HR

THE BANK OF PUNJAB
CHAPTER NO. 1
BANKING HISTORY
INTRODUCTION
WHAT IS BANK?
EVOLUTION OF BANKING IN PAKISTAN
KINDS OF BANKS
BANKING SECTOR REVIEW
1
DEPARTMENT OF COMMERCE
FACULTY OF ADMINISTRATIVE SCIENCES KOTLI A.K.
THE BANK OF PUNJAB
INTRODUCTION
1.1
WHAT IS BANK?
A bank is institution for the custody, loan or exchange of money for sanctioning
credit, for transferring funds by domestic and foreign bills of exchange. It is a pipeline
through which currency moves in to and out of circulation. As it is clear from the
definition of banking, the main activity or function of banking is borrowing and
lending of money with a margin of gain. However, as far as the present day banking is
concerned, there is a number of different, setup under specific different Objectives,
performing various functions.
DEFINITION: According to Banking Companies Ordinance, 1962, section 5(6)

Banking means acceptance for the purpose of lending or investment, of deposit
money from the public, repayable on demand or otherwise.
1.2
EVOLUTION OF BANKING IN PAKISTAN
The State Bank of Pakistan was set up on July 1 1948. As the central bank of the
country. At the time of independence it was decided that Reserve Bank of India would
provide the central bank services to both Pakistan and India. The establishment of
central bank was necessary because Reserve Bank of India refused to allow credit
against securities to Government of Pakistan. The share in cash of Rs. 750 million
from the joint assets was not handed over to Pakistan.
In the developed societies, the banks do not have to make many efforts in mobilizing
savings, as it has become a second habit with the people. The commercial banker
financing the short and long-term capital needs of the business. The loan and
discounters of commercial banks include real state mortgages and long term loans,
which extend to as long a period as ten years.
These banks also act as insurance agents and underwrites, provide brokerage services
and implement domestic as well as foreign economic policies of the Government.
Commercial banks in developing countries have to make vigorous efforts of resource
mobilization at all levels. However, with the passage of time the commercial banking
2
THE BANK OF PUNJAB
operation is undergoing remarkable qualitative change. In Pakistan for instance,

banking facilities are being extended to the unbaked places. Planed efforts are being
made to enhance the supply of bank advance to the new priority sectors in consonance
with the present day socio-economic needs.
The commercial banks in Pakistan were established as under:
(a) Habib Bank Limited was set up on August 25, 1941 at Bombay. Its head
office was shifted to Karachi on August 7, 1947.
(b) Allied Bank Limited was established in 1941.
(c) Muslim Commercial Bank Limited was set up on July 9, 1947 at Calcutta.
Its head office was transferred to Dacca on August 17, 1948. Again its
head office was shifted to Karachi on August 23, 1956.
(d) National Bank of Pakistan was established on November 9, 1949 at
Karachi.
(e) The Habib Bank (overseas) Ltd. Was set up on August 9, 1952 at Karachi.
(f) The United Bank Ltd was established on November 7, 1959 at Karachi.
(g) Standard Bank Ltd was set up on February 14, 1963 at Karachi.
(h) Commerce Bank Ltd was started on April 27, 1963 at Karachi.
(i) Sarhad Bank Ltd was formed on January 20, 1970 at Karachi.
(j) The Bank of Punjab was established on July 26, 1989 at Lahore, which
was established under the Bank of Punjab Act 1989.
1.3
KINDS OF BANKS
Total financial institutions in Pakistan are 177, which are separated in the following
manner:
23 Domestic Commercial Banks.
21 Foreign owned banks
16 Investment Banks
32 Leasing Companies
46 Modarbas
39 Mutual Funds
3
THE BANK OF PUNJAB
Paid up capital of all these institutions is almost Rs. 94 billion or US $ 1.7 billion.
Total credit portfolio of the country is Rs. 750 Billion. The classification of banks
according to their functions is difficult. It is due to overlapping of functions.
The commercial banks are doing the function of saving bank. The exchange banks are
performing the duties of commercial banks. Anyhow the following is the functional
classification of banks.
1.3.1 CENTRAL BANK

The central bank is the leader of all other banks. It does not compete for profit. It has
a right to issue notes. It is a bank of government and commercial banks. It controls the
operations of other banks for monetary and economic stability in the country.
1.3.2 COMMERCIAL BANK

The commercial bank receives surplus money from the public and lends to others who
need funds. The bank collects cheques, bills of exchange etc. for customers. It
transfers money from one place to another. It provides agency and general utility
services. The purpose of a commercial bank is to earn profit.
1.3.3 AGRICULTURAL BANK

This bank provides loans to farmers for purchase of seeds, fertilizers, implements,
fencing, payment of land and improvement of land and equipments. The main purpose
of the bank is to develop agricultural sector.
1.3.4 INDUSTRIAL BANK

The bank meets the credit needs of the industries for short and long term. The funds
are required for purchase of raw material, payment of day-to-day expenses,
machinery, building extension and replacements.
1.3.5 CO-OPERATIVE BANK

The bank is opened by persons of similar occupation living in same areas for
providing banking facilities. The bank is helpful to farmers and small producers. In
Pakistan the cooperative bank is registered under the cooperative societies act.
1.3.6 SAVING BANK

4
THE BANK OF PUNJAB
The bank collects saving of people having low income. The people can open account
in saving bank. They can take money back during working hours. A notice is
necessary if the amount exceeds a certain limit. The purpose of this bank is to develop
saving habits among the people with low earning.
1.3.7 EXCHANGE BANK

The exchange banks have their head offices in foreign countries. Such banks deal in
foreign exchange. The banks offer finance to foreign traders, import and export of
goods and make foreign payments.
1.3.8 MORTGAGE BANK

The bank provides loans against land and building for short and long term. The loans
are generally granted for agriculture. In Pakistan there is a need of Mortgage bank. At
present HBFC is doing the work of a mortgage bank in housing sector.
1.3.9 INVESTMENT BANK

The bank is opened to buy and sell shares and other securities. It also provides loans
for purchase of shares and debentures etc. It helps new companies by under writing
the shares, bonds and other securities.
Banking Sector Review

Total Assets Composition
2003 2004 2005
Cash & Bank
12.5 16.1 12.4
Advances
43.6 51.9 52.6
Investment
31
22.2 23
Other Assets
7.7
5.1
6.2
Lending of F1
5.2
4.7
5.8
5
THE BANK OF PUNJAB
Total Assets Composition %age

5.2
7.7
4.7
5.1
5.8
6.2
22.2
23
51.9
52.6
12.5
16.1
12.4
2003
2004
2005
31
43.6
Cash & Bank
Advances
Other Assets
Lending of F1
Investm ent
Total loans of the banking sector shows growth of Rs.206 billion during the nine
month period ended September 30, 2005 from year end figure of 2004. Although this
growth is no where near record growth 38% for the year 2004, however, keeping in
view rising interest rates scenario it includes the market appetite and continuation of
economic growth.
6
THE BANK OF PUNJAB
CHAPTER NO. 2
THE ORGANIZATION
HISTORY
MISSION STATEMENT
OUR CORE VALUES

ORGANIZATIONAL MANAGEMENT
BOARD OF DIRECTORS
AUDIT COMMITTEE AUDITORS
REGISTERED OFFICE
OWNERSHIP
CAPITAL STRUCTURE
FUNCTIONS OF THE BANK OF PUNJAB
BRANCH NETWORK
REGIONAL NETWORK
OPERATING HIGHLIGHTS
MANAGEMENT HIERARCHEY
THE BANK OF PUNJAB

7
THE BANK OF PUNJAB
2.1
HISTORY
The Bank of Punjab was established in 1989,under the Bank of Punjab Act 1989 and
was given the status of scheduled bank in 1994.
The act provided the foundation on which the structure of bank was created. The
entire responsibility of policy formulation and management has been placed, under
the act of 1989 with the board of directors. The bank comprises ten directors, out of
which six directors are appointed by the government (three from civil service and
three prominent personalities from industry, agriculture, commerce etc.) Remaining
four directors are elected amongst shareholders, the criteria for which have already
been laid down in the act. The board is headed by chairman / managing director
appointed by the government who runs the affairs of the bank as per guidelines
provided by the board.
The board of directors fully participates in policy formulation of the bank and meets
after every third month for this purpose. To deal with day-to-day operational matters,
Board constituted a managing committee comprising of six of its members, including
the managing director and five other directors who meet at least once every month.
2.2
MISSION STATEMENT
To exceed the expectation of our stakeholders by leveraging our relationship with the
Government of Punjab and delivering a complete range of professional solutions with
a focus on programme driven products and middle tier markets through a motivated
team.
OUR CORE VALUES:
Our customers
Profitability
Corporate social responsibility
Recognition and reward
Excellence
8
THE BANK OF PUNJAB
2.3 ORGANIZATIONAL MANAGEMENT

2.3.1 BOARD OF DIRECTORS
Name
Mr. Shahzad Hassan Pervez
Mr. Hamesh Khan
Mr. Salman Siddique
Mr. Qaiser Zulfiqar Khan
Mr. Mian Muhammad Latif
Mr.Syed Salman Ali Shah
Mr. Mr. Shahzad Ali Malik
Mr. Mr.Jahangir Siddiqui
Mr. Mr.Gohar Ejaz
Mr. Sikandar Mustafa Khan
Mr. Azizul Hameed
Designation
Chairman
President
Director
Director
Director
Director
Director
Director
Director
Director
Secretary to the Board
2.3.2 AUDIT COMMITTEE

