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THE BANK OF PUNJAB.

ACKNOWLEDGMENT
Man is not perfect in all the context of his life. Although today man is doing
some difficult and nearly impossible things, but his mind is still limited and has minor
thinking approaches. It is mercy of almighty ALLAH who blessed man with mind and
knowledge and make him able to do a lot of things. It is almighty ALLAH who shows
the man light in the darkness and man finds his way to the light. Without blessings
of almighty ALLAH man is nothing but a helpless creature.
Same is the case with me, I also face many difficulties during
completion this report and have been successful in my duty only because of the help
of almighty ALLAH.
I feel pleasure to admire all the management of department of
commerce B.Z.U Multan whose tireless efforts are fruitful for the student and
better educational atmosphere. I am thankful from my depth of heart to Sir
G.M Malikm whose guidelines have always been with me during completion
of report.
I also pay thanks to all my friends.

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THE BANK OF PUNJAB.

INTRODUCTION OF BANKING
Commercial Banking and its Functions

The word “Bank” is said to have been derived from the Latin word
“Banque” or “Back’ or “Bancus”. The history of bank dates back as
early as 2000 B. C. Since then commercial banking has passed many
phases. The commercial banks perform so diversified functions that it
is not possible to define the word bank.

As far as the law is concerned, Banking Companies Ordinance 1962


defines the term banking as following: -
“Accepting for the purpose of lending or investment of
deposits of money from the pThe bank of punjabic repayable
on demand or otherwise and withdrawals by cheque, draft,
order or otherwise.”

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THE BANK OF PUNJAB.

The commercial banking has been developed into an important sector


economy. It is a service-oriented organization, which performs
numerous functions. The functions, which a commercial bank performs,
can be divided into following categories.
1. Basic Functions
2. Agency Services Functions
3. General Utility Functions
These are classified as following.

Basic Functions

These include:
1) Accepting of deposits
2) Making advances and loans
1. Accepting of Deposits
a. Current/Demand Deposit
b. Saving Deposits
c. Fixed Deposit
2. Making Advances and Loans
a. Running Finance
b. Term Finance
c. Project Finance
Agency Services
These include:
 Collection of Cheques
 Collection of Dividends
 Purchase and Sales of Securities
 Execution of Standing Instructions
 Collection of Bills
 Acting as trustees or Executors

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THE BANK OF PUNJAB.

 Transfer of Funds
General Utility Services
These include:
 Supplying Trade Information
 Issue of Travelers Cheques
 Issue of Credit Cards
 Foreign Exchange Business

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THE BANK OF PUNJAB.

COMMERCIAL BANKING IN PAKISTAN

(PAST AND PRESENT)


At the time of Partition the total number of commercial banks in Indo-
Pak subcontinent were 38. These were as per detail given below.
 Pakistani Banks = 02
 Indian Banks = 29
 Exchange Banks = 07
The Pakistani banks had total deposits of Rs. 880 Million and advances
were Rs. 198 Million. These banks had the figure of branches of 213 at
that time. Theses 2 banks were scheduled banks. The story of non-
scheduled banks is not different. The number of these banks fell to 106
from 411 with the reduction of branches to 69 from 487.

This situation was not proper for the development of country. The need
was felt to establish a sound banking structure to strengthen the
financial sector of country. Quaid-e-Azam himself took initiative and
interest. In result, State Bank of Pakistan was established. Then in
1949, National Bank of Pakistan was established. However, in 1974,
the banks were nationalized and five major banking companies were
made. However, the performance of these nationalized banks did not
show the performance for which this step was taken. Therefore. The
Govt thought it beneficial for the banking sector to reverse the action
and privatize the banks. In 1991two banks Muslim Commercial Bank
and Allied Bank of Pakistan were privatized. Along with these steps, so
many other banks were also given permission to be opened in the
country. Because of that certain other banks like Bolan Bank, Khyber
Bank, Metropolitan Bank, Union Bank etc. started working in Pakistan.
The foreign banks also opened their branches in Pakistan.

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THE BANK OF PUNJAB.

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THE BANK OF PUNJAB.

HIERARCHY
President

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Assistant Vice President

Officer Grade 1

Officer Grade 2

Officer Grade 3

Operational Staff

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THE BANK OF PUNJAB.

MANAGEMENT OF THE BANK OF PUNJAB

LIMITED PAKISTAN

BOARD OF DIRECTORS
Chairmam: Shaikh Nayahan Mabarak Al Nahayan

Deputy Chairman: Muhammad Anwar Pervez.

President and CEO: Amar Zafar Khan.

Director: Omar Zahir Jaffar Al Askari.

Director: Zameer M. Choudhary

Director: Javid Sadiq Malik

Director: Tahsin Khan Iqbal

Director: Ahmad Waqar


SENIOR MANAGEMENT

Name Designation
Amar Zafar Khan President & CEO
M. A. Mannan Deputy CEO
Nauman Hussain Director Operations & Utilities
Mansoor M. Khan Head Corporate Banking Group
Shaharyar Ahmad Head Investment Banking Group
Shahid Waqar Mehmood Head Commercial Bank
Aman Aziz Siddiqui Head International Operations
(Dubai)
Ali Sameer Chief SAM (Domestic)
Risha Moheyuddin Global Treasurer
Khalid Munawaruddin Head Credit Policy
Supervision

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THE BANK OF PUNJAB.

Mehboob A,Karim Country Operations Head


Muhammad Ejazuddin Audit Chief
Rukhsana Asghar Global Head Human
Resources
Aameer Karachiwalla Chief Financial Officer /
HCA

INTRODUCTION OF THE BANK OF

PUNJAB

Augha Hussain Abdi renowned banker and established THE BANK OF

PUNJAB on 7th November 1959. As private scheduled bank with

authorized capital of 2950 million having ordinary share of Rs 10 each.

THE BANK OF PUNJAB made tremendous progress in almost all

segments of banking. Augha Hussain Abdi was the founder and first

president of THE BANK OF PUNJAB.

In the work of his able guidance and dynamic leadership THE

BANK OF PUNJAB got tremendous progress.

Bank played very important role in the development of industry, trade

and commerce. The Bank is playing an active role to meet the financial

requirements of small business and agriculture sector under the

mandatory credit assign by State Bank of Pakistan.

Democratic Govt, (ZULFIQAR ALI BHUTTO) nationalized all commercial

scheduled banks including THE BANK OF PUNJAB in 1974.

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THE BANK OF PUNJAB.

THE BANK OF PUNJAB was the largest privatization attempted by the

Government of Pakistan, launched in June 2001, with 21 interested

parties. It was impacted by the adverse developments of the

September 11, 2001 and was finally concluded in October 2002 by

which stage only three bidders were left. The consortium comprising

Bestway Group (BG), out of the UK and Abu Dhabi Group (ADG) from

the UAE were finally the winners at a record price. The signaled the

strong confidence reposed by these investor groups, in the improved

governance of the country, the economic potential, the banking

opportunity and the existing management of the bank.

Karachi Head Office

State Life Insurance Corp. Building #1,


I.I. Chundrigar Road, Karachi, Pakistan
P.O. Box No.: 4306
Phone: 92-021-2417100
Gram: "UNITED"
Fax: 92-21-2413492

PRODUCTS & SERVICES

THE BANK OF PUNJAB has taken progressive steps and has introduced
innovative products and services to provide you a variety of banking
and financing services.
Hamrah - Rupee Traveller Cheque, Now Offers Rewards For You
Cheque Encashment Facility - cheque encashable at any designated
branch

 UNICARD - Credit card, No more counting of cash

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THE BANK OF PUNJAB.

 UNICASH - ATM Network for 24-hour cash withdrawal

 TEZRAFTAAR- Free doorstep remittances in 24 hours.

 UNIZAR PLUS- For foreign currency accounts.


Accounts can be opened in US Dollars or Pound Sterling You can
maintain current, saving or term deposit accounts. No restriction on
the transfer of funds to anywhere in the world, and attractive rate of
return. Residents and non resident Pakistani, Firms and Companies are
eligible to open these accounts. This account is exempt from Zakat.
Withholding Tax on profit as per SBP’s rules and regulations and
withdrawal allowed in foreign currency.
 Locker Facilities

 Haj and Umrah Services

 Agricultural Loans - on easy terms

 Small Business Scheme

 THE BANK OF PUNJAB Sahara - Free Insurance Cover of


up to 1 Mill

CUMMUNITY SERVICES
THE BANK OF PUNJAB is committed to the welfare of Pakistan. It lends

to farmers for the purchase of tractors, superior quality seed and

fertilizers. THE BANK OF PUNJAB further fosters the individual welfare

and well being of the common man by lending house building finance

and loans to set up small businesses. THE BANK OF PUNJAB has played

a leading role in the dissemination of Computer Technology in

Pakistan and is dedicated to the promotion of sports. Agricultural Loans

on Easy Terms Small Business Scheme THE BANK OF PUNJAB Sports

Complex.

