MONEY & BANKING MGT411

“Practical knowledge of banking”

PREPARED BY:
MC070400829 NOORUDDIN

TEACHER: DR. TALAT AFZA

Executive Summary______________________________________________

Soneri Bank Limited (the Bank) is engaged in banking services, and operates 118 branches,
including four Islamic banking branches in Pakistan. The Bank operates in four segments:
corporate finance, trading and sales, retail banking and commercial banking. Corporate
finance includes syndicated financing and services provided in connection with mergers and
acquisitions, underwriting, privatization, securitization, research, debt, equity, syndication,
initial public offering (IPO) and secondary private placements. Trading and sales segment
includes fixed income, equity, foreign exchanged, commodities, credit, funding, own position
securities, brokerage debt and prime brokerage. Retail banking segment includes retail
lending and deposits, banking services, private lending and deposits, trust and estates
investment advice and merchant/commercial/corporate cards. Commercial banking includes
projects finance, real estate, export finance, trade finance, factoring and leasing.

The essence of business philosophy is to cater to the banking requirements of small &
medium sized entrepreneurs, providing them qualitative & competitive services with
emphasis on encouraging exports. Nearly forty percent of our credit portfolio is related to
export financing and credit decisions are taken within 48 hours that is why we say:

“We have more time for you”

2
Table of Contents___________________________________________________

Executive Summary…………………………………………………….2

1) Bank Introduction & History …………………………………….4

2) Organizational Structure of Bank………………………………….7

3) Product & Services Offered………………………………………...9

4) Balance Sheet Analysis…………………………………………..16

5) Central Bank Role………………………………………………..23

6) Conclusion……………………………………………………….28

7) Bibliography……………………………………………………..29

Appendix………………………………………………………………30

3
1.1 BANK INTRODUCTION & HISTORY

Incorporated on September 28, 1991 the first Branch of Soneri Bank Limited formally
opened doors for operations in Lahore on April 16, 1992 followed by Karachi Branch on
May 09,1992. The bank now operates with 117 branches spread all over Pakistan including
the Northern Areas of the country where no other private bank has ventured so far. Expansion
of branches is based on a policy of maintaining a balance between the urban and rural areas
with a view to offering services even in the remote areas of Pakistan. Pleasant and
sophisticated atmosphere has been provided in the branches which are all fully air-
conditioned and computerized.

The bank is looking forward to attain further growth through activating the areas of SMEs
and Agricultural Credit.

The Pakistan Credit Rating Agency Limited (PACRA) has maintained bank’s credit rating at
“AA-” for the long term and “A1+” for the short term and “A+” for the Term Finance
Certificates reflecting bank’s well maintained risk profile with preserved sound asset quality.
We take this opportunity to thank the Ministry of Finance and State Bank of Pakistan for
their continued support and guidance.

Registered Office
Rupali House 241-242, Upper Mall Scheme
Anand Road, Lahore – 54000

HEAD OFFICE:
87, Shahrah-e-Quaid-e-Azam,
4
P.O. Box No. 49, Lahore.
Tel: 6368142-48 Fax: 6368138
Swift: SONEPKKALHR E-mail: main.lahore@soneribank.com

CENTRAL OFFICE:
5th Floor, Al-Rahim Tower,
I.I. Chundrigar Road, P.O. Box No. 5856, Karachi.
Tel: 2439562-67, 2444401-05 Fax: 2439561 2446661
Swift: SONEPKAXXX E-mail: info@soneribank.com

1.2 CORPORATE INFORMATION

Chairman
Mr. Alauddin Feerasta
Chief Executive Officer
Mr. Safarali K. Lakhani

Directors
Mr. Nooruddin Feerasta
Mr. Inam Elahi
Mr. S. Ali Zafar
Mr. Abdul Hayee
Mr. Shahid Anwar (NIT Nominee)
Mr. Manzoor Ahmed (NIT Nominee)

Company Secretary
Mr. Abdul Hayee

Audit Committee
Mr. Nooruddin Feerasta (Chairman)
Mr. S. Ali Zafar (Member)
Mr. Shahid Anwar (Member)

5
Mr. Abdul Hayee (Member & Secretary)

Auditors
A.F. Ferguson & Co.
Chartered Accountants

Legal Advisor
Manan Associates, Advocates

Registrar and Share Transfer Agent

THK Associates (Private) Ltd.
Ground Floor, State Life Building No. 3
Dr. Ziauddin Ahmed Road, Karachi-75530
UAN: +9221-111-000-322
Fax: +9221-5655595