Mr.Qaiser Zulfaqar Khan
Chairman
Mr.Salman Siddique
Member
Mr. Syed Salman Ali Shah
Member
Mr. Shahzad Ali Malik
Member
Mr.Qaiser Zulfiqar Khan
Member
2.3.3 AUDITORS
M/S A.F.Ferguson & Company
Chartered Accountants
2.3.4 REGISTERED OFFICE

7-Egerton Road, Lahore Pakistan
2.3.5 OWNERSHIP
Ownership/Major Shareholders
a. Provincial Government 51.568%
9
THE BANK OF PUNJAB
b. Foreign Funds 0.489%

c.
Individuals 19.669%
2.4 CAPITAL STRUCTURE

AUTHORIZED CAPITAL; At the time of establishment in 1989 the authorized
capital was Rs.200, 000,000 divided into 20,000,000 shares of Rs.10 each.
Paid-up capital was Rs.851, 880,000 divided into 85,188,000 shares of Rs.10 each
2.5 FUNCTIONS OF THE BANK OF PUNJAB

The Bank of Punjab is a commercial bank. It performs the same function that of a
commercial bank;
* Resource mobilization
* Loans and investment
The sun rising over the five wavy lines in emblem symbolizes the dawn of a new era
of progress and prosperity for the land of five rivers and hence for Pakistan.
Furthermore the main objectives of the isolation of cotton flowers and the spikes of
wheat in the emblem is firstly to represent the fact that the economy of Punjab stands
on the agricultural produce especially cotton and wheat and secondly to determine the
emphasis which the bank is to place on development of Agro-based Industrial
Development.
2.6 BRANCH NETWORK

The Bank of Punjab has opened 254 branches as on 31-12-2004. The branches are
well located, in commercial and some residential areas, thus catering to the needs of
business community and private individuals. All branches are air-conditioned, well
furnished and equipped with modern facilities to provide services in a congenial
atmosphere.
10
THE BANK OF PUNJAB
2.7 REGIONAL NETWORK

REGION
FAISALABAD
GUJRANWALA
KARACHI / QUETTA
LAHORE
MULTAN
RAWALPINDI
PESHAWAR
TOTAL BRANCHES
43
45
05
67
63
37
06
2.8 OPERATING HIGHLIGHTS

In the backdrop of the above stated economic scenario where the banks are flushed
with liquidity and the private sector credit is stagnant, the banking sector as a whole is
experiencing extremely difficult times. However, as far as the performance of Bank
during the year under review is concerned the Board is proud to state that, by the
grace of Allah, the Bank was successful in sustaining its growth and the results
achieved during the 2003 are more than satisfactory.
During the year ended December 31, 2004 the Bank earned a pre-tax profit of Rs. 1.7
billion reflecting a growth of 132% over the preceding years profits of Rs. 431.8
million. The Shareholder's equity increased from Rs.3, 305 million to Rs.5, 208
million as at 31 December 2003 with a comfortable Capital Adequacy Ratio of
15.5%.
The deposits of the bank increased by 47 % during the year under review to Rs. 34,
938 million as compared to Rs. 23,767 million as at the last year end while the total
assets increased to Rs. 43, 621 million as at December 31 , 2003 reflecting an increase
of 47 % over the last years figure of Rs. 29, 525 million.
11
THE BANK OF PUNJAB
MANAGEMENT HIERARCHEY
CHAIRMAN
BOARD OF DIRECTORS
MANAGING DIRECTOR
GENERAL MANAGERS
FINANCE
DIV
AUDIT
DIV
CREDIT
DIV
ADMIN
DIV
REGIONAL MANAGERS
OPERATIONAL MANAGERS
12
THE BANK OF PUNJAB
CHAPTER NO.3
ACCOUNTS DEPARTMENT
OPENING OF NEW ACCOUNT
ACCOUNTS OF THE CUSTOMERS
INDIVIDUAL'S ACCOUNT
JOINT ACCOUNT
PARTNERSHIP ACCOUNT
COMPANYS ACCOUNT
TYPES OF DEPOSITS
PLS SAVING BANK DEPOSIT
PLS TERM DEPOSIT
CURRENT DEPOSITS
SHORT NOTICE TERM DEPOSITS (SNTD)
PRIZE SAVING SCHEME
BOOKS RELATING TO CUSTOMERS
ISSUANCE OF A CHEQUE BOOK
CHEQUE
PAYMENT OF CHEQUES
TERMS AND CONDITIONS FOR CHEQUES
13
THE BANK OF PUNJAB
ACCOUNTS DEPARTMENT
3.1
OPENING OF NEW ACCOUNT
The opening of a new account is the establishment of customer banker relationship.

By opening an account at a bank, a person becomes a customer of the bank.
Before a banker opens a new account, he should ascertain whether the person desirous
of opening the account is a desirable customer. The banker should determine the
prospective customer's integrity, responsibility, occupation and the nature of the
business by the introductory reference given at the account opening. Negligence in
this informal preliminary investigation may result in serious consequences not only
for the banker concerned directly, but also for other bankers and the public who may
be affected indirectly.
3.2
ACCOUNTS OF THE CUSTOMERS
There are different accounts of the customers which are discussed as under
3.2.1 INDIVIDUAL'S ACCOUNT

An individual can open either PLS saving account or current account. He can open the
account in any branch of the bank. When an individual asks the bank officer to open
the account, the bank officer asks whether he wants to open PLS saving or Current
Account. After preliminary investigation, application form is given to the individual.
The form contains many options for the operation of the account. Every new account
holder is to be introduced by one existing account holder. After completing the form,
the individual deposits the form to the concerned officer and deposits the initial
amount to the cashier. The officer handling the application verifies the form and asks
the customer to come next day if he requires a chequebook. On the next day a
chequebook is given to customer, now a customer can handle his account freely.
14
THE BANK OF PUNJAB
SPECIMEN SIGNATURE
When an account is opened with a banker, the customer gives the banker a specimen
of the form of signature, which would appear on all his cheques to express the
authority for the payment of cheques drawn on his banker. This specimen is taken
generally on a card specially designed for this purpose and rules for the customers,
full name, and account number are entered on it. If the banker has reasons to doubt the
genuineness of a signature, he should either get it confirmed for his satisfaction or
return the cheque with the remark "signature differ".
PROBLEMS IN INDIVIDUAL'S ACCOUNT
a) Death of the customer
b) Lunacy of the customer
c) Insolvency of the customer
3.2.2
JOINT ACCOUNT
There are the accounts of two or more persons who are neither partners nor trustees.
When such an account is opened, it is necessary that the banker should obtain clear
directions as to whether one or more of them shall operate upon the account.
3.2.3 PARTNERSHIP ACCOUNT

This account is to be operated according to instructions given at the time of opening
the account. Every partner in a firm has an implied power to bind his co-partners by
drawing and endorsing of cheques, the drawing, accepting and endorsing to bills of
exchange and making and endorsing of promissory notes. A partner has an implied
authority to countermand payment of any cheque drawn on the firm's account and the
banker is bound to comply with the instructions issued by that partner. In addition the
account opening form duly signed by all the partners, and the specimen signature
cards containing the specimen signatures of the persons authorized to operate the
account, a partnership letter, duly signed by all the partners in their personal capacity
is also obtained, wherein all the partners assumes the liability of the firm to the bank
as joint and several. This letter is obtained from both registered and non-registered
firms, and is not a substitute for the partnership deed in a registered firm.
15
THE BANK OF PUNJAB
3.2.4 COMPANYS ACCOUNT

The account of the company is opened on the resolution of Board of Directors, which
nominates the persons authorized to operate upon the account. The banker must take
the specimen signatures of the authorized persons, and allow the operations on the
account under those signatures as long as the authority is not terminated. When a
banker received a notice of death, retirement or dismissal of the authorized person, he
should stop the operation on the account and wait for a fresh resolution authorizing
another person for operations. However, the cheques signed by authorized persons
before death, retirement or dismissal should be honored by the banker, because they
were valid instruments before the termination of his authority. Any doubt or suspicion
should be referred to the company. The banker may open the account of newly floated
public limited company without certificates of commencement of business in order to
receive the amount of issued capital from the prospective share holders; but should
not allow any withdrawal from the account till the certificate of commencement of
business's copy is submitted to him. Failure to obtain this certificate necessitates the
refund of the amount to the prospective shareholders by the promoters.
3.3
TYPES OF DEPOSITS
The following types of deposits are offered to the general public in "The Bank of
Punjab".
PLS saving bank deposit
PLS term deposit
Current deposits
Short notice term deposits
Prize saving scheme
3.3.1 PLS SAVING BANK DEPOSIT

On PLS saving Bank deposits, banks pay profit which are not prefixed and is
announced normally in July and January, zakat @ 2.5% is deducted from PLS saving
Bank deposit on first day of Ramazan. A withholding tax @ 10% is also recovered
from the profit paid on PLS saving bank deposits account. Minimum amount to open
PLS saving account is Rs.500/16
THE BANK OF PUNJAB
The deposits are allowed to draw their money by cheques upto a limited amount,
normally fixed by Head Office during a week.
3.3.2 PLS TERM DEPOSIT

