A Report On: Summit Bank Ltd.

Submitted To: Prof. Riaz Ahmed Mian

Submitted By: Erbaz Khan

M14BBA038

Abdul Basit

M14BBA015

Muhammad Waqar

M14BBA032

EXECUTIVE SUMMARY
THE PURPOSE OF STUDY WAS TO KNOW ABOUT SUMMIT BANK LIMITED AND TO
ANALYZE THE FINANCIAL STATEMENT.

Summit Bank

Page 1

In this report the Summit Banks history, mission, vision and services as well as management is
mentioned. After this the analysis of financial statements is conducted which shows where the
Banks is standing.
Banking sector of Pakistan has been transformed within a short period of 5 years from a
sluggish and Government dominated sectors to a much more agile, competitive and profitable
industry. Speed and sequencing of banking sector transformation and its role in promoting
economic growth is now a leading story of a sector success. Within Pakistan SBP offers a story
of what effective leadership of regulator and change management and corporate governance can
achieve and offer. Outside Pakistan it is serving to offer rich lessons in what difference
governance of regulator can make and how bank restructuring and privatization can change the
landscape of the industry.
Summit Bank Limited started operations in August 2006 and became a profitable entity within
one year. AHBL had started off with a high capital base and is positioned to take advantage of
the business synergies and complementary afforded to it by its sponsoring group. The bank has a
quality management team, a first class technology platform, and commitment to global practices.
Its business strategy is based on the block-building principle wherein profitable niches are
tapped progressively.
Summit Bank made heavy investments towards enhancing its capabilities in the area of
automation and technology. It is well positioned to meet client needs; with improved competitive
advantage.
Trade finance department working these departments was a great learning exposure for us. When
we conduct financial and trend analysis of Summit Bank we found that its financial position is
improving year by year. Comparative study with other banks shows that it is somewhat better
then other banks. We concluded that Summit Bank is performing very well.

Contents
Introduction of report

04

History of the organization

07

Vision & Mission

09

Summit Bank

Page 2

Board of Directors

12

Field of activities

20

Financial analysis

51

PEST & SWOT Analysis

55

Dilemmas faced by organization

58

Recommendation

59

Conclusion

61

Reference

62

INTRODUCTION

The report is about Summit Bank its products, field of activities and its financial analysis. In the
report, SWOT analysis is conducted so that we may able to give an authenticated approach to
problems and Dilemmas faced by the Branch. When we conduct comparative analysis of
operations, products offered and funds used, we found it far better as compared to other banks
working in Lahore.
Management style is somewhat participative and its culture is friendly and cooperative.
We learnt a lot of different fields, and organizational behavior in real world phenomenon which
gave us practical knowledge of what we have studied theoretical.

Summit Bank

Page 3

WHAT IS A BANK?

A bank is a financial institution that offers the widest range of financial services. These financial
institutions play a vital role throughout the worlds economic system. Caircross defines bank as:
A financial intermediary and a dealer to create credit bank or banker is a dealer in credit or more
properly a dealer in money. It is an intermediate party between the borrower and the lender. It
borrows from one party and lends to another.
The system of common settlement of receipts and payments have been derived from the school
of thought of the ancient Romans temple banking, to develop trade and trading relations with
each other nations. Banks are of different types. The term Commercial Banking is a throwback
of commercial loan theory. The theory holds that the bank assets (except for cash) should consist
exclusively of commercial loans that are short-term loan to businesses to financing the
production and transportation of goods.
Among the services provided by the commercial banks, two services are very important;

Accepting deposit
Lending loans

Summit Bank

Page 4

Other functions include safekeeping of valuables, financial advising, cash management, offering
trust service, selling insurance policies, retirement plans and offering security brokerage services,
etc.

The banking structure of Pakistan

The banking structure of Pakistan consists of State Bank of Pakistan, Commercial Banks,
Exchange Banks, Cooperative Banks, Saving Banks and specialized Credit Institution.
Banking means the accepting, for the purpose of lending or investment, of deposits of money
from public, repayable on demand or otherwise, and withdrawal by cheques, drafts, order or
otherwise.

VARIOUS ROLES OF BANKS

The Intermediation Role
Transforming savings received primarily from households into credit (loans) for business firm
and others to make investments in new buildings, equipment, and other capital goods.

The Payments Role

Carrying out payments for goods and services on behalf of their customers (such as by issuing
and clearing checks, wiring funds, dispensing currency and coin, etc.)

Role as a Guarantor
Standing behind their customs to pay off customer debts when those customers are unable to pay
(such as by issuing letters of credit to support international trade and to back customer issues of
commercial paper), which makes it both easier and cheaper for a banks customers to obtain
credit elsewhere in the financial marketplace.

The Agency Role

Acting on behalf of customers to manage and protect their property or issue and redeem a
customers securities (usually provided through the banks trust department).

The Policy Role

Serving as a conduct for government policy in attempting to regulate the growth of the economy
and pursue social goals.

Summit Bank

Page 5

HISTORY OF SUMMIT BANK LIMITED

Arif Habib Group is among the largest most, most innovative and fastest growing business group
in Pakistan. In addition to financial services(Asset Management, Brokerage Services, Corporate
Finance and Project Advisory, Private Equity and commercial Bank), the group has also interest
in fertilizer, cement and real estate.
This has made possible by a strong brand franchise built on decades of first-rate services to
clients. Managing assets in excess of PRs.37 billion (US$617 million), the group holds interests
in the securities brokerage, investment and financial advisory, investment management,
commercial banking, commodities, private equity, cement and fertilizer industries.
The Group takes pride in its orientation towards client service. It believes that its key success
factors include continuous investment in staff, systems and capacity building, and its insistence
on universal best practices at all times.
Summit Bank Ltd is one of the fastest growing commercial banks of Pakistan, which, in a very
short span of time, has expanded its network across the country and built an infrastructure based
on state of the art Risk Management Framework as well as IT platform. Also targeting to be
a universal bank in terms of providing products and services in all key segments of banking i.e.
Corporate and Investment Banking, Trade Finance, Commercial Mid Market / SMEs, and
Consumer Banking, it commenced its operations in August 2006.
The Pakistan operations of Rupali Bank Limited were acquired by Arif Habib Securities Limited
under the Scheme of Amalgamation approved by the State Bank of Pakistan. The name of Rupali
Bank Ltd was subsequently changed to Arif Habib Rupali Bank Ltd and then finally to Arif
Habib Bank Ltd in October 2007. On 31st March 2010, Suroor Investments Ltd a company
incorporated in Mauritius, acquired 59.41% stake in Arif Habib Bank Ltd from Arif Habib
Securities Ltd, and on 18th August 2010, Arif Habib Bank Ltd was rebranded as Summit Bank
Ltd.
Suroor Investments Ltd also entered into share purchase agreements (SPAs) with majority
shareholders of MyBank Ltd and Atlas Bank Ltd, who after completion of the transactions have
merged in Summit Bank Ltd expanding the Banks geographical outreach with a network of 165

Summit Bank

Page 6

Real Time Online branches across the country. In line with the managements vision of making
this bank a front runner amongst its peer banks, this merger has brought synergies and access to a
wider range of markets and customers.
By acquiring one of the best IT platforms of the world, offering web and SMS based banking to
the customers besides providing superior MIS to the Management; the Bank is committed to be
recognized as a preferred supplier of financial services to the markets it serves. To achieve these
goals, the Bank will strengthen itself in the financial service industry, leverage optimal mix of
technology to attain operating cost efficiencies, achieve product and service differentiation, while
at the same time growing its footprint through further expansion of its branch network across the
country, because we are committed to you.