STOCK EXCHANGE : SNBL

PRESENT PRICE :

6
2.1 ORGANIZATIONAL STRUCTURE

TOP LEVEL MANAGEMENT

MR ALAUDDIN FERMR. ALAUDDIN

FEERASTA

MR. SAFAR ALI K LAKHANI CEO

MR. NOORUDDIN FEERASTA

DIRECTOR

MR. IMAM ELAHI DIRECTOR

MR. S. ALI ZAFAR DIRECTOR

MR. ABDUL HAYEE DIRECTOR

7
 MIDDLE & LOWER MANAGEMENT

DIRECTORS

AUDITORS SECRETARY

SEVP EVP

VP AVP

GRADE I GRADE 2

GRADE 3

8
3.1 PRODUCTS & SERVICES OFFERED

The following are the services and products offer by the bank to facilitate customer in
providing them their savings in order to make future investment and growth for the
organization

SPECIAL NOTICE DEPOSITS

Period Rate of Return

Minimum investment of Rs. 10,000/- Profit payment on
maturity as well as rollover of profit
7 days 6.00% p.a
30 days 8.00% p.a

PLS SONERI SAVINGS ACCOUNTS

Rate of Return
DESCRIPTION
p.a
Minimum balance of Rs. 5,000/- must be maintain per
month on daily basis other wise Incidental Charge of Rs.
50/- will be deducted.
Profit payment is on half yearly basis.
Balance Upto Rs. 100,000 5.00 %.
Balance Over Rs. 100,000 but upto Rs.1.0 Million 8.00 %.
Balance Over Rs. 1.0 Million but upto Rs. 10.0 Million 10.00 %.
Balance Over Rs. 10.0 Million 12.00 %.

PLS TERM DEPOSITS

Rate of Return
DESCRIPTION
p.a
Minimum investment of Rs. 10,000 Profit payment
according to term, Profit rollover facility available.
Term 1 month 8.00 %.
Term 3 month 9.00 %.
Term 6 month 10.00 %.
Term 1 year 11.00 %.
Term 2 years 12.50 %.

9
 Term 3 years 13.00 %.

CERTIFICATES OF DEPOSITS

DESCRIPTION %age
Pre mature encashment will be made on the return of
PLS Term Deposit. Minimum period after which
encashment will be made is 90 days
Soneri Savings Certificates (3 Years Term - New
Scheme)
11.50%
Profit Payment on Half Yearly basis, minimum deposit
start from Rs. 10,000/-
Golden Deposit Certificates (5 Years Term)
Profit Payment on monthly basis, minimum deposit start 10.25%
from Rs. 10,000/-
Diamond Deposit Certificates (New Scheme ef
1.1.2009)1 Year
12.00%
Profit Payment on monthly basis, minimum deposit start
from Rs. 10,000/-
Diamond Deposit Certificates (New Scheme ef
1.1.2009)2 Year
13.00%
Profit Payment on monthly basis, minimum deposit start
from Rs. 10,000/-
Diamond Deposit Certificates (New Scheme ef
1.1.2009)3 Year
14.00%
Profit Payment on monthly basis, minimum deposit start
from Rs. 10,000/-
Diamond Deposit Certificates (3 Years Term - Old
Scheme)
11.50%
1 Year Profit Payment on monthly basis, minimum
deposit start from Rs. 10,000/-
Diamond Deposit Certificates (3 Years Term - Old
Scheme)
12.00%
2 Year Profit Payment on monthly basis, minimum
deposit start from Rs. 10,000/-
Diamond Deposit Certificates (3 Years Term - Old
Scheme)
13.00%
3 Year Profit Payment on monthly basis, minimum
deposit start from Rs. 10,000/-
Soneri Premium Deposit (12 Months Period) NEW
Profit Payment on maturity, minimum deposit start from 15.00%
Rs. 10,000/-

10
NOTE “ANNUALISED RATES OF EXPECTED PROFIT FOR DIFFERENT TYPES OF PLS DEPOSITS

CURRENT ACCOUNTS
Rate of Return
Term
p.a
Current Deposit Account
Free Statement of Account Every Six Month
NIL
Minimum balance requirement Rs.10,000/-
FREE ATM Card, Online Banking, T-Banking etc
Basic Banking Account
Free Statement of Account Every Six Month
NIL
No Minimum, 4 Cheques Issuance any additional will be
charge FREE ATM Card, Online Banking, T-Banking etc

