Internship Report

On HABIB BANK LTD GRAIN MARKET BRANCH HAFIZABAD

Submitted By:,

MUHAMMAD NAEEM MBA Roll No. W-585048 Session 2007-2009

Submitted To:,

MIS BEENISH EHSAN

(Lecture A.I.O.U, Islamabad)

BUSINESS ADMINISTRATION ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD (GUJRANWALA CAMPUS)

DEPARTMENT OF

Dedication I dedicated this efforts to my Parents & Teachers who Guide & Encourage me during the course

Of My Studies and preparation of this Report.

Preface
Every student of Master in Business Administration at ALLAMA IQBAL OPEN UNIVERSTY has an essential requirement to do Six weeks internship in any of the well reputed organization. The purpose of this program is to acquaint the students with practical applications of theoretical concepts taught to them during conduct of their MBA program. The internship in HABIB BANK is personally arranged by my own resources and the department gave me a letter for getting this internship. Really, it was a nice opportunity to have a close comparison of theoretical concept in practical field, involving the use of primary and secondary data. All the efforts on the way are summarized in shape of this Internship Report. This Report may depict

deficiencies on my part but still it is an output of a student efforts, for which I beg pardon. The out put of my analysis is summarized in a shape of Internship the contents of the report Shows the detail of sequence of these. The report is concluded with problem and suggestions. I have no words to express my gratitude to the chairman management sciences and my advisor Lecturer, Mis, BEENISH EHSAN for their intellectual guidance without which it could have been rather difficult for me to complete this report. MUHAMMAD NAEEM REG. 07-PHD-0017 ROLL NO-.W585048

ACKNOWLEDGEMENT
No one can say that I am perfect everyone should admit that without the help of ALLAH and His people a man cant get anything so I bow my head before almighty Allah with gratitude. I am also very much thankful and presents salute to many individuals who have helped me in shaping this report .I am also very much thankful to lot of former fellows and contemporary colleagues who took the time and trouble during the last few days to speak to me a b o u t t h e w a y t h i s t e x t c o u l d b e f u r t h e r i m p r o v e d . First of all this report owes it originated to the valuable assistance of our learned & honorable teacher Mis, BEENISH EHSAN whose able guidance and encouraging attitude throughout has

been a source of inspirations for us. Without his kind attitude patronage, we would have never accomplished this task. I am also thankful to the staff Habib Bank Ltd especially to Sir SALAHU DIN CHATHA (Chief/Area Manager) who provide me an opportunity to work in friendly environment. I am also very much thankful to Sir ZAKA ULLAH (Cash Officer) and Sir Muhammad RIAZ BAJWA (Advances In-charge). It has been an honor and pleasure to work with; Mr. Salahu Din Chatha (Chief/Area Manager) Mr. Muhammad Riaz Bajwa (Credit Hub Manager) Mr.Amjad Pervaiz Bajwa (Manager Operation) Mr.Rana Bilal Ahmad Khan (Credit & Marketing Officer)

Executive Summary:
As we all know very well that time and tide wait for none. So, because of this rapid change in time and era we have to cope with it. During this era I got an opportunity of getting practical knowledge about the Banking system in Pakistan. So to quench the thirst of practical exposure and for getting the basic knowledge about Bank I joined HBL Grain Market Branch Hafizabad six week in HBL I gather all necessary information about HBL. Efforts have been made to compile this report in such a way that activates its salient features not only for students but also for the layman. I have divided this report into different Chapters. First Chapter is about introduction OF HBL. Second Chapter is about General Banking Department gives us description about how to open an account, how to deposit and clearing. Third Chapter discusses the procedure of customer dealing and satisfaction fourth 6

Chapter is about the branch where I worked and watch different function which I learned in HBL Grain Market Branch Hafizabad. Fifth Chapter is about the procedure of getting different type of loans and advances. Chapter sixth is about human resource operation and practice at HBL. Seventh Chapter is gust of knowledge acquired by me. Chapter eighth is about SWOT ANALYSIS of HBL.Chapter ninth tells about my knowledge because here I gave different type of Recommendations to different problems. At last I must say that this text is designed to stimulate the curiosity about management practices of HABIB BANK Ltd of Pakistan. And to raise readers consciousness about the banking system working in Pakistan and out side the Pakistan.

CONTENTS

CHAPTER #. 1.

DESCRIPTION INTRODUCTION Meaning of Bank Historical Development of Bank Historical Development of HBL Goals of HBL Fund Raising Sources Hierarchy of HBL General Banking Department of HBL Account Opening Section Deposit Section

PAGE #. 9 to 21

2.

22 to 36

Clearing Section Remittances Section Accounts Section 3. 4.

General HBL Function Throughout the World

FUNCTIONS OF HBL GRAIN MARKET BR.HAFIZABAD Bank Deposits Bank Accounts Current Accounts Saving and Profit and loss Accounts Time/Fixed Account LOANS & ADVANCES Finance for Working Capital Trade Finance Facilities Finance for Capital Investment General Products Other Products and Services Investment Assistant (IA) Human Resource management Human Resource Management Process Selecting And Recruiting Process In HBL Training And Development Performance Management And Appraisal Compensation Labor Management Relation Conflict Management New Knowledge Acquired Knowledge About the Clearing Section Knowledge About Remittances Knowledge About Account Section: Knowledge about cheques Filling of Cheques Mutual transfer of cheques Swot Analysis Strength Weaknesses. Opportunities Threats PROBLUMS I SOUGHT AND RECOMENDATION Problems

35 to 45 46 to 49

5.

50 to 52

6.

53 to 74

7.

75 to 76

8.

77 to 81

9.

82 to 83

Strong Recommendations

GLOSSARY . BIBLIOGRAPHY

84 85

CHAPTER # 1
INTRODUCTION MEANING OF BANK
The word bank has been derived from the French word banque or bancus which means bench, office or institution for the keeping, lending and exchanging of money. Some authorities have the opinion that Bank is derived from the Germen word back which to the meaning of joint stock fund. The bank is a financial institution that borrows money from one party and lends to the other party (Government, individual, business) and the difference between borrowing and lending make profit for the bank. Bank borrows and lends money on interest basis. Banks are classified according to their sphere of activity; the main types of banks are as under. Commercial banks Industrial banks. Agricultural banks.

 Saving banks. Exchange banks. Central banks. Cooperative banks COMMERCIAL BANK Commercial is engaged in performing the routine duties of banking business. Such bank collects the money from the people (as borrowing) and extends the same money as a loan for development purposes. Commercial bank plays a vital role in the economic development of a country by performing the variety of function as given below:

Accepting of deposits (Current, saving and fixed account). Making loans and advances (overdraft, cash credit, discounting bill). Agency services to customers (Collection of cheques, dividends, electricity, water and gas bills, and sale of securities, and acts as a trustee. General utility services (Foreign business, Issue traveler cheques, providing trade information). HISTORICAL DEVELOPMENT OF BANK: History of bank is very old, the history of bank is traced to as early as 2000 B.C. The priest in Greece used to keep money and valuable of the people in temples. Its origin is also traced to early goldsmiths. They used to keep strong safe, for storing the money and other valuable of the people. People with surplus money deposited with them. The first stage in the development of banking was the acceptance of deposits from people.

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Later on goldsmiths began to issue receipts for the money deposited with them to settle transactions. These receipts were used in payment of debt and acceptable to all. This was the second stage towards the development of banking. When goldsmiths realized that they had surplus money therefore they intended to lend some portion of money to he nearly traders and merchants who constantly requested for loans This business was quiet profitable and they instead of charging interest from depositors began to give interest on the money deposited with them to attract more people this was the third stage towards the development of banking. They also planned to allow the customers to withdraw in excess of the amount deposited to meet the customers needs. This facility is called overdraft and they used to keep some portion of money for this purpose. After some time there was then started too much confusion in the banking system and they were not able to Meet the demands of customers. This failure on the part of money lender to return money caused distress among the people.

To overcome this problem people felt that their must be a bank which control the banking activities of different lending organization. As a result of conference held in 1548 at Nuremberg. The decision was taken in favour of establishing a bank that regulates the banking activities. The first bank was found in Geneva in 1587. Later on many other banks were established will the same objective.

We can conclude that commercial banking system actually developed in nineteenth century. Now a days the banking activities has greatly increased commercial banks are now multi serviced organizations and play an important role in financial markets and in the economic development of the country.

HISTORY AND DEVELOPMENT OF Habib Bank Ltd:

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Habib Bank Limited commonly referred to as "HBL" and head-quartered in Habib Bank Plaza, Karachi, Pakistan, is the largest bank in Pakistan. The bank has a network of 1425 branches in Pakistan and 55 branches worldwide. It has a domestic market share of over 40%. It continues to dominate the commercial banking sector with a major market share in inward foreign remittances (55%) and loans to small industries, traders and farmers. Overseas, it has operations in the following countries:

Afghanistan, Australia, Bahrain, Bangladesh, Belgium, Canada, China, France, Hong Kong, Iran, Kenya, Lebanon, Maldives, Nepal, Netherlands, Nigeria, Oman, Singapore, Sri Lanka, Turkey, UAE, UK & USA.

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Mohammed Ali Jinnah, Pakistan's founding father, realized the importance of financial intermediation while he was campaigning for the creation of a separate homeland for the Muslims of India. He persuaded the Habib family to establish a commercial bank that could serve the Indian Muslim community. His initiative resulted in the creation of Habib Bank in 1941, with HO in Bombay (now Mumbai), and fixed capital of 25,000 rupees. The bank played an important role in mobilizing funds from the Muslim community to finance the All-India Muslim League's campaign for the establishment of Pakistan. Habib Bank also played an important role in channeling relief funds to the people hurt in the communal riots and violence that preceded the departure of the British from India. After Pakistan was born in 1947, Habib Bank, at the urging of Governor-General Jinnah, moved its headquarters to Karachi, Pakistan's first capital. This gave Karachi its first commercial bank of the newly formed Islamic Republic of Pakistan. HBL was incorporated on 25th August 1941 and operated in the private sector until its nationalization in 1974. HBL has been approved for privatization and the privatization commission has selected a Financial Advisor to prepare a comprehensive plan and assist in the sale process. The government has appointed a professional management team to restructure the bank and to recover and clean its doubtful and classified portfolio

COMPANY DESCRIPTION:
HBL is a Banking Company, which is engaged in Commercial & Retail Banking and related services domestically and overseas.

BRAND OF HBL:
HBL says Our brand identity is the outward expression of what we stand for as an organization. This is summarized in our vision, mission and is supported by our values.

VISION OF HBL:
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Enabling people to advance with confidence and success

MISSION STATEMENT OF HBL:

To be recognized as the leading financial institution of Pakistan and a dynamic international bank in the emerging markets, providing our customers with a premium set of innovative products and services, and granting superior value to our stakeholders shareholders, customers and employees.

To make our customers prosper, our staff excel and create value for shareholders

VALUES OF HBL:
HBLs values are the fundamental principles that define its culture and are brought to life in its attitudes and behavior. It is companys values that make its unique and unmistakable. Company values are defined below: Excellence Integrity Customer focus Meritocracy

EXCELLENCE:
This is at the core of everything HBL does. The markets in which HBL operates are becoming increasingly competitive, giving their customers an abundance of choice. Only through being the very best - in terms of the service HBL offers, its products and premises - can it hope to be successful and grow.