Summit Bank

Page 7

Summit Bank

Page 8

COMPANY MANAGEMENT SYSTEM

Management means the administration and the governing body that is concerning the whole
organization. All the decision and strategies are been proposed and evaluated the management of
the organization. At Summit Bank, the management is pretty strong and there is lot centralization

Summit Bank

Page 9

in the whole network of the bank. The management at Summit Bank has been divided into 3
major parts. I-e, Board of Directors, the Top management, and the group of middle managers,
supervisors and the employees.

The Board of Directors

The upper most part of the management is the Board of Directors or the Executives. The Board
of Directors are responsible for the first phase of the management process, i-e, planning. So, all
the decisions and the strategies are being proposed and implemented under the instructions and
the supervision of the board of directors or the executives. Also the policies and the overall
objectives of the Bank are being proposed at this level of the organization.

The Top Management

The top management involves the branch managers and the chief managers of the bank including
the operations managers as well. The major responsibilities include the strategy formulating for
the bank and supervising the whole staff at the branch. They define and interpret the objectives
and vision and then formulate policies for their completion.

The middle management, supervisors and the employees

Departmental heads constitute this level of management at Summit Bank. They are directly
responsible for planning and controlling the activities of officers. Finally, the employees whose
activities are monitored and controlled according to the desired objectives.

Mr. Nasser Abdulla Hussain Lootah

Chairman
Mr. Husain Lawai
President and CEO

Summit Bank

Page 10

Mr. Nasim Beg

Director
Mr. Asadullah Khawaja
Director
M. Farid Uddin
Director
Dr. Ahmed Khalil Mohammad Samea Al Mutawa
Director
Mr. Shehryar Faruque
Director

Husain Lawai
President and CEO
Mohammad Zahir Esmail
Chief Operating Officer
Syed Mohammad Anwar Lutfullah
Group Head Operations, Information Technology, Consumer, Branchless Banking & Corporate
Communications
Ahsan Raza Durrani
Group Head Corporate and Investment Banking, Financial Institution and Capital Market

Summit Bank

Page 11

Gulrays Khan
Group Head Compliance & Co-ordination and Control
Syed Asif Ali
Group Head Enterprise Risk Management
Mr. Akhtar Ali Khan
Group Head SAM & Legal
Mr. Gulrez Yazdani
Group Head Wealth Management Division
Muhammad Amin Bhoori
Chief Financial Officer & Company Secretary
Pervez Mobin
Head of Human Resource Management
Faisal Shaikha
Head of Treasury
Aziz Morris
Head of Internal Audit
Aziz Abbas
Head of Business Promotion and Development
Mohammad Mursleen Rao
Head of Corporate-North

Organizational Structure

Board of
Directors
Chief
Executive
Officer

Executive
Incharge

Summit Bank

Page 12

Credit card

Credit

Audit

Internation
al Banking

Marketing

Finance

BUSINESS APPROACH AND CORE VALUES:

It is their business objective to be a Universal Bank in terms of providing products and services
in all key segments of banking i.e. Corporate, Wealth Management, Commercial Mid Market/
SMEs and Consumer Banking.
The projected Branch network is based on centralized processing centre (factory and boutique
concept) with secure and real time IT capability. Hence the delivery Channel configuration is
dependent upon the potential in each location in terms of size, Product Delivery Template and
Head count for each Branch.
In terms of Statuary capital Requirement, they are determined to meet and in fact exceed the
Minimum Capital Requirement-MCR benchmark via injection f capital and retention of retained
earnings. Mandatory allocations of 20% of after tax profits Free Reserves until such time our free
reserves are equal to MCR will further strengthen their equity base.

Business and branch Network

Summit bank is currently operating with 165 branches throughout Pakistan (breakup is given in
coming part). Several new sites have already been identified at strategic locations. All branches
are online, equipped with state of the art technology capable of providing Real Time Banking
services to the clients. A professional team has been developed to meet the expectations of
demanding customers. This is line with the banks strategy to build infrastructure of international
standard to attract and retain a sizeable client base. The growth in the economy provided them
numerous opportunities and they remained selective pursuing business through which strike a
balance between growths and prudent like risk taking and diversification. Summit banks
performance in 2007 was a result of the pragmatic and will planned efforts of the management to
attain present strategic goals aimed at providing quality services to their customers and at the

Summit Bank

Page 13

same time enhance the shareholders value. Despite the high growth level, they continued to
ensure the high customer satisfaction and service quality levels are maintained and they are
appreciative of the trust and confidence that their customers place in them. Management firmly
believe that the success of the Bank lies in expanding there way of financial services and
seamlessly delivering innovative solutions to meet customers requirements across all the
platforms. Accordingly, they work closely with their customers in order to understand their
business needs and to address them with high quality tailored financial products so that they are
viewed as a strategic partner in the business growth. Management is pleased and encouraged to
receive a very favorable response to their endeavors from their respective customers. In all,
management believes that the economic outlook for the coming year is bright with the right mix
of products and services and their committed workforce; they can deliver yet another superior
performance next year. Bank will continue to build infrastructure, leverage the cutting edge
technology in plan introduce products and services, manage risk efficiently and effectively and
generate alternative revenue streams. Management has ambitious plans for the coming year and
they are all ready to make it happen to the benefit of their stake holders Banks focus and energy
for the coming year evolve around customer base and look to expand network of branches
throughout the country.

AUTOMATION & TECHNOLOGY

Information technology and its optimum use greatly facilitate work and increase performance
potential. Summit Bank is in the forefront of providing customers online and timely services. For
this, automated and technologically sophisticated work flows and systems are a prerequisite.
Summit Bank continually invests in upgrading these systems and similarly training the human
resource. The ultimate aim is to achieve both service and cost optimization.
The in-house developed software hplus has been successfully installed in all the branches and
has been well received. Plans are underway for the installation of ATMs and joining Switch
Group of other prominent banks.