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THE BANK OF PUNJAB.

REGIONAL OFFICES & BRANCH


There are ten regions and1113 branches all over the Pakistan and
abroad.

Number of Region Branches


Karachi 102
Hyderabad 117
Lahore 80
Faisalabad 151
Sialkot 69
Multan 151
Islamabad 145
Peshawar 156
Quetta 42
Azad Kashmir 79
Corporate Banking 2
Special Assets 2

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THE BANK OF PUNJAB.

THE BANK OF PUNJABLIMITED CHOWK

MEHRBAN MULTAN

My internship was assigned at The bank of punjablimited Chowk

Mehrban Multan under the kind supervision of Mr. Abdul Samad & Mr.

Ahmed Nawaz.

OPENING OF ACCOUNTS

The banking history is filled with various instances of fraud. These


frauds are largely attributable to incorrect opening of accounts.
Therefore in order to prevent these frauds, the bank manager and
other officer’s need to due care and exercise required precautions at
the time of opening of accounts. This aspect of banking is full of
delicious, always ranks at top priority and much of the bank's
operational success depends on it.

At the time of opening of the account, bank officers should tact-fully


obtained as much information as possible about the integrity and
character of the person, his correct name, address and occupation.
This in fact will be the only opportunity when they will be able to talk to
the prospective customers in a friendly and frank atmosphere. This is
the time, when they have a slight edge over the customer about his
personal status and business etc. Therefore, it is very much necessary
that due care and proper procedure be followed up for opening
different types of accounts for various types of customers.
The bank of punjabLimited is having accounts of the customers to be
classified as follows.

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THE BANK OF PUNJAB.

a) INDIVIDUALS
b) PARTNERSHIP FIRMS
c) JOINT STOCK COMPANIES
d) AGENTS
e) CLUBS, SOCIETES AND ASSOCIATIONS
f) EXECUTOR AND ADMINISTRATORS
g) TRUSTS
h) LOCAL BODIES ETC

When a customer opens an account, he enters into a contractual


relationship with the Bank. As such all requisites of the contract are
necessarily be fulfilled. For instance, at the time of opening the
accounts, the intended customer must have the following
characteristics

General Guidance For Officers For


Opening The Accounts

Some essential points that must not escape the attention of the
officers while opening the accounts:
I) As far possible, the Branch Managers themselves should
handle the account-opening job. Only in exceptional cases at
Main Branches, the job may be assigned to the manager
operations.
II) As much relevant information as possible must be elicited
from the prospective customer relating to his means, line and
place of business.

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THE BANK OF PUNJAB.

III) Each and every column of the account opening form should
be neatly and correctly filled in with necessary details.
IV) Accounts must he properly introduced. In this concern, the
following precautions arc to be observed.
i) As far as possible, the person introducing the account
should attend the Bank personally with the prospective
customer. This would serve the dual purpose.
a) The Branch Manager shall have the opportunity of eliciting
vital information as to the standing, prospect ability and the
means of the person he is introducing.
b) The identity of would be customer is established.

ii) In case the person introducing the account does not call at
the Bank, extreme care should be taken while verifying his
signatures and guidance.
iii) Introduction from persons having doubtful dealings with the
Bank should be declined,
iv) Current account holders can introduce both types of
accounts viz. Savings Bank Account and Current Accounts. However
Introduction, from savings Bank Accounts holders should not be
accepted for opening current accounts. Exceptionally,
Introduction by customers of good standing may be accepted in Cases
where they maintain substantial balance and these Accounts are
sufficiently old.
vi) The Staff members generally allowed not Introduce the account.
They will introduce accounts only for those persons who are personally
known to them and whose credentials are about to clean.

vii) As far as possible the account opening form should be


completed by the prospective customer in presence of the introducer

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THE BANK OF PUNJAB.

who is then aware of the particulars furnished and can corroborate the
same.

V). Specific information concerning the profession or occupation of


the prospective customer should be recorded in the account
opening form. The description "Private Service" or "
Businessman.

VI). Signatures on the account opening form as well as the specimen


signature card must be put by the customer in the presence of
the bank officer/manager who will at least them preferably in the
presence of introducer.

VII). No chequebook should be issued to the new account openers


unless their accounts are properly introduced.

VIII). Accounts may be opened with cash or deposit of cheque.


IX). In the case when Cheques form initial deposits, it is incumbent
upon the branch managers to satisfy themselves additionally
that title of the account holder is genuine for the cheque
deposited.

X). Letter of thanks should be sent to the introducer the day.


XI). Account is opened. This precaution would accomplish the
purpose of intimating the introducer that the account has been
opened on strength of his introduction.

XII). A statement of account should be dispatched at the customer's


address soon after the first transaction in account is completed.
This would help to ensure that no bogus account is opened.

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THE BANK OF PUNJAB.

XIII). As for as possible, in the evening, the officer of a branch should


XIV). Visit the customer’s area to establish that the address given by
the customer is correct and he commands respect and honor in
the vicinity he is living in.

XV). Number of customer's NIC should be correctly recorded in the


account opening form and a copy of it should be kept on record.

XVI). No account should be opened in the name of undercharged


insolvent.

In addition to above general guideline, the officers should adhere to


following procedure for each type of customer.

a) Individual

Such account may be classified as follows.


• Account of Literate ladies and gents
• Account of illiterate ladies and gents
• Account of parda observing ladies
• Joint Account

1. No serious complications are involved in opening accounts of this


category except when the ladies are parda observing, In the case of
parda observing ladies, their family adult member wilt attend the local
magistrate for attestation of her signature. Alternatively, the bank may
induce opening of joint accounts of such ladies along with their family
adult member.

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THE BANK OF PUNJAB.

2. In the case illiterate ladies and gents, the following precautions are
observed in addition to those provided in the above guidelines.
 Two photographs are to be obtained. One to be pasted on
account opening form and the other on specimen signature
card.
 Instead of signature, right hand thumb impressions to be
obtained on the specimen signature card from the ladies.
 Each time such a customer should attend the bank personally
and will put their thumbs impressions on the cheque before
the officer.
 Such a customer should be advised not issue cheque payable
to 3rd parties,

3. The problem arises particularly in the case of parda observing


ladies. Some serious complications are involved in this concern. As for
as possible, they should be discouraged to open the account with the
bank independently. Alternatively, the procedure prescribed for literate
parda observing ladles should be followed up with the precautions
narrated above.

4. When the account is opened by more than one person but the
relationship between them is neither of trustees nor partners, it would
be termed as joint account.

Whenever such accounts are opened, definite instructions regarding


operations on the account and payment of balance in case of death of
any one of them should be obtained. In die absence of any instruction
for the account operation, all joint account holders should sign the
cheque for withdrawal of amount from their account.

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THE BANK OF PUNJAB.

In operations of joint account, following important points are required


to be remembering.
A) Any member of joint account may give stop payment instructions of
any cheques with the bank and the later should honor such
instructions. However removal of these instructions must be
signed by all the members.

B) The member of a joint account may wish to delegate authority to


any outsider to operate the account. However such a mandate is
necessarily to be signed by all the members.

C) Any mandate referred in (II) because automatically cancelled when


the bank comes to know of death, insolvency or insanity of any of the
members of the joint account.

D) In the case of members of the joint account become insolvent or


Insane, operation on the account should be stopped and Instruction to
be required for payment of the balance amount from the remaining
solvent and sane member.

E) In the case of member of joint account dies, operation on the


account must be stopped and balance in the account is to be paid
as per instructions recorded with the bank.

B) Sole Proprietary Accounts

"SOLE PROPRIETORSHIP” is that kind of business where the business is


controlled and owned by a single person. While opening

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THE BANK OF PUNJAB.

the account of such an enterprise, following points are to be adhered


to;

a) Eligibility
Sole proprietary concern is perfectly eligible to open bank
Account/s. However, as it is a business concern, a PLS Saving Bank
Account is to be opened in the name of the firm.

b) Introduction
Proper introduction is required for opening an account of such
Enterprise.

c) Documents required
Usual documents as in case of opening accounts for an individual
are required. However, while opening such accounts, it must .be
established that the proprietor desirous of opening the account is
the sole proprietor of the Business in whose name the account is to be
opened. This is done by getting the proprietors, statement
"'Declaration-11 “on reverse of the account opening form.

d) Authority to third party to operate the account


The sole proprietor can give an authority, in writing, to third parties
Including his employees to operate upon firms account, giving
There in also clear-cut and well-defined extent of such an authority.
e) Declaration
Application for account opening should be singed in official
Capacity shares declaration on reverse of the account opening form
Should be singed in individual capacity.