INTEGRITY:
HBL is the leading bank in Pakistan and its success depends upon trust. Its customers - and society in general - expect it to possess and steadfastly adhere to high moral principles and professional standards.

CUSTOMER FOCUS:
HBL understands fully the needs of its customers and adapts its products and services to meet these. HBL always strives to put the satisfaction of its customers first. 14

MERITOCRACY:
HBL believes in giving opportunities and advantages to its employees on the basis of their ability. HBL believes in rewarding achievement and in providing first-class career opportunities for all.

PROGRESSIVENESS:
HBL believes in the advancement of society through the adoption of enlightened working practices, innovative new products and processes, and a spirit of enterprise.

OPERATIONAL STRUCTURE:
HBL is one of the largest commercial bank of Pakistan. It accounts for a substantial share (20%) of the total commercial banking market in Pakistan with a network of 1,705 domestic branches; 55 overseas branches in 26 countries spread over Europe, the Middle East, Far East, Asia, Africa and the United States; 3 HBL wholly owned Subsidiaries namely Habib Bank Financial Services (PVT) LTD. Karachi, Habib Finance International LTD (Hong Kong) and Habib Finance Australia Ltd. Sydney; 2 Joint Ventures namely Habib Nigeria Bank Ltd. (40%) and Himalayan Bank Ltd. (20%) and 2 representative offices in Iran and Egypt.

D O M E S T I C A N D I N T E R N A T I O N AL N E T W O R K S :
Major Local Market Presence: HBL is one of the largest commercial banks in Pakistan representing approximately 20% of the assets and deposits of the banking sector. A HOUSEHOLD NAME: HBL's brand name is well established. It has an extensive domestic network of 1705 branches reaching virtually every segment of the Pakistani economy.

A FULL SERVICE BANK: HBL provides its customers a complete range of banking products and services including retail banking, corporate and institutional banking, trade finance, consumer finance and credit cards.
AN INTERNATIONAL BANK: HBL has a presence globally through an extensive international branch network described

in the table below;

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. Country
AFRICA Kenya Mauritius Seychelles Sweden ASIA Bangladesh Fiji Islands Maldives Singapore Sri Lanka Karachi EPZ MIDDLE EAST Bahrain Lebanon Oman UAE Belgium France

Status
Branch Operation Branch Operation Branch Operation Branch Operation Branch Operation Branch Operation Branch Operation Branch Operation /OBU Branch Operation Branch Operation Branch Operation /OBU Branch Operation Branch Operation Branch Operation Branch Operation Branch Operation

Opened
1956 1964 1976 1982 1976 1991 1976 1971 1951 1983 1969 1964 1972 1966 1975 1980

Branches
5 4 1 1 2 1 1 1 3 1 3 1 11 8 1 1

Netherlands Turkey UK USA

Branch Operation Branch Operation Branch Operation Branch Operation

1979 1983 1961 1971

1 1 6 1

OWNERSHIP STRUCTURE
Shareholder
State Bank of Pakistan Islamic Republic of Pakistan State Life Insurance Corp. of Pakistan Other Public Bodies Outstanding Shares (1,217,849,500)

Percentage (%)
92.24 1.30 0.23 0.05 100

NATIONAL AND INTERNATIONAL EVENTS OF HBL:

1951 HBL opened the first of 3 branches in Sri Lanka. 1952 HBL established Habib Bank (Overseas). 1956 HBL opened first of 5 branches in Kenya.

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1957 or 1958 HBL opened a branch in Aden. 1961 HBL opened the first of what would become 6 branches in the UK. 1964 HBL opened the first of 4 branches in Mauritius and a branch in Beirut. 1966 HBL opened the first of 8 branches in the UAE.

1969 HBL opened first of 3 branches and an OBU in Bahrain. However, HBs branch in Aden is nationalized.

1971 HBL opened an OBU in Singapore and a branch in New York. 1972 HBL opened the first of 11 branches in Oman. HBL constructed Habib Bank Plaza in Karachi to commemorate the banks 25th Anniversary. 1974 The government of Pakistan nationalized HBL and HBL merged with Habib Bank (Overseas). 1975 HBL opened a branch in Belgium. HBL also merged with Standard Bank, a Pakistani bank. 1976 HBL opened a branch in the Seychelles, the first of two branches in Bangladesh, and a branch in the Maldives. 1979 HBL opened a branch in the Netherlands. 1980 HBL opened a branch in Paris and another in Hong Kong. 1981 HBL established Nigeria Habib Bank with 40% ownership. HBL also opened a representative office in Teheran. 1982 HBL opened a branch in Khartoum. 1983 HBL opened branch in the Karachi EPZ and a branch in Istanbul. 1984 HBL established Habib American Bank in New York with a branch each in Manhattan and Queens, and a US International Banking Facility. HBL also opened a branch in California.

1987 HBL opened in Australia.

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1991 The Habib Group established a separate private bank, the Bank AL Habib, after private banking was re-established in Pakistan. HBL opened a branch in the Fiji Islands, and took over the Paksistani branches of failed bank, BCCI.

1992 In Nepal HBL acquired 20% of Himalayan Bank. 1995 HBL established a representative office in Cairo.

1990s HBL established Habib Finance (Australia), and Habib Finance International Limited, Hong Kong. 2000 HBL established Habib Canadian Bank. 2002 On June 13, 2002 Pakistan's Privatization Commission announced that the Government of Pakistan had granted the Aga Khan Fund for Economic Development (AKFED), a subsidiary of the Aga Khan Development Network, rights to 51% of the shareholding in HBL, against an investment of PKR 22.409 billion (USD 389 million).

HBL's UK operation came close to being shut down due to regulatory issues with the Financial Services Authority. The issue was resolved by converting the operations to a subsidiary. Then Habib Bank Limited and Allied Bank of Pakistan merged their operations (Habib contributed its 6 branches and Allied its 4), into a new bank, called Habib-Allied International Bank, in which Habib Bank has a 90.5 percent shareholding, while Allied Bank has 9.5 percent. Simultaneously with the transfer of business to the new bank, both Allied and Habib Bank close down all independent operations in the UK.

2003 HBL received permission to open a branch in Afghanistan. 2004 On February 26, the Government of Pakistan handed over management control of Habib Bank to AKFED. The Board of Directors was reconstituted to have four AKFED nominees, including the Chairman and the President/CEO and three Government of Pakistan nominees.

2006 HBL sold the operations that it had established in Fiji in 1991 to Bank of South Pacific.

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FUND RAISING SOURCES Capital & Reserves Certificate Capital Authorized 50,000,000 Certificate of Rs.10/-each Issued, subscribed and paid up Capital Reserves Redeemable Capital Security Agent Assets Leased out WHEN HBL GRAIN MARKET BR. IS ESTABLISHED. 1. This Branch was established on May 10, 1975 to facilitate two giant Business community and inhabitant of HBL (HAFIZABAD) Branch, besides providing series of general banking to the citizens and nearby areas. Currently it an on-line bank. 2. BASIC FUNCTIONS Accepting of deposits: Rs.500, 000,000 397,072,000 189,371,667 Rs.586, 443,667 100,000,000 32,432,247 Rs.819,898,309

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1.

Current account account

2.

Saving account

3.

Fixed deposit

1.

Advancing of loans: Loans and advances 2. Cash credits 3. Provision of Qarze-e-Hasna

3. Agency functions Collection of cheques Transfer of funds from one place to another Handling of Salaries and Pensions of federal/provincial employees and defense personnel Assisting to Agriculture Act as an agent or representative of his customers Collection of Negotiable Instruments Issuing Guarantees and Indemnities Granting of letter of credit

4. General utility services: Utility Bills collection Sale and encashment of Prize Bonds Issue of Travelers Cheques Supplying of Trade information Act as a referee Financing of Foreign Exchange 20

Preparation of feasibility reports for small industrial units Collection of fees and money for people proceeding on Hajj providing pilgrimage services Acts as Income Tax adviser

HIERARCHY OF HBL(HAFIZABAD) GRAIN MARKET BRANCH

Manager

Operation Manager

Credit Manager

Advances Incharge

Accountants/Deposits Incharge

Establishment Incharge

Remittances Incharge

PLS Saving A/cs incharge

Current A/cs Incharge

Cash Incharge

Dispatch Incharge

Govt. Transactions Incharge

Computer / IT Incharge

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Chapter#2 GENERAL BANKING DEPARTMENT

This department consists of the following sections:-

1. 2. 3. 4. 5.
1. A.

Account opening section. Deposit section. Clearing section. Remittance section. Accounts section.
ACCOUNT OPENING SECTION: HOW TO OPEN AN ACCOUNT

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There are certain formalities which are to be observed for opening of a current or saving account with a Bank. These formalities in brief are as under

I.

FORMAL APPLICATION:

The customer is to fill "Account Opening Form. It is a formal request by a customer to the bank to allow him to have and operate the current or saving account. ii. OBTAINING INTRODUCTION:-

The bank before opening, and account obtains introduction of the customer from old customer, responsible person etc. iii. SPECIMEN SIGNATURE

When the Banker is satisfied about the integrity of the customer, he agrees to open the account. The Banker obtains the specimen signatures of the customer on the signature book or on card. IV. MINIMUM INITIAL DEPOSIT:-

In Pakistan the current account can be opened with a minimum of Rs. 500/- and PLS Saving Account with a minimum of Rs 100/- These amounts are also the minimum balances to be maintained by the account holders with the Bank. V. OPERATING THE ACCOUNT. When an account is opened in a Bank, the Banker gives to the customer. i. Pay in slip book.

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ii. IV.

Cheque Book.

PRECAUTIONS IN PREPARING THE PASS BOOK:-

The Banker should be careful in preparing the pass book However, the customer himself should.

i. ii. iii. iv.

Send the pass book for making entries and also periodically check up them. He should also see that the entries are initialed by the accountant. The customer should verify the entries with own books of account. In order to safe guard the secrecy of the account; the customer should receive the pass book in closed cover.

B.

WITH-DRAWL. Withdrawal is made on cheques supplied by the Bank. A new cheque book is

issued only on receipts of the requisition slip attached to the cheque book issued previously and this presented along with the depositor pass book for entire against cheque book challan. Cheque book is issued on discretion of the branch manager. C. INTEREST. The current rate of interest allowed on deposit in saving Bank account is ascertained at the Bank. This rate is subject to change. The amount of interest is calculated for each calendar month on the lowest balance at credit of an account between the close of the sixth day of a month and the end of the month and only on every complete sum of ten rupees.

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Every account is made up half yearly to 30th June 31st December, and the interest calculated as above is added to the balance of each account as on these dates.

D.