PRODUCTS & SERVICE LINE

Summit Bank has a dedicated team of banking professionals with a thorough knowledge of
Banking products and markets. Their aim is to contribute positively to the development of
Banking and Capital Markets by capitalizing on Summit Banks expertise in product innovation
and customer service.
Summit Bank offers the largest product range available with any Banking institution in Pakistan.
Their best selling products are:

Non stop banking

24/7 cash withdrawal facility
Real time online Banking
Free unlimited online transactions

Summit Bank

Page 14

CORPORATE BANKING

Current Accounts (Pak Rupees)

Foreign Currency Accounts
Clearing and Fund Transfer
Trade Services
Project Financing

CONSUMER BANKING

Current Account (Pak Rupees)

PLS Account
Saving Accounts
Term Certificates
Saving Deposit Lockers

CONSUMER FINANCE

Current Account (Pak Rupees)

Personal Loans
Personal accidental insurance
ATM withdrawal insurance
Home finance
Foreign Currency Account

FREE SERVICE INCLUDING:

Free E cash issuance-ATM card

Free e-mail alerts-sms alerts for the transactions you do with them
Free etopup-recharge your mobile balance
Free evoice-24/7 customer care center at toll free number 080024252
Free ebanking-internet banking
Free phone banking

Summit Bank

Page 15

Summit Bank is committed to the personal welfare and professional development of all its team
members. It realizes that proper training of human resource is essential, not only for a more
productive and satisfied work force but also for a homogeneous corporate culture.
The bank continues to follow its strategy of hiring batches of young and energetic management
trainees who are sent to a Training and Development Center for training in all areas of banking.
The Training and Development Center is a state of the art facility with an impressive faculty. At
the same time short courses are continually conducted for other team members to only enhance
their skill levels but also increase their performance potential.
Lately, Surroor investments Ltd (SIL) have taken over Summit Bank and the board of directors
of the bank has been changed.SIL has 60 percent shares of Summit bank limited.
In addition; SIL has also signed share purchase agreements with the principal sponsors of My
Bank Ltd. And Atlas Bank Ltd, respectively, and made down payment in each case. Acquisition
of My Bank has been completed on August,18 2010 and after merging with Atlas Bank it will
have a branches over 160 and total assets of about Rs.100 billion. The name of the new bank is
Summit Bank Limited.

Rating Type: JCR VIS

Rating
Agency

Summit Bank

Short Term Medium to

Long Term

Subordinated
Debt

Page 16

Outlook

Instrument
JCR-VIS

A-

A-2

A- (SO)

Rating Watch -Developing

FIELD OF ACTIVITIES
ACCOUNT OPENING DEPARTMENT
The department that is responsible for opening and closing an account assumes immense
significance and holds a central place in the basic banking operations.

Details of the Account Opening Form

In the account opening form the client is required to provide the following information. The first
part establishes the Particulars of account which include title of account in block letters as per
CNIC, title to appear on ATM card and mailing address.
The second part is then Account information which includes Type of account to be maintained.
The various choices offered are:

Profit and loss saving

Current account

Summit Bank

Page 17

Daily Product
Basic banking
Other________

Customer relation

Individual
Joint

Currency in which the account is to be maintained/ operated. The currencies

include:

Pakistani Rupee
U.S. dollar
Pound sterling
Euro
JPY

The information to be provided in the account opening form is as follows

The client should inform weather the zakat to be deducted or not.

The client is supposed to provide the information whether the account would be
maintained singly (only one person operates the account) or jointly (two or more than two
persons maintain the account).
Name of the person who intends to operate the account is to be provided.
Provision of either Fathers or the Husbands name is also a pre-requisite.
Occupation of the prospective account holder is also to be written.
Name and complete address of the employer is to be written.
Nationality is to be provided.
Country of residence is to be specified.
Telephone number is must.
The national identity card, of course is an integral part of the account openingapplication.
Passport number, if the prospective client has got one.
Another requirement is the date and place of issue of the national identity card.
The prospective client also has to provide the name, address and relationship of any one
of his/her close relatives in order to facilitate the communication problem. The clients
often have a misconception that there next of kin might, if some peculiar circumstances
arise, get the profit out of his account but this is not the case. The name and address of a
close relative is only recorded in order to under take necessary communication when
needed.

Summit Bank

Page 18

In case of a business concern there are two more things that are to be provided by the
business.

PROCEDURE OF OPENING AN ACCOUNT

THE ACCOUNT OPENING FORM:
When a client comes to the bank, and makes a request for opening of an A/C. The officer first
gave him a prescribed application form.

Completion of the Form:

The name, occupation, and complete address of the person opening the account are written in the
columns provided in the form. One signature of the person is taken on the face of the form and
one is taken on the backside. These signatures should be usual signatures and he would operate
the account with them in future.

Specimen Signature Card (S. S. Card):

The signatures of the client are obtained on a specimen Signature card. These cards are obtained
in duplicate with two signatures on each card from the customer. Every time a cheques is
received for a payment from the client, the signature on the cheques are verified by comparing
them with the S.S. Card.

Issuance of Account Number:

When all the formalities are completed then the final approval of account has to be taken from
the Branch Manager. After obtaining approval of the branch manager an account number is
allotted to the customer and all the information is entered into the computer. Then that account
number is printed on the Cheque Book, S. S. cards and account opening form.

Summit Bank

Page 19

Issuance of a Cheques book:

After opening an A/C with the bank, the A/C holder once again makes a request in the name of
bank for the issuance of a cheques book. The A/C holder mentions title of A/C, A/C number, sign
it properly and mentions the no of leaves he requires. Normally Summit Bank issues a cheques
book having at least 25 leaves. Every cheques book also contains one leaf that is used for another
issue of a cheques book.

Entry of Cheques Book:

Before issuance of a cheques book, the employee performs certain functions. They include:

Stamping every leaf if the account is photo account

Enters it in the cheques book issue register.
After entry in the manual register, and in the system the employee issues the cheques
book to the A/C holder after his/her signature on the register.

Recording in Computer:
After opening of account, all information regarding the account is entered into the computer.
Currently, a program named hplus is being used for this purpose. Record of all the transactions
regarding the account of a customer is kept updated in the computer.

Summit Bank

Page 20

PROCEDURE FOR CLOSING AN ACCOUNT:

The procedure followed for the purpose of closure of an account is described in the following
steps:
The client who wishes to close an account first has to give an application, duly signed on the preprinted application of the bank. The client has to attach this application with the liability form
(explained below). The client can also give an application on a plain paper, but correct signatures
are very necessary.
Then it has to be made sure that if the account to be closed is a saving or Foreign Currency
Account then the account balance before closing should be zero. In case of these types of
accounts the bank does not take any closing charges. If a client wishes to close a current account
then the bank charges Rs.150, so at the time of closing the balance should be Rs.150.
Along with the application to close the account clients Cheque book is also received from him
and then it is destroyed in order to prevent any misuse in the future.
A liability form is filled and sent to the Trade Finance Department and Credit Department in
order to check that the customer does not owe the bank a single penny in any regard. A debit
voucher and a credit voucher are also attached to the liability form.
When both of these departments approve that the customer does not owe any money to the bank
and the form is returned to the account opening department then the original account opening
form pasted in the ledger when the account was opened is marked account closed along with the
date on which it is so marked. One thing has to be taken into immediate consideration that the
account number allotted to the client (who has closed his account), after closure of the account
becomes useless and is not allotted to anyone in the future.
After approval of the liability form, it is sent to either the Foreign Currency Accounts
Departments or the Cash Department, as the case may be so that the officer who scanned it in the
first place could return the specimen signature card to the account-opening department.
Once the S. S. Card is received back from the concerned official then the liability form, the
clients application along with the specimen signature card is pasted in the ledger right along side
the original account opening form. The form has to be pasted with the original account opening
form even if the account was opened a decade ago. In the computer as well all the entries and
records related to that particular account are permanently deleted by using the close account
option.