Banks also receives deposits for a fixed term. They are cashable on the expiry of
terms along with the profits announced by the banks for that term. The PLS TDRs can
also be cashed before the expiry of terms but no profit will be paid for the remaining
period. The Banks will deduct zakat @2.5% and withholding tax @10% on the
profits.
3.3.3 CURRENT DEPOSITS

Business community keeps their deposits in current accounts. They can withdraw any
amount standing to their credit in current deposits by Cheque without serving any
notice to the bank. Current deposits are also known as demand deposits. The bank
does not pay any profit on such accounts but it recovers incidental charges if a
balance in the current account is below the desired level. Minimum amount to open
current deposit account is Rs.1000/-.
3.3.4 SHORT NOTICE TERM DEPOSITS (SNTD)

The period of this deposit range from 7 to 29 days and over. The profit is calculated
on daily product basis. Likewise PLS, TDR, Zakat is recovered @ 2.5%. If it falls
within Zakat period and withholding tax is deducted @10% on profit paid.
3.3.5 PRIZE SAVING SCHEME

Recently Bank of Punjab has introduced the saving scheme. Bonds are issued at a
minimum price of Rs.5000. On which the bank pays 7%. Moreover the Bank of
Punjab gives 12 prizes of motorcycle every month. These deposits are easily
convertible into cash through bank.
3.4
BOOKS RELATING TO CUSTOMERS
3.4.1 PAY IN SLIP
17
THE BANK OF PUNJAB
When money is to be deposited in the bank, the pay in slip is to be filled. The object
of this book is to provide the customer with the bank's acknowledgment for receipt of
money to be credited his account.
3.4.2 CHEQUE BOOK

A Chequebook contains a number of cheques, which is given to a customer upon
written request. It enables a customer to make withdrawal from his account or made
payment to various parties by issue of Cheque.
3.4.3 PASS BOOK

Passbook is a copy of the customers account as it appears in the books of the bank.
The clerk in this book records Balance.
3.5 ISSUANCE OF A CHEQUE BOOK

Chequebook shall be processed in the following manner.
1. Leaves of Chequebook are counted.
2. Name and account number of the party written on cover and requisition slip.
3. Account number entered on all leaves of the chequebook.
4. Name and account number entered in the chequebook issue register against
the particular cheque series.
5. Deposits in charge will sign on the cover of the chequebook, the
registration slip and initial in the chequebook issuance register.
6. All cheque leaves are stamped the name of the branch.
3.6 CHEQUE
The definition of a cheque makes it clear that there are three parties to it, drawer,
drawee and payee. Drawer is the person by whom or whose authority draws the
cheque. You can say the account holder. Drawee is party, which acts upon the order
of the drawer and pays the money, which is always a banker. Payee is the person to
whom or to whose order the money is to be paid.
18
THE BANK OF PUNJAB
3.7 PAYMENT OF CHEQUES

The primary function of a banker is to receive deposits from public on different
accounts with the obligation to repay them either on demand or after the expiry of a
fixed period. For withdrawals from current, savings, bank RF and CF accounts
constituents draw cheques, which are presented for payment in one of the following
ways:
1. Over the counter for cash payment.
2. Through the clearing where clearing arrangements exist.
3. Over the counter for credit to another person's account with the bank.
As paying bankers can claim protection only when they make the payment of cheques
drawn on them in due course. Thus the main requisites of payment in due course are:
1. The payments should be made in accordance with the apparent tenor of the
instrument, which means what appears on the face of the instrument to be
intention of the parties.
2. The payment should be in good faith and without negligence and
3. The person receiving the payment should be in possession of the instrument
under circumstances, which do not lead to believe that such person is not
authorized to receive the amount.
3.8
TERMS AND CONDITIONS FOR CHEQUES
Terms and conditions for cheques, which a banker must keep in mind, are as
under:
3.8.1 DATE
The Cheque presented for payment should not be a postdated. A postdated Cheque is
one dated later than the date of issue. It should not be paid for the following reasons:
1. The customer may stop payment before the due date of the cheque.
2. The banker has no right to debit customers account before its due date.
19
THE BANK OF PUNJAB
3. If banker pays a postdated cheque in case the customer dies or becomes insane or
insolvent before the cheque is due for payment then he shall have to bear away loss
that may arise out to his action.
4. The banker will lose the statutory protection granted to him for payment in due
course.
3.8.2 SUFFICIENCY OF FUNDS

Sufficient funds must be available in the account to meet the withdrawal
3.8.3 AMOUNT
The amount should be stated in words and figures on the faces of a cheque. If there is
any difference between the two, a banker can pay the amount given in words. But it is
upon the banker either he offers the smaller amount in some instances or returns the
cheque with the remarks "amount in words and figures differs".
3.8.4 MUTILATED CHEQUE

A cheque torn or worn not by the customer in such a way as to give sufficient
evidence of his intention to cancel, it is called a mutilated cheque. Such a cheque
should be returned unpaid by the banker marked mutilated cheque.
3.8.5 PRESENTATION DURING BANKING HOURS

The cheque should be presented for payment during the usual banking hours. In case a
banker pays cheques outside those hours, he exceeds his authority and may be liable
for any damages suffered by his customer as the result.
20
THE BANK OF PUNJAB
CHAPTER NO.4
CASH DEPARTMENT
CASH RECEIPTS
PAY-IN SLIP/VOUCHER POSTING
FOREIGN CURRENCY NOTES
CASH PAYMENT
PAYMENT AUTHORIZATION
DAILY CASH CHECKS
PETTY CASH
EVENING BANKING
21
THE BANK OF PUNJAB
CASH DEPARTMENT
Cash department of BOP is given the complete responsibility of handling all receipt
and disbursement of cash, as a result of transaction in both local &foreign currencies.
It is also responsible for the bookkeeping of these transactions and the safe custody of
cash &near cash securities.
Cash held whether in Pak.Rupee or in the form of F.C. Notes is non-profit earning
asset and therefore overall balance is kept to the minimum, consistent with branchs
known requirements.
4.1
CASH RECEIPTS
The Receiving Cashier when handling cash deposited by customers proceed as under:
He counts cash ensuring that the denomination details and total cash stated
in the pay-in-slip agree with amount of cash deposited.
He checks that amount in words and figures in the pay-in-slip are correctly
written and the details on pay-in-slip and relative counterfoil are identical.
He records the amount received into Cash Receipt Register put his initials
there against and sign the pay-in-slip and relative counterfoil, which is
passed on by him to the authorized officer for verification of the recording
in Cash Receipt Register against the pay-in-slip.
The authorized officer after satisfying as to the correctness of the

recording in Cash Receipt Register stamps the deposit slip and counterfoil
with CASH RECEIVED STAMP retained under his exclusive control
22
THE BANK OF PUNJAB
during the day, and signs the pay-in-slip and counterfoil at the same time
putting his initial against the relative entry in Cash Receipt Register.
The counter file is returned to the depositor and the deposit slip retained
for further processing.
4.1.1 Pay-in Slip/voucher Posting
The amount stated on the pay-in-slip/voucher is posted by the Cashier into

the customers account through the computer terminal provided to him.
Once the transaction is posted, the terminal screen shall display a

transaction number, which the Cashier records on the pay-in-slip/voucher
and passes it on to the authorized officer, who carries out supervisory
control level 1 on the transaction.
The pay-in-slip/voucher is thereafter passed on to the remaining authorized

officers to carry out next levels of supervisory control function and
thereafter pay-in-slip/voucher returned to the concerned Receiving Cashier
for retention until the days cash has been balanced.
4.1.2 Foreign currency notes
Care is exercised in purchasing or accepting Foreign Currency Notes for

credit to customers account, especially those notes, which are not in wide
circulation and also large denomination notes.
Cash Department staff possess the knowledge and experience to verify the
genuineness of Foreign Currency Notes in general circulation, such as
Sterling and US Dollars, but they refer all other currency Notes
deposited/purchased to an officer
4.2
Cash Payment
Procedure for cash payment in Bank of Punjab Mirpur Branch is as under:

4.2.1 Customer cheques for cash Payment duly signed on the reverse by the presenter
will be ensured by the cashier.
4.2.2 The Cashier will ensure that the Cheque is correctly presented.
23
THE BANK OF PUNJAB
4.2.3 Date of the Cheque, which should not be post-dated where date of the Cheque
is more than six months old from the date of presentation.
4.2.4
Before the payment cashier will ensure that amount in words and figures are
same.
4.2.5 Cashier will make sure that the Cheque he receives is pertinent to the concerned
branch.
4.2.6 Cashier will enter the cheques number and amount into Register.
4.2.7
Then cheques will be sent for the authorization to the concerned officer for
further processing.
4.3
Payment Authorization
The authorized officer at least of level-1 authority holder, ensure that the cheques are
correctly drawn by checking that
(a)
The cheque is not post date
(b)
Amount stated on the cheques in words and figures agree with each
other.
(c)
Cheque is drawn on the same branch where it is being presented for

payment.
(d)
Cheque bears signature of the drawer.
(e)
Cheque is not crossed.
(f)
Cheque is not mutilated.
(g)
Cuttings/alterations on cheques have been authenticated by

drawers signatures in full against the cutting/alterations.
(h)
After above checking the authorized officer posts the cheques into
the account.
(i)
Once the Cheque has been processed through all the
applicable
supervisory levels it is returned to the paying cashier for payment.
4.4 DAILY CASH CHECKS

