally employees candidates who are not fit for the required job. It is suggested that the bank should have clear cut policy for recruitment.

5.2

Recommendations 5.2.1 Market Research

In order to avoid the consequences, it is very essential for the bank to carry out a detailed market research / analysis and prepare a new product plan before launching any venture or expansion plan. 5.2.2 Organization Rules

It is therefore, recommended that the systems and procedures must be dynamic, flexible and subject to continuous monitoring and evaluation. This is very important task as the objective of the systems must be to facilitate the functions and achieve the desire results. Thus the changes must be made and improvements done.

5.2.3

Selection and Recruitment

The process of recruitment and selection is very important for the growth of any organization. Hiring process and job description should be modified and 52

improved. One of the cost effective method to select competent employees is to offer internship programmes to graduates from business and management schools and the recruitment in the bank should be made purely on merit basis and test should be conducted to evaluate the candidates ability whether he / she fits for the job requirements. HRD should be fully free from any influence of higher authorities and staff union in conduction of test and in the selection of candidates. 5.2.4 Customer Relation

The bank should retain the old customers and maintain a customer base, which is fully satisfied so that it becomes a source of addition. 5.2.5 Credit Department

To make credit department more effective the bank should hire trained and qualified graduates. And they should be posted at credit administration division, relationship manager and credit risk management level. 5.2.6 Salaries

To motivate the employees it is suggested to introduce proper job analysis system. Also to attract trained and skilled professional the salary package should be in accordance with the market and competitors. 5.2.7 Training Program

In this case the bank should fallow the system of State Bank of Pakistan and some other big banks. SBP have their own training institute where the selected candidates under go for 6 months training. This training improves the

efficiency of candidates also clear many ambiguities in the mind about the fulfillment of their duties. In Soneri bank candidates were send to main branch Karachi, and then after different postings they reached back to the city from where they belong to, but now this process is not in practice and the candidates are employed without proper training. This training process should resume again. 5.2.8 Job Rotation

To improve the human resource abilities the bank should introduce proper job rotation system. This can be achieved by replacing an employee from one department to another for some duration in order to seek the operations of all departments.

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