Summit Bank

Page 21

IMPORTANT DOCUMENTS USED:

Liability Form
This particular form is used when an account is to be closed. The staff of account opening
department, after filling in the name and account number of the client forwards this form to the
credit department and the trade finance department who upon receipt of such liability form make
required scrutiny so as to check whether or not the customer owes some money to the bank or
not.

Account Statement Request Form

This small form is used to request for the account statement for the desired period. The client
gets this Performa from the account-opening department and then, after filling it up, gives it to
the computer section that gives the statement to the client in printed form.

Issuance Requisition
This requisition is used by the staff to order for any thing (e.g. stationary) they need. They write
the type and quantity of the stationary they need, get it signed by the Manager Operations, give it
to the person in-charge of issuance of stationary who on receipt of this requisition (duly signed)
issues the stationary.

Debit and Credit Vouchers

These two vouchers are basically used when an account has to be closed. The debit voucher
shows as to how much amount has to be taken from the clients account and the credit voucher
shows as to hoe much amount has to be credited as Banks income, in order to facilitate the
account closing process.

Application to Close the Account

This is a pre printed application of the bank in which the client fills in the account number, the
title of the account and the type of account and requests the branch manager to close his account
with the Bank.

Application to Change the Address

This is again a pre printed request form in which the client fills in his name, account number,
telephone numbers and the new address so that he could communicate with the bank and receive
all the notices, statements and other necessary document which the bank might send through
mail depending upon the circumstances.
Mandate Form Used by an Individual to Enable a Third Party to Operate the Accountant
individual to enable another individual to operate hi/her account without changing the title of the
account uses this form. In this form the account holder certifies that the person to whom he is

Summit Bank

Page 22

giving the mandate shall be fully authorized to embark upon all possible transactions with regard
to this account unless and until otherwise specified.

CASH DEALING DEPARTMENT

This department of bank is mainly responsible for the handling of cash deposits and encashment
of cheques issued by the account holders. The following are the sections of the cash dealing
department

Receipts of cash
Encashment of cheques
Cash receipt section

The depositor uses depositor slip/vouchers for depositing the amount. Client fills these vouchers,
fulfilling all requirements.

Encashment of Cheques
Cheques encashment is made in four steps

Receiving of cheques
Verification of signatures
Computer terminal process
Payment of cash

CLEARING DEPARTMENT
One of the basic economic functions of banks is to receive deposits and to honor cheques drawn
upon them. So, cheques are a most commonly used instrument for making payments by account
holders.
Now the question arises that how these cheques & other negotiable instruments drawn on one
bank are deposited in other banks and money is transferred from one bank to another. Clearing

Summit Bank

Page 23

House has provided this facility. Clearing house facilitates different banks to get their cheques
drawn upon other banks to be cleared
.Cheques lodged in clearing constitute two types of clearing

Outward Clearing
Inward Clearing

Outward Clearing
When cheques and other negotiable instruments drawn upon other banks like MCB,ABN-AMRO
of the same city (as Lahore) are presented in Summit Bank Limited to deposit them in the
respective payees accounts, these instruments are lodged in outward clearing of summit Bank
limited.
When the cheques are presented in Summit Bank to be deposited in their respective payees
accounts, different stamps are put on cheques before their lodgment in outward clearing.

Crossing the cheques

Crossing means two parallel transverse lines, drawn across the face of the cheques with or
without words written in between them. Crossing may be general or special. In clearing, cheques
are crossed specially. Cheques are stamped with banks name between two transverse parallel
lines to constitute special crossing. After the cheques have been crossed specially, the holder
cannot receive payment except through the banker named on the cheques. Basic advantage of
crossing is to save the instrument to go it from illegal hands. If, crossed cheques is lost or stolen,
there is no risk of wrong payment. So it is an effective means of minimizing the risk of loss or
forgery.

Clearing Stamp
After the cheques have been crossed specially, clearing stamp is put on the cheques and other
instruments, with the following days date, as these cheques would have to be presented in their
concerned drawee banks on the subsequent day.

Endorsement Stamp
It means anything written or printed upon the back of an instrument. So, at the end, the cheques
are endorsed in full (endorsed specially) by putting the stamp with words describing Payees
account Credited in Summit Bank Limited.
.After putting these three stamps on cheques & other negotiable instruments, they are sent to
NIFT (National Institutional Facilitation Authority) with Add List. NIFT after segregating the
cheques of different banks delivers them to their concerned banks, which constitute the inward
clearing for those (drawee) banks.

Summit Bank

Page 24

Inward Clearing
Cheques and other negotiable instruments (PO, DD etc.) drawn on Summit Bank Limited,
Lahore, sent by other banks, constitutes the inward clearing of Summit Bank. After having all the
stamps and dates of cheques confirmed, the concerned drawers accounts are debited (in Summit
Bank Limited) and main branchs account is credited by the total amount.

Collection
When cheques and other negotiable instruments drawn upon other banks outside the city
(Lahore) are presented in Summit Bank Limited, Branch, Lahore to deposit in payees accounts,
then instead of clearing, these instruments are lodged in collection and constitute outward bills
for collection. Cheques of cities, where Summit Bank Limited branch exists (e.g. Islamabad,
Faisalabad etc.) are sent to that branch where these cheques are lodged in is outward clearing.
Otherwise, they are directly sent to the drawee bank. Postage & other charges are deducted on
account of payee according to Schedule of Charges.

Accounts
It is probably the only department in the entire bank where there is almost no direct customer
dealing. Two types of accounts are there which are as follows:

Inter-Branch Accounts
Like other banks, Summit Bank Limited has a network of branches all over the country. These
branches in different cities are interlinked with each other through their correspondent accounts
in other branches. So, all payments from one branch to another branch (in the same city or
another) are made by debiting and crediting these inter-branch accounts.

Inter-Bank Accounts
Like inter-branch accounts of a bank, different banks have correspondent accounts with each
other. Main branches of banks in a city maintain these inter-bank accounts. So, money is
transferred from one branch of a bank to another banks branch through these inter-bank and
inter-branch accounts.
The accounts department deals with various routine activities for the bank. The main activities
performed by it are

Budgeting
Reporting
Maintenance & depreciation of fixed assets
Miscellaneous functions

Budgeting

Summit Bank

Page 25

Accounts department of bank, for a year makes budget of branch. Fiscal year of bank starts from
January 01 and ends on December 31. The accounts department starts preparing budget from
October for the next year.

Procedure
The budget is based on forecasting through past performance First of all, the bank reviews what
are its sources of funds and where it can utilize these funds?
The main sources of the bank are deposits, borrowing from other banks, borrowing from SBP,
banks paid-up capital, its reserve fund, profit generated by the bank.
The budget is submitted to the head office for recommendation and modification. Monthly
budget meeting is held by branch managers to analyze the monthly performance. Budget and
actual performances are employed and variance is computed for analysis.
The management will then drive the reasons for the variance and take remedial measures to
achieve the targets.