TRANSFER OF AN ACCOUNT. Account can be transferred to any other branches of N.B.P. free of charge. If a

depositor wants to transfer his account, he presents his pass book personally or sends it to Bank and writes an application for the transfer of an account. E. CLOSING OF AN ACCOUNT: A depositor willing to do, his account must present his pass book in order that with drawls and the amount of interest due on the account is entered therein and final balance stuck. This balance is then paid to the depositor and his receipt is taken, the pass book is canceled, unused cheque forms on hand are also surrendered at the same time. F. SECRECY: The secrecy of depositors account is the. Responsibility of every official engaged in the Bank service. G. MONEY DEPOSITED OR DRAWN BY POST: When money is sent by post for deposit, the pass book and a letter starting the amount of the deposit and the number of the account accompany it. 25

When a depositor wishes to withdraw money by post he must forwards his pass book with a letter starting the number of his account, the amount to be drawn and either the money is to be remitted by moneyorder or in currency notes registered.

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H. i.

TYPES OF BANK ACCOUNT. Saving account

Saving Account is that account in which customer puts his surplus money which he saves from his daily expenditure. The account can be operated by depositing a minimum cash of Rs. 5/-. Small percentage of interest is allowed on the balance of this account. ii. CURRENT ACCOUNT: The current account is that one which the customer draws his daily cheques and is normally operated by the Business-men. It can be operated by minimum amount of Rs. 500/- Any number of cheque amounting undue minimum balance limit can be issued by the account holder for withdrawal or for payment. No interest is allowed on this account. iii JOINT ACCOUNT A joint account occurs when two or more than two customers have one account. The parties to a joint account are considered in law as they are one person. iv. PROFIT AND LOSS SHARING ACCOUNT. This can be operated by a person, firm or organization by depositing Rs. 100/or above. The holder of this account will get profit of his amount, or he will bear the loss as the case may be. So an individual is equally participant in profit and loss. The holder of account can withdraw up to Rs. 15,000/- per month is eight withdrawals, in case of higher withdrawal, seven day prior notice is necessary. This account is operated under interest free system.

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v.

FIXED DEPOSIT ACCOUNT. In this account an amount is deposited

into the Bank for a fixed period of time. The fixed period may be three months, six months, one year, two years, five years and more. The Bank allows a higher rate of interest for larger period.

At the time of operating on account the Bank issues deposit certificates for the period and amount. The account holder can not withdraw his amount before the specified period, but the same Bank will allow loan against that certificate. Bank is liable to give interest on this account on maturity date.

2.

DEPOSITS SECTION:
There are two types of deposits i.e. current and saving. There are different

forms present in the section of or deposits. 1. ii iii iv Current account form. Saving account form. Private or individual form Private firm account form

In the above mentioned forms, the bank makes an agreement with his customers.

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3.

CLEARING SECTION.
Every Bank performs the paying and receiving functions. Cheques are

collected which are drawn up to Banks for customers. Similarly the cheques drawn on different Banks and deposited by Banks own customers for collection within the city is know as clearing The functions of receiving and paying is mostly done through the clearing house. A clearing house can be defined as "AA place where that representatives of all Bank get together to settle the receipts and payment of cheques drawn on each other" Clearing House provides the facility which can hardly be dispensed with especially, in case of crossed cheques. There are two main types of clearing. i ii Outward clearing Inward clearing.

i. OUTWARD CLEARING: It includes those cheques and other instruments which are sent by the Bank to the Banks for payment on behalf of its own clients. Cheques are sent to clearing house thorough local main branch. A delivery message from the local main branch comes to every branch at a fixed time to pick its outward clearing or outward returns as the case maybe. Outward Clearing At Branch a. b. c. d. e. Account number of payee/endorsee is written on the back side of the cheques. The instrument and the paying in slips are separated. The instruments are sorted I Bank-wise and branch wise. Schedules are prepared. Jotting of all the schedules are taken in the clearing House statement. Amount of the cheques in written in t 29

f. g.

he "Delivered" and to pay column. After balancing the outward clearing, the pay in slips are released to C.D. department.

h. i.

After balancing, a transfer debit voucher is prepared. The instrument, schedule. Etc. is delivered to the messenger from the main branch.

ii.

INWARD CLEARING. The cheques drawn are called inward clearing drawn on Habib Bank through its

representatives. On the Bank presented by other Banks for payment it includes those cheques and other instruments of Pakistan branches which other Banks present at the clearing house. INWARD CLEARING AT THE DRAWN BRANCH a. Numbers of instruments noted in the schedules are verified immediately on receipt. b. The amount's of all the instruments are jotted down and totaled. If should be equal to the amount mentioned in schedule from the local main branch. c. d. e. The amounts are debarred to the relevant accounts if otherwise in order. The IBCO is prepared crediting the amount of the main branch. If there is any return, that is deducted from the total and IBCO prepared for the remaining amount.

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TYPES OF CHEQUES COLLECTED BY CLEARING SECTION.

1. TRANSFER CHEQUES. These are the cheques which are collected and paid by same branch of HBL For example Mr. Ali is a customer of HBL of CITY branch and draws a cheque in favor of Mr. Hussain who is also the customer of the same branch. 2. TRANSFER DELIVERY CHEQUES. The cheques which are collected and paid by two different branches of a Bank situated in the same city. For example a person draws a cheque on N.B.P. main branch, Hafizabad in favor of another person who maintains an account with N.B.P. Gjranwala road branch, Hafizabad. 3. CLEARING CHEQUES. When the payee/endorse and the drawer of cheque maintains account with different Banks, the collection Bank in any one of the following methods:a. It can collect cash by sending its representative with the cheques to each of the paying Banks. It is not so much appropriate. b. c. The Bank maintains an account with the paying Bank. The cheques can be exchanged by representative of the various Banks who meet at a fixed time and at a fixed place. This is the most efficient method of collection and paying cheques.

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FUNCTIONS OF CLEARING SECTION IN A BRANCH. a. To accept transfer, transfer delivery and clearing cheques from the customer of the branch and to arrange for their collection. b. To arrange payment of cheques drawn on the branch and gives for collection to any other branch of H.B.L. or any other member or such member of local clearing house. c. To collect amounts of cheques drawn on members of the local clearing house sent for collection by N.B.P. branches not represented at the local clearing house. PROCEDURE FOR CLEARANCE OF CHEQUE. The customers are provided with the copes of pay In-slip, whenever the customer wants to deposit any cheque, he fills in the pay in slip himself and hands it over the counter along with the instrument. 4. REMITTANCE SECTION Remittance means transfer of money from one place to another place. It is of two kinds. I. II. 1. Inland remittance. Home remittance.

INLAND REMITTANCE.

An inland remittance means a transfer of money payable at a certain place within the country. Inland remittances can be classified as under:a. b. Within locality. Out side locality.

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a.

WITHIN LOCALITY When a branch situated in Hafizabad is required to send drafts to any other

branch situated in the same city the process is known as within locality. For example HBL. Main Branch, Hafizabad sends any draft to HBL. Hafizabad branch. b. OUTSIDE LOCALITY. Outside locality is an important type of inland remittances, which means the transfer of money payable outside the city. For example, HBL. Main Branch Hafizabad sends any draft to a Branch situated at LAHORE. It is commonly done through the following three means:i. ii iii i. Telegraphic transfer (T.T) Mail Transfer (M.T) Demand Draft (D. D)

TELEGRAPHIC TRANSFER In telegraphic transfer, the Bank takes commission and telegram charges from

the sender. A receipt is issued to the sender for the value received. The Bank itself transfer the funds to the drawer branch though a coded message in telegram, confirmatory of which is also sent through routine date mentioning all details. All bank Branches have been provided with their code books name Bank Keys Code Book where from the coded message is agreed by the drawer branch. T.T. can be sent open, which may be paid in cash in drawer branch, or may be direct y creditable to relevant account. ii MAIL TRANSFER (M.T.) The Money can be remitted through this means also. In this case the payable amount at the drawer branch can only be transferred to an account; amount can not be paid in cash. Other procedure is same as T. deposit of money at sending branch.

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Difference is only of postage and. telegram charges. The M.T. which in its self is an advice also is sent by registered post, while T.T. is sent through telegram. iii DEMAND DRAFT (D.D) Demand draft is a written order by a branch of a specified Bank, drawn on another branch of the same Bank to pay a certain sum of money only to or to the order of the Payee. Demand drafts are purchased by the clients and after receipt of money Bank issues and delivers the D.D. to the purchaser, who himself sends it to the payee. In D.D. the Banks do not recover postal charges as it is payable by the purchaser. The Bank, after deliver of D.D. to the purchaser also sends its own advice called IBCO (Inter Branch Credit Order) to the drawee branch mentioning therein all details of issued draft. 5. ACCOUNT SECTION. Every Business organization deals in money matters. Bank also deals in money and more over since the money belong to the depositors therefore, it is of utmost importance to keep systematic and correct record. Further-more, the Banks are commercial institutions and its main objective is to earn profit, therefore, then record of all incomes and expenditures are kept correct and systematically. In H.B.L. the responsibility for maintaining necessary accounting data and to keep up to date records In a systematic manner has been assigned to the Accounts Department.The Branches of Bank perform their daily routine work and deal in money that belongs to depositors. ACCOUNTS TERMS. The account department maintains all the accounting records properly there are certain accounting terms which are defined into the following Here account department hold great importance in banking, because it keeps all the accounting records properly.

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1.

ACCOUNT A summary of all debit and credit transaction pertaining to a similar nature or to

an individual or body of persons is called an account. 2. VOUCHERS Written evidence recorded on a price of paper in respect of a money transaction is called voucher. 3. GENERAL LEDGER. Main ledger is a book, where various accounts of different type are kept. Generally this book is in bended form containing several sheets for several accounts. 4. SUBSIDIARY LEDGER. Where a main head has got different sub-head of it: subsidiary leader are maintained. These subsidiary ledgers are maintained from the main ledger. BOOKS AND STATIONERY. The account department uses the following books and stationery a. b. c. d. e. f. Cash book cum-general ledger. Abstract book. Income and expenditure ledger. Register of vouchers Transfer book. Receiving cashier book.

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g. h. i.

Paying cashier book. Supplementary sheets. Different vouchers.

FUNCTIONS OF THE ACCOUNT SECTION. The main functions of the account section of a branch are as follows: 1. 11. Balancing and maintenance of books. Preparation of statement.

During the course of daily business of the branch, a number of cheques are presented by customer for cash payment, though transfer, delivery and clearing cheques at the counter. Also a number of new accounts are opened and cash is deposited by the customers. A number of new vouchers are passed by the branch by debiting, one account and crediting another account. So in order to ensure that during the day all the transactions have properly been recorded and they are complete in all respects and are recorded in proper books by the branch this recording is done on daily basis and maintained by account section.

1.BALANCING AND MAINTAINING OF BOOKS.

Balancing the cash book means that all the transactions have properly been recorded and there is no mistake in any of these vouchers. 1.. 11. 111. iv. Arrangement of voucher. Preparation of supplementary. Preparation of summary. Agreement of total of the summary, with the total of transfer book.

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2.

PREPARATION OF STATEMENTS. To Judge the performance of branches, the Head Office requires periodic

statements from them. Through these statements the top management watches the progress of the branches and they provide them necessary guidance, The top management decisions depend upon these statements also. The following are the important statements prepared by the account section: a. b. c. Balance sheet on daily basis. Pak account on daily basis. Provisional income and expenditure statement on monthly basis.