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THE BANK OF PUNJAB.

C) Minor's Account
According to section 3 of the majority act, 1875.
A person who has not attained the ago of 18 years is said to be
A MINOR, However where guardian is appointed by the,
Competent court of law, majority will be deemed when the minor
attains the age of 2"1 years.
Legally, a minor cannot upon a bank account since opening of bank
Account is the result of contractual relationship which minor does
Not possess. However in order to inculcate the habit of savings,
Deposit account may be opened in the name of (.ha minor jointly with
Her/his guardian. Operation of the account nevertheless shall rest
With the guardian.
A minor may open any of the following types of deposit account along
with his/her guardian:
o PLS Saving Bank Account.
o PLS Term Deposit Account.
o PLS Special Notice time Deposit Account.
o Call Deposit Account.

D) PLS Saving Bank Account

Following-points should be kept in mind while opening the account


of a minor.

1. Application of account opening and Specimen signature card are to


be singed by the guardian.
2. Such an account is termed as a Minor’s Account and not to joint
Account.
Account.
3. Account is to be opened in the "name of the minor and his/her

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THE BANK OF PUNJAB.

Guardian".
4. Account is to be operated by the guardian only.
5. Following stamp is to be affixed invariably on the account opening
Application form.
"Guardian will continue to operate upon the account oven if
Minor attains majority."
6. Minor can neither give stop payment mandate nor can claim the
Balance during his/her minority where the guardian is alive.
7. On attaining the majority and after providing sufficient
Constructive proof of his major ship.

If a minor under such circumstances, wants to operate upon the


Account, new account is to be opened.

8. In the case of death of minor, balance is to be paid to the


Person authorized by the court of law.
9. In the case of death of guardian, balance in the account is to be
Paid according to the instructions of the competent court of law
Only.

E) Joint Account

When two or more persons who are neither executors, nor


administrators, nor trustees, nor partners, agreed to open an account
that account is entitled as joined control account. When such an
account is opened with a bank, all usual precautionary steps which are
taken in the individual's account holders to give specific mandate as to
the operation of account.

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THE BANK OF PUNJAB.

Main provisional regarding a joint account are being discussed here


under.
Authority of Over Draw

Power to draw cheques does not of itself carry the power to overdraw
the account unless specifically authorized to do so, because one joint
account holder would not so responsible for a debt created on the
account by another. Thus, arrangements are provided in the mandate
to create an overdraft to run side by side / with power to draw
cheques.

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THE BANK OF PUNJAB.

II. Presumption against delegation of authority

In the absence of any specific authority to act on one signature the


bankers should insist upon all the parties to sign cheques and other
orders in their joint capacity. In brief, all the parties to joint account
must sign cheques and other instruments.
III. Authority to Countermand Payment of
Cheque/Instruments

Banker may be authorize to countermand payment of Cheque, bills


of exchange and Promissory notes etc, On the instructions of
both/all/either of parties to the account.

IV. Authority to Revoke Instrument


The parties to a joint account may agree that the Instructions given by
them shall remain in force until written revocation thereof by them or
either of them is conveyed to the banker. This clause provides for a
situation where two parties met in disagreemen
disagreement and one of them
desires to revoke this authority, which he does by sending a written
notice to the banker. On receiving this notice the bank should
immediately inform the other joint account holder/s.

V. Death of Joint Customer


In the event of death of two or more joint customer, a banker is
Required to act upon the survivorship clause contained in the
mandate. The purpose of this clause is to state the term of the contract
governing the operation of account and liability of the bank to pay the
balance amount to the survivors or to such specified person(s) as the
intention of the mandate indicates. In the absence of any specified
instruction, the bank will get good discharge by paying the balance to

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THE BANK OF PUNJAB.

the survivor(s), simply because under the Law of devolution all rights
and liabilities pertaining to the estate of deceased pass on to his
survivor or survivors, hence they become entitled to receive the
balance amount on the death of one or more Joint Customers.

On receiving notice of the death of one of two joint customers, any


cheque presented for payment, and signed by the deceased should be
returned unpaid with the remarks "Drawer Deceased". If there is only
one survivor then as per rule the balance vested in him, and so the
cheques signed by him may be honored, In case of more than one
survivor, a fresh mandate should be obtained from them.

VI. Stopping a joint Account


If Joint account holder who has undertaken joint and several
liabilities dies and the account is having debit balances, the bank
should immediately stop (.he account, and alt future transactions
should pass through a new account opened for this purpose. This will
preserve the bank's right against the deceased estate.

VII. Insanity of a joint account holder


Insanity of joint customer countermands any authority given in respect
of operations on the account, which should be stopped pending joint
instructions from the same parties and the receiver in lunacy,
appointed for this Purpose.

XIII. Bankruptcy of joint account holders


In the event of bankruptcy of a joint account holders, the right of
survivorship does not come into operation but it effects in cancellation
of a mandate given in respect of operations on the account,

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THE BANK OF PUNJAB.

consequently, when a banker comes to knowledge of a bankruptcy


petition filed against a joint, accountholder, he must make
arrangements that no further drawings from the account are allowed
or permitted.

Presentation of bankruptcy petition effects in stopping all payments


through, cheques whether presented by the insolvent bankrupt
customer or drawn by the solvent customer to joint account. It is quite
conceivable that a solvent customer may draw what properly belongs
to him, but obviously it is difficult for a banker to determine this right
and, therefore, safety for him lies in paying only one Joint direction of
the trustee and solvent customer. Any article, which had been
deposited for sac custody, should likewise be the subject of joint
instructions.

In the case of debit balance amount, it should be stopped in order to


Preserve the bank's right against the bankrupt's estate. The bank,
which proves in that estate for the entire debt, ignoring the remaining
account holder and any security deposited by them. Any security
deposited by an insolvent customer must be realized or valued, and
the bank will prove in its estate for amount of old draft minus the
security as realized or valued.

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THE BANK OF PUNJAB.

F) Joint Stock Companies

There are various types of companies. Normally, following two types


of companies open their accounts With the banks,
• Private Limited Companies
• PThe bank of punjabic Limited Companies

Private Ltd. Companies are those where the share capital is not offered
to the general pThe bank of punjabic instead offer is restricted to a
particular class of society or within the family members. Generally their
shares are not transferable. The minimum number of shareholders is
two and the maximum of 50.

In the case of PThe bank of punjabic Ltd. Companies, share capital is


contributed by
the general pThe bank of punjabic. Every national of Pakistan who is
authorized to
enter to the contract can purchase their shares. Shares of these
companies are transferable and treated freely in the stock exchange
markets. The minimum number of shareholders is 7 whereas there
is no upper limit extending to infinity.

While opening the company's account, the bank manager must ensure
that board of directors of the company is properly constituted and
requested for opening the account comes through resolution of the
board of directors, the resolution should be signed by the chairman of
the meeting where such resolution is passed and counter signed by the
company’s secretary or authorized director. It should also bear
common seal of the company.

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THE BANK OF PUNJAB.

In the resolution of the board of directors, the board will resolve as


follows.
* That the account is to be opened with The bank of punjabLimited.
* The names of Directors are given who would be authorized to
operate upon account.
* That as and when any changes takes place in constitution of the
company and/or operation on the account. The bank will be informed
accordingly.
Besides the resolution, the following documents are obtained while
opening such accounts

1. Memorandum of Associations
It is the constitution of the company. It sets out the objectives for
which the company is formed. It lays down the foundation with in
which the company can operate.

2. Article of Association
It contains the rules and regulations for day-to-day operation of the

company. Generally this document contains the followings.


• General Power of Directors
• Procedure concerning calling of meeting
• Mechanism of decaling the dividend.
• Election and retirement of directors
• Methodology of computing profit and loss.

3. Certificate of Incorporation

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THE BANK OF PUNJAB.

It is very important document. This document is evidences formation of


the company in its legal perspective. It signifies that all requirements
of law relating to the company’s formation have been fulfilled, registrar
of joint stock companies issues it.