Reporting
The accounts department, in the form of reports, clubs the details of various departments
together. Each and every minute detail is provided in weekly, monthly and annual reports. The
reports are submitted to head office, SBP and to the government.
The accounts department prepares many reports, of which the most common are

Statement of Affairs
Income & Expenditure
Foreign Currency Report
Outstand Receipt Report

Maintaining Of Fixed Assets & Their Depreciation

Accounts department maintains the record of all the assets and charges depreciation on them.
The bank normally uses the straight-line method to compute the depreciation.
The accounts department prepares asset purchase report and asset sale report after every 6months
that helps in changing the depreciation. It is calculated on monthly basis and charged yearly.
Bank not only depreciates the existing assets but also the assets transferred in and transferred out.

Miscellaneous Functions
The accounts department also performs some other miscellaneous functions like

Summit Bank

Page 26

Reconciliation Statements
Closing Entries
Foreign Exchange Forward Transaction
Reconciliation statements
The bank prepares reconciliation statement with head office and SBP

Head Office
Reconciliation with head office is done in reconciliation department. The branches send their
reports to the head office. They check the posting of all the entries if outstanding, which has not
been posted by branch or head office. The reconciliation is carried out in the head office and
accounts department handles quarries.

State Bank of Pakistan

The SBP keeps the record of every scheduled bank. The bank statements and statements of SBP
are reconciled on daily basis. Reconciliation is basically setting of outstanding entries. The
reconciliation statement contains two sides. One contains entries originated from bank but not
responded by SBP and on the other side entries originated by SBP but not responded by bank.

Closing Entries
Accounts department also passes the closing entries on monthly, 6 monthly and yearly bases to
calculate the profit and analyze the overall performance for a certain period.

Foreign Exchange forward transaction

In the past, the banks had to keep their foreign exchange with SBP on the agreement that SBP
will purchase the foreign exchange on book rate and charge a fee for covering the risk. This
whole transaction was known as foreign transaction. Now this facility is not available. Now
banks can avail it by renewing their limit on old accounts with SBP.

Statements
The predominant functions performed by the accounts department can be categorized into two
broad categories.

Daily Activity Checking

Report Generation

Daily Activity Checking

All the operations performed in various departments of branch are computerized. The functions
are performed through the customized software of the bank called hplus. In order to facilitate
double-checking of all the transactions done, every concerned official also passes vouchers. At

Summit Bank

Page 27

the day end all the vouchers passed by various officers working in different departments are
given to Accounts Department. Furthermore the I.T. department also prepares a report which
constitutes of the computer print outs of all the transactions / entries which have been fed into the
computer system of the branch that day.

Report Generation
The exact number of reports generated by the accounts department on a daily, weekly, monthly,
bi-yearly and yearly basis is somewhere in the bracket of 500. It is neither necessary nor possible
to get acquainted by all of these reports in a short period of time. Some of the common reports
are

Daily Advance and Deposit Position

Daily Exchange Position
Daily Fund Management
Closing Reports
Monthly Assets & Liabilities
Monthly Budget Review Report
Monthly Monitory Statement
Monthly Performance Review Report
Schedule Of Maturity Distribution

From these statements, five reports carry extreme importance. The five reports are

Daily position of advances and deposits

Statement of affairs
Daily exchange position report
Fixed assets statement
Month review of performance.
The Local Remittances Department

Besides cheques (the primary notes of exchange in a bank), banks also handle Promissory Note,
Bills of Exchange, Bank Drafts, Pay Orders, Traveler Cheques, Pay Slips, Call Deposit Receipts;
as negotiable instruments.

Summit Bank

Page 28

Pay Order (PO):

Pay Order is a negotiable instrument made by the bank, on account of a customer; to pay on
order the specified amount Pay Orders are used to make payment or to transfer money, with in
the same city. Pay Order is always drawn on the bank that has issued it.

Making of a PO:
When a person requires a Pay Order (made by Summit Bank Limited, Lahore), he is asked to
complete the prescribed application form in which the amount of pay order is to be stated.
Certain amount of commission and advance tax is charged on issuance of pay order. After having
the total amount deposited in the bank (in cash or through cheques, incase of account holder),
pay order is issued in favor of the payee.
Like cheques, when pay orders issued by Bank, are presented in other banks to get them
deposited in the payees accounts, they constitute the outward clearing for those banks and
inward clearing for Summit Bank Limited, Branch Lahore.

Demand Draft (DD):

A Demand Draft is a negotiable instrument issued by the bank, on account of a person, and
drawn on its own branch in a specific city or on the branch of another bank in that city (in case
bank doesnt have any branch there), requesting it to pay the specified amount to the person
named on it.
Demand Drafts are used to make outstation payments or to transfer money, out of the city.
Therefore, a DD is always made for a particular city.

Making of a DD:
Suppose a customer requests his Summit Bank Limited, Multan Road Branch Lahore to provide
him a DD made on his account for a particular city like Islamabad.
Then, after having the total amount to be deposited with application form, demand drafts issued
in favor of the specified person in Islamabad (supposed) and is drawn on Summit Bank Limited,
Islamabad Branch. So, when this demand draft is presented by payee in any bank, it constitutes
the inward clearing of Summit Bank Limited, Islamabad Branch.

Cancellation of PO & DD

Summit Bank

Page 29

After issuance of Pay Order, Demand Draft by Summit Bank Limited, Branch, Lahore, if any
one of these has to be cancelled by the customer, it is returned in the bank. Then, after deducting
the cancellation charges of Rs.100, the remaining (net) amount is paid to the customer through
Cash Payment Voucher.

Advance Tax against Remittances

Advance Tax is deducted on issuance of PO & DD (when customers dont have tax exemption
form) and credited in Tax on PO & DD account. Tax deducted has to be paid to State Bank of
Pakistan (SBP) with in one week of issuance of these instruments.

TRADE FINANCE
Trade deals with entry / departure of goods into / from one country to another country.
International trade basically is a consequence of an agreement between buyer and a seller
separated by geographical boundaries.

Summit Bank

Page 30

To ensure secured transfer of goods to the right buyer and a right seller, the services of the
Financial Institutions are of great importance. In this relation the banks have proved to be not
only dealers but also the leaders.

Trade finance
The term Trade Finance encompasses all banking transactions that are embarked upon in relation
to exports and imports. Now-a-days banks have become a compulsory assistant to almost all the
International Trade transactions. When trade is taking place between the representatives of two
countries (exporter and importer), the exporter involves his bank (the Advising Bank) in the
transaction, as he wants to feel secure regarding timely payment of his remuneration in the
required currency. On the other hand the importer involves his bank (the Issuing Bank), in order
to get a sense of security regarding timely supply of the required product, in the required manner.
The Trade Finance Department has two predominant dimensions namely Exports and Imports.
Thus there are two processes that take place in international trade i.e. the buying process (the
importer purchases the products from the exporter) and the selling process (the exporter sells
the goods to the importer).

The buying process

The buying act exchanges one thing, usually currency, for another of equivalent value. The
objective of the buyer is to obtain the most competitive price and delivery with the best quality.
The buying process begins with locating the source of a good or service, and ends when it is
resold, stocked in inventory, or the service is completed.
Within the global market place, companies worldwide become the potential source of goods and
services. However, the objective remains the same for each purchase, to get the best price with
the best delivery and with the best quality.