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CHAPTER# 3
FUNCTIONS OF HABIB BANK LIMITED
To fulfill the basic objective that is of socio-economic nature HBL perform following important functions: Commercial Banking Corporate Banking Investment Banking Retail Banking Islamic Banking COMMERCIAL BANKING Enterprises operating in the middle market contribute significantly to the economy of a country. Traditionally, this sector was the stronghold of HBLs business. During the early 90s, with the liberalization of the financial sector in Pakistan, competition in the industry stiffened due to the emergence of new banks in the private sector. The senior management at most of these banks comprised personnel from HBL. They not only knew the market but were also familiar with the shortcomings of HBL. Under the new set-up, they were able to address these shortcomings and began to target HBLs customer base. With the inception of an alternative, HBL customers started migrating to the newly established banks this causing the erosion of HBLs market share. During FY-2000 HBLs management decided to address this issue. Hence forth, Commercial Banking was created to focus on the business needs of the middle market customers. On November 1, 2000 Commercial Banking came into being. At present, 18 Commercial Centers and Sub-Centers functioning, located at Karachi, Lahore, Faisalabad, Sialkot and Gujranwala. 38

Goals The Goals of setting-up Commercial Banking was two-fold: First to stop the erosion of market share in the middle market; Second, to regain the lost market share

The strategy adopted to achieve the above objective was to position Commercial Banking segment as the Trade Finance Bank for its customers. The rationale behind this strategic decision was to capitalize on the existing marketing knowledge & strong contacts with the middle market customers, who were loyal to the HBL brand. The product line of Commercial banking includes: FUND BASED FACILITIES Running Finance for Working Capital requirements (RF) Finance Against Packing Credit for Pre-shipment (FAPC) Finance Against Foreign Bills for Post-shipment (FAFB) Finance Against Imported Merchandise (FIM) Finance Against Trust Receipt (FATR) Demand Finance: Medium Term Loans (DF) NON-FUND BASED FACILITIES Letter of Credit (LC) o DA (Unseen) o DP (Sight) Letter of Guarantee (LG) Successful achievement of the strategy entailed addressing the following key issues: Developing a sales culture so that business was aggressively sought

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 Improvement of Counter Service Reducing the turnaround time on credit decisions Training of staff to enhance credit and sales skills Following initiatives were taken to address the above issues: Fictionalization of branches into two key areas: Marketing; and Operations Implementation of a standard organization at Centers & sub-centers where by there were two key areas within operations:

Trade Counter Service i.e. Cash & Remittances De-layering of the Credit processing to ensure quick turnaround on credit decisions Setting up of Relationship Management teams at all Commercial Banking Centers to focus on procurement of business Setting-up of Credit Administration Departments at all Centers for improved Risk Management Training of staff in following key areas:
o o o

Credit Trade Services Computer literacy

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IMPACT OF THE STEPS The decision to setup Commercial Banking has been fruitful. This is evident from the following results: Enhanced customer interaction by the branch management has now become possible after segregation of marketing and operations at the branch level. Decentralization of Credit Authority and streamlining of the processes have resulted in reduced turn around time. Currently decision making in this area is perhaps most efficient in the market place. Our strategy has allowed us to achieve our first objective; the trend of erosion in our market share has been reversed. We now would be looking at regaining our market share. Commercial Banking is making headway with improvement not only in terms of the business figures but also in its ambiance. Renovation of is being carried out in order to give a professional look to all the Commercial Banking Centers. CORPORATE BANKING Corporate Banking Group serves large institutional and corporate customers in Pakistan through 10 dedicated corporate banking centers in all major cities. The CIBG portfolio consists of most of the largest names in the market and represents all major industry groups, including textiles, large scale manufacturing, telecommunications, petrochemicals, fertilizer, airlines, transportation and services. It offers its clients a comprehensive range of banking services via a one-window interface through designated relationship manager. Corporate Banking is recognized as a market leader due to its unique ability to meet the entire spectrum of a customers banking requirements. HBLs large equity base allows to meet the financing needs of the largest corporate and its large network and specialized teams are able to deliver and provide customized solutions. The Group

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has increasingly focused on providing value addition services to the customers, e.g. payroll and cash management services. The Bank has become a leader in cash management services by leveraging its large domestic branch network and now provides such services to a range of large and medium sized corporations, including the Pakistani units of some Fortune 500.companies.

The Group also strives to stay ahead of the market by anticipating customer requirements. We strongly believe in relationship banking, which is essential for us to remain responsive to our customers. We also remain focused on improving productivity and ensuring the quality of our risk management.

In 2003, Corporate Banking Group continued to expand the scale of its activities, with a substantial increase in new customers, revenue and profitability. INVESTMENT BANKING An Investment Banking Unit has been established which focuses on loan syndications, development of local currency corporate bonds (TFCs) and advisory services. RETAIL BANKING The Retail Banking network, with 1425 branches, is the core strength of Habib Bank. Its extensive reach in all geographic locations urban and rural throughout the country provides access to over 5 Million customers across all sectors of the economy. The network provides HBL with the largest diversified low cost deposit base of any bank in Pakistan, and forms the basis for many of its other business lines: corporate and investment banking and treasury activities.

Retail Banking Group (RBG) has two principal areas of activity; The retail network for deposit mobilization The consumer-banking group.

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Deposits mobilization, the traditional strength, continued to perform strongly in 2002 with deposits growing by 12%.

HBL is the only major bank to have a very dedicated group to serve the Small & Medium Enterprises (SME) sector. HBA believes that the SME sector can be an engine of growth for the economy and represents an area of opportunity for the Bank. CBG was therefore established in late 2000 to provide banking services and credit on a structured and systemized basis. It now covers 25 branches in the six major industrial cities of Pakistan. The Group now works closely with its customers, which cover all segments of the economy including the textile sector, vendors and suppliers to structure the finances and improve their capabilities. We have been very encouraged by the outcome that reaffirms its belief in the potential of this sector. There is a growing propensity for consumer spending to uplift living standards. Recognizing that consumer demand can be a major driver of investment and economic growth, the Government has also moved towards an enabling regulatory framework and has also taken initiatives to create an appropriate legal regulatory framework to enable the development of a housing finance market.

With its extensive branch network and large customer base, HBL has an important role to play in the development of this sector of the economy in which it expects substantial growth in the next five years. HBL has moved aggressively and has already introduced three major products; Personal Loans, Car Financing Consumer Durable Financing

in association with major suppliers of consumer products. These have been well received and volumes have been building up steadily. It is the intention of HBL to be a leader in consumer financing. Plans are also underway to develop mortgage 43

financing for the housing sector. Agriculture is the most important contributor to Pakistans economy. HBL, which has been a leader in agriculture financing, plans to increase further its credit to this sector with a particular focus on providing a wider range of products to small and medium size farmers. In this regard, to provide flexibility, the Haryali scheme for farmers was introduced which is a 3-year revolving facility rather than the traditional short term seasonal financing. HBLs specialized agricultural finance department helps farmers in modernizing their farming techniques. The Government has also provided a regulatory framework to encourage corporate farming and as this develops the participation in this sector. Will grow even further. While HBL continue to develop its products, we recognize that quality of customer service will become an even greater differentiating factor in the market. HBL have taken a number of initiatives in this area; investing in technology, training and upgrading of its branches. Extended banking hours and better facilities for utility bill payments have been made available. In 2002, HBL launched real time inter-city banking, internet banking for 500,000 customers and PC banking for its corporate and commercial banking customers. HBL ATM network has expanded and its usage is also growing rapidly. A Debit Card program has also been introduced which will be available in over 1,000 point of sale terminals within the country.

Inward remittances from overseas Pakistanis provide an immeasurable support to the economy. Owing to our unique combination of the largest domestic and international networks, we process the highest volume of overseas remittances into Pakistan. We recognize that speed and efficient processing is the requirement of remitters and to meet these needs, we have put in place our FAST Transfer service and our fully automated processing center in Karachi ensures that all remittances are delivered within 24 hours in urban areas and 48 hours in rural areas.

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In our Retail network, we have an unmatched distribution network, which provides us many opportunities for growth, and we plan to use this to soon provide additional services, including wealth management services.

ISLAMIC BANKING The Bank of Khyber has taken the first step towards Islamic banking and for this purpose an Islamic banking division has been established to complete the necessary regulatory and operational formalities thereby paving the way for commencement of Islamic Banking in its specialized branches. THE MISSION OF HBL To be recognized as the leading financial institution of Pakistan and a dynamic international bank in the emerging markets, providing our customers with a premium set of innovative products and services, and granting superior value to our stakeholders shareholders, customers and employees. MEMBERS OF MANAGEMENT COMMITTEE ORGANIZATION.SETUP.OF.HBL The Public Relation Division of HBL maintains effective rapport with the general public by communicating the policies and schemes of the bank through press and electronic media. Besides maintaining close relationship with journalists & advertising agencies, the Division also receives the visiting dignitaries and delegations from abroad. HBL believes in serving the nation and building the country strong. We are always at the forefront to support noble causes and promote the social & cultural activities in the country. The Public Relation Division of HBL sponsors various social, cultural and sports events to generate healthy activities in the society. It also organizes religious programs to uphold the religious tradition of our people. The Division represents the bank at important forums to exchange views on national & international issues with various organizations to boost the intellectual activities.

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The Commercial Banking at Habib Bank Limited focuses on small and medium sized businesses. This segment is the traditional stronghold of HBL with proven expertise and market knowledge. Units dedicated to service small and medium sized business are located at Karachi, Lahore, Faisalabad, Gujranwala and Sialkot. Each unit has Relationship managers with in-depth knowledge of the market. These relationship managers assist existing and potential customers with their financial needs.

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CHAPTER # 4
FUNCTIONING OF HBL where I did my internship.
HBL bank is functioning under following set up:

BANK DEPOSITS
Deposits are to the bank as a backbone is to the body of a man. They are the lifeblood of the bank. HABIB BANK LIMITED and all other commercial banks perform the function of deposit accepting from the general public by offering suitable rates of interest on them, or on simply a promise to repay on demand.

OPENING OF ACCOUNT BY AN INDIVIDUAL.