ISLAMIC BANKING PRODUCT

DESCRIPTION Profit p.a

Soneri Jari Account (Islamic Banking Product)
Free Statement of Account Every Six Month
NIL
No minimum or maximum limit
FREE ATM Card, Online Banking, T-Banking etc
Soneri Bachat Account
Free Statement of Account Every Six Month Profit calculated
Initial starting investment of Rs. 100, Profit payment on on monthly
quarterly basis.fFREE ATM Card, Online Banking, T- average
Banking etc
Soneri Munafa Account
Free Statement of Account Every Six Month Profit calculated
No minimum or maximum limit on daily product
FREE ATM Card, Online Banking, T-Banking etc
Profit payment at
Soneri Meaadi Account
the quarterly after
Minimum deposit of Rs.10,000/- for period 1, 2,3,4,5
deduction of exp
years and quarterly and halfyearly. Fund utilize on the
and management
basis and in accordance with the Shariah Principle
fee

E BANKING & CARDS

DESCRIPTION Charges
11
 Simple ATM Card
Free for the first time, Issuance Charges Rs. 200 + Ex.
Duty Rs. 15 charges on 1Link ATMs and Rs. 5 on
NIL
Balance Inquiry on M Net, POS Transaction allowed, Rs.
25,000/- daily limit for withdrawing cash and 250,000
on Fund transfer facility
Visa Classic Card
Free for the first time, Issuance Charges Rs. 200, 3% on
purchase on POS terminal, Can be used outside the
150 p a
country (conversion rate applied), 2 Year Expiry from the
date of Issue, Daily limit for withdrawing cash is Rs.
35,000/- and for Fund transfer Rs. 250,000/
Visa Gold Card
Minimum Balance requirement for issuance of card is
Rs. 50,000/- for the last six month, Rs. 500, 3% on
purchase on POS terminal, Can be used outside the
country (conversion rate applied), 2 Year Expiry from the 500 p.a
date of Issue, Daily limit for withdrawing cash is Rs.
50,000/- and for Fund transfer Rs. 250,000/. Running
Finance Facility available (condition applied). Easy to
use every where
Online Banking
Free for all the customer, no charges applied. Simple NIL
Balance Inquiry,
Fund Transfer
Fund transfer within the same bank is Free upto
250,000/- . 1Link member banks the charge per
transaction is Rs. 50/-
Utility Bills Payment
Utility bills can be paid through bank ATM Machine,
KESC, SSGC, PTCL, Warid etc
Telephone Banking
24 Hour Telephone Banking Service available for
national and international customer
Cheque Free Banking
Now customer can withdraw money from their account
without having cheque. All they need to do is to give
there atm card to the online banking teller at bank can
cash upto 300,000

NOTE “WITHDRAWL ABOVE RS 25,000/- PER DAY WILL LEVY WITHHOLDING TAX.

CONSUMER FINANCING
12
DESCRIPTION Markup Rate
Soneri Car Finance
For Cars upto 1800 CC Rs. 1.0 M
For Cars exceeding 1800 CC Rs. 2.0 M
Down Payment
On finance of upto Rs. 1.0 M : Minimum 15% of Car
Price.On finance exceeding Rs. 1.0 M
but not more than Rs. 2.0 M : Minimum 20% of Car
17%
Price.
Payment Period
Payment period upto 5years
Processing Fee
Rs. 2000/- per application up front (Refundable)
Prepayment Penalty
2% on outstanding principal
Soneri Ghar Finance
Financing Amount:
Purchase / Construction of residential property up to Rs.
5,000,000/-
Extension / Renovation on own property up to Rs.
2,000,000/-
Fee and Legal Charges
Processing fee Rs. 2,500/- or 0.50% of the finance
amount which ever higher
Eligibility:
Confirmed Permanent Employee/ Self Employed Floating markup
Professionals / Business person. rate @4.5%
Minimum length of confirmed service with present prevailing SBP
employer must be at least for 5 years. discount rate @
Minimum length of practice by Self Employed 16.5%
Professionals / Business person must be at least for 2
years.
Applicant’s age must not be more than 60 years at the
time of maturity of the finance being applied for.
Monthly repayment installments not to exceed 40% of
the net take home salary / 40% of declared monthly
income.
Should have no over due track record from any bank in
Pakistan
Life insurance cover for the loan amount.
Soneri Personal Finance
Eligibilty
Salaried persons in permanent employment with legal 19.00% p.a
entities approved by the Bank who meet our other
conditions to qualify for the finance.
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 Maximum Amount of Finance
Rs. 500,000/- or Five times of applicant’s one month
gross salary