24
THE BANK OF PUNJAB
The Branch Manager before locking away the cash into the safe carry out the
following checks:
i)
Ensure that Receiving and Paying Cashiers Cash Books reflect the
correct position of transaction and Net Cash balance in Till.
ii)
Ensure that summaries prepared by the Main Cashier in respect of total

cash receipts and payments are correct and agree with the position
reflected in Cash Transaction List.
iii)
Ensure that total Cash held summary and closing cash balance position is
correct and the Cash Balance Book reflects the correct position.
iv)
Carryout physical counting of total cash held to agree with the Cash
Balance Book. Scope of daily cash counting is left to the discretion of
Branch Managers. Once the cash has been checked and found correct the
Branch Manager signs the Cash Balance Book and arrange for locking
away the cash into branch vault under his personal supervision and that
of the Main Cashier.
4.5
PETTY CASH
To meet the day-to-day sundry expenses of the branch, the branch Managers using
their discretion may draw appropriate amounts to the debit of Advance Against Petty
Cash Account held with the Main Cashier and recorded in Petty Cash Register.
Daily petty expenses may be disturbed out of petty cash held. These expenses would
normally relate broadly to three types of expenses, i.e. Conveyance, Entertainment,
and Miscellaneous Expenses. Disbursements out of petty cash are made against Petty
Cash Memos duly authorized by the Branch Manager.
At end of counter hours paid Petty Cash Memos is totaled-up for each three types of
expenses and the totals of each type of expense recorded in Petty Cash Register. At
the end of the month, total expenses are credited to Advance Against Petty Cash
Account ensuring that the balance therein is brought down to Nil.
4.6
EVENING BANKING:
This service is restricted to acceptance of deposits whether in the from of cash or

cheques, Demand Drafts, etc. cash accepted is for credit to customer account value
25
THE BANK OF PUNJAB
next working day or for issuance of Pay Order and Demand Drafts dated next working
day.
Where Transfer Cheques are tendered for issue of Pay Orders or Demand Drafts the
transaction account for with same day value. Under no circumstances the instruments
issued and the relative transactions are dated with next day value.
Cash received during Evening Banking hours is recorded into Evening Bank Cash
Receipt Book. Deposit slips and counterfoils are stamped with specially designed
cash received stamp for Evening Banking with date of deposit and wordings For
credit next working day. Validation process of deposit slips and recording there of in
Rough Cash Receipt Book is similar to those applicable to normal banking hours.
At the end of Evening Banking hours, the total cash received as per cahiers Cash
Receipt Book is agreed with the cash physically held. The Cash Receipt Book
reflecting the Chief Cashier and Branch Manager/authorized officer and the cash
together with supporting sign total cash received Pay-in-slips locked away in the
overnight safe operated under dual control.
On next working day Pay-in-Slips are retrieved from the overnight safe and posted
into their respective accounts. Cash from overnight safe is shifted by the Chief
Cashier to the reserve Cash in Strong Room and taken into account for the purpose of
balancing of cash at the close of counter hours.
A similar treatment is given to foreign Currency Notes accepted during Evening
Banking for Credit to customers F.C. Account.
26
THE BANK OF PUNJAB
CHAPTER 5
REMITTANCE DEPARTMENT
DEFINITION
INLAND REMITTANCES
MODES OF REMITTANCES
OUTWARD REMITTANCES
TELEGRAPHIC / TELEX TRANSFERS
DEMAND DRAFTS
PAY ORDERS
CANCELLATION OF REMITTANCE INSTRUMENTS
T.T MESSAGES
27
THE BANK OF PUNJAB
REMITTANCE DEPARTMENT
5.1
DEFINITION
Transfer of funds between two branches of the same bank or branches of two different
banks is called Remittance. A prior arrangement for such transfer of funds must be in
place.
5.2
INLAND REMITTANCES
Transfers of funds between two branches of the same or two different banks located in
the same country and express in local currency is termed as Inland Remittances.
5.3
MODES OF REMITTANCES
Remittances are affected by using following modes of payment: -
5.3.1
(i)
Telegraphic Transfers
(ii)
Demand Drafts
(iii)
Travelers cheques
(iv)
Mail Transfers
(v)
Pay Order
TELEGRAPHIC TRANSFER
This constitutes a telegraphic/telex instruction emanating from one bank/branch to an

other bank/branch to pay a specific amount to a named person either in cash or Credit
to the named persons account maintained with a named branch of a named bank
(Person means individual, firm, company, Association, Club, Trust etc).
28
THE BANK OF PUNJAB
5.3.2
DEMAND DRAFT
Demand Draft is a negotiable instrument issued by a bank / branch requesting a

named bank / branch to pay a specified amount to a named person or to his order, and
as such legal provisions as to crossing, endorsement, collection and payment in due
course are similar to those for cheques. Following are the standard features of a
Demand Draft.
I)
Banks own specially designed stationery on security paper is used.
II)
It has a specified Date of Issue. Demand Draft is valid for payment

within six month from the date of issue.
III) Bearer demand draft is not issued and instead it is made payable to the
order of a named beneficiary.
IV)
Amount in words and figures which the drawee bank / branch is

requested to pay.
V)
Name and address of drawee bank / branch.
VI) Serial and control number of the D.D allotted by the issuing branch.
5.3.3
RUPEE TRAVELLERS CHEQUES
These are also negotiable instruments and are different form drafts that
these come
in pre-printed and pre-signed forms for different denominations and are payable to the
purchaser and considered as a safe means of carrying money as opposed to Cash.
Rupee Travelers Cheques are payable at any of the issuer banks accredited outlets
which may include in addition to bank branches, hotels and big stores as well.
5.3.4
MAIL TRANSFERS
This mode of funds transfer is similar to telegraphic transfer except that the Payment
instruction signed by two authorized signatories is sent to the paying bank / branch
through mail. Banks very rarely use funds transfer through this mode.
5.3.5
PAY ORDERS
29
THE BANK OF PUNJAB
These are also negotiable instrument made out on banks standard security stationary.
But are different from the other above mentioned funds transfer instruments in as
much that these are safe draw i.e. payable at the issuing branch.
5.4 OUTWARD REMITTANCES

As the name denotes the act of transfer of funds constitutes Outward Remittance for
the branch affecting such transfer of funds. The ability of a branch to execute an
outward payment instruction is to a great degree governed by the efficiency of
communication system available in the locality of the branch.
5.4.1
COUNTER VALUE FUNDS
All remittance applications are attended promptly but not executed until good value
covering funds are irrevocably assured. For any reason if an application cannot be
acted upon, the applicant is immediately informed.
5.4.2
DRAWING ON CORRESPONDENT BANKS BRANCHES
When using the services of a correspondent bank branch, the terms and conditions of
the relative Agency Arrangements must be complied with.
5.5
TELEGRAPHIC / TELEX TRANSFERS
Customers desiring to remit funds by means of telegram / telex are required to

complete the Banks standard Remittance Request Form and tender the same at the
Outward Remittance counter. The officer attending such Request Forms process these
as under:
(i)
Check that it is addressed to the branch attending the application.
(ii)
Check that the date on the Request Form is correct.
(iii)
Check that appropriate box for the mode of remittance (Telegram /

Telex or Demand Draft) has been ticked.
(iv)
Check that beneficiarys name and address is clearly written.
(v)
Check that the remittable amount is clearly written.
5.5.1 TRANSACTION RECORDING

The officer after conducting the above referred checking exercise gain access into the
T.T.
30
THE BANK OF PUNJAB
5.5.2 SYSTEM GENERATED TELEX MESSAGES

Once the transaction has been released the relative T.T. payment message in
quadruplicate is generated through system and used as under: (i) Original
Message:
For
application
of
Test
symbol
and
transmission of message to the branch.