4. Certificate of Commencement of Business


This document authorizes the pThe bank of punjabic Limited Company
to commence business after when the company is incorporated. As
such this document is not required from Private Limited Companies.
Even in the case of PThe bank of punjabic Ltd, Company, account may
be opened without this document for receiving share application
money. However operation on account is not allowed nor the cheque
book is issued.
Operation on account shall only be allowed when the company files
the certificate of commencement of business.
In the case of companies account, following points are required be

remembered.
 For the pThe bank of punjabic Limited company in the absence
of the commencement of business, any contract made by the

company is provisional and not binding on the company.


The company's any act winch does not fall within the purview of its
memorandum of association is considered illegal.

 On any point, if there appears difference between the


memorandum and articles of association, the memorandum of
association will always held good.
 Since the companies as legal entitles as such no introduction is
required from for opening of their accounts.
 Death, retirement or dismissals of the directors does not effect
operation on the account. However, Death, retirement or

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THE BANK OF PUNJAB.

dismissal of directors authorized to operate upon the accounts


temporarily put embargo on operations of the account. In such,
fresh resolution authorizing another person to operate upon the
account is to be called for from the company.
The cheques signed by the directors before their Death, retirement or
dismissal should be honored since they are considered valid
instruments. In the case of their doubtfulness, the matter may be
referred to the company.
Winding up of the company in any manner terminates its career. At
this stage, operation on account should be stopped. There after, no
cheque is to be honored.

CLUBS, SOCIETIES AND ASSOCIATIONS


These concerns are non-trading in nature. They have their own
rules and regulations and their affairs are monitored by the committee
called as governing body or Managing Committee or Executive
Committee.
While opening account-of these concerns, the following documents
are obtained.

1) Account opening form specially meant for the purpose.


2) Specimen Signature Card.
3) Resolution to be passed by their Governing body wherein they will
resolve that.

a. Banking account opened in their name, with United Bank


Limited.
b. Name(s) of the person to be specified for operation on the
account.
c. The manner in which the account shall be operated.

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THE BANK OF PUNJAB.

d. Certified copy of rules and regulations.


e. Letter of registration.
f. Letter of undertaking to the effect that as and when change takes
place they will inform the bank of such change.

CASH DEPARTMENT

1. Cash Receipt
Periodicals detailed instructions have been issued on cash receipt /
cash payment via HO operation Circular. However, following points
may be kept in view while receiving cash on counter invariably.
o The depositor duly signs deposit pay-in-slips.
o Cash received stamp should be affixed on both the portions
voucher & the counter foil.
o It should be signed by the officer receiving cash and duly entered
in the cash receipt book.
o Detailed denomination of cash must be noted on the reverse of
the pay-in-slip. So that, in the case difference in cash it could be
tallied with the cash detail noted on the reverse of the pay-in-
slip.
o Immediately after the receipt of cash, it should be entered in the
computer. The relevant officer signs on the both portions of the
pay-in-slip. The left portion of the slip is turned to the depositor
and the right portion is kept by the bank.

2. Cash Payment
While making the payment of cheque, special attention will
nevertheless be given on the following important points.

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THE BANK OF PUNJAB.

o Drawer’s signature have been duty verified from the relative SS


card after affixing the rubber stamp of “signature verified” and
putting the initials by the verifying officer.
o Dates of cheque have been checked.
o TWO signature of the recipient of cash on the reverse of the
cheque have been duly obtained and the paying cash officers
have satisfied bona-fide of the recipient of cash.
o Passed cheque/instrument must be scrolled in cash scroll
books, Running scroll number must be suffixed under the
signature of the passing officers before handing over to the
paying cash officers.
o The passing officers must hand over AII cancelled and passed
cheques to the cash department after entering into the
passbook. The paying cash officer will receive such cheques
after putting his initials against the entry recorded in the
passbook.
o No cheque is processed without prior posting in the respective
account maintained in the ledger against his credit balance.
The officer debited for the posting in the ledger in the
computer.
o Cash denomination must be noted on the reverse of the cheque
before affecting cash payment to the customer.

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THE BANK OF PUNJAB.

Supervising Of Entries In Ledger, Posting & Balancing


The relevant officer in the bank records the entries of receipt and
payment in the ledger in the computer. The officer carefully
record the entries in the computer and are supervised by the
officer latter.

DEPOSIT DEPARTMENT
One of the various facilities, which are provided by a commercial bank,
is that of ‘Locker’. This facility is extended only to valued clients.
Locker’s business is covered under the contract of bailment; section
148 of the contract act 1872 defines a bailment as.
“Delivery of goods by one person to another for some purpose upon a
contract that they shall, when the purpose is accomplished, be
returned otherwise disposed of according to the directions of the
person delivering them. The person delivering the goods is called the
bailer and person to whom the goods are given is called the bailee.”
The bailer and the bailee, under the locker’s business is known as
LICENSOR AND LICENSEE respectively (where bank is the licenser and
customer is the licensing).

Procedure for Obtaining a Locker


Following is the procedure for obtaining a locker facility.
1. Every person who is competent to enter into a valid contract
under section 11 of the contract act of 1872 is eligible to have
this facility subject to acceptance of the banker in this context. It
is, therefore, clear that this facility is not granted to a minor.
2. The perspective licensee has to make request on the bank’s
prescribed form (Application for renting safe deposit locker) and

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THE BANK OF PUNJAB.

give his specimen signature on specimen signature card for


locker.
3. When the above is duly completed, the licensee has to deposit
the following emoluments:
a. Key Deposit
b. Rent On locker
Key deposit is refundable at the expiry of the agreement subject to the
claim/s of the banker if any. Whereas rent on locker is non-refundable
and is the income of the bank.
Entry
Dr…. Cash or Customer’s PLS/CD A/C
Cr….Key Deposit A/C
Cr…Income A/C or Rent On Locker
4. When the amounts are received then the licensee is allotted a
distinctive locker number and the key is also given to him.
Effects of allotting locker number are marked in Locker
Registration Form Account Opening.

Condition of Grant of Safe Deposit Vault License By


The bank of punjabLimited
 The relationship of parties shall be that of a Licensor
(The bank of punjabLimited) and Licensee (Applicant).
 The locker shall be used be the Licensee only for the
purpose of deposit of document, jewellerey or other
valuables and the licensee shall not use the lockers for
the deposit of any property of explosive or harmful or
destructive nature.
 All the fees another charges in respect of locker are
payable strictly in advance and in the event of non-
payment of such fees when due, whether such fees

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THE BANK OF PUNJAB.

have been demanded or not, shall give the right to the


Licensor to refuse the Licensee an access to the locker.
 All property deposited in the locker will be at the risk
and responsibility of the Licensee and the Licensor will
not incur or be liable for any loss or destruction or
damage to any contents of the locker or to any part
thereof by theft, pilferage, fire or other accidents. The
licensee should take out his own insurance for the
value of contents in the locker.
 The property deposited in the locker shall become and
be subject to a general lien of the licensor for all money
due from the licensee, to the licensor, with the power
of licensor to sell, dispose or deal in any other manner
all such property or part thereof in realization of the
money due by the licensee of the licenser for any
account what so ever.
 Either the licensor or licensee on can terminate this
agreement given to the other party seven days notice
in writing, expiring prior to the date on which the
agreed period of the license terminates, of the
intention to terminate the said agreement.
 In the case of termination of agreement, the Licensee
will be bound to deliver the keys of the locker to the
Licensor and also deliver vacant possession of the
locker to the licensor, before noon of the day on
termination of the license.
 The agreement of license of the locker shall be deemed
to have been renewed for the future period of the year
after the date of termination.

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THE BANK OF PUNJAB.

 In the event of licensee losing the key of the locker or


misplacing the same, the licensee should notifying the
licensor without any delay about such a loss.
 All the charges of repairing the locker and /or for
changing the lock and key and other charges in this
connection regarding the said locker, shall be payable
forthwith to the licenser.
 The entire repair required to be done to the locker,
locker door etc. shall be done exclusively by workmen
appointed by the licenser.
 The licensor should be notified immediately about any
change of address of licensee. Notice or
communication, sent by post to the registered address
of the licensee shall be considered to have been duly
served at the place, where it would, in the ordinary
course of post, have reached him.
 Licensee are requested to keep the keys of the locker
in the place of safety and should not divulge the
number of their lockers and their passwords (if any)
and are requested not to deliver the keys of the locker
to any person other than their duly authorized agent.
 The Licensee agrees to abide by such rules and
regulations as The bank of punjabLimited may from
time to time adopt.