DOMESTIC BANKING CHARGES

Term Charges
Upto Rs. 10,000/ -
0.20 Min or Rs.
REMITTANCE 30/- Rs.10,001/=
to Rs.100,000/-
Drafts, MTs and TTs drawn & payable 0.15% Minimum
on our own branches: Rs.50/=
Telex Charges = Rs, 50/- Over Rs.100,000/=
Postages = Rs. 30/- 0.055% Minimum
Rs.200/=

Payorders Intercity upto

Cancellation Charges = Rs. 25/- 500,000/- Rs.100/-
Issuance of Duplicate = Rs. 50/- and over Rs 200/-
In Town Rs. 250/-
Same day outward clearing
Other branches Rs.
Cheque return charge due to
150/- instrument
0.40 per quarter
Inland LC
Minimum Rs. 400
Advising Rs. 500/-
per quarter
Duplicate Statement of Account Rs 50/-
Issuance of Bank Account Certificate Rs. 50/-
Issuance of Bank Balance Confirmation Certificate Rs. 100/-
BILLS
0.20 or Rs.25/-
plus courier
Through own branches
0.35 or Rs.45/-
Through branches of other banks
plus courier

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4.1 BALANCE SHEET ANALYSIS
ITEMS 2007 2006
(000’s) (000’s)
ASSETS
Cash and Balance with Treasury Banks 1 5,861,205 5,551,302
Balances with Other Banks 2 4,349,673 6,603,003
Lending to financial and Other Institutions 3 3,175,009 3,193,405
Investment – net 4 19,181,562 16,724,253
Advances – net 5 40,154,449 35,412,248
Operating fixed assets 6 2,150,955 1,929,885
Deferred tax assets - -
Other assets – net 1,981,207 1,315,578
Total assets 76,854,060 70,729,674
LIABILITIES
Bills payable 1,640,514 957,576
Borrowings 5,865,471 8,916,437
Deposits and other accounts 60,150,128 53,000,647
Sub-ordinated loans 1,198,800 1,199,280
Liabilities against assets subject to finance lease - -
Deferred tax liabilities – net 425,398 338,698
Other liabilities 963,270 705,133
Total liabilities 70,240,581 65,117,771
Net assets (Total assets –Total liabilities) 6,610,479 5,611,903
REPRESENTED BY:
Share Capital 4,114,222 3,116,835
Reserves 1,876,669 1,676,602
Unappropriated profit 238,775 400,853
6,229,666 5,194,290
Surplus on revaluation of assets – net of tax 380,813 417,613
6,610,479 5,611,903

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ASSETS – Use of Funds
CASH & BALANCES WITH TREASURY BANKS 1 2007 2006
(000’s) (000’s)
In Hand,
Local currency 1,145, 416 988,046
(Including NPB of Rs. 12,514 (M)
Foreign currency 320,153 234,429
In Transit,
Local currency 8,425 -
Foreign currency 5,991 4,915
With State Bank of Pakistan
Local currency current account 3,921,377 3,499,831
(SBP Act, 1956 U/s 36: banking companies to
maintain a local currency reserve)
Foreign currency current account 176,509 166,039
(Represent foreign currency maintained with SBP)
Foreign currency deposit account against foreign 165,663 509,376
currency deposits mobilized
(Foreign currency cash reserve maintain with SBP
under FE-25 scheme. The foreign currency cash
reserve comprises of an amount equivalent to at least
5% of Bank’s foreign currency deposit)
With National Bank of Pakistan
Local currency current account 117,671 148,666
5,861,205 5,551,302

BALANCES WITH OTHER BANKS 2 2007 2006

(000’s) (000’s)
In Pakistan,
On current account 1,139,420 1,242,424
(Markup 10 to 10.75% with maturity 3 months)
On deposit account 2,000,000 4,100,000
Outside Pakistan,
On current account 1,210,253 1,260,579