After entering into bank premises the person goes through the following steps for opening an account in the bank and for becoming a bank customer. 1. AN INTRODUCTION: The first important step to take place in bank is to get satisfactory introduction of the person, who wants to become banks customer. This introduction is made from the person /party who are respectable and honorable and have an account with the bank. In HBL (Grain Market Branch) the branch manager takes great care of this step and gets introduced with the person himself. His main intention is to determine the prospective customers integrity, respectability, occupation, and nature of business he is doing at the time of opening an account. 2. ACCOUNT OPENING FORM AND SPECIMEN SIGNATURE CARD: Now the person is provided with an application form known as Account Opening Form. This form contains: i. Title of account ii. Address iii. I.D.Card number

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iv.Telepnone.No. (Office and Residence) vi. Signatures of the applicant vii. Amount deposited viii. Check book series No. In addition to this the customer is required to attach a copy of National Identity Card with the form. SPECIMEN SIGNATURE CARD: Specimen of signatures will be obtained from depositor at the time of opening his account. A specially designed card is used for this purpose; the card must be countersigned by an official of the bank not below the rank of an officer. 3. ACCOUNT OPENING REGISTER: Now the name of the customer will be recorded in account opening register, and from here the account no. of the customer will be written on (top most corners) account opening form and on specimen signature card. 4. ISSUANCE OF CHEQUE BOOK AND PASS BOOK: The cheque book will ordinarily be issued to all customers desiring to have drawing facility. Cheque book consists of 10,25,50,or 100 pages depending upon customer requirement. Customer can withdraw money by signing a cheque and writing the amount he wants to withdraw from his account. A special cheque book register is kept to enter the name of the person having cheque book. PASSBOOK is another important type of book handed over to the customer as he opens the account with the bank. The withdrawl and deposit of money is recorded date wise in this book. 5. RECORDING IN TO GENERAL LEDGER: The concerned officer records the name and amount deposited with the bank in to general ledger. Separate ledgers are maintained for different types of accounts e.g.

i. Current Account Ledger 48

ii. Saving Account Ledger iii. Fixed Deposit Account Ledger iv. Call Deposit Account Ledger As and when customer deposits the money, amount is credited the general ledger and the withdrawal is followed by a debit entry in the ledger.

TYPES OF ACCOUNTS MAINTAINED BY HABIB BANK LIMITED GRAINMARKET BRANCH HAFIZABAD

The following types of accounts are maintained in HBL: 1. Current accounts. 2. Profit and loss sharing account. 3. Fixed deposit account. 4. Foreign Currency Accounts CURRENT ACCOUNTS: A bank account which may be used to lodge payments or to withdraw money on demand. Its main purpose is to serve the businessman. Form number F-53 is provided to the person to open the account. It is a statutory requirement to maintain current account. Its main features are: 1. Minimum amount for opening this account is Rs.500 2. Any person can open the account with the bank 3. According to inter banks agreement interest is not paid on current account. 4. Bank act as custodian of money 5. Over draft facility is provided to the customers 6. Customer can withdraw money through cheque supplied by bank Total depositors in current account in HABIB BANK LIMITED GM.BRANCH up to 15-07-2006were 847000 approximately and the number of current accounts are 44.

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SAVING/P&L SHARING ACCOUNTS To provide interest free banking facilities in Pakistan, this type of account was introduced in January 1982.The main features of this account are: 1. Instead of having fixed return in the form of interest the deposited money will be shared in profit and loss of the bank. 2. One can open the account by depositing minimum Rs.100 3. Withdrawal is allowed 8 times in the month total not exceeding Rs.15000. 4. To withdraw a large amount a notice of 7 days to the bank is necessary. 5. There is not any kind of interest is provided on money deposited. 6. Rate of profit is declared at the close of each half-year. Total deposits in PLS account in HABIB BANK LIMITED GM.BRANCH up to 1507-2006were 26633000 approximately a number of accounts are 713. TIME/FIXED DEPOSIT ACCOUNT: This account is the major source of funds for the banks. This account is best for people who have surplus money and dont need such funds in nearer future. The money is deposited for a fixed period of time. Main features of this account are: 1. Fixed amount deposited for fixed period. 2. Amount of profit can be obtained after each six months. 3. Higher will be the time period, higher will be the rate of profit. 4. A receipt is used for the amount deposited called fixed deposit receipt. 5. Period of deposit can vary from 3 months to 5 years. The amount can be withdrawn before maturity after surrendering interest. The number of term/ fixed deposit account up to 15-08-2005 were 93 and their deposits 9853000. The total number of accounts in this branch = 898 Total deposits in these accounts = Rs 43528000/ Total loans accounts in this branch = 182 and advances in these loan accounts = Rs 14030000/

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CHAPTER # 5
LOANS & ADVANCES
In HBL the following facilities of lending are available to its customers: Finance for Working Capital Trade Finance Facilities Finance for Capital Investment General Products Other Products and services Investment Assistant (IA) FINANCE FOR WORKING CAPITAL Running Finance: Cash Finance: For Working Capital requirements.(RF) For Inventory financing.(CF)

The Commercial Banking at Habib Bank Limited focuses on small and medium sized businesses. This segment is the traditional stronghold of HBL with proven expertise and market knowledge. Units dedicated to service small and medium sized business are located at Karachi, Lahore, Faisalabad, Gujranwala and Sialkot. Each unit has Relationship managers with in-depth knowledge of the market. These relationship managers assist existing and potential customers with their financial needs. Trade Finance Facilities: Export Finance: o Foreign Currency Import Finance against Packing Credit: for preshipment requirements (FAPC) o Finance against Foreign Bills: for post-shipment requirements (FAFB)

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o Foreign Currency Export Finance: Dollar financing for pre & post shipment requirements (FCEF) o Foreign Bills Purchase: for financing of export bills (FBP) IMPORT FINANCE: o Finance against Trust Receipt: for financing imported goods (FATR) o Finance against Imported Merchandise: for financing imported goods (FIM) o Finance: Dollar financing for import requirements (FCIF) o Letter of Credit: for importing inventory & capital goods (LC)

FINANCE FOR CAPITAL INVESTMENT:

Demand Finance: medium term loans for capital expenditure (DF) Leasing: for financing capital expenditure.

General Products:

Letter of Guarantee (LG) Bid & Performance Bonds Mobilization Advance Guarantees

OTHER PRODUCTS AND SERVICES:

Commercial Day to day banking: There are a wide range of accounts and services to help you manage your money. We offer: o Current Accounts: Non-interest bearing account for your daily banking needs. o Cash Management Services : Giving you the convenience of cash handling. o Habib Bank Easy Access: Real time online banking at commercial centers for customers online transfer/deposit of payments. o HBL E-Banking: Habib Bank Limited has launched a product HBL ebank which allows 24 hour access to accounts through internet banking, and PC banking. o ATM: Now, adding more convenience, the customers can also use the ATMs of other partner banks.

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INVESTMENT ASSISTANT (IA):

Investment Assistant has been created specifically to assist expatriate Pakistanis who are interested in investing in Pakistan. Using Commercial Banking as a platform, we will be providing information of legislative, regulatory and financial nature to prospective investors to help them setup their businesses in Pakistan.

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Chapter#6
INTRODUCTION OF HUMAN RESOURCE MANAGEMENT DEPARTMENT OF HBL:
HUMAN RESOURCE MANAGEMENT STRUCTURE: The HRM department plays an important role in value of any company. HBL has very active and one of the best HR department in Pakistan as well as world wide. The structure is as the President is assisted by ten Senior Executive Vice-Presidents and a staff of 29 Executive Vice Presidents, 154 Senior Vice Presidents, 420 Vice Presidents, 831 Assistant Vice Presidents, 2350 officers Grade-I, 4108 officers GradeII, 3364 officers Grade-III and 10658 Clerical/Non-Clerical employees. The total staffing as per 1999 balance sheet figures is 23022. Strategic planning of HBL: HBL uses two types of Corporate-level strategies Diversification strategy Geographic expansion strategy Diversification Strategy: It implies that HBL will expand by adding new service lines. With the passage of intervals HBL is used to introduce new banking services. Geographic expansion strategy: It takes the company abroad. Acting upon this strategy HBL has been expanded abroad. The abroad branches are mentioned above in introduction section. HBL is planning to expand its business and branches in more countries. Business level strategies used by HBL are Cost leadership Differentiation Focus Cost leadership: HBL aim is to become low-cost leader in banking sectors that is why HBL is providing effective services in low cost than other banks in Pakistan. Differentiation: HBLs strategy is to provide unique banking services to its customers in banking sectors to make itself valuable for its customers.

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Focus: HBL provides banking services to its customer in that way that customer cannot get that services from other competitors. FUNCTIONAL STRATEGY: HBL identifies basic courses of action that each department pursues in order to get basic goals and objectives of HBL. Harmony of departments towards HBLs single goal makes it unique in the competitive market. JOB ANALYSIS: The procedure for determining the duties and skill requirements of a job and the kind of person who should be hired for it is called Job analysis. Job analysis is every important as job analysis information is used in Selecting and recruiting, compensation, performance appraisal, training and in resolving other issues which HBL faces. HBL takes Job analysis services from Sidat Hyder Morshed Association (SHMA) which is the biggest HR consulting firm in Pakistan. The methods which are used in collecting job analysis information are The interview Questionnaires THE INTERVIEW FOR JOB ANALYSIS: Interview is a big source in collecting information in the job analysis. Individual employees, group of employees and supervisors with vast knowledge about jobs are interviewed. The format of interview is Structured and unstructured. In structured interview a set of sequence of questions are followed by interviewers and in unstructured type of interview the interviewer pursues points of interest as they come up in response to questions. QUESTIONNAIRES: In questionnaire the employees solve the fill out questionnaires to describe their jobrelated duties and responsibilities. The formats of questionnaires are either structured or open ended. Quantitative job analysis techniques: Following methods are also used in job analysis which are called quantitative job analysis techniques The position analysis questionnaire (PAQ): A questionnaire used to collect quantifiable data concerning the duties and responsibilities of various jobs.

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JOB DESCRIPTION: After getting job analysis information the next step is to describe job description which contains the points of job identification, job summary, chain of command relationships), responsibilities and duties, standard occupational classifications and standard of performance and working conditions. JOB SPECIFICATIONS: After formulating job description the next step taken is job specification in which the traits of employees are defined who are assumed suitable for the job. HR manual contains five processes Selecting and Recruiting Training and Development Performance Appraisal Compensation Employee relation SELECTING AND RECRUITING: The recruitment and selection process starts with employment planning. This process of deciding what positions the firm will have to fill, and how to fill them. Personnel or employment planning embraces all future positions, from maintenance clerk to CEO. SELECTING AND RECRUITING PROCESS ACCORDING TO HBL The diagram below represents the process on which HBLs selection is based. This gives an overview to potential candidates as to the steps involved in becoming a part of the HBL team.