The selling process

The selling process exchanges goods and services for currency of equivalent value. The objective
of a sale is to achieve the highest price for the goods while preserving the relationship for
continued business. Trade finance can be categorized into two departments

Imports Department
Exports Department

The exporter and the importer might decide to carry on trade without the

IMPORTS DEPARTMENT
In the common words, import means bringing commodities into a country from outside by sea or
air. Stated differently, whenever there is a need of any commodity in a country and if that
commodity is not available the need for import arises.

Requirements to be fulfilled

Summit Bank

Page 31

When a person wants to import, he must have to register his name and his companys name. The
registration was previously granted by chief controller imports and exports but now the Export
Promotion Bureau of Pakistan performs this task. For Import Registration, the following basic
documents are required:

Questionnaire duly filled in

National Identity Card (attested copy)
Membership Certificate of Chamber of Commerce
National Tax Number / Certificate
Bank Certificate
Affidavit in case of Female Proprietor / Partner / Director
Sales Tax Registration

The fulfillment of these requirements will give the registration to the importer and after that he
can open an L/C with any bank and can import anything.

The Letter Of Credit (L / C)

International trade involves numerous factors such as payment for imports in the exporters
country, shipment of goods within the limitations prescribed and difficulties of enforcing legal
rights in the foreign country etc. Therefore, to overcome these impediments a system has been
enforced, this system is represented by Letter of Credit. It is a conditional bank undertaking of
payment. An L/C is a commitment on the part of buyers bank to pay or accept draft drawn upon
it provided draft doesnt exceed a specified amount.
In simple words, it can be defined as; A banks written undertaking given to the exporter for
payment of a certain sum of money on behalf of the importer provided the exporter tenders to the
bank, or its overseas agents, the specified documents within a specified period in accordance
with the terms of the undertaking.

Basic parties involved in a Letter Of Credit (L / C)

There are four basic parties involved

Importer & its Issuing Bank

Exporter (Beneficiary) & its Advising Bank

Various Shapes OF the Letter Of Credit (L / C) There are various types of L/Cs used in trade.
The main kinds are as follows:

Revocable Letter of Credit:

It is the one, which can be cancelled or modified by the issuing bank at any time without any
notification to the seller. Since it offers little security to the seller, it is hardly used in foreign
trade by the exporter.

Irrevocable Letter of Credit:

Summit Bank

Page 32

It is the L/C that can be amended or cancelled only with the agreement of issuing bank,
confirming bank and seller. This L/C gives more security to exporter as compared to revocable
L/C. In Pakistan, all banks including Bank Alfalah Limited-IBD are permitted to open
irrevocable L/Cs only.

Confirmed Letter of Credit:

The letter of credit is that which has the protection of credit standing of importer as well as
exporters bank. The exporters bank that confirms the Letter of credit takes the liability of
paying agents, in case of issuing bank fails to make payment to the exporter.

Unconfirmed Letter of credit:

Under the unconfirmed Letter of credit the advising bank (through whom the credit is negotiated)
does not give any kind of guarantee to the exporter that the issuing bank will honor the bill
drawn.

Types of letter of credit (L / C)

There are two main types of L/Cs.

Sight L/C
If the beneficiary of a credit is to obtain the payment immediately on presentation of stipulated
documents, it is sight credit. In this form of credit, the exporter draws a sight or demand draft
payable at the counters of the advising bank or the bank specified in the letter of credit. The draft
is paid on presentation if all the other terms of the credit have been complied with.
In this form of letter of credit the beneficiary or exporter gets the credit from advising bank
immediately after completing all the requirements. Banks usually deal in this type of letter of
credit more because there is lesser risk for both the exporter and the bank. Bank gets payment
from importer before giving him the possession of documents. In other words, we can say in this
type of L/C when importer sights the document he makes the payment to the issuing bank.

Usance L/C
When a credit is to be paid upon the maturity of a bill of exchange drawn under the terms of the
credit, it is called an Acceptance Credit or Usance Credit or Terms credit. In this type of letter of
credit the payment will be made on maturity of a bill of exchange. This maturity or tenor of this

Summit Bank

Page 33

type of letter of credit varies e.g. 30, 60, 90, 120 days. Exporter does not get payment on the
receipt of documents rather he gets the acceptance on bill exchange by importer that payment
will be made on maturity.
Common Shipping terms used while opening Letter Of Credit (L/C)

C & F (Cost and Freight)

Insurance of shipment is borne by importer, while exporter pays the freight under this condition.

CIF (Cost Insurance and Freight)

Exporter has to pay both insurance and freight under this condition, but not applicable in
Pakistan.

CIF & C I
When goods are shipped on CIF and C I (Commission and Interest) basis, it means the price
quoted includes cost, freight, insurance, commission and interest.

F O B (Freight on Board)
When freight of goods shipped, is not realized in advance by shipping company, it is then to be
paid by the importer on delivery of goods at the port of destination.

Documents required for opening letter of credit (L / c)

For getting an L/C issued, the importer has to submit the following documents

Performa Invoice:
The foremost document required by the bank for establishment of an L/C is the Performa Invoice
(signed by both the importer & exporter). The exporter issues it. It comprises all the terms and a
condition that has to be mentioned on L/C. Performa Invoice constitutes the basis of the whole
transaction.

Indent:
When the importer and exporter dont have direct relations and are connected to each other
through an intermediary, called Indenter, then he (indenter) issues an indent form containing all
terms and conditions (like Performa Invoice).

Annexure B:
This is a form in triplicate and must be filled by the importer. The HS (Harmonized Code) or ITC
(International Trade Control) code of the imported goods must be mentioned. Every commodity
has a different universally applicable code. The banker must check before opening the L/C that
the HS code given by the importer is correct.

Summit Bank

Page 34

Form I:
This form is also a part of the SBPs efforts to check all transactions in which foreign exchange
is involved. The form I also contains all the information about the transaction along with the
importers import registration number.

L/C Form with Adhesive Stamp:

The application form for the opening of an L/C must possess a legal stamp with it. This stamp is
worth Rupees 100. Without a legal adhesive stamp, an application for opening of an L/C will not
be accepted.

Insurance:
It is necessary for the importer to get the consignment insured and provide proof of having done
so.

Promissory Note
It is an unconditional written promise signed by the maker, to pay on demand or at afixed or
determinable future time, a certain sum of money to the specified person or to the bearer of the
instrument. Therefore, to make the payment (by importer) secure, bank obtains a promissory
note signed by the importer, along with the above stated documents.

L/C Margin:
It is a certain percentage of the value of L/C that is retained by the bank as security.

Clauses of letter of credit (l / c)

A letter of credit contains several clauses. The main ones are

Type of Credit:
The heading of a credit indicates the type of credit and its purpose. For this purpose, every bank
has prescribed its own letter of credit forms.

Value of Credit:
The fixed amount to which the bank is liable is specially mentioned in the letter of credit.

Specifications of Documents:
The documents required are specially mentioned in the credit.

Description of Goods:
A brief description of goods that are required by the importer is given.

Summit Bank

Page 35

Part-Shipment and Trans-Shipment:

Part-Shipment means shipment of goods in lots or installments that is in more than one shipment.
Trans-Shipment means the carriage of goods by more than one vessel or mode of transport. The
credit must specify whether this can be trans-shipped / part-shipped or not.