16
LENDING TO FINANCIAL & OTHER 3 2007 2006
INSTITUTIONS (000’s) (000’s)
Call money lendings 1,500,000 1,750,000
(Markup 9.75% - 10.25% maturity upto 3 months)
Repurchase agreement lendings 1,675,009 1,443,405
(Markup 11.18% - 11.20% p.a ordinary shares)

INVESTMENTS 4 2007 2006

(000’s) (000’s)
Available for sale 13,576,889 10,915,744
(Market T-bills, Pak Investment bond, Fed. Investment
bonds, Fully paid-up ordinary shares, Units of mutual
funds, Fully paid-up preference shares
Held by maturity 5,687,141 5,892,884
Investment at Cost 19,264,030 16,808,628
Less: Provision of diminution in value of invest. (5,700) (5,700)
Investment (net of provision) 19,258,330 16,802,928
Surplus/(deficit) on revaluation of available sale (76,768) (78,675)
securities
Total investments at market value 19,181,562 16,724,253

ADVANCES 5 2007 2006

(000’s) (000’s)
Loan, cash credits, Rf’s etc in Pakistan 37,218,507 32,287,262
Bills discounted and purchased
Payable in Pakistan 298,483 585,220
Payable outside Pakistan 3,288,234 2,955,877
Advances – gross 40,805,224 35,828,359
Provision of non performing advances (650,775) (416,111)
Advances – net of provision 40,154,449 35,412,248

17
OPERATING FIXED ASSETS 6 2007 2006
(000’s) (000’s)
Capital work-in-progress 184,256 71,026
Advances to suppliers and contractors 1,949,595 1,858,859
Intangible assets 17,104 -
2,150,955 1,929,855

LIABILITIES – SOURCE OF FUNDS

Bills Payable 7 2007 2006
(000’s) (000’s)
Bills Payable - In Pakistan 1,640,516 957,576

Borrowings 8 2007 2006

(000’s) (000’s)
In Pakistan 4,895,707 8,498,663
Outside Pakistan 969,764 417,774
5,865,471 8,916,437

18
Deposits & Other Accounts 9 2007 2006
(000’s) (000’s)
Sub –Ordinated Loans – Unsecured 9 2007 2006
Customers (000’s) (000’s)
Listed Term Finance Certificates
Fixed deposits 1,198,800
18,498,298 1,199,280
16,205,806
Savings deposits 28,610,361 21,132,755
Current Accounts 10,377,688 9,503,116
Call deposits 127,181 178,556
Margin deposits 524,604 391,239
Special exporter account - 3,273
Others 117,334 83,914
Total customers 58,255,466 47,498,659
Financial Institutions
Fixed deposits 1,675,959 4,867,758
Savings deposits 218,425 634,003
Current accounts 278 227
Total financial institutions 1,894,662 5,501,988
Total deposits & other accounts 60,150,128 53,000,647

Deferred Tax Liabilities 10 2007 2006

(000’s) (000’s)
Accelerated Tax depreciation 222,339 186,074
Surplus on revaluation of fixed assets
Other Liabilities 11 231,922
2007 250,791
2006
Prov. For diminution in the value of investments (000’s)
1,995 (000’s)
1,995
Markup /return/interest
Prov. Against payableadvances
non-performing in local currency 577,809
- 536,250
65,639
Markup /return/interest
Deficit on revaluation ofpayable in foreign currency
securities 1,068
26,868 1,585
30,533
Unearned commission and income on discounted bills 19,155
425,398 17,630
338,698
Accured expenses 47,109 27,469
Current taxation (provision less payments) - 54,350
Branch adjustment account 238,329 -
19
Provision for employees compensated absences 55,583 37,770
Others 24,217 30,079
963,270 705,133
Share Capital 12 2007 2006
(000’s) (000’s)
Authorized Capital (Ordinary shares of Rs. 10/ each) 500,000,000 500,000,000
Issued Subscribe Paid up Capital
Opening Balance 3,116,835 1,653,494
Shares issued during the year 997,387 1,463,341
Closing Balance 4,114,222 3,116,835
Major Share holders as at 31st

Major share holders Number of % of

Shares held Shareholding
National Investment (Unit) Trust 96,669,576 23.50%
Trustee – Alauddin Feerasta Trust 83,427,820 20.28%
Trustee- Feerasta Senior Trust 81,320,110 19.77%
Trustee- Alnu Trust 40,669,629 9.89%
302,087,135 73.44%