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THE BANK OF PUNJAB.

PROFIT AND LOSS SHARING ACCOUNT

Features & Rules Regarding PLS A/C

Profit and Loss sharing saving bank accounts are opened in the
names of individuals (Both Single and Joint), charitable institutions
for provident fund of local bodies, autonomous corporations,
companies, associations, societies and educational Institutions and
in all other cases where such accounts are required to be opened
under the orders of competent court of law. These accounts are
based on Profit & Loss sharing system.

Zakat is deducted @ 2.5% on 1st of


Ramzan each year on the
minimum balance declared by the central zakat committee.
Tax is deducted @ 10 % on profit paid to the depositor irrespective
of the amount of profit.

These types of deposits are, actually, designed for the people of


small means, to develop a habit of saving among them. The funds
so derived are invested in profitable ventures under non-interest
bearing system of that the objective of the Islamization of banking
system can be achieved.
Rules For Opening PLS Account

The request for opening of an account is obtained on a bank’s


prescribed account opening form. The account when opened could be
introduced properly by any existing PLS or CD account holder. All the
required documents along with a copy of NIC number must be
obtained.

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THE BANK OF PUNJAB.

The requirement for then minimum initial deposit varies from bank to
bank. According to the bank’s circulars minimum initial deposit should
not be less than Rs. 5000/-. However sometimes managers even
accept an initial deposit of lesser amount. In The bank of
punjabLimited, minimum initial deposit of Rs. 10000 is acceptable.
A distinctive number is allotted to each account and this number is not
re-allotted even if an account is closed.

Operation in PLS Account

Deposits
Money is deposited in customer’s account by way of bank’s printed
pay-in-slips. These pay-in-slips should be stamped in the name of the
branch and should be jointly signed by the receiving and another
authorized officer of the bank. The signature of the depositor (any
person) should also be obtained on the pay-in-slips. The pay-in-slips
containing account number and title of account should be properly
filled in by the customers and checked by the cash-receiving officers.

Withdrawals

Only the account holder or any person authorized by him is allowed to


operate upon the account. Bank’s printed chequebook is provided to
draw money from the account. All the cheques should be signed
according to the specimen signature provided to the bank at the time
of account opening.
The customer has right to stop the payments of any cheque or even to
stop the operation of whole account. He has to serve the bank with the
written application for this purpose.

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THE BANK OF PUNJAB.

If any stop payment instruction is given by anyone of the joint account


holder, then in order to revoke such instructions they (customers) will
have to give written application properly signed by all of them.

Cheque Books

Chequebooks are issued to the account holder after receiving a printed


requisition slip inserted near the end of each chequebook. Only the
account holder is authorized to receive the chequebook. If the account
holder sends any other person for receipt of a chequebook, he must
send a written authorization in the name of the recipient along with the
requisition slip. Acknowledgement of receipt of cheque book is also
obtained from the account holder; in this case the cheques from that
cheque book will only be honored after the receipt of the
acknowledgment. The bank will recover the excise duty, paid to the
government (@ Rs. 2.5 per leaf), from the customers in respect of the
chequebook issued.

Statement of Account /Pass Book


Now Passbook is not issued to the Account holders due to the using of
internal computer system. After every six months a statement
containing the all transactions by the bank are sent to the account
holders. The account holder can also obtain the statement of his
account at any time during the banking hours from his bank.

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THE BANK OF PUNJAB.

Profit & Loss Sharing

Profit/Loss is paid /recovered on these deposits according to the rate


declared by the bank at the end of each half yearly/yearly closing. The
provision for the profit is calculated on monthly basis and is calculated
on the minimum balance in the amount between the closing of the

business at 6th day and the last day of the each month. No profit is paid
on any balance, which is below Rs. 10000.
The bank has the right to debit its customer’s account In respect of
losses on the basis of half yearly/yearly closing of bank’s books of
accounts.

Transfer of Accounts

An account can be transferred from one branch to other free of charge,


without effecting the Profit/Loss position of the account. The
accumulated products on the credit balance in such account for the un-
accounted period would also be transferred to the transferee branch.

Death of Account Holder

Whenever branch is informed about death of an account holder, that


account should be marked as “deceased account” and the legal heirs
of deceased person should stop the payment till the completion of the
formalities.

In case the credit balance in the deceased account in up to Rs.10,000/-


the amount can be paid to the legal heirs, after obtaining approval
from the Head Office and after obtaining an identity bond on the stamp

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THE BANK OF PUNJAB.

paper or Rs. 50/- and an affidavit on a stamp paper of Rs. 10/-


(attested by oath commissioner) duly executed by all the legal heirs.
All the legal heirs should be properly introduced to the bank. In case
credit balance in account is over Rs.10,000/- then a succession
certificate should be obtained from the legal heirs and payment should
be made accordingly. The payment should be made through a crossed
payment order to the legal heirs.

Closer of the Account


The customer has a right to close his account at any time and draw the
outstanding balance if any.
He has to submit the bank:
 Application for closure of account
 Unused cheque book

If an account is closed within six months of its date of opening, bank


will charge Rs. 15/- as a cost of stationery.
The bank is also has to right to close the account anytime without
giving prior notice and without disclosing any reason.
Change of Address
The customer should immediately communicate any change of address
to the bank.
PLS TERM DEPOSITS
These deposits are acceptable for a certain fixed period of time and
are repayable after expiry of the agreed period.
Following are their salient-features.

Deposit Modes

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THE BANK OF PUNJAB.

Deposit is accepted in any of the following modes.


• Cash
• Cheques
• Conversion of other deposit/s
Deposit Limits

Deposit is acceptable for any amount i.e. no limit on maximum


amount. However, the deposits less than Rs. 1000/- are not accepted
for issuance of the TDR.
Zakat Deduction
Zakat is deducted @ 2.50% from the Term Deposit irrespective of the
amount of PLS Term Deposit provided the deposit remains on zakat
dedication date. As no profit is paid on PLS TDR overdue, no zakat is
deducted on it.
Income tax Deduction
Income tax at source is deducted @ 10% on the profit paid. However
the following classes of recipients of profits on PLS saving accounts
and PLS Term deposit have been exempted.

 Central Government.
 A provincial government.
 A local authority.
 A banking company receiving profit on inter-bank deposits from
another banking company.

Encashment & payment of Profit


A duty discharged PLS TDR is en-cashable along with earned profit on
its maturity date. Profit will cease to accrue after maturity date.

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THE BANK OF PUNJAB.

Pre-maturity Encashment
The deposit, as term indicates, should remain with the bank for the
period agreed to and profit is paid accordingly. However, it happens
sometimes that depositor desires to en-cash the receipt before
maturity, the bank allows encashment of TDR before maturity with
certain penalty at the rate of 2% on the un-expired period of TDR.
Nevertheless, no profit is paid if the TDR is presented for encashment
before 3 months. In this case, only principal amount is paid to the
depositor.

Renewal of Deposit
Term deposit is not automatically renewable. It can be renewed for
similar period upon receipt of depositor’s written request on or after
the maturity date, to get now PLS TDR the depositor is required to
present the old PLS-TDR duty discharged. The depositor is required to
mention specifically whether or not the amount of profit accrued be
added while renewing the old PLS-TDR.

Other features

 Depositor has to fill application from & specimen signature


card.
 No introduction is required.
 No chequebook is issued.
 No account number is allotted, however each receipt is
serially numbered.
 PLS-TDR is free from all bank charges, commission or excise
duty.

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THE BANK OF PUNJAB.

 Deposit may be accepted from minor provided application


from, his/her guardian signs specimen signature card.
 Deposit is also accepted in joint names. Joint account holders
are required to clearly state on the application from whether
they wish the deposit to be repayable to both or all of them or
to either or any of their member.
 Deposits are equally acceptable from illiterate person. Such
person is required to furnish two photographs and thumb
impression.
 It is not transferable.

SPECIAL NOTICE TIME DEPOSITS


These deposits are also one of the different modes of PLS based
banking business being carried out by banks in Pakistan.
Following are their salient features.

Deposit Modes

Deposit is acceptable in any of the following forms.

 Cash
 Cheque
 Conversion of other deposit/s

Deposit limit
Deposit is accepted for any amount i.e. no limit on maximum amount.

Terms of Issue
A special notice time deposit (SNTD) is either withdraws able at notice
of 7-29 or 30 days.

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THE BANK OF PUNJAB.

Zakat Deduction
Zakat is deducted@ 2.50% from the eligible depositors irrespective of
the amount of SNTD provided the deposit remains with the branch on
1st of Ramzan.