(ii) 2nd copy: - For Dispatch to drawee branch as confirmatory copy.
(iii)3rd copy: - For attachment to the Extract of Soneri Account.
(iv) 4th copy: - Departmental copy.
5.5.3
BANK CHARGES
Statements detailing recovery of government dues and bank charges against each
remittance are generated and credit vouchers for total amount to Revenue account as
appearing in the statement are raised in support of the transactions already credited to
the government dues and revenue accounts.
5.6
DEMAND DRAFTS
For issuing Demand Drafts the procedures above is to be followed.
5.6.1
SYSTEM GENERATED DRAFTS
Once the transactions have been released the desired drafts using Banks standard fanfold security stationery are printed through the printer connected to the computer
terminal through which the transaction has been processed. The fan-fold set of the
printed drafts are signed by two authorized officers of the branch who quote their
individual Power of Attorney Number under the signature after comparing the details
of the drafts against those appearing in the Remittance Application Forms which is
also signed by them simultaneously to indicate that the drafts have been issued and
signed.
5.7
PAY ORDERS
Following procedure is adopting in issuing of Pay Order
5.7.1 SYSTEM GENERATED PAY ORDERS

31
THE BANK OF PUNJAB
Once the relative transactions have been released the desired Pay orders using Banks
standard security stationery for this purpose are printed through the computer printer
connected to the terminal through which the transactions were posted. Unlike fan-fold
draft forms a pay order security stationery comprise a single leaf and is divided into
two sections by way of perforation i.e. the main instruments and counterfoil thereof.
Both the sections are printed with the details of the payment i.e. Date of issue, name
of the payee and the amount in words and figures. Once the pay orders are printed
these are signed by the authorized officers of the branch in the same manager as
drafts.
5.7.2 BLANK PAY ORDERS FORMS

The procedure for maintenance of records of stock of blank Pay orders, control
thereon and the balancing of the stocks are the same as detailed above covering draft
forms.
5. 8 CANCELLATION OF REMITTANCE INSTRUMENTS

5.8.1 TELEGRAPHIC TRANSFERS
i)
Telegraphic Funds Transfers once affected cannot be cancelled.

However subject to beneficiarys written consent the funds remitted may
be refunded to the remitting bank by the drawee bank for onward
payment to the remitter.
ii)
An application from the remitter in this connection is to be obtained

explaining the reason for refund of the amount already remitted and the
drawee branch / bank approached for arranging the refund with the
beneficiary.
5.8.2 DEMAND DRAFTS AND PAY ORDERS

i)
Demand Drafts / Pay orders may only be cancelled at the request of the
purchaser, who is required to complete and sign standard request from
for this purpose.
32
THE BANK OF PUNJAB
ii)
The draft / pay order desired to be cancelled is attached to the

cancellation request form. Before cancellation and refund of the amount
of the instrument the following points checked and necessary measures
taken: (a) The draft or the pay order has not been indorsed by the beneficiary.
If indorsed in blank or full it can not be cancelled.
(b) The signatures of the purchasers on cancellation request from match
with those a purchaser form and have been signed in the same
capacity.
iii)
Refund of Pay orders cancelled are made to the debit of Bills PayablePay order issued.
iv)
Only the amount of drafts\pay order is refunded to the purchaser. Bank

charges recovered earlier in respect of drafts drawn on correspondent
banks is credited to Income Account-Miscellaneous Earnings.
v)
Signatures of the officer be torn-off and stapled to the cancelled The

Draft / Pay order should be stamped CANCELLED and the instrument
which should be attached to the relative debit voucher.
5.9
T.T MESSAGES
Two copies of T.T Payment message (original & carbon copy) with test number duly
authenticated by the Officers responsible for tests verification are delivered by the
Telex Department to the officer Incharge of Inward Remittances Section who
acknowledge receipt of the original copy of message on the relative carbon copy.
5.9.1 Telegraphic Transfers Payments

Payment of T.T. Remittances may be effected in any one of the following manners as
appropriate:i)
Through Credit to customers account at Drawee branch. In this case the

payment message is incorporated with Branch name or word
yourselves name and account number of beneficiary.
33
THE BANK OF PUNJAB
ii)
Through bankers pay order. In this case the beneficiary is maintaining an

account with another local bank as indicated in the relative T.T.
message.
iii)
Through issuance of a T.T. Receipt where beneficiarys bank name is

not disclosed and the Instructions simply state Advise & Pay with
name and address of the beneficiary.
Either the beneficiary may have an account with the branch with average and present
balance equal to or more than the amount of the T.T or if the present balance is less
then the amount of the T.T or the beneficiary does not maintain an account with the
branch, he is identified by a customer of the branch whose average and present
balance in his account is equal to the amount of the T.T. if not more.
CHEPTER NO.6
CLEARING DEPARTMENT
INTRODUCTION
CLEARING
CLEARING HOUSE
TYPES OF CLEARING
INWARD CLEARING
OUTWARD CLEARING
MAJOR INSTRUMENT AT CLEARING DEPARTMENT
TYPES OF CHEQUE
COLLECTION OF CHEQUES
PROCEDURE OF CLEARING THE CHEQUES
CHEQUE RETURNED
34
THE BANK OF PUNJAB
CLEARING DEPARTMENT
6.1 INTRODUCTION
Nearly all the banks provide a wide variety of services to their depositors. One
valuable service provided is that of clearing. Clearing department also plays an
important role in performing the activities of the bank. The basic function of clearing
department is to provide services to customers in collection of their cheques of other
banks, whether they are in city or outside the city. The customer can get the money in
his account at The Bank Of Punjab from the Cheque drawn on another Bank. The
bank accepts the Cheque in the clearing department & later on collects these cheques
from the bank on which it is drawn through the clearinghouse i.e., state bank of
Pakistan.
6.1.1 CLEARING
We can define clearing as, the transfer of funds from one branch of bank to the other
branch of the same bank or the other bank on which the instrument is drawn, without
involving cash through State Banks clearing house or we can say in other way that
cheques which can not be cashed at the cash counter of the bank.
6.1.2 CLEARING HOUSE

35
THE BANK OF PUNJAB
It is one of the services provided by State Bank of Pakistan to the other commercial
banks SBP acts as a clearinghouse. Different banks are the members of the
clearinghouse. A representative of each bank represents his bank in the
clearinghouse. A clearing house is an association of commercial banks set up in a
given locality for the purpose of interchange &settlement of credit claims. Each
banks representative has cheques on behalf of his bank customers in the
clearinghouse.
They hand over these cheques to the respective banks on which these cheques are
drawn &receive from other banks, if any. In MIRPUR the National Bank of Pakistan
provides these services. The NBP maintains the account of The Bank Of Punjab like
other scheduled banks and debits the account of the drawee bank and credits the
presented bank, which is BOP in that case.
6.2
TYPES OF CLEARING
Clearing department deals with the two types of the clearance. These are stated
below:
1
INWARD CLEARING.
OUTWARD CLEARING.
6.2.1 INWARD CLEARING

Cheque drawn on BOP and presented by other bank or handed over to BOP agent in
clearing house. That is inward clearing for BOP .So inward clearing results in outflow
of funds to collecting bank reducing the balance in the clearing account.
6.2.2 OUTWARD CLEARING

Similarly cheque, which is drawn on other, bank and presented to BOP are known as
outward clearing for BOP. So outward clearing results inflow of funds from paying
bank into the clearing account maintained with the clearinghouse, increasing the
balance in the clearing account. Outward clearing thus may be:- Local clearing
,Outstation clearing .
Excess of outward clearing over inward clearing produces a net increase in the
clearing account balance. It is called favorable clearing. Excess of inward clearing
over outward clearing produces a net decrease in the clearing account balance. It is
36
THE BANK OF PUNJAB
called unfavorable clearing .The balance of incoming & outgoing clearing should be
nil in the clearinghouse.
6.3
MAJOR INSTRUMENT AT CLEARING DEPARTMENT.
Following instrument can be presented at the clearing department;
6.4
Cheques
Demand drafts
Pay orders
TYPES OF CHEQUE
Some specific types of cheque are being entertained in the clearing department of
BOP main Branch Mirpur.
These types of cheque are:
1.
Local cheque.
2. Outstation Cheque.
3.
In house Cheque.
6.4.1 LOCAL CHEQUE

By local cheque we mean collection of cheque from the banks which are the members
of the clearinghouse and which are located within the city.
6.4.2 OUT STATION CHEQUE

By outstation cheque we mean collection of cheque from the banks, which are
situated outside the city. It means that presetting bank and the bank on which the
cheque is drawn are not situated in the same city.
6.4.3 IN HOUSE CHEQUE
37
THE BANK OF PUNJAB
In house cheque are drawn on one branch of BOP and presented to another branch of
BOP, such cheques are marked with transfer stamp. In BOP Mirpur branch we are
transacting the in house cheque, which are drawn by different branches of BOP.
6.5
COLLECTION OF CHEQUES
The pay-in-slip is checked &entered in the Inward collection or Outward collection .