20
Surplus/(Deficit) on Revaluation of Assets 13 2007 2006
(000’s) (000’s)
Fixed Assets 430,713 465,755
Securities (49,900) (48,142)
Surplus of revaluation of fixed asset - net of tax
Surplus on 1st Jan 716,546 770,457
Transfer to unappropriated profit & Related deferred (53,911) (53,911)
tax liability
As on dec 31st 662,635 716,546
Less: related deferred tax liability (231,922) (250,791)
430,713 465,755

21
5.1 CENTRAL BANK ROLE

Regulation R-1 – LIMIT ON EXPOSURE TO SINGLE PERSON

The total outstanding exposure (fund based and non-fund based) by a bank / DFI to any
single person shall not at any point in time exceed 30% of the bank’s / DFI’s equity (as
disclosed in the latest audited financial statements), subject to the condition that the
maximum outstanding against fund based exposure does not exceed 20% of the bank’s /
DFI’s equity.

 Soneri Bank adhere the Regulation R-1 not to expose its fund and non-fund based exceed
to 30%

Regulation R-2 – LIMIT ON EXPOSURE AGAINST CONTINGENT

LIABLITIES
Contingent liabilities of a bank / DFI shall not exceed at any point in time 10 times of its
equity. Following shall not constitute contingent liabilities for the purpose of this regulation:
(a) Bills for collection.
(b) Obligations under Letters of Credit and Letters of Guarantee to the extent of cash margin
retained by the bank / DFI.
(c) Letters of credit/guarantee where the payment is guaranteed by the State Bank of Pakistan
/ Federal Government or banks / DFIs rated at least ‘A’ by a credit rating agency on the
approved panel of State Bank of Pakistan or Standard & Poors, Moody’s or Fitch-Ibca.
(d) Non-fund based exposure to the extent covered by liquid assets.
(e) Claims other than those related to provision of facilities (fund based or non-fund based) to
the banks’ / DFIs’ constituents, where the probability of conversion of these claims into
liabilities are remote.
 Soneri Bank adhere the Regulation R-2 and maintained bank’s credit rating at “AA-” for
the long term and “A1+” for the short term and “A+” for the TFC.

22
Regulation R-3 – MINIMUM CONDITIONS FOR TAKING EXPOSURE
While considering proposals for any exposure (including renewal, enhancement and
rescheduling / restructuring) exceeding such limit as may be prescribed by State Bank of
Pakistan from time to time (presently at Rs 500,000), banks / DFIs should give due
weightage to the credit report relating to the borrower and his group obtained from Credit
Information Bureau (CIB) of State Bank of Pakistan.

 Soneri Bank adhere the Regulation R-3 and all the branches requires to obtain CIB from
SBP before disbursing any loans.

Regulation R-4 – MINIMUM CONDITIONS AGAINST UNSECURED FINANCING

FACILITIES
Banks / DFIs shall not provide unsecured / clean financing facility in any form of a sum exceeding Rs
500,000/- (Rupees five hundred thousand only) to any one person.

For the purpose of this regulation, following shall be excluded / exempted from the per party limit of Rs
500,000/- on the clean facilities:

(a) Facilities provided to finance the export of commodities eligible under Export Finance Scheme.

(b) Financing covered by the guarantee of Pakistan Export Finance Guarantee Agency.

(c) Loans / advances given to the employees of the banks / DFIs in accordance with their entitlement / staff
loan policy.

(d) Investment in COIs / inter bank placements with NBFCs, provided the investee NBFC is rated ‘A+’,
‘A’ or ‘A-’ for long-term rating and at least ‘A2’ for short-term rating or equivalent by a credit rating
agency on the approved panel of the State Bank of Pakistan or Standard & Poors, Moody’s and Fitch-Ibca.

 Soneri Bank adhere the Regulation R-4 and all the branches providing running finance
or personal finance unsecured loan amount does not exceed the required figure i.e
Rs.500,000/-

Regulation R-5 – MINIMUM CONDITIONS AGAINST UNSECURED FINANCING

FACILITIES
While taking any exposure, banks / DFIs shall ensure that the total exposure (fund-based and
/ or non-fund based) availed by any borrower from financial institutions does not exceed 10
times of borrower’s equity as disclosed in its financial statements

It is expected that at the time of allowing fresh exposure / enhancement / renewal, the current
assets to current liabilities ratio of the borrower shall not be lower than 1:1. However, in
exceptional cases, banks / DFIs may relax this ratio upto 0.65:1

 Soneri Bank adhere the Regulation R-5 and all the branches before disbursing loans
checks the borrower equity does not exceed 10 times

23
Regulation R-6 – EXPOSURE AGAINST SHARES /TFC’S AND ACQUISITION OF
SHARES
(a) take exposure against the security of shares / TFCs issued by them.