Collection of Charges:
The buyer and seller should have been decided as to which party would bear the expenses
because of interest/ markup and other bank charges. The credit specifies the party that would
bear the charges.

Validity Period:
This is a very important clause and because every credit indicates an expiry date or the validity
period. This period is so fixed to provide sufficient time to complete the transaction.

Reimbursement Clause:
This clause indicates the method for obtaining the reimbursement by the foreign negotiating
bank. It will be discussed elaborately in later part.

Shipping Marks:
If the importer wants that the goods should be identifiable with some special packing marks, it
should be so specified in the credit. This clause is not found in all the credits.

Procedure of Issuance of Letter Of Credit (L / C)

After completing the documents necessary for opening the letter of credit the procedure of
issuance of letter of credit starts.

Letter Of Credit (L / C) application form

After having an L/C limit approved, the process of L/C opening starts with L/C application form.
The bank has prescribed a standard application form that contains the required guidelines,
instructions and other relevant terms and conditions under which the L/C is to be opened and
claims from the beneficiary are to be settled.

Summit Bank

Page 36

The application form contains the following

Description of the goods, detail of quantity, unit price, total price and currency of credit
Instructions about the advice of credit, whether it should be sent by airmail, by courier or
telecommunicated
Form of credit: whether revocable or irrevocable, confirmed or unconfirmed. Due to
permission of irrevocable credit only, it is prescribed on form
The name and address of the beneficiary
Type of credit: whether sight, Usance etc
Validity period of credit and last dates for shipment and negotiation
Port of shipment and port of destination and whether trans-shipment and/or partshipment are allowed
Types and number of sets of documents required to be submitted by the exporter
Shipping terms in the contract of sale, e.g., FOB, C&F or CIF etc.
The application form must possess a legal stamp worth Rs. 100. Form without this
adhesive stamp is not accepted. This legal stamp is usually pasted on the application form
before giving it to the applicant.

Banks involved in the processing of letter of credit (L / C)

Starting from the establishment of an L/C, till the retirement of documents, following are the
banks involved in the whole L/C Cycle. The number of banks involved in L/Processing may vary
from 1 to 6. Only a single bank can perform all the functions through its different branches.

Issuing Bank (Opening Bank):

Bank opening the letter of credit is called Opening Bank or Issuing Bank. Opening banks
undertaking under an irrevocable or confirming L/C is absolute. Therefore, once an L/C has been
communicated to the beneficiary through the bank, the banker has no option, but to pay provided
the other terms and conditions have been fulfilled.

Advising Bank:
The bank that advises the L/C i.e., the bank that physically delivers the L/C to the exporter on the
behalf of the issuing bank. It is a correspondent bank of the issuing bank situated in the
beneficiarys country or it can also be a branch of issuing bank.

Negotiating Bank:
The negotiating bank receives the documents and delivers to exporter. When the exporter
completes all the documents, after making shipment, the negotiating bank sends them to the
issuing bank.

Summit Bank

Page 37

Reimbursement Bank:
According to ICC Rules, Reimbursement against foreign currency has to be made through the
country originating that currency. Therefore, for dollar transactions, reimbursement has to be
made (received) through the banks situated in USA. When issuing bank dont have any branch in
USA (for dollar payments), Summit Bank has Nostro Account, that bank is known as
Reimbursement Bank or Drawee Bank. It is a correspondent bank of issuing bank and makes
payment by debiting the nostro account.

Intermediary Bank (Collecting Bank):

Intermediary Bank is that where the negotiating bank has its Nostro Account and who obtains
reimbursement against L/C from reimbursing bank and gives credit to the negotiating bank. For
dollar payments, intermediary bank would have to be situated in USA. Similarly, for transactions
in GBP, both the Reimbursement & Intermediary banks would be in UK.

Approval of Letter of Credit (L / C)

When the importer has provided all the required documents for the credit, an approval sheet is
put on top of them. This sheet shows the credit limit of the party and if the tenureis Sight or
Usance. After, the completion of the approval sheet, the L/C is presented to the local credit
committee of the bank for approval.

Communicating Letter of Credit (L / C)

After establishing the letter of credit, it is communicated to the beneficiary through many
intermediaries.

Transmission of Letter of Credit (L / C)

After issuance, the L/C is sent to the advising bank. There are many ways to transmit an/C to the
advising bank. These are:
Through Airmail through Courier
Through Telex
The medium is used according to the instructions of importer mentioned on the top of the L/C
Application form.

Advising Letter of Credit (L / C)

After transmitting the L/C to advising bank, it is advised (physically delivered) to the exporter,
through advising bank. Summit Bank has collaboration with a number of banks Worldwide, for
advising its L/Cs. For example, if an L/C has to be advised in Australia, it can be advised
through ABN AMRO or Standard Chartered Bank, Australia.

Summit Bank

Page 38

Negotiating Letter of Credit (L / C) documents

Negotiating bank, after receiving the documents from advising bank, intimates the exporter.
When the exporter makes the shipment and completes all the documents, he presents them to the
negotiating bank. The negotiating bank sends these documents to the issuing bank, according to
the date of negotiation mentioned on L/C, and claims the reimbursement

Documents sent by the Negotiating bank

Following are the documents sent by the negotiating bank for the settlement of L/C;

Bill of exchange
A Bill of Exchange is an instrument in writing containing an unconditional order, signed by the
maker, directing a certain person to pay a certain sum of money on demand or at future
determinable period, to a certain person or to the bearer of the instrument. It is drawn by the
exporter through negotiating bank (drawer) and is an order for the importer or issuing bank
(Drawee; Summit Bank) to pay a specified amount. In case of sight bill (for sight L/C), it has to
be paid immediately.

Commercial Invoice
Commercial Invoice prepared by the exporter signifies the name and address of importer, invoice
price, invoice number and all the specifications of goods being imported.

Packing List
It is prepared by the exporter to show that the consignment is in accordance with the order of
importer.

Shipment Advice
Shipment Advice is issued for the insurance company to provide every information and
specifications regarding shipment.

Certificate of Origin
This document is a certification for the origin of goods. It certifies that the goods being imported
(or exported) have the origin of a specific country.

Phytosanitary Certificate
The exporter in case of commodities, like medicinal herbs, sends this certificate. It certifies that
the use of goods is not harmful.

Bill Of Lading/ Airway Bill/ Railway Receipt

Summit Bank

Page 39

Bill of Lading is a document issued by the shipping company that stipulates the quantity of
commodity, weight, port of shipment & discharge, date of shipment and other specifications

Insurance Policy (If Applicable)

If insurance is responsibility of exporter i.e. in case of CIF price, then the L/C issuing bank also
requires the insurance policy along with other documents. Usually, all the transactions are carried
out in FOB or C&F prices.

Covering Schedule
Along with the above stated documents, the negotiating bank sends its Covering Schedule on
which the instructions regarding the whole transaction are prescribed. It also mentions the
number of each document sent by the exporter.

Scrutiny of documents
After receiving all the documents, next and the most important step is to scrutinize the
documents. For this purpose, a list called Check List of Import Documents is prepared. All the
documents must be in accordance with the requirements of L/C. In case of any deviation the
documents can be rejected and payment can be stopped. Negotiating bank must be intimated
about any discrepancy found, with in 7 days.