After making the entry the counter file is returned to the client.
6.5.1 Inward Bills for collection (IBC)

Inward collection means the Cheque received &drawn on BOP for payment. Inward
bills for collection means Cheque received from another branch for clearing. These
cheques first cleared and then transferred to the branch account.
6.5.2 Outward Bills for collection (OBC)

Outward collection means the cheque of other banks. Outward bills for collection are
the reciprocal of IBC that is drawn on bank and deposited in other bank.Within 3 days
payment should be received, otherwise reminder will be send to the payer to pay
amount.
This reminder will be either through courier service or TCS etc. if payment is not
received within 15 days then reminder should be sending after 8days of fifteen days
limit.
6.5.3 STAMPING:
Three stamps will be used in case of IBC& OBC.
1. Stamp of OBC or IBC whichever is the case.
2.
Crossing stamp.
3.
Payees account will be credited.
First two will be in front side of Cheque while the third stamp will be on the backside
of Cheque.
6.6
PROCEDURE OF CLEARING THE CHEQUES
Pay in Slip: The Customer fills pay in slip; this slip is just like deposit slip. The
cheque number, date, amount, & account number must be written on this slip.
38
THE BANK OF PUNJAB
Stamping and Scrutinizing: The officer on receipt of cheque and pay in slip will
stamp the pay in slip with Cheque Received and give a portion of slip to customer
and the remaining portion is attached with the original cheque.
The original cheque will mark with two stamps, Ist BOP and 2nd Clearing Stamp.
Before 12:30 P.M all cheque are counted and then scrutinized in bank wise and sent to
clearing house.
Stamping Of The Instruments: The instrument of payment accompanied by a payin-slip (Cheque receipt) is received at the counter of the bank by the concerned officer
who conducts scrutinizing of the bank by the concerned officer who conducts
scrutinizing of the instrument. If no discrepancies are noted then the officer should
sign the pay-in-slip & its counter file. The counter-file & the pay-in-slip should then
be stamped in the following manner.
i)
The clearing stamp bearing the date of the next working day should be
affixed on the face of the cheques.
ii)
Special crossing stamp containing the name & branch name of bank
should also be affixed on the face of the cheques.
iii)
The third necessary stamp indicates the paying bank to credit payees
account. It is the conformation of outward clearing.
iv)
If payees account only is mentioned on the cheque, the payee

should sign on the back of cheque for endorsement of cheque to another
person.
6.6.1 ITEMS TO BE CHECKED ON CLEARING CHEQUES

When cheques are received from the clearing following items should be checked
immediately:
1.
Cross stamp
2.
Clearing stamp
3.
Pays account will be credited
4.
Date (which should be current)
5.
Endorsement stamp on backside

39
THE BANK OF PUNJAB
6.
6.7
Amount in figures and words should be matched.
CHEQUE RETURNED
There may be a case when the bank returns cheque received from clearing. There may
be any one or more than one reasons. These reasons are written on the slip, which is
then attached with the returned cheque by marking cross against that reason for which
cheque is returned. This slip is called cheque returned slip and contains following
items:
Insufficient Funds should not be used but REFER TO Drawer
Not Arranged for.
Effects not cleared may be presented again.
Exceeds Arrangement.
Full cover not received.
Payees Endorsement irregular/illegal/required.
Banks confirmation required.
Drawers signature differs.
Alterations in date/figures require drawers full signatures.
Post dated.
Mutilated.
Amount in words and figures differ
Clearing stamp required /requires cancellation.
Addition to bank discharges should be authenticated.
Cheque crossed Accounts payee only.
. Collecting Banks discharge irregular/required.

Clearing stamp required on back/front/to be cancelled.
Payees discharges on revenue stamp required.
40
THE BANK OF PUNJAB
CHAPTER NO.7
CREDIT DEPARTMENT
FINANCIAL INSTITUTIONS IN PAKISTAN
WHAT IS CREDIT?
CASH CREDIT
41
THE BANK OF PUNJAB
CREDIT DEPARTMENT
7.1
FINANCIAL INSTITUTIONS IN PAKISTAN
Total 177 financial institutions in Pakistan in which:

23 Domestic Commercial Banks.
21 Foreign owned banks
16 Investment Banks
32 Leasing Companies
46 Modarbas
39 Mutual Funds
Paid up capital of all these institutions is almost Rs. 94 billion or US $ 1.7 billion.
Total credit portfolio of the country is Rs. 750 Billion. In this field BOP plays his role
effectively and efficiently. The credit activities are played under a separate
department. So the major activities of this department are:
42
THE BANK OF PUNJAB
a) To give credit to customers

b) Closely monitor the development in different accounts
c) Reporting to SBP & head office.
7.2
WHAT IS CREDIT?
Credit means any arrangement, however named, whereby a bank acting at the
request and on the instruction of a customer or own behalf.
It is to make a payment to or to the order of a third party or is to accept and pay bills
of exchange (drafts) drawn by the beneficiary.
A authorizes another bank to effect such payment, or to accept and pay such bills of
exchange or authorizes another bank to negotiate, against stipulated documents. In
credit operations all parties concerned deal with documents and not with goods,
services and /or other performances.
7.3
CASH CREDIT
Cash credits are those where the bank actually advances money against further
repayment. These are also known as funded facilities.
Cash credit or funded facilities are of the following types.
i)
RUNNING FINANCE/OVER DRAFT
Running finance is a credit facility established usually in local currency for a

specified period of time at fluctuating rates of mark up (interest) whereby the
customer is allowed to overdrawn his account to an agreed amount. Mark up is
charged on the outstanding balance.
ii)
DEMAND FINANCE
Demand finance is a credit facility, which is different from running finance in the
sense that a fixed amount is credit to the customers account, which can be drawn by
customer at any time at lump sum. Mark up or Interest is charged on the full amount
whether it is utilized or not. The demand finance facility falls into two categories:
Demand loan is short-term loan, which usually involves less than one-year period.
iii)
TERM FINANCE
43
THE BANK OF PUNJAB
Term loan is provided for a fixed period of time. Time period for term finance is more
than one year and mark up rate depends upon the period-involved customer credit
worthiness and BOP regulation.
iv)
AUTO FINANCE /CAR FINANCE
Car finance facility is provided by the BOP against guaranty. The Mark up on such
type of loan is nine percent (9%) per month. Down payment is Fifteen percent (15%)
of the total price of the Vehicle and remaining amount is financed by the bank.
v)
THE BANK OF PUNJAB AASAISH LOAN
The bank of Punjab is also providing Aasaish loan for the household facilities. Bank
charge slight interest rate on this scheme.
VI)
THE BANK OF PUNJAB SME LOAN

The bank of Punjab is also providing loan for small and medium enterprises.
VII) THE BANK OF PUNJAB HOUSE LOAN

The bank of Punjab is facilitating its customers with house loan on suitable
term and conditions.
VIII)
THE BANK OF PUNJAB CRORE PATI SCHEME
This scheme is basically introduced by Government of Punjab but managed by the

bank of Punjab. The Bank Of Punjab Crore Patti Scheme is a fund for the
development of the Punjab thats why this fund is called Punjab Development Fund
(PDF)
44
THE BANK OF PUNJAB
CHAPTER
HUMAN RESOURCE DEPARTMENT

INTRODUCTION
FUNCTIONS OF THE PERSONNEL DEPARTMENT
RECRUITMENT AND SELECTION
TRAINING
PERFORMANCE REVIEW
EXECUTIVE TRAINING AND DEVELOPMENT
45
THE BANK OF PUNJAB
HUMAN RESOURCE DEPARTMENT

8.1
INTRODUCTION
The Main Personnel Department of The Bank is in Lahore that is in the head office
and it is called the administrative division. In the Administrative division all the
record related to the offices are kept. The duty of the administrative division or the
personnel department in head office is to make assessment for the requirement of
labor in each branch of the bank.
The administrative division also decides whether the employees are selected within
the bank or outside the bank. The Administrative department also makes the general
policy for employees welfare.
8.2 FUNCTIONS OF THE PERSONNEL DEPARTMENT

The following are the main functions performed by the personnel department for the
accomplishment of its policies and objectives.
Recruitment
Training
Performance review
46
THE BANK OF PUNJAB
Executive training and development
8.2.1 RECRUITMENT AND SELECTION

The selection of the employee is very important decision the management has to take.
Bank recruitment policy is very strict, and mostly depends upon the ability of the
candidate and personal observation of the top-level management.
There is no quota system exist in the bank. Whenever vacancies fall vacant bank
makes advertisement in the newspapers and asks for the application. The selection of
the candidate is made through these applications.
All persons have fulfilling the following requirements are directly appointed as
Officer Grade III:
1. First Division in graduation
2. One first division in Inter or matriculation
3. Written test base only, no interview
4. Age not more than 25 years
One who clears IBP (Part I) will be promoted as Officer Grade II on the very next day
of the result.
8.2.2 TRAINING
The newly hired employee generally starts as a clean slate on which nothing has yet
been written. Good training is an art. The training policy of the personnel department
is different for the
New employees
Existing staff
For the newly selected candidates it is compulsory for them to get training. There is a
separate academy of the Bank in Lahore, the Mall Branch that is called the training
institute. The following procedure is adopted in the training program.
Two month training in the academy
One month job training
Again one month training in the academy
47
THE BANK OF PUNJAB
8.2.3 PERFORMANCE REVIEW