Income Tax Deduction


Income tax at source is deducted 10 % on the profit paid. However the
following classed of recipients of profits of profits on PLS saving
accounts and PLS term deposit have been exempted.
 Central Government
 A provincial Government
 A local Authority
 A banking company receiving profit on inter-bank deposits from
another banking company.

Encashment & Payment of Profit


A SNTD is excusable along with earned profit after the expiry of the
relevant notice period. This deposit, as against PLS Term Deposit,
continues to earn profit as long as it remains with the bank therefore,
there is no need of its renewal as it is renewed automatically.
Other Features

 Depositor has to file application from & specimen signature


card.
 No introduction is required.
 No chequebook issued & No account number is allotted,
however each receipt is serially numbered.
 SNTDR is free from all bank charges. Commission& E. Duty.

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THE BANK OF PUNJAB.

 Deposit may be accepted from minor provided application


from, his/her guardian signs specimen signature card.
 Deposit is also accepted in joint names. Joint account holders
are required to clearly state on the application from whether
they wish the deposit to be repayable to both or all of them of
to either or any of their member.
 Deposits are equally acceptable from illiterate person/s. Such
person is required to furnish two photographs and thumb
impression.
 It is neither negotiable nor transferable.
CALCULATION & PAYMENT OF PROFIT

PLS Saving Account


Profit payable on PLS saving account is determined by the bank at its
sole discretion on the basis of its net working results at the end of each
half-year. Profit is paid on the minimum balance of Rs. 10000/-
between the 6th of month and end of month.

Monthly provision in respect of profit payable on PLS saving account is


made on the minimum balance appearing in cash-cum-general ledger
between 6th last a day of the month at provisional rate (which is actual
rate of profit declared for the last half). Formula for calculation
provisional amount of profit is given hereunder.

Minimum monthly product X provisional rate of profit /12 month end

entry on account of accrued of profit is:


Dr. Expenditure Account-Profit paid on PLS saving a/c
Cr. Profit payable on PLS saving a/c
On declaration of actual rate of profit, if

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THE BANK OF PUNJAB.

a). Provision is more than the actual figure, following entry is to be


made:
Dr. Profit payable on PLS saving a/c
Cr. Expenditure Account-Profit paid on PLS saving a/c

b). Provision is less than the actual figure; following entry is to be


made.
Dr. Expenditure Account-Profit paid on PLS saving a/c
Cr. Profit payable on PLS saving a/c
SNTDs

Profit continues to accrue on PLS SNTDs until its Encashment. Profit is


calculated as follows:
(Sum of daily products for period X Rate in %)/365
Month end provisional entry in this respect is:
Dr. Expenditure Account-Profit paid on SNTD a/c
Cr. Profit payable on SNTD a/c

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THE BANK OF PUNJAB.

Term Deposit Receipts

Profit ceases to accrue on TDRs after the maturity date, which is


transferred then to the PLS overdue TDRs account. In case of
prematurely Encashment, bank charges 2% penalty on the principal
amount for the un-expired period. Formula for calculating monthly
provision is as follows.
(Sum of daily products for period X Rate in % /365
Month end provisional entry in this respect is:
Dr. Expenditure Account-Profit paid on PLS TDRs a/c
Cr. Profit payable on PLS TDRs a/c

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THE BANK OF PUNJAB.

REMITTANCES DEPARTMENT

BANK DEMAND DRAFTS (DD)

A bank draft is an order instrument issued for the payment of certain


sum of money to or to order of certain person and drawn on one office
of the bank by another office usually. There are 3 parties to the draft.
 Drawer - Issuing Bank
 Drawee - The bank on which the draft is drawn.
 Payee - The named person to whom the payment is to
be made. He may be an endorsee if the draft has been
endorsed properly.

Where request is received by the banker to issue a bank draft, it is


written request on specifies DD application from. While issuing a draft
it is necessary that the draft should be free from alternation.
All the details must be written neatly and clearly in ink.
As an additional precaution the draft should be protect graphed across
the face of the same. In case the protect graph is not available a sum
slightly in excess of the amount payable must be written in red ink
preceded by the words ”Under” or “ Not over”. It is known as “
Protective Crossing” or security notation.

After the issuance of a bank draft, it is handed over to the applicant


and its advice containing the particulars of the draft is sent to Drawee
branch for their necessary information and payment of the draft on its
presentation.

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THE BANK OF PUNJAB.

It is not necessary to be an account holder of payee in Drawee branch.


But if DD is crossed then payee must be the account holder o Drawee
branch.

Payment of Demand Draft


The payment of demand daft may be executed in two possible ways.
a) On receiving the dd credit advice (IBCA) at the drawee branch.
b) Payment before the IBCA is received (EX-advice).

The original DD is to be retained by Drawee branch in each of the


above mentioned cases and serves the purpose of the debit voucher. A
record of the situation pertaining to the payment or otherwise of a
particular DD is maintained in the DD payable register at the Drawee
branch.

Practical procedure with regard to the payment of DD in The bank of


punjablimited must be summarized.
1. The branch which issue DD is called originating branch. After
issuance of DD, it passes following entry:
Dr. – Cash
Cr. – HO A/c
2. All drafts drawn on the branch are routed through the general
ledger account “Draft Payable” of the bills payable account. The
Drawee branch on receipt of the advice credits this account.
Following entry is passes after receiving advice.
Dr. – HO A/c
Cr. – DD Payable
3. Drafts are to be retained as debit voucher to the relative account
when a draft has been paid.
Following entry is passes after payment.

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THE BANK OF PUNJAB.

Dr. – DD Payable
Cr. – Payee account on Cash
4. In DD is presented In other bank, then it comes to Drawee
branch through clearing and following entry is passed:
Dr. – DD Payable
Cr. – HO A/C
5. Signatures are always verified on all drafts drawn on a branch.
6. Normally, payment of a draft should be made after receipt of a
corresponding advice. In case the advice has not been received.
Payment should be executed through the approval of the
manager at the Drawee branch who should satisfy himself with
regard to the authenticity of the draft in term of signatures and
otherwise. The draft paid ex-advice should also be debited to the
demand draft payable account.
7. On the receipt of advice from the drawer branch, signature
should be verified and test verified if the amount of draft
exceeds Rs. 5,000/-
8. The particulars of draft should be entered in DD payable register.
9. The draft when paid should be marked in the DD payable
register.

Essential precautions at the time of payment

1. The instrument should be scrutinized properly with the regard to


the name, Drawee branch, amount in words and figures protect
graphic and signatures of officers.
2. The payment should not be effected unless the payee has been
identified to the satisfaction of concerned officials at the Drawee
branch.

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THE BANK OF PUNJAB.

Mail Transfer
Sometime a constituent of the bank wants to transfer funds from one
account to another, or a non-constituent wishes at remit funds in a
particular account maintained at some place with a branch of the bank
or when the accounts are transferred from one branch to other, such
amount/balances are remitted by means of mail transfer. The
procedure for issuance of a mail transfer is the same as discussed for
the draft except that the applicant is provided with the memorandum
for money received from him for issuance of a mail transfer on the
particular branch of the bank. Mail transfer advice is sent to the paying
branch where it is treated as a credit voucher because money only
transfers in the account of payee in paying branch.

Payment of MT

1. On receipt of advice from drawer branch the test should be


verified if amount exceeds Rs. 5,000/-
2. The particulars of MT should duly be entered in TT/MT payable
register.
3. Following vouchers should be passed after the test has been
verified.
Dr. – HO A/C
Cr. – MT Payable A/C
4. At the time of payment following entry is passed:
Dr. – MT Payable A/C
Cr. Customer’s A/C
Before making the payment of MT the Drawee branch must ascertain
the followings:
• It is drawn on the same branch.
• Payee has signed the revenue stamps of adequate amount.

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THE BANK OF PUNJAB.

• Payee is properly identified.

Telegraphic Transfer (TT)

Generally mail transfer advice reaches the Drawee branch next day
when courier arrangements exist. However when it is sent through
post offices it usually take 2 to 3 days to reach its destination. But
sometimes an individual whether customer or no, demand that this
funds should be transferred from one place to another through the
quickest means. In such cases transfer of funds message is passed on
though a telegram, ordinary or express, to the Drawee branch of the
bank. A tested message is sent to the drawee branch followed by the
confirmation copy.

In case the payee immediately requires the payment, the tested


message is given on the telephone. For telegraphic message, bank
charges one additional expense of Rs. 100/- from the customer.