Retirement of Documents
The whole transaction of foreign trade in which an L/C is involved, completes with the
retirement of documents.
The documents that are first lodged in PAD are retired when the importer pays the total amount
(payable). This amount includes the PAD plus the mark-up charged on PAD and other charges
(mentioned on cost memo). Upon receipt of payment, when the documents are retired, they are
given to the importer and he gets the consignment cleared from custom authorities (by
submitting the Bill of Entry).

This completes the whole transaction of Foreign Trade, carried out through a Letter of Credit.

The Exports Department

Export plays the major role in the economic development of the country; it is the one of the
major sources of earning foreign exchange without additional burden on the economy.

Conditions for Exporter

Like an importer, there are certain conditions that a person must fulfill to become an exporter.

Summit Bank

Page 40

The person must be an account holder of Summit Bank Limited.

No one can export any commodity until and unless he/she is a Pakistani and has a valid
export registration with the EPB.
The person must process a valid membership certificate of Trade Organization, licensed
and recognized by Federal Government like a Chamber of Commerce (e.g. Lahore
Chamber of Commerce).
The person must possess a valid NTN (National Tax Number) certificate.
A person cannot export any good unless he files a Form E (E stands for exports) with his
application to the bank.
The person must have the Sales Tax Registration Certificate.

Two key documents

Two major kinds of documents reach the export department;

Letter Of Credit
In simple terms a letter of credits is defined as a banks written undertaking given to the exporter
for payment of a certain sum of money on behalf of the importer, provided the exporter tenders
to the bank, or its overseas agents, the specified documents within a specified period in
accordance with the terms of the undertaking. Documentary credits as they are called, L/Cs have
been discussed in detail in the imports section.

Contract
A contract is defined as an agreement, certain and performable, made by competent parties, with
their free consent for the lawful object, and lawful consideration, and if not expressly declared
void.
Another way to define contract is that it is a Mutual understanding between the buyer and the
seller without the involvement of the L/C. involvement of a letter of credit. In this situation, trade
is carried out based on a mutual contract between them.

Complete Export Cycle

The process of export starts with the receipt of the Letter of Credit (or Contract) by the bank. The
issuing bank sends the L/C to Summit Bank Limited, Branch, GUJRANWALA through the
advising bank. Upon receipt of L/C, an intimation letter is prepared and is sent to the beneficiary

Summit Bank

Page 41

of the L/C, advising him that his reached Summit Bank Limited, NGT Branch, Lahore and he
should collect it immediately.
As mentioned earlier, an E-form is necessary for exports out of the country. It is a part of
exchange control mechanism of the State Bank of Pakistan. When an exporter receives an L/C,
the next job is to get an E-form from the bank. After filling in the complete information about the
goods to be exported, the exporter brings the E-form to the bank for verification. The bank
verifies the contents in accordance with the documents and not by physical checking. The E-form
is a quadruplicate and contains the following information.

The Commodity
The quantity
The price
The port of shipment
The port of destination
Terms of shipment
Export registration number

After getting the E-form verified from bank, the exporter starts preparing for his shipment. As
the banks only deal in documents, so in order to receive the payment for his good to be exported,
the exporter has to send certain documents to the L/C issuing bank via negotiating bank. These
documents have already been discussed in import section.

A very important step in the export process is to scrutinize the documents, before sending them
to the issuing bank. It requires utmost care and attention of the bank officer. When the documents
are presented in the bank, they are always scrutinized and they must be in accordance with the
requirements stipulated on the L/C. Any deviation could result in rejecting the documents by the
importer, hence causing loss to the exporter or even to the bank if the documents are to be
negotiated

Summit Bank

Page 42

FINANCIAL ANALYSIS
1. Return on equity =Net income/ shareholders equity

Return on Equity
Years

Ratio

2012

-83.98%

2013

-27.90%

2. Capital Adequacy= Total regulatory capital / total risk weighted exposure

Capital Adequacy
Years

Ratio

2012

5.35%

2013

7.77%

3. Return on Assets = net income / average total assets

Return on Assets
Years

Ratio

2012

-4.18%

2013

-4.51%

4. Earnings per Share = net income / total number of shares

Summit Bank

Page 43

Earning per Share

Years

Ratio

2012

( 5.58)

2013

(1.53)

PEST ANALYSIS
Political Factors

Lack of confidence on political system

Bad policies of govt.

Increase tax rate

Summit Bank

Page 44

Economic Factors

World wide recession

Uneven distribution of wealth

Inflation
Exchange rate
Unemployment
Growth rate

Social Factors
Population trend
Culture
Religious factor
Joint family system
Low standard of living
Costless value of life
Literacy level
No concept about insurance

Technological Factors
Complications in policies
Online service
Using new software's

Summit Bank

Page 45

SWOT ANALYSIS
Strengths

Versatile products and services

Goal oriented management system
Foreign investment support
User friendly internet services
High confidence of Customers

Weaknesses

Lack of Branches in underdeveloped Areas

Not pure Islamic Banking
No incentives for agricultural sector
No Advertisement

Summit Bank

Page 46

Opportunities
By expanding their network Summit Bank can capture the corporate customers.
It can enhance its market share by introducing new offers like car financing and short
and long terms loans for agricultural sector.

Threats
Big competition in the market
In Home Financing Union Bank or to some extent NBP are threats.
The launch of any new bank could be a threat for summit bank

DILEMMAS FACED BY ORGANIZATION

Software security is not good. It is open to all restriction. Internal control is not efficient.
Use of Flash drive can cause virus in the system.
In Summit Bank non availability of IT professionals.
Summit bank directs hiring the staff.
No training after selection
No proper HR
No proper appraisal to evaluate performance of employees.
Employees are not holding the proper position. Finance manager & IT Professional is a
same person.
Sale promotion/marketing department are same in the Summit Bank.

RECOMMENDATION

ATM Machine is not working in the bank. ATM is need of the era.
There must be training before the employees start working in bank.

Summit Bank

Page 47

Software needs a greater security.

There is an ambiguous authority to utilize the software.
Account opening dept, has the authority to give reports and show customer balance but
the same function is also performed by foreign trade, credit and other depts. It shows that
they have ambiguity in utilizing the software as it is not open to all.
Marketing of Islamic banking products like:- Musharka etc.
Proper back up should be made available for existing employees.
In networking, no input control on data.
Floppy disk, USB should not be allowed, Uninstalled in systems.
Tests of employees should be conducted on Islamic banking. So that
Employees should become aware of Islamic terms and their meanings.
IT professional must be hire.
Human Resource officer should be hired.

CONCLUSION

It is backed by powerful international investors

Employees are the most important assets of any organization.

With their focused strategy and product development initiatives planned for the year,
Summit Bank is strongly positioned to meet these challenges.
Summit bank has to maintain its position through product innovativeness, customer care
and advertising and promotion.

REFRENCES
Annual report
Annual report 2013 of Summit Bank Limited (formerly Arif Habib Bank)

Websites
www.summitbank.com.pk

Summit Bank

Page 48