(b) provide unsecured credit to finance subscription towards floatation of share capital and
issue of TFCs.

(c) take exposure against the non-listed TFCs or the shares of companies not listed on the
Stock Exchange(s). However, banks / DFIs may make direct investment in non-listed TFCs.

(d) take exposure on any person against the shares / TFCs issued by that person or its
subsidiary companies. For the purpose of this clause, person shall not include individual.
take exposure against ‘sponsor director’s shares’ (issued in their own name or in the name of
their family members) of banks / DFIs.

(f) take exposure on any one person (whether singly or together with other family members
or companies owned and controlled by him or his family members) against shares of any
commercial bank / DFI in excess of 5% of paid-up capital of the share issuing bank / DFI.

(g) take exposure against the shares / TFCs of listed companies that are not members of the
Central Depository System.

(h) take exposure against unsecured TFCs or non-rated TFCs or TFCs rated below ‘BBB’ or
equivalent. Exposure may, however, be taken against unsecured / subordinated TFCs, which
are issued by the banks / DFIs for meeting their minimum capital requirements, as per terms
and conditions stipulated in BSD Circular No. 12 of August 25, 2004.

B) ACQUISITION OF SHARES:

i) Banks / DFIs shall not own shares of any company / scrips in excess of 5% of their own
equity. Further, the total investments of banks in shares should not exceed 20% of their own
equity.

i) The banks/DFIs may also take exposure in future contracts to the extent of 10% of their
equity on aggregate basis.

 Soneri Bank adhere the Regulation R-6

Regulation R-7 – GUARANTEES

The requirement of security can also be waived by the banks / DFIs in cases of guarantees
issued to Pakistani firms and companies functioning in Pakistan against the back to back /
counter guarantees of branches of guarantee issuing bank / DFI or banks / DFIs rated at least

24
‘A’ or equivalent by a credit rating agency on the approved panel of State Bank of Pakistan or
Standard & Poor, Moody's, and Fitch-Ibca.

 Soneri Bank adhere the Regulation R-7 and maintain US$250,000 subject to internal
credit control and providing SBP with FE-25 statement frequently

REGULATION R-8 -CLASSIFICATION AND PROVISIONING FOR ASSETS

In addition to the time-based criteria prescribed in Annexure-IV, subjective evaluation of

performing and non-performing credit portfolio shall be made for risk assessment and, where
considered necessary, any account including the performing account will be classified, and
the category of classification determined on the basis of time based criteria shall be further
downgraded. Such evaluation shall be carried out on the basis of credit worthiness of the
borrower, its cash flow, operation in the account, adequacy of the security, inclusive of its
realizable value and documentation covering the advances….

 Soneri Bank adhere the Regulation R-8 and provide necessary information to SBP on
time to time basis regarding performing and non-performing credit portfolio

REGULATION R-9 -ASSUMING OBLIGATIONS ON BEHALF OF NBFCs

The total amount of guarantees issued by an NBFC, and accepted by the banks, on the
strength of which the exposure will be allowed by the commercial bank / DFI, will not
exceed per party limit of the bank / DFI as mentioned in Regulation R-1. Before taking
exposure against the guarantee of NBFC, banks / DFIs shall ensure that total guarantees
issued by an NBFC in favour of banks / DFIs do not exceed 2.5 times of capital of the NBFC
as evidenced by the latest available audited financial statements

 Soneri Bank adhere the Regulation R-9 and doesnot exceed 2.5 times of capital of NBFC

REGULATION R-10- FACILITIES TO PRIVATE LIMITED COMPANY

Banks / DFIs shall formulate a policy, duly approved by their Board of Directors, about
obtaining personal guarantees of directors of private limited companies. Banks/DFIs may, at
their discretion, link this requirement to the credit rating of the borrower, their past
experience with it or its financial strength and operating performance.