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In recruitment process first of all planning session is occurred, in planning session it is determined that which section HBL will have to fill and how to fill. If there is a vacancy of executive job then succession planning is done for filling that vacant place. ANALYSIS OF POSITIONS AND REQUIREMENT: After planning it is analyzed that which position is going to be filled and the requirement is analyze by job analysis. IDENTIFY CANDIDATES: HBL identifies its candidates by developing the criteria of job description and job specification and acting upon these criteria job vacancy ads are spread through different Medias like newspapers and internet. OUTSIDE SOURCES: HBL uses outside sources for recruitment which are Advertising Newspapers (Daily Jung, Nawa-e-Waqt, The Nation, Dawn and Daily Khabrein etc) Trade and professional journals (Aurora Magazine) Internet job sites(people.com) Outside sources of candidates: Sidat Hyder Morched Association works for outsourcing for HBL. College recruitment Employee referrals Walk-ins Finding internal candidates: Job Posting Rehiring former employees Prescreening and short listing: Many candidates apply for job in response to vacancy ads by submitting their CVs. Selection board goes through those CVs and selects those candidates which initially fulfill criteria of selection board. After prescreening selection board short lists the 57

candidates who are considered most suitable for job at initial level on the basis of their resume. TEST/ INTERVIEW: In this process short listed candidates are called for test and interview according to nature of their applied jobs. SELECTION INTERVIEW: Selection interview is conducted for short listed candidates. A selection interview is the procedure designed to predict future job performance on the basis of applicants oral responses to oral inquiries. Formats used in selection interview: Structured/Directed Unstructured/Non directed Modes of Interview: Penal interview An interview in which a group of interviewers questions the applicant. Structured sequential interview An interview in which the applicant is interviewed sequentially by several persons; each rates the applicant on a standard form. Types of questions: SITUATIONAL: A series of job-related questions that focus on how the candidate would behave in a given situation. Job related: A series of job-related questions that focus on relevant past job-related behaviors. These types of questions are asked from those candidates who have past experience of job. STRESS: An interview in which the interviewer seeks to make the applicant uncomfortable with occasionally rude questions that supposedly to spot sensitive applicants and those with low or high stress tolerance. These sorts of questions are asked according to high designation of candidate. 58

Puzzle questions: Recruiters for technical and finance job use questions to pose problems requiring unique solutions to see how candidates think under pressure. TESTING: Organizational performance always depends in part on subordinates having the right skills and attributes. Keep in view this point HBL tries its level best to hire highly skilled and suitable employee for each job. For judging these skills HBL conducted some tests of employees on the basis of Reliability Test validity The consistency of scores obtained by the same person when retested with the identical or equivalent tests is called reliability and the accuracy with which a test and interview what it purports to measure or fulfills the function it was designed to fill is referred as validity. Types of test: Generally two types of tests are taken in HBL Tests of Cognitive ability Physical tests Cognitive test abilities consists of INTELLIGENCE TESTS Tests of general intellectual abilities that measure a range of abilities, including memory, vocabulary, verbal fluency, and numerical ability are intelligence tests. APTITUDE TESTS Tests that measure specific mental abilities, such as inductive and deductive reasoning, verbal comprehension, memory, and numerical ability are aptitude tests. TESTS OF PHYSICAL ABILITIES Tests that measure static strength, dynamic strength, body coordination, and stamina are physical. Job related to guards and deliverers go through this sort of test.

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HBL adopts recruitment process as Entry level programs Experienced professionals Campus recruitment Rehiring

ENTRY LEVEL PROGRAMS:

HBLs Entry-Level Programs are structured to ensure that you will quickly assume responsibility for concrete tasks and important projects. Rotational assignments across different business units provide a comprehensive and valuable experience in a relatively short amount of time. EXPERIENCED LEVEL PROGRAM: HBL recruits experienced professionals in all areas of the bank and encourage the creation and pursuit of innovative ideas. HBLs dynamic work environment offers diverse opportunities to stimulate ongoing employee needs and supports career enhancement opportunities. HBL encourages you to explore this section to find out about current job openings and how to submit your resume. CAMPUS RECRUITMENT: HBL is proud of its ability to nurture individuals and empower them to hone their talents. HBL size gives itself the unique ability to provide fast growth and significant responsibility early on in a career with multiple avenues to reach the top. As part of HBLs human resource strategy, HBL visits various universities across the country to induct & groom fresh business graduates every year. Enthusiastic and talented youth form the backbone of its banking operations and are nurtured to become future leaders at HBL. To attract the best young talent, HBLs resource department employs a pro-active strategy. HBL actively participates in campus seminars by giving presentations that highlight HBLs background, vision, mission, values, recruitment & selection process, future career prospects and overall business strategies. HBL hires fresh talent on a permanent basis and offer a wide range of career opportunities across all functions, including Finance, Marketing, Operations, Information Technology and Human Resources.

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REHIRING FORMER EMPLOYEES: It is an internal hiring source. Rehiring the former employees is the process in which HBL rehires the former employees. But this process is practiced very rarely.

FINAL SELECTION: After going trough all the processes the best candidates according to HBLs selection boards are selected. ORIENTATION: Just after final selection and before starting of training process orientation is conducted for selected employees in orientation new employees are provided with basic background information about the HBL the basic contents of successful orientation are Information on employee benefits Personnel policies The daily routine Company organization and operations Safety measures and regulations

2. TRAINING AND DEVELOPMENT: Training is the process of teaching new employees the basic skills they need to perform their jobs and development is result of that training. For training and developing HBL follows five steps process of training and development Needs analysis: Identify job performance skills needed, assess prospective trainees skills, and develop objectives. Instructional design: Produce the training program content, including workbooks, exercises, and activities. Validation: Presenting (trying out) the training to a small representative audience. Implement the program: Actually training the targeted employee group. Evaluation: Assesses the programs successes or failures. 61

Task analysis: In this area a detailed study of a job to identify the specific skills required, especially for new employees are analyzed. Performance analysis: After analyze the main tasks required in performing jobs it is verified that there is a performance deficiency and determining whether that deficiency should be corrected through training or through some other means (such as transferring the employee). If there is found some deficiency in performing job then training is highly recommended to recover deficiencies. Training methods used by HBL: On-the-job Training Off-the-job Training Apprenticeship Training Informal learning Effective lectures On-the-job Training: Having a person learn a job by actually doing the job is OJT. Methods of OJT are Coaching or understudy Job rotation Special assignments Action Learning Coaching or understudy: It is the OJT method in which employee is coached and taught by profession that how to do the job in order to meet HBLs goals and objectives. At managerial level the trainee works directly with a senior manager or with the person he or she is to replace; the latter is responsible for the trainees coaching. It is done at all levels of job. New employees are trained through coaching and old employees are also trained through this method like when some new innovation is introduced old employees are trained in order to handle that new innovation. In 2008 all managers have been trained to operate Misys Software (Automation of service provision and book management). Job Rotation: Moving a trainee from department to department to broaden his or her experience and identify strong and weak points. Job rotation is usually done at 62

managerial level. HBLs Manager Associate (MA) program is used for job rotation training. Special Assignments: Special assignments are also given to employees for special training. These assignments are actually related to tasks within the branch by achieving those tasks assigned by trainer, employee get training. Action Learning: Management trainees are allowed to work full-time analyzing and solving problems in other departments. This OJT method is just for managerial level employees. OFF-THE-JOB TRAINING: It is the method which is opposite to the OJT. In this method employee does not get training at his/her work place. This method of training is only for managerial level employees. Off-the-job training methods are Case study method Outside seminars Case study methods: special case studies are given to employees which contains some dilemma about banking sector. By solving those case study problems employee gets training to take bold and effective decision in crucial situations. Outside seminars: HBL encourages its employees to participate in the seminars arranged by banking sectors not just in the Pakistan but also beyond the boarders. By participating in outside seminars employee gets authentic knowledge about the new horizons of banking sector which is useful for HBL and makes it leading bank in Pakistan. APPRENTICESHIP TRAINING: A structured process by which employees become skilled workers through a combination of classroom instruction and on-the-job training. It is actually combination of OJT and lectures delivered to employees. It may be for both levels of managerial and fresh employee. In this method employee is first given the lecture about his/her job and after that implementation of lecture in practical field is observed. INFORMAL LEARNING: The majority of what employees learn on the job they learn through informal means of performing their jobs on a daily basis. EFFECTIVE LECTURES: Lectures about jobs are also delivered. These lectures are delivered to new employees as well as senior level employees and managerial level too. In these lectures employees are prepared for facing new challenges in the banking sectors and also told them how to achieve those challenges. 63

SUCCESSION PLANNING: It is actually management developing program. Management development is attempt to improve current or future management performance by imparting knowledge, changing attitudes, or increasing skills. In order to achieve management development, succession planning is done. Succession planning is a process through which seniorlevel openings are planned for and eventually filled. The main purposes of succession planning are Anticipate management needs, Review firms management skills inventory, Create replacement charts, Begin management development. HBLs Management Trainee (MT) program deals with succession planning. MT is defined in the following section of Training and developing methods.

Training and development programs at HBL: HBL uses following programs for training and development Management Trainee Management associate Cash officers Internships

MANAGEMENT TRAINEE: HBLs Management Trainee (MT) program looks for highly motivated individuals who exhibit the potential to excel as future leaders. The program is geared towards providing challenging work assignments complemented by a learning component for select individuals from reputable universities. At HBL, the MT program offers extensive interactive classroom training, on the job rotations and personal mentoring from senior management to provide a comprehensive learning experience. The objective of the program is to realize potential and translate the experience into a successful banking career. MANAGEMENT ASSOCIATE: HBLs Management Associate Program is a training and rotational program focused on dealing with branch banking requirements. It provides accelerated development opportunities across HBLs branch network of Retail, Corporate & Commercial banking. During this program, candidates are assigned with challenging business scenarios to enhance their critical and analytic skills. Another crucial element of the program ensures that managerial skills are honed and developed. This provides associates

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with the expertise required to handle supervisory and administrative tasks that will result in the development of successful business managers. CASH OFFICERS: HBLs Cash Officers Program catapults successful candidates to the front lines of the bank. Candidates in this program are the banks ambassadors and must have exemplary skills in dealing with clients. The program involves an extensive one-month training period based on branch banking operations before placement in the branches. Energetic and focused graduates from HEC recognized institutions with good communication and interpersonal skills qualify for HBLs Cash Officers Program. Before being placed at HBL branches, these individuals must exhibit a proven ability to add value and act as agents of change. INTERNSHIPS: HBLs Internship Program offers promising students with the exciting opportunity to apply their classroom learning experience to real life corporate assignments. Through the program, internees can support their career goals by using the internship as a launching pad for creating contacts with professionals in the field and identifying their own competencies to build a successful career with HBL. 3. PERFORMANCE MANAGEMENT AND APPRAISAL: Evaluating an employees current and past performance relative to its performance standards is called performance appraisal. A process that consolidates goal settings, performance appraisal, and development into a single common system to ensure that employees performance is according to COMPANYS AIMS IS CALLED PERFORMANCE MANAGEMENT. PERFORMANCE MANAGEMENT AND APPRAISAL AT HBL: HBLs performance management and reward systems ensure that goals are met in an effective and efficient manner. HBL defines a clear path for you to contribute to the organizations overall goals, peppered with regular reviews and feedback to help you gauge your progress. At HBL growth is not a function of time but rather of performance. As your performance improves, the role that you play within the organization will accelerate to reflect your input. HBL generally uses BARS (Behaviorally anchored rating scale) it is an appraisal method that uses quantified scale with specific narrative examples of good and poor performance. PERFORMANCE APPRAISAL FORM OF HBL: HBLs performance appraisal form contains two sheets, one is FORM B2 and other is FORM B3. FORM B2 contains appraisal for Clerical staff at branch or Field Offices there are two main headings Area/factors and level of achievement points. Level of achievement point contains five points ratings A (4), B (3), C (2), D (0-1) and N/A. AREA/factors contains five kind of factors which are

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A-Productivity B-Individual \attributes C-Technology D-Customer Service E-Personal

Each area is further categorized in different factors. Area A-Productivity contains Job knowledge TD clearing/Bills Ledger Posting Timely Lodgment of Clearing Followed Return unpaid cheques Nothing of Stop Payment Instruction Volume of Work Handled Accuracy & Attention to Detail Willingness & Ability to work with other units/people Ability to write Effectively Adoptability of new assignments Deposit Mobilization /saving/current CPDC etc Number of fresh account arranged Reduction in customer complaint Hajj application target Timely Balancing of branch ledger/books etc Accuracy in counting/cash handling & counting speed Receiving of payments of utilities

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Dispatch of requisite statements Maintenance of guns in order Zero theft Delivery of letter/Dak in time Quality of work Speed of work Filing and record keeping Typing/data entry speed Typing/data entry accuracy

B-Individual Attributes contains Professional/technical knowledge & competency Initiative (eagerness to learn, enlarge knowledge) Reaction to responsibility Sense of responsibility Oral communication Ability Written communication ability Sorting of notes Cash excess/shortage situation Performing under pressure Ability to work without supervision Willing to work after office hours

C-Technology contains Knowledge of computer

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Knowledge of internet & E-mail

D-Customer contains Courtesy to Customer Rapport with customer Creative response to customer needs Business sense (maximum revenue/ minimum cost)

E-Personal contains Health & energy Appearance Integrity & loyalty Grooming Manner of speech Attitude Intelligence Leave record Attendance record Punctuality Each factor is marked tick against level of achievement and in the end total points scored is written in the specific box. Also the signatures of appraisee and appraiser are taken. FORM B3: This form contains two big boxes. First box is about Development Plan/ Supervisor comments. In this box supervisor gives comments about appraisee strengths and further appraisees development needs (need to improve academic & professional qualification).