The primary value of the job descriptions evaluation is to serve as the basic for a
review of the individual performance in each job. Each employee understands that
what is expected from him.
Personnel department made review of the officers by analyzing that
1. The task assigned to the officer is completed or not.
2. The task completed within the given time
3. The result of that task is favorable
4. Performance is comparable with the standard of the organization
5. What is the achievement of the employee for meeting the assigned task?
6. What methods are used for the completion of the task?
All the above-mentioned tools are used for performance review. The management
takes action in favor of the officer in case of the completion of the task, in shape of
a) Increases the salary of the employee
b) Provides higher training to the officer for more.
c) Difficult task
d) Other benefits provided to the employees.
The management keeps all the records of the officer and checks the performance
trend. Management takes personal discussion with the employee. If the employee is
not satisfied with his performance evaluation, he is also allowed to talk with the
management.
8.2.4
EXECUTIVE TRAINING AND DEVELOPMENT
It is the duty of personnel department to make successor management. For this

purpose bank staff is growing a system and improvement in the quality of bank
executive is made.
Executive training program is conducting by the bank, because training may increase
the knowledge and skills of an individual and thus it turns the individual into true
48
THE BANK OF PUNJAB
executive. Training can improve management techniques; it helps the management to

make better decisions.
Development on the other hand, has different connections in the growth of the inner
person and his or her motivation. It is true that not only the training is important for
the better manager but also the development of the manager. For explore the mind and
talent of the junior officers, management motivates them by offering higher study.
49
THE BANK OF PUNJAB
CHAPTER 9
FINANCIAL STATEMENTS
9.1 BALANCE SHEET AS AT DECEMBER 31, 2005
Rupees in thousands
2004
Assets
Cash and balances with treasury banks
Balances with other banks
Lendings to financial institutions
Investments
Advances
Other assets
Operating fixed assets
Deferred tax assets
Liabilities
Bills payable
Borrowings from financial institutions
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets
Other liabilities
Deferred tax liability
Net assets
Represented by
Share capital
Reserves
Unappropriated profit
Surplus on revaluation of assets
2005
5,579,566
2,118,242
1,019,488
16,197,505
39,438,923
1,277,201
689,486
--66,320,411
8787387
9367595
7593681
18026181
63623705
2040568
1715061
111154178
267,113
2,831,605
54,724,311
81,795
567,540
8,964
58,481,328
7,839,083
478001
6791007
88465051
55403
1474425
220177
97484064
13670114
1,506,230
2,770,645
143,590
4,420,465
3,418,618
7,839,083
2349719
4257337
169817
6776873
6893241
13670114
50
THE BANK OF PUNJAB
9.2
PROFIT AND LOSS ACCOUNT FOR THE YEAR

ENDED DECEMBER 31, 2005
Rupees in thousands
Mark-up earned
Mark-up paid
Net mark-up
Provision against non-performing advances
Provision for diminution in the value of
investment
Bad debts written off directly
interest income after provision
Non mark-up/interest income
Fee, commission & brokerage income
Dividend income
Income from dealing in foreign currencies
Other income
Total non mark-up
Non mark-up/interest expenses
Administrative expenses
Provision against off balance sheet items
Provision against receivable from NIT
Other charges
Total non mark-up/interest expenses
Profit before taxation
Taxation
Current
Deferred
Profit after taxation
Unappropriated profit brought forward
Transfer from surplus on revaluation of fixed
assets
Profit available for appropriation
appropriations:
Transfer to:
Statutory reserve
Capital reserve
General reserve
Reserve for issue of bonus shares
2004
2005
2,555,039
719,074
1,835,965
6125093
2668739
3456354
46,940
327373
0
121
8,130
1,788,904
0
3623
330996
3125358
172,873
554,218
41,311
328,361
1,096,763
2,885,667
255149
753669
93208
228749
1330775
4456133
1,116,097
364
32,046
1,217
1,001,648
1,735,943
1274971
0
4744
11461
1291176
3164957
225,916
141,853
367,769
1,368,174
668700
143015
811715
2353242
101,699
143590
1,469,873
3166
146756
2499998
274,000
0
500,000
552,283
1,326,283
471000
0
800000
1059181
2330181
51
THE BANK OF PUNJAB
Unappropriated profit carried forward
9.3
143,590
169817
CASH FLOW STATEMENT FOR THE YEAR ENDED

DECEMBER 31, 2005
Rupees in thousands
2004
Cash flow from operating activities
Profit before taxation
Less: Dividend income
(Gain)/loss on sale of fixed assets
Compensation for delayed assessed income tax refunds
(Gain) on sale of investments
2005
1,735,943
-554,218
-954
-29,228
-102,228
3164957
(753699)
(540)
-----3163
1,049,364
2407555
71,275
8,968
32,046
----7726
46,940
364
121
77799
327373
3623
---12766
4744
(12434)
151,988
1,201,352
413871
2821426
3,592,968
-21141962
-375189
(6174193)
(24515778)
(1053474)
-17924183
(31743445)
-Bills payable
-Borrowings from financial institutions
-Deposits
-Liabilities against assets subject to finance lease
-Other liabilities (excluding current taxation)
-77536
147,368
19,786,252
-25848
165,503
210888
3959402
33740740
(26392)
620039
Income tax paid
19,995,739
3,272,908
-253945
38504677
9582658
68222
Net cash flow from operating activities

Cash flow from investing activities
3,018,963
9514436
Net investments in held-to-maturity securities

Net investments in available for sale securities
Net investment in held for trading securities
Net investment in subsidiaries
-2035342
-1373670
-29513
1099359
(328876)
(43972)
2757
Adjustments for non cash charges

-Depreciation and amortization
-Provision for employee benefits
- Reversal of Provision for diminution in value of investments
-Provision for excise duty recoverable
-Provision for claim for recovery of shares
-Provision against non-performing advances
-Provision against off NIT items received
-Provision for clam for recovery of share
(Increase)/decrease in operating assets

-Lendings to financial institutions
-Advances
-Other assets (excluding advance taxation)
Increase/(decrease) in operating liabilities
52
THE BANK OF PUNJAB
Dividend income
Investments in operating fixed assets
Sale proceeds of property and equipment disposed-off
549,218
(3386400
40,481
725098
(107709)
1595
Net cash flow from investing activities

Increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
-3187466
-168503
7,966,311
1342738
10857174
7797808
Cash and cash equivalent at end of the year
7,797,808
18654982
53
THE BANK OF PUNJAB
CHAPTER 10
WORK DONE BY ME AT THE BANK OF PUNJAB
ALLAMA IQBAL ROAD MIRPUR BRANCH AZAD
KASHMIR
10.1
INTRODUCTION TO BRANCH PERSONNEL

Name
Mr. Kashif Shahzad Mir
Mr. Mudasar Munir
Mr.Musarat Hussain Shah
Mr. Naheed Imtiaz
Mr. Tanveer Hussain
Mr. Liaqat Hussein
Mr. Raja Muhammad Nawaz
Mr. Hamid
Mr. Rizwan Ahmed
Designation
Branch Manager
Officer Grade I
Officer Grade II
Officer Grade III
Cash Officer
Gun Man
Gun Man
Messenger
Messenger
Major activities performed during my internship programme in different departments

are as follows, dated from July 17, 2006 to Sep 9, 2006.
10.2 ACCOUNTS DEPARTMENT

In this department, I gain the practical knowledge about opening account. This
department deals with opening current and saving account for its customers and all
matters regarding thereof.
10.2.1 OPENING AN ACCOUNT

In order to open an account, first of the entire customer has to fill a form prescribed
by the bank. The person is required to bring some reference or introduction for
opening the account. Introducer may be the person who has any account with BOP.
Some important information regarding introducer e.g. the name and account number
of the introducer is written on the space provided on the specimen signature card.
54
THE BANK OF PUNJAB
Then in order to find out whether he is a true introducer or not, a letter is sent to him
thanking him for this introduction so that anything wrong may come into notice.
10.2.2 DEPOSITS
The procedure undertaken upon receiving deposits from the customer is as follows:
i) Examining the deposit slip to ensure that the name and the account numbers are
clearly indicated.
ii) Counting the cash/cheques and agree the total with the amount on the deposit slip.
iii) After that the pay-in-slip is validated for cash transaction / transfer / clearing
transfer as appropriate before the counterfoil is handed over to the customer.
iv) Cheques signed by directors, partners or employees of a company, drawn in favor
of them and credited in their account in the bank are to be scrutinized.
10.2.3 WITHDRAWALS
Cheques can withdraw amount. The withdrawals can be made only at the branch
where the account is maintained.
All cash withdrawals are authorized by the officer under his full signature. No third
party withdrawal is permitted.
In current account, the bank does not offer any interest. We can deposit or withdraw
any amount during banking hours.
In PLS account, we can withdraw up to Rs.25000/- without any notice. If we want to
withdraw more than Rs.25000/- a notification must be given to the bank.
10.2.4 ISSUANCE OF CHEQUE BOOK

The accountholder requests for the new chequebook by presenting the requisition slip
along with the authority letter to the concerned office. His signatures are verified
before giving him a new chequebook. The presence of the accountholder is
compulsory to get a new chequebook. But if he sends a third person to get his
chequebook then the procedure is as follows:
i) An authority letter is given to the third party by the accountholder.
ii) The account holder verifies the signature of the third person on that authority letter.
55
THE BANK OF PUNJAB
iii) The bank officer gets the signature of that third person to confirm whether he is
the same to whom the accountholder has sent.
iv) The bank issues the new chequebook and authority letter is kept by the bank.
10.3 CLEARING DEPARTMENT

In this department, I have worked for three week and prepared the clearing myself.
My responsibility was to receive all the clearing cheques and to make a schedule of
these cheques after making an entry in the inward or outward clearing registers and
then to submit these schedules along with the cheques to the main branch. Main
branch receives the cheques from all of its branches and makes the lots of these
cheques again. Main branch send these cheques to the State Bank of Pakistan where a
clearinghouse exists. In this clearinghouse, the representatives receive their cheques
and go back to their bank's main branch. Then main branch sends these cheques to
their relevant branches where the validity of these cheques is verified and the
accounts of the relevant clients are affected.
Then an advice is sent to the issuing bank that the cheques are honored. In case, if the
Cheque is dishonored a memorandum is issued to the bank on which various reasons
of dishonor are printed and one or more reasons are marked duly.
10.3.1 POSTING OF DEPOSITS AND WITHDRAWALS