 Soneri Bank adhere the Regulation R-10 and make sure proper documents should be
obtain before facilitating private limited company

REGULATION R-11- PAYMENT OF DIVIDEND

Banks / DFIs shall not pay any dividend on their shares unless and until:
(a) they meet the minimum capital requirements as laid down by the State Bank of Pakistan
from time to time;

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(b) all their classified assets have been fully and duly provided for in accordance with the
Prudential Regulations and to the satisfaction of the State Bank of Pakistan; and
(c) all the requirements laid down in Banking Companies Ordinance, 1962 relating to
payment of dividend are fully complied.

 Soneri Bank adhere the Regulation R-11 provide its shareholder regular dividend as well
as right shares according to the banking companies ordinance, 1962

REGULATION R-12- MONITORING

While extending fund based facilities to borrowers against hypothecation of stock and / or
receivables on pari-passu basis, banks / DFIs shall obtain monthly statements from borrowers
that contain a bank-wise break-up of outstanding amounts with the total value of stocks and
receivables there-against.

 Soneri Bank adhere the Regulation R-12 and provide provide necessary statements on
monthly basis which contains the information as per laid down under this regulation

REGULATION R-13- MARGIN REQUIREMENTS

Banks / DFIs are free to determine the margin requirements on facilities provided by them to
their clients taking into account the risk profile of the borrower(s) in order to secure their
interests. However, this relaxation shall not apply in case of items, import of which are
banned by the Government. Banks / DFIs are advised not to open import letter of credit for
these items in any case till such time the lifting of ban on any such item is notified by the
State Bank of Pakistan.

 Soneri Bank adhere the Regulation R-13 and before opening any LC it will obtain special
code from SBP and follow the instructions as laid under.

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6.1 CONCLUSION

Soneri Bank was incorporated in 1992 as a public limited company with paid up capital of
Rs.300(M). Over the last 16 years the bank has achieved sustained growth with a network of
117 branches across the country. The equity stands at Rs. 6.610(bn) and total assets of PKR
Rs. 76.854 (bn) at the close of the year 2007.

My personal experience with the bank is that when I visited Soneri Bank head office which is
located at 5 th Floor, Central Office, Al Rahim Tower , 1.1 Chundrigar Road, Karachi, I have
being overwhelmed by the staff and when I request them to assist me in my report
assignment of my Virtual University they offer me with great help. Firstly, I have being
introduced by different department of the bank i.e The General Manager’s office of the South
region is on the 2nd Floor of the same building than they have Soneri Bank Data Center at 7 th
Floor alongwith is the HR Department on the same floor and than they have other
miscellaneous department on different floor. For more detail they asked me to visit any
branch manager which will help in this context further. So, I visited Senior staff member of
Soneri Bank Limited Garden Branch he assist me with all the necessary information on the
part of the bank.

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6.1 BIBLIOGRAPHY

Money and banking , Dr Talat Afza, Lecture Notes

Soneri Bank, Annual Reports
o Year 2005 (Audited)
o Year 2006 (Audited)
o Year 2007( Audited)
o Year 2008 3rd Quarter (Unaudited)
State Bank of Pakistan Prudential Regulation for Corporate and Commercial
Banking
State Bank of Pakistan BPRD Circulars
PACRA Rating for Banking and Other Financial Institutions
How to write Annual Report By Joane Fritz, About.com
Writing on the Job: A Norton Pocket Guide By John C. Brereton & Margaret A.
Mansfield.
Effective Writing, Stunning Sentences, Powerful Paragraphs and Riveting Reports By
Bruce and Ross-Larson
Dawn Newspapers for updated information
Instruction Circulars of Soneri Bank Limited
Economic Reviews for Banks and their activities.
State Bank of Pakistan, Website, http://www.sbp.gov.pk
Soneri Bank website, http://www.soneribank.com

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7.1 APPENDIX

Soneri Bank Annual Report for the Year 2007 is available at the following link. Due to the
size and requirement it will not appended with this report

Direct Link to Download

http://www.soneribank.com/soneribank/html/anualreport2007.pdf

State Bank of Pakistan Prudential Regulations for Commercial Banking can be download as
follows.

Direct Link to Download

http://www.sbp.org.pk/publications/prudential/PRs-Corporate.pdf

The Pakistan Credit Rating Agency Limited (PACRA) banking rating methodology can be
download as follows

Direct Link to Download

http://www.pacra.com/RMethodology/Bank%20Rating%20Methodology.pdf

The Pakistan Credit Rating Agency Limited (PACRA) bank loan and recovery rating can
be download as follows

Direct Link to Download

http://www.pacra.com/RMethodology/BLR%20Methodology.pdf

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