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Second box is called overall assessment box. In this box appraiser gives the overall performance grade to appraisee according to B2 form and the grade is given in form of A, B, C, D. Then comments of appraisee is also taken in form of agree/disagree. Then overall assessment is reviewed by reviewer and reviewer gives its comments too, but it is not necessary. After it final acceptance of appraisee is also taken along with signatures.

Following is some brief detail about appraisal areas A-PRODUCTIVITY: Productivity is actually about the performance of employee in the clerical field. It indicates that how much effectively and efficiently an employee performs its duty and how much employee is committed with the achievement of organizational goals and objective. Following factors of Productivity are defined briefly; Job knowledge: It is first and basic factor of productivity. This factor shows that how much employee has awareness about his/her job. TD clearing/Bill ledger posting: This productive factor indicates the ability of employee about ledger posting of HBL. His shows how much an employee is expert and clear in indicating or posting of ledger regularly. Timely Lodgment of clearing: This is the job in which the employee of HBL is to present the cheques of other banks, which are given by customers for depositing in their accounts in the State Bank before 10 oclock. In this assessment it is determined whether employee is punctual in presenting cheques to State Bank in the specific time. Follow return unpaid cheques: In this job the employee is to return the unpaid cheques to the bank before 3 pm which are rejected by State Bank due to some incompleteness like absence of signatures, inefficient money in the account of customers or other reasons cause refusal of cheques by State Bank. In performance appraisal it is assessed that whether employee is fulfilling his job well or not and on the basis of his performance he is given points. Noting of Stop payment Instruction: In this job employee notes the stop payment instruction due to lose of cheques by customer. If customer loses his/her cheques then he/she has to tell about lost cheques to the branch of HBL and in response the employee is to note down the stop payment and also feed this information in the computer for database record in order to restrict misuse of the lost cheques. Volume of work handled: In this assessment it is noted that how much volume of task or work is being handled by employee and on the basis of volume of work handled the employee gets points of achievement against the block in appraisal form.

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Accuracy & attention to detail: In this job it is indicated that how much an employee is attentive and accurate in noting down the job whether he/she is performing at desired level or not. Willingness and ability to work with other people/unit: In this section it is noted that how much the employee is willing and how much he/she has the ability and quality to perform well in the group of people or unit and it is determined is he/she is able to perform in the group or not if a group task or assignment is given. Ability to write effectively: In this assessment it is noted that how much employee has effective skills of writing which matters in reporting or hand written application. Adoptability of new assignments: In this job it is determined how much employee is able adopt new assignments related to his/her job. Does he/she have ability to adopt new challenges in his/her job? Deposit Mobilization/saving/current CPDC etc: In this factor it is assessed that how much the employee is responsible for depositing certificates of saving, current and CPDC (Crore Pati Deposit Certificate) purchased by customers. Number of fresh account arranged: In this job the employee is to arrange new accounts by feed the data in the database system and issuing cheques books. In this assessment it is appraised that how much the employee has arranged newly opened accounts and on the basis of number the employee is granted with grade on the appraisal sheet. Reduction in customer complaint: This job is related with customer service member. In appraisal it is defined how many complaints of customers are reduced by employee. Hajj application target: This job is related with Islamic Banking section of HBL. Each employee is given with the target of submission Hajj application. On the basis of submitted target Hajj application employee gets point ratings on appraisal form. Timely balancing of Branch Ledger/books: In this job employee has to balance the branch ledger on the daily basis. On the basis of balancing of ledger in time the employee is given grade points on appraisal sheet. Accuracy in counting/cash handling & Counting speed: This determines that how much employee is able to count or handle the cash efficiently and how fast cash is counted by the employee. Dispatch of requisite statements: In the bank the employee of related job is to dispatch the balanced Ledger/Books, financial statements and number of accounts before authority of branch on monthly basis. While appraising employee it is defined that how much he/she is efficient and punctual in his/her job. Maintenance of Guns in Order: In this assessment it is determined that how much the employee is active in performing the order of his/her head. The obedience of the employee to his/her head in the bank task is counted in this assessment.

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Zero Theft: In assessment the employee is assessed according to handling of his/her honesty in his/her job. It is counted that how much he/she has been committed with theft in performing job. Delivery of Letter/Dak in time: This job is about the deliverer of letter/Dak to the one bank to other banks, one branch to other branches of HBL and dispatch of cheques to State Bank. The employee is graded with points according to punctuality in delivery in the appraisal form. Quality of work: In this assessment the employee is given with grade points according to quality of his/her performance in his/her specific job. Speed of work: In the assessment of job this factor shows that how much fast and efficient an employee is in performing his/her task related to his/her field. Filing and record keeping: In this job the employee is to file and record the data of customer for database. According to effectiveness of record keep employee gets points in appraisal form. Typing/Data entry speed: This is about computerized record keeping. In this factor it is assessed that how much the employee has speed in typing data. Typing/Data entry accuracy: In record keeping it is noted that how much accurate the employee is in typing data for database. B-INDIVIDUAL ATTRIBUTES: This area of factor is about the employees attribute or properties in performing job. Followings are factors of individual attributes; Professional/technical knowledge & competency: In this attribute it is checked that how much the employee has professional skills about his/her job and how much he/she is competent has technical knowledge about his/her job in the bank. Initiative (eagerness to learn, enlarge knowledge): In this factor it is noted that how much employee is eager to learn new thing about job and how much he/she is interested in enlarging knowledge of job. Initiative factor is very important in job field cause initiate new task in the field is good attribute of professional employee. Reaction to responsibility: In this attribute it is assessed that how the employee reacts when some responsibility is given to him, it is noted whether he/she reacts warmly and professionally or considers new responsibility as a burden. Sense of responsibility: in this attribute it is assessed that how the employee takes the responsibility whether takes it professionally and serious or carelessly. Oral Communication Ability: In this factor it is assessed that how much employee has ability to communicate orally with the customers and head. Speaking skills are counted in this appraisal. 71

Written Communication ability: In this attribute the ability and writing skills of employee is assessed. Sorting Notes: In this factor the ability of sorting and handling of currency notes are judged. It is assessed that whether employee is sorting notes according to sequence. Cash excess/shortage situation: Cash handling is noted in this factor. It is a negative appraisal. Some time employee gives or receives more or less amount by customers, if he/she gives more than real amount then he/she has to compensate this money from his/her own pocket. Performing under pressure: In this factor the performance of employee is assessed under pressure situation. It is checked that how much he/she is capable and confident to perform under pressure circumstances. Ability to work without supervision: In this factor it is checked that how much the employee is able to perform his/her duty efficiently without supervision and it is also assessed that whether supervisor has to keep eye on his/her to get the work one. Willing to work after office hours: In this factor it is noted that how much employee is dedicated towards his/her job even after office hours. C-TECHNOLOGY: This is the area of appraisal in which the capability of using of technology of employee is assessed. Followings are major factors of area of technology Knowledge of computer: The knowledge of using of computer is counted in this factor. Knowledge of e-mail & internet: The knowledge of internet and sending/receiving is assessed in this factor of technology area. D-CUSTOMER SERVICE: This is the area of appraisal in which the motivational and dedicated level of employee toward customer service is assessed. Followings are factors of this area; Courtesy to customers: in this factor of customer service area it is assessed that how much employee is courteous towards customers, whether he/she is deals with customers politely or harshly. Rapport with customer: In this factor it is assessed that whether employee cashes the cheques of customer within time or he/she makes customers wait due to his/her personal gossips etc. Creative response to customers needs: In this factor it is judged that how creatively and professionally the employee responses to customers needs regarding banking system.

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Business sense: This factor determines the sense of employee regarding business that whether he/she knows about economic terms and their uses. E- PERSONAL: This is the area in which personality of employee is evaluated. Factors of this area are as following; Health & Energy: In this factor of personal area physical and mental health of employee is evaluated and also the use energy of performing in job.

APPEARANCE: In this factor the appearance of employee is counted. The dress code and manner of dressing is assessed. INTEGRITY AND LOYALTY: In this factor the loyalty and integrity of employee is assessed. The dedication and commitment of employee while performing duty is counted. Honesty and faithfulness with job and company is also assessed. GROOMING: In this factor the development and grooming of employees personality is counted. Manner or Speech: In this factor of personality the manner of speech or manner of talking to others are assessed. Manner of speech should be polite and understandable. Attitude: In this factor the employee gets point on the basis of positive and professional attitude in his/her personal life. INTELLIGENCE: In this factor of personality the intelligence of employee is evaluated. Attendance record/Leave Record/Punctuality: The employee is given grade points on the basis of regular and timely attendance according to time table.

4. COMPENSATION:
The salaries, rewards, bonuses, and incentives on the basis of job and performances are compensations.

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COMPENSATION AT HBL: HBLs focus is on attracting, developing and retaining the best in the business by offering market driven compensation and benefits packages. HBLs compensation and benefits strategy combines the need to maintain a high performance culture along with market competitiveness. Annual benchmarking exercises are conducted to stay abreast with industry standards. According to performance each employ gets benefits and compensation. Time does not matter only performance matters at HBL. Employees are paid in two forms Direct payments Indirect payments

Direct financial payments: Pay in the form of wages, salaries, incentives, commissions, and bonuses. Indirect financial payments: This mode of payment is not related to cash payments like medical, insurance, residence, car, car fuel etc.

5.