I had worked on computer for posting the deposits and withdrawals of the customers.
The procedure for posting was that firstly the officer passed the entry and then the
other officer authenticated it. If the authentication is not made then there is no entry of
the transactions in the computer. Entry is completed after the authentication.
10.4 SALE OF TICKETS OF PUNJAB DEVELOPMENT FUND

I have sold the tickets more than 5000 which are amounting to Rs. 125000.
56
THE BANK OF PUNJAB
CHAPTER 11
FINDINGS
11.1 SWOT ANALYSIS
11.1.1 Strengths
The computer system not only helps them in providing the customer better and
efficient services, but also reduces the manual work required by the staff.
The Bank of Punjab is a newly established bank and the loans which issued by
the bank are saved ate this time.
As the other banks are facing the default problem. The staff of the Bank of
Punjab is very professional and hardworking it is an edge upon the other bank
which has employed very old factuality members.
The Bank of Punjab is introducing the very profit schemes for the investors,
which are very attractive to motivate the present and potential investors.
11.1.2 Weaknesses
Their branch network is very small. They have only 03 branches in Azad
Kashmir. While other banks have large network all over the Azad Kashmir,
giving them an easy excess to depositors. With these 03 branches it is very
difficult for the Bank of Punjab to compete with other banks.
The Bank of Punjab is the bank, which is doing business on small scale as
compared to other schedule banks in Pakistan. However, we can say that

the network of the Bank of Punjab is limited.
On the other hand, the Bank of Punjab is going very well and they have no big
weakness at this stage. But future is unpredictable so the Bank of Punjab must
take care in all respects.
By means of advertising, a good portion of target market could be attracted.

The other competitors like MCB in Private Sector and Habib Bank Limited in
57
THE BANK OF PUNJAB
Public Sector are doing quite aggressive advertisement whose result is also
reflected in their sales and deposit figures.
There is also weak point of the Bank of Punjab that there is no facility of OnLine Banking in Azad Kashmir branches as some. Other banks are providing
this facility.
11.1.3 Opportunities
People are not satisfied with the existing performance of banking system,
which creates lot of problems for them such delays in payments etc. The Bank
of Punjab has a opportunity because it has a young and qualified force and
they dont make any delay regarding any matter related to payments.
Due to high defaults in banking sector all the surplus money holder are
looking for a newly bank where saving remain save and it will give them a
reasonable profit. In this connection the Bank of Punjab is going very well for
getting the opportunity to get the confidence of public and business sector.
11.1.4 Threats
The recent privatization of nationalized banks shows a serious threat to the

existing banks in private sector.
All banking sector is going towards privatization. And after privatization they
are improving their performance, which is big threat for the Bank of Punjab.
Secondly state bank always making polices in the favor of gain five banks of
Pakistan, which create problems for other banks.
58
THE BANK OF PUNJAB
11.2 SUGGESTIONS
The Bank of Punjab must have to increase their branch network especially in
AJ&K because the single branch, which is working Mirpur, is going very well
and producing revenue for the Bank.
Employees should be appointed on the basis of merit It will lead the institution
towards professionalism.
There should be training programs for employees to improve their

performance.
The Bank of Punjab should improve its value added services and reorganize
the banks internal structure. New development must be adopt by the bank it
will give the bank an edge upon its competitors.
The leadership style should be changed. There should be MBO (Management

by Objective) to improve the efficiency and effectiveness of the employees.
The Bank of Punjab must have to give its attention towards the establishment
of credit cards, travelers Cheque, ATM, etc. The bank should use new
technology
As such system should be designed that every employee who has some
problems with his officer can communicate it to the higher management and
some steps must be taken to improve that.
Proper attention should be paid to upgrade customer services.
Refresher Courses for the staff are most important in any international
organization.
59
THE BANK OF PUNJAB
Conclusion
During my internship at The Bank of Punjab, Mirpur Branch, I have got working
experience in a prominent organization.
I have worked in the different departments of the bank such as clearing department,
cash department, sales department, bills collection department, marketing department
etc, under the sympathetic supervision of the branch personnel. I worked for a specific
period of time in the above mentioned departments and practically gain the
knowledge about the working of the several departments.
I found that the branch personnel are very cooperative and almost satisfied with their
jobs. They assigned me various tasks which I have satisfactorily accomplished in the
given time period. However during my work I observed that the staff members are
very punctual and regular in performing their duties.
60
THE BANK OF PUNJAB
BIBLIOGRAPHY
www. Bop. Com
Auditors committee (2003) Annual Report-Lahore- Auditors committee BOP
D.S Bench (1988) Human Resource functions. Macmillan Publishing

Company
Gitman (1988)Principal of managerial finance. New York. Harpers & Row

Publishers
M.A Ghani (1995) Principal of Accounting Urdu Bazar Lahore. Zia-ul-Haq

Qureshi
Stephen B.Robbins (2001) OB. Pritice Hall of India: Askoe Ghosh
Saeed Khan (1998) Banking Currency and Finance. Urdu Bazar Lahore.Syed
Sharafat Hussain
Dogurs Sons. (2003) Banking Knowledge: Lahore Urdu Bazar. Naeem
Management of BOP (2004) Pamphlet-Lahore Management of Bank
The Bank of Punjab, Annual Report 2003.by Makhdooms Publishers.
Successful Time Management, By Jack D. Ferner, Second Edition.

Izharsons Printers.9-Rattigan Road, Lahore
61
THE BANK OF PUNJAB
APPENDIX
Abbreviations
Meanings
AJK
BOP
Azad Jammu & Kashmir

Bank of Punjab
CD
Current Deposit
DD
Demand Draft
FC
Foreign currency
GM
General Manager
HO
Head Office
IC
IBC
LC
Inward Clearing
Inwards bills for collections
Local Currency
LT
Local Transfer
MT
Mail Transfers
OC
Outward Clearing
OG
Officer Grade
OBC
Outwards bills for collections
PDF
Punjab Development Fond
PLS
Profit & Loss saving account
RO
Regional Office
RF
Running Finance
SVP
Senior Vice President
SAD
Saving Account Deposit
SBP
State Bank of Pakistan
SNTD
Short Notice Term Deposit
SWOT
Strengths Weaknesses Opportunities & Threat

62
THE BANK OF PUNJAB
TT
Telegraphic Transfers
UBL
United Bank Limited
63

HR

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

HR

Uploaded by

Copyright:

Available Formats

THE BANK OF PUNJAB

BANKING SECTOR REVIEW

THE BANK OF PUNJAB

DEFINITION: According to Banking Companies Ordinance, 1962, section 5(6)

EVOLUTION OF BANKING IN PAKISTAN

THE BANK OF PUNJAB

operation is undergoing remarkable qualitative change. In Pakistan for instance,

THE BANK OF PUNJAB

1.3.1 CENTRAL BANK

1.3.2 COMMERCIAL BANK

1.3.3 AGRICULTURAL BANK

1.3.4 INDUSTRIAL BANK

1.3.5 CO-OPERATIVE BANK

1.3.6 SAVING BANK

THE BANK OF PUNJAB

1.3.7 EXCHANGE BANK

1.3.8 MORTGAGE BANK

1.3.9 INVESTMENT BANK

Banking Sector Review

12.5 16.1 12.4

43.6 51.9 52.6

THE BANK OF PUNJAB

Total Assets Composition %age

Cash & Bank

THE BANK OF PUNJAB

OUR CORE VALUES

THE BANK OF PUNJAB

THE BANK OF PUNJAB

THE BANK OF PUNJAB

2.3 ORGANIZATIONAL MANAGEMENT

2.3.2 AUDIT COMMITTEE

Mr. Syed Salman Ali Shah

Mr. Shahzad Ali Malik

Mr.Qaiser Zulfiqar Khan

2.3.4 REGISTERED OFFICE

THE BANK OF PUNJAB

b. Foreign Funds 0.489%

2.4 CAPITAL STRUCTURE

2.5 FUNCTIONS OF THE BANK OF PUNJAB

2.6 BRANCH NETWORK

THE BANK OF PUNJAB

2.7 REGIONAL NETWORK

2.8 OPERATING HIGHLIGHTS

THE BANK OF PUNJAB

THE BANK OF PUNJAB

THE BANK OF PUNJAB

OPENING OF NEW ACCOUNT

The opening of a new account is the establishment of customer banker relationship.

ACCOUNTS OF THE CUSTOMERS

3.2.1 INDIVIDUAL'S ACCOUNT

THE BANK OF PUNJAB

3.2.3 PARTNERSHIP ACCOUNT

THE BANK OF PUNJAB

3.2.4 COMPANYS ACCOUNT

PLS saving bank deposit

PLS term deposit

Short notice term deposits

Prize saving scheme

3.3.1 PLS SAVING BANK DEPOSIT

THE BANK OF PUNJAB

3.3.2 PLS TERM DEPOSIT

3.3.3 CURRENT DEPOSITS

3.3.4 SHORT NOTICE TERM DEPOSITS (SNTD)

3.3.5 PRIZE SAVING SCHEME