Payment of TT
A TT facilitates urgent transfer of funds either by a telegram or through
telephone. A step-wise procedure relating to the payment of TT at the
Drawee branch is as under:
o The originating branch passes following entry.
• Dr. – Cash
• Cr. – HO A/C

o The drawee branch receives message either on telephone


or through telegram. In cases of a telephone conversation,
the concerned official at Drawee branch should ask for the

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THE BANK OF PUNJAB.

proper identification of the official at the drawee branch.


Whereas the message should be decoded in case of
telegram.
o The particulars of the TT should duly be entered in the
TT/MT payable register.
o Following entries are passed when advice received and
payment is executed:
Advice Received:
Dr. – HO A/c
Cr. – TT Payable A/C
Payment is executed:
Dr. – TT Payable A/C
Cr. – Customer’s Account
o TT should be paid after proper identification.

Payment Order

A Banker’s payment order or branch cheque is an instrument drawn by


a banker on himself. Implicit in a payment order is an undertaking on
the part of banker to pay, certain sum of money on the presentation of
the instrument.
The payment orders are generally issued for anyone of the following

practical purposes.
1. To facilitates all locally payable expenses on account of a bank
for the reason that such payments are not executed through
cheques.
2. For all local payments under instructions of customers for sundry
purposes like payment of insurance premium, payments to third
parties, club bills, rent and taxes etc.

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THE BANK OF PUNJAB.

Issuance

 For the issuance of the payment order, the purchaser


giving his name and address thereof will tender an
application on bank’s standard form. In the case of request
from the bank customer for the issuance of payment order,
a letter in this respect will be obtained giving full
particulars of the payee authorizing the bank to debit the
account.
 The cost of the payment order along with an amount of
Rs.5/- as commission plus excise duty will be paid on the
counter.
 In case of letter of authority, the total amount i.e. payment
order amount, commission, excise duty and postage, if
any, will be debited to the customer’s account as per bank
instructions and contra credit will be passed to bills
payable / payments orders account, commission, excise
duty and postage account.
 The transfer voucher as above shall be processed through
bank transfer book.
 The manager/second officer shall sign the application form
for the issuance of payment order.
 The cash receipt voucher or transfer credit voucher duly
passed by the authorized officials containing bank transfer
stamp and its running serial number shall be appended
with the next payment order serial number under the
authentication of the authorized official.

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THE BANK OF PUNJAB.

 The particulars of payment order shall be inserted on the


blank payment order leaf either through a trying machine
or shall be neatly hand written using indelible ink.
 Subsequently, the particulars of the each payment order
shall be recorded in payment order issued register.
 The payment order shall be signed by two authorized
officers of the bank simultaneously authenticating entry
and verify the following.
a. Name, code and address of issuing branch.
b. Name of payee.
c. Amount in words and figures.
d. Date of issue.
e. Nature of crossing if desired by purchaser.
Payment

1. Payment shall be duly identified by the bank customer or by


manager/second officer in case the payment order is presented
for cash payment on the counter or the payee shall be requested
to present it for payment either through clearing or some
account according to the type of crossing it contains and it will
be ensured that the payment order is properly receipt on it
reverse on appropriated value or revenue stamps which will
serve as endorsement also.
2. The payment orders will be entered in payment order issued
register after marking the date of issue against the date of
payment and date of payment against the date of issue in the
contra columns under authentication.
3. The payment as given above will be adopted in case of all
payment orders received for payment either through clearing or
bank transfers except that usual precaution shall be observed to

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THE BANK OF PUNJAB.

ensure that the bank stands discharged from the payment in due
course.

Balancing

1. All the outstanding payment orders on the date of balance shall


be jotted down once in a week and the total thereof will be
tallied with the outstanding of that date in the respective head of
the cash-cum-general ledger. Authorized officer to ensure that
the outstanding entries have been correctly taken out and total
thereof agree with closing balance will check the entries in the
balance book.
2. The payment order books are item of security stationer and will
be kept under joint custody of the manager / chief manager and
the cash officer while payment order book in use will be kept
under personnel custody either of the manager or second office
during the banking hours.
3. The purchaser of payment order will be requested to arrange it’s
encashment if it is not presented for payment within three
months of its issuance.

ACCOUNTS DEPARTMENT

Accounts department is the department, which deals and checks all


the activity of all the departments. It also deals in the expression

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THE BANK OF PUNJAB.

finance of the bank. Salary payment is also one of the functions of the
bank.

Checking Banks Daily Activity

Accounts department deals and checks the daily banking activity all
vouchers that has been posted to the computer are scrutinized in the
accounts department. The “end of the day” computer print is also
received. The next day activity separated some statement from end of
the day. The vouchers are sorted head wise. The vouchers are
matched with the entries in the statement.
Any abnormality if occurs can immediate be catch. All the vouchers
and instructions are checked individually against the computer
printouts. After checking they are signed by all the officers.

Other activities

1) Preparation of daily bank position statements


2) Payment of salaries
3) Preparation of the statements
4) Depreciation calculation

INWARD REMITTANCES

Remittances whether inland or foreign can be inward or out ward. The


term inward remittances, according to the exchange control manual,
means” purchase o foreign currency in whatever form and includes not
only reattaches by M.T/T.T drafts but also Purchase of travelers’

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THE BANK OF PUNJAB.

cheque, drafts under travelers’ letters of credit, bill of exchange,


currency notes and Coins.
* Authorized Dealers may freely purchase T.T.S., M.T.S, Drafts Bill etc,
Expressed and payable in foreign currency or drawn in rupees on
bank’s non – resident rupees accounts.

PROCEDURE FOR EFFECTING PAYMENTS THROUGH


M.T/T.T
1) Verify amount of M.T/T.T, if in foreign currency into Pak. Rupees
by applying ‘DO’ buying /T.T. Buying rate as issued by the
exchange Rate committee nominated by the State Bank of
Pakistan.
2) Debit in your Books, account of foreign bank/ correspondent
where your account is credited in reimbursement and credit
party’s account.

PAYMENT OF FOREIGN DRAFTS

If the draft expressed in foreign Currency is drawn on you and


presented for payment in collection.
1) Verify signature of the bank of draft
2) Check validity of draft
3) Check the account in figures and words
4) Check endorsements given by the collecting bank.
Draft is actual an instruments issued by a bank to pay the amount to
person who will present the draft at counter. Issuing bank will send the
advice to bank that will make the payment and issuing bank will make
the entry.

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THE BANK OF PUNJAB.

Debit Party A/C


Paying bank will make an entry
Debit H.O/non Resident Bank
Bank Credit

OUT WORD REMITTANCES

The term “ Outward Remittances” means “ Sale of foreign exchange in


any form and includes not only remittances by T. T. S drafts etc, but
also sale of travelers” cheque, traveler, letter of credit, foreign
currency notes and coins. Outward remittances can be either by sale of
foreign exchange or by credit to non-resident rupee account of banks
over seas branches. Authorized dealer may sell foreign exchange for
approved transactions only in accordance with the procedure outlined
by the SBP.
Any person who wishes to purchase foreign exchange must lodge an
application with an authorized dealer on the appropriate prescribed
form accompanied by form T-1 or T-2 or M form duly Supported by the
requisite documents on receipt, the application should be examined by
the authorized dealer and if the authorized dealer is satisfied that the
application is covered by the regulations it may effect the sale of
foreign exchange.

OPENING AND MAINTENANCE OF

FOREIGN CURRENCY ACCOUNTS


 All persons, firms and companies of local or foreign origin,
whether resident or non resident, can open foreign currency
accounts all foreign currency accounts are interest based and
are not PLS based.

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THE BANK OF PUNJAB.

 Accounts may be opened in US Dollars pound Sterling, deutsche


marks, and EURO dollar.
 Deposits in FC Accounts may be made in the form of cash,
traveler’s cheque,
 Bank or any other agency cannot enquire or raise any question
about the sources of funds, deposited in foreign current Accounts
by the customer.
 Any amount at any time can be withdraw form these accounts.
 There is no limit for CASH with drawls.

CLEARING DEPARTMENT
Following types of cheques are collected by clearing department.
TRANSFER CHEQUES
Transfer cheques are those cheques, which are collected and
paid the same branch of bank.

TRANSFER DELIVERY CHEQUES


Transfer delivery cheques are those cheques, which
are collected and paid by two different branches of a bank
situated in the same city.