LABOR MANAGEMENT RELATION:

relationships that contribute to satisfactory productivity,

Labor Management Relations involves the body of work concerned with maintaining employer-employee motivation, and morale. work situations. The environment at HBL is cultural, ethical and challenging that that encourages creativity and commitment among employees. HBL fosters a work environment where employees can realize their potential whether locally or in the international arena. Thus, HBL enables its employees to achieve their professional goals while keeping in synch with the banks overall objectives. HBL believes in two skills for employee relation Interpersonal communication Conflict management INTERPERSONAL COMMUNICATION SKILL: Essentially, Employee Relations is concerned with

preventing and resolving problems involving individuals which arise out of or affect

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At HBL the first skill for managers to understand and practice is interpersonal communications, because it is the foundation for all actions in the workplace and it allows the manager an opportunity to build relationships with the overall workgroup without alienating anyone in the work environment. Working with diverse groups of people requires a tremendous amount of interaction. If these interactions are positive, they can help create the right workplace climate, attitudes, beliefs and behaviors. Keeping in view these all points interpersonal HBL emphasizes on strong interpersonal communication skill for effective accomplishment of goals.

CONFLICT MANAGEMENT: In HBL the second skill for managers to leverage, is conflict management. It is actually conflict resolving approach. Learning to leverage this skill helps in resolving employee relations issues quickly and effectively, and creates greater satisfaction with the workgroup. Manager cares employees emotions and feelings.

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Chapter#7
New Knowledge Acquired
Truthfully speaking every thing was new to me in Habib Bank limited though I have a good Bookish knowledge but truthfully speaking it was totally different from the practical knowledge of the banking. But with the grace and able to learn every section of the Bank .I utilize all my bookish knowledge to get this practice

WHAT I LEARAND DURING INTERNSHIP THE most important thing that i learn is that the difference between the behavior of officials.

Account opening section:

I spent the 1st three days in account opening section. As the area where I did my internship, the people are not well educated that is why whenever a person will come for opening an account than the manager referred that man towards me. Than I guide that man and the form of opening an account will be Filled by me and all the legal requirement are completed by me. In past the Habib Bank use and the old type of firm but now it Is using a new firm of opening an account. There were five sign Are required on old type of firm but now the new firm require Only one side. Whenever a person goes to open an account than He need a person for introduction who has an account in that Branch of the Bank

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CLEARING SECTION:
I also work in clearing section during my work I learned how to Collect the different cheques of different Banks. then I learned how these cheques of different Banks mutually transfer. For mutual transfer everyday a meeting is held in NBP main branch Hafizabad. The representative of UBL, ABL, BANK AL FALAH, , and HBL was participating and thus mutual transfer of cheques were held. SHAHID SULTAN TARAR sahib was the in charge of this section he gave me a lot of attention.

REMITANCES SECTION
I also worked in remittances section .in remittances section I learned how to transform the money from one place to another place. In this section I learned ,

1: DEMAND DRAFT. 2: TELEGRAPHIC TRANSFOR. 3: ON LINE TRANSFOR.

On each transaction there is commission charged to the sender. The commission of (D.D) is Rs; 350. This charges is on the (D.D) up to 600000. The commission of (T.T) is Rs175. The commission of (O.T) is Rs 200.

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Chapter # 8

SWOT Analysis
The acronym SWOT stands for a firms internal Strengths and Weaknesses and its external Opportunities and Threats. The purpose of such analysis is to build on companys strengths in order to exploit opportunities and counter threats and to correct companys weaknesses. SWOT analysis is based on the assumption that if managers carefully review such strengths, weaknesses, opportunities, and threats, a useful strategy for ensuring organizational success will become evident1.

Strengths and weaknesses typically relate to the internal environment of an organization, whereas opportunities and threats are brought about by the external environment of an organization. In the following section, both internal and external analyses of HABIB BANK IMITED are outlined:

7.1 INTERNAL ANALYSIS Internal analysis of a firm is the analysis of its strengths and weaknesses. Unless a firm has internal strengths and controls its weaknesses, it cannot take advantage of opportunities and escape threats which the external environment presents. Following are the main strength and weaknesses of HBL.

Samuel, C. C. (1989). 4th edition, Principles of Modern Management. Massachusetts: Wm. C. Brown Publishers. p.143

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7.1.1 STRENGTHS Strength can be defined as an area where a company is best at doing something or a feature that puts the company at an advantage in comparison to its competitors. MCB enjoys the following strengths: i. ii. HABIB BANK is a well established bank enjoying long history of over 65 years of experience and profitable operation. HBL was the first privatized bank that gives it an edge over other nationalized banks as it can develop any strategy consistent with the demand of market and free from any political or bureaucratic influence. iii. iv. v. vi. vii. HBL is the largest private bank in Pakistan now and people trust is very high. It has the largest branch network among private banks of Pakistan. HBL is the market leader in introduction of e-banking and it has the largest ATM network in the country. The Banks Rupee Traveler Cheques have been market leaders for the past six years. HBL was rated the best domestic bank for two consecutive years of 2000 and 2001 by Euro money, a leading international publication. viii. HBL has forged strategic alliances with international banks for expanding its network further, both locally and internationally. ix. HBL has the ability to bring innovative products and services like personalized service, electronic funds Transfer, sophisticated financial products such as electronic banking, auto-teller machines and evening banking. x. HBL has been very effective in controlling costs as it successfully restructured itself after its privatization. During this process more than 1,600 employees were relieved under a golden handshake scheme and 110 branches were closed. xi. Excellent branches appearance gives an edge to HBL over other banks. The branches are well furnished even in less developed areas where other banks branches give a poor view.

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7.1.2 WEAKNESSES A weakness is defined as an area in an organization where the organization is not as good at doing something as its competitors or a thing which an organization lacks thus putting the organization at disadvantage in comparison to its competitors. weaknesses. i. Mission of HBL is not well defined. ii. Though HBL is first largest Pakistan, yet the fact remains that it is not market leader as NBP. Its total assets is always less than NBP total aasets. iii. Now as it is a privatize bank that is why GOVERNAMENT support to HBL decreased as it was in past. Based on the above definition, MCB has the following

iv. Employees at branch level are not properly motivated to work by heart. They take the all routine activities as a boring job. v. Most of the employees lack managerial training as they are not properly educated. Due to seniority, they have moved up on the hierarchy line to GradeI, II or III positions having hardly bachelor degrees. This type of senior staff cannot apply the modern and innovative techniques of management in decision making.

7.2

EXTERNAL ANALYSIS

An organization has to monitor its environment constantly to keep up with new developments and changes in the environment. A change in the external environment may be either an opportunity or threat. In either case, the organization has to properly use it strengths to avail the opportunities and avoid or minimize the negative effects of threats. Following are the main opportunities and threats of HBL.

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7.2.1 OPPORTUNITIES An opportunity can be defined as a change in external environment which if properly exploited with the organizational strengths will result in enhanced sales, market share, or income. Using its strengths, MCB can avail the following opportunities: i. HBL may enhance its Rupee Travelers Cheques (RTCs) sales by searching for new market niches. ii. It can introduce debit card system or may convert the existing ATM cards into a complete debit card. iii. New products like personal loans, mortgage and auto leasing and cash management which diversify credit risk and add to revenue generating products, are currently provided in big cities like Lahore, Islamabad, Karachi, and Rawalpindi, these products may be tested for success in other small areas of PAKISTAN in different provinces. iv. Developing network for electronic transaction require huge investment which cant be made all at once, there exists an opportunity for HBL to enter into agreement with other banks to use each others ATMs which will result in an increased convenience to HBL customers and customers of other banks. v. As all around the world remittances of money are strictly monitored so as the money remitted may not fall in hands of so-called terrorists. for that all conventional money laundering through Hundies have been stopped, there is an opportunity for HBL to extend its branch network to various emphasizing mainly on introducing electronic fund transfer facilities. countries

7.2.2 THREATS Threat can be defined as a change in external environment which if not met with proper strategies will result in loss of revenues, market share, or income. In the context of MCBs external environment, the following potential threats exist:

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i. The Rupee Travelers Cheque (RTC) sales volumes may be affected on account of regulatory restriction imposed by SBP on issuance of large value denominations. ii. The frequent reduction on 6-month and 12-month Treasury Bills discount rates by SBP may create pressure on the banks profitability. iii. The low discount rates are also negatively influencing the advances rates which may affect the banks profits from the other side. iv. Foreign banks operating in Pakistan are playing a significant role by incorporating new technologies and providing better quality services thus creating a threat to the local banks especially to HBL which tries to develop core competence in electronic based products. Policies of privatization, foreign exchange reforms, and structural adjustments have increased the inflow of foreign resources through direct and portfolio investment. In trade financing, the role of foreign banks is even more significant, as approximately 30 percent of the total trade of the country is transacted through them. Major portion of the trade financing is for importers to establish letters of credit

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Chapter # 9
PROBLEMS I SOUGHT
During my Six weeks stay in (HBL Grain Market Branch Hafizabad) I found various problems, which I think, so should be resolved for the better functioning of the Bank. Some of these problems are of such nature that their solution will help the Bank and its workers in cooping in this complex world of globalization. THESE PROBLEMS ARE: 1) There is a lack of on-line information in the Bank about the changes taking

place in the world of Banking. 2) 3) A customer cannot find any kind of journal or newspaper there. Educated staff is there but they are not specialized in their respective fields

e.g. accounting, finance and depositing etc. 4) In early days of month there is a great rush of customers, which cause

inconvenience for the officer concerned and cashier as well. 5) 6) 7) Separate cabins are not available for the staff. A separate counter for ladies is not maintained there. After entering into Bank premises a customer wants to see and meet manager

himself, (because of not having a separate room for him) which some time causes inconvenience for the manager. 8) Only one computer is available there, which is insufficient for the modernized

functioning of the day. 9) No specialist in computer is there. 10) Messengers in the Bank are not quick in obeying the orders of manager. the

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RECOMMENDATION I PROPOSE
1) 2) 3) I will give following suggestions for the better function of the Bank: The management should provide better arrangement for the employees. The daily newspapers and journals should be provided to the employees and

customers visiting there. 4) A separate hajj applications acceptance counter should be provided to

overcome inconveniences faced by the customers. 5) 6) 7) 8) A separate ladies counter should be there The Bank management should be very careful while granting the loans. Personal interests should not be given importance and customers Personal credit worthiness must be carefully scrutinized public relation desk

should be established in each and every branch for guidance as well as redresses of grievance of customers at the spot. 9) 10) policy. 11) New talent / professionals should be hired to coupe with the competitive Online Banking should be introduced in all the branches. Aggressive publicity campaign must be introduced through press and

Electronic media for new products and scheme by initiating vigorous marketing

demand in the industry. 12) Information technology should be introduce in all the branches to enhance the

efficiently. 13) The commission on government rashed enhanced / made rational to increase

the Banks profitability. 14) The financial statement should be made more transparent and reliable. Consumer financing should be initiated to capture the market share.HBL

15) 16)

Employees induction, promotion and transfer should always be

made on merit.

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GLOSSARY
A.I.O.U: D.D: T.T: A/C: O.B: O.B.D: P.L.S: Dr: Cr: C.A: F.L: L.G: D.F: L.C: R.F: F.A.P.C: Allama Iqbal Open University Islamaba Demand Draft Telegraphic transfer account Other Bank other Bnak Draft Profit and Loss Account debit Credit Current Account Flexi loan Letter of Guarantee Demand Finance Letter of Credit Running Finance Finance against Packing Credit

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BIBLIOGRAPHY
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