CLEARING CHEQUES
When the payee or endorsee (which deposits the
cheques for collection), and the drawer of a cheque maintain
accounts with different banks the paying bankers.
The most efficient methods of collecting and paying such
cheques is that in which those cheques (claims of money) are
exchanged by representative of the various banks, who most at
a fixed place at fixed hours, and make their settlement through a

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THE BANK OF PUNJAB.

controlling bank. The banks so joining from themselves into a


bankers clearing house. All the members of a clearinghouse
maintain accounts with the controlling bank. If on a given day a
bank delivers cheques worth more than the amount of cheques it
receives, its account with the controlling bank is credited with
the difference. If on the other hand, the bank has received
cheques and other negotiable instruments worth more than the
cheques, etc. It has delivered to all the other members or sub
members of clearinghouse. Its account with the controlling bank
is debited with the amount of which those of all other banks
exceeded its claims on that day.

BANK ADVANCES
The financing the bank of an organization through loan/advances
is known as advance and it through either.
1. Deposits
2. Shareholder’s investment

By financing we mean the money lending for the purpose of


investment in profit earning activity.
Since the bank has to give profits to its depositors, divided
to the shareholder, salaries to the employees and other
organization expenses. The earnings of advances are meeting
the above requirements. Approval or disapproval of the proposal
depends upon the nature. If advance are required for productive
project it is relatively easily approved by the bank but if the
advances are required for unproductive purpose it is mostly
rejected.

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THE BANK OF PUNJAB.

BORROWING GUARANTEE
The borrower has to give more guarantees against the
advances. The guarantee is provided by the contribution sources
of the business. Bank always analysis the chances, of
repayments the amount and normally make 85 percent advance
on 100 percent security. Therefore, before giving the advance
bank the credibility of the borrower and also checks the
feasibility of the project.
If the feasibility satisfies the bank that the project has the
ability of profitable returns the advance will be make.

METHODS OF CHARGE LOAN


Following are the important methods to charge the loans:

PLEDGE
In this method some tangible goods or some important
documents are deposited to the bank. If the borrower makes the
fails, bank has the authority to sell that goods or documents to
meet its loss. In the method, of there are any custody charges,
these are bearded by the borrower.

MORTGAGE
In this method borrower gives the charge to the bank for any
part or whole of his property there are two kinds of mortgage.
• Legal Mortgage

• Equitable Mortgage

Legal Mortgage

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THE BANK OF PUNJAB.

A contract of property with the bank is written on a stamp


paper and signed by the requester. Borrower gives the authority
that if he fails to repay the loan; bank can sell his property.

Equitable Mortgage
It is written on a bank page. Equitable mortgage does not
allow the bank to sell the defaulters property. For selling the
property a power of attorney and sanction of the court is necessary.

LEIN
By lean we mean the right for retaining the property of any
debtor until the recovery of the debt.
• Specific lean
• General lean

Specific Lean
In this type of lean the retainer has the right on that good
against, which the debt is due e.g. a motor mechanic has a lein on
motor car against the repair charges.

General Lien
In this type of lien the bank has the right to retain the
goods to which the debt is due in addition of any balance due.

GUARANTEE
In this method a guarantor gives an undertaking that he
will be responsible if the borrower to repay the debt. Usually
agriculture loans are given through guaranties.

LEASE FINANCING
Making periodic cash payments installment to another
firm, which passes the asset, does it. Once an asset is acquired for
us without having its ownership the owner firm is called lessor and
he user firm is called leasing. This type of arrangement is

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THE BANK OF PUNJAB.

particularly useful in financing industrial machines and equipment


for medium and long term. And lessor gets a reasonable return.

CASH FINANCE
It is a seasonal finance this type of finance is related with
trade. It is a type of sale transition at price set by mutual
consultation of bank and the client, e.g. client applies for grant of
Rs. 1000 for purchasing price or wheat, the bank will purchase price
with Rs. 1000 and will keep it in its own godown. Now when client
will come to have rich he can get only that portion of price for which
he will payment. Client or party also bears other expenses of goods
in godown under locks key.

HOUSING FINANCE
This type of financing is made when the client has to
purchase a house or a flat or has to construct a house/flat. Bank
purchases that house to and sell it to the client simultaneously at
the marked-up price. Repayment can be made in lump sum or in
installments. In a case or installments, it becomes long term
financing. Minimum and maximum financing of the bank is Rs.
150000 to Rs. 300000 respectively. The period (if allowed). Banks
finances the client only up to 60 percent of the price of the house.
The client can make repayment in 15 year or in 180 equal
installments monthly. The repayment of installment starts after the
expiry of grace period.

FIXED ASSETS FINANCING


For earning more profit this type of financing is all
medium and long term investment for commercial bank having
surplus funds. We can define fixed assets as “those economic
resources. Which are expected to benefit normal operation of an
organization for a longer period of time, So it has a wide scope in

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THE BANK OF PUNJAB.

trade, commerce industry and agriculture. This type of facility is


available to individuals firms and companies.”
The fixed assets is purchased by the bank and sold to the client
at market-up prices on deferred payment as agreed upon. This price
is received in installments on agreed bases. It is a sale transaction
between bank and the client through out the agreement this buyer
seller relationship exists.

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THE BANK OF PUNJAB.

BANK CHARGES
Drafts
Issuance of Demand Draft

Up to Rs 100000 0.10% Minimum RS.50/-

Over Rs 100000 0.05% Minimum Rs 150/-

Issuance of Duplicate DD Rs 50/- (flat)


MTs & TTs
Issuance of MTs & TTs 0.10% Minimum Rs.50/-
Telephone/Fax/Postage Actual Minimum RS.25/-
Inter Branch transactions in
Online Branches-Uniremote
(Cash deposit/Cash withdrawal
account to account transfer)
Within city Rs.50/- (flat)
Intercity 0.10% Minimum Rs.50/-
Maximum Rs.3000/-
DD/TT cancellation charges Rs.100/- (flat)
Duplicate SDR/TDR issuance
Charges Rs.100/- (flat)
Pay order
Issuance of pay Order for A/C holder Rs.50/-
For Non A/C holder
Rs.200/-
Cancellation of pay Order for A/C holder Rs.50/-
For Non A/C holder Rs.200/-
Issuance of Duplicate P/O For A/C holder Rs.50/-
For Non A/C holder Rs.200/-
Rupee Travellers Cheques
Issuance of Rupee Traveller

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THE BANK OF PUNJAB.

Cheques. Rs.5/- per leaf. Minimum


Rs.50/-
Refund in lieu of lost Rupee
Travellers Cheques. Rs.300 per application
THE BANK OF PUNJAB cheque Encashment
Facility. (cheques encashed at
Branches other than the account
Maintaining branch)
Within city Rs.50/- (Flat)
Intercity 0.10% Minimum Rs.50/
Lockers
Safe deposit lockers fee to be
Recovered in advance or at the
Commencement of the period.
Size Amount fee in Rs. Key Deposit in Rs.
Small 1000/- 2000/-
Medium 1500/- 2500/-
Large 2000/- 3000/-
Extra Large 3000/- 3000/-
Late Payment Charges 10% of the
Applicable annual
Rent.
Breaking Charges. Rs.2000/- per Locker
Stop payment
Ch/DD/Po Rupee A/c Rs.150
Per transaction.
F.c A/C-US$ 5
Per transaction.
Online funds transfer
Through uniremote same

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THE BANK OF PUNJAB.

Issuance or new
Cheque book in lieu
Of lost cheque book Rs.150/-
US$ 5 for F.c a/c
Account closing
Processing fee Rs.250/-
Rupee A/C
US$ 10
For F.C A/C.
Salary Disbursement
Charges Rs.25/- from
A/C holder
Per account
Per month
Where salary
Is credited.
Gove pension
Disbursement Rs.10 per account
Per month where
Pension is credited
Note:
No charge to be recovered from the account holder. If charges are
recovered from remitting organization’s main account under
agreement.

THE BANK OF PUNJAB ONLINE


THE BANK OF PUNJAB has already introduced its online
banking in its overseas branches & now is trying to introduce this
online banking in Pakistan. Few steps have been taken that is the

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69
THE BANK OF PUNJAB.

introduction of ATM in near future. We hope that THE BANK OF


PUNJAB will might be in a position in near future to compete with
other banks. Due to online banking the customers will get more
facilities.

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THE BANK OF PUNJAB.

SWOT ANALYSIS

Strengths
The bank of punjabLimited has following strengths.

 The bank has stable growth in deposits since its emergence.


 The loan facility provided by the bank is on sound basis.
 The bank is providing variety of financial services.
 The officers of the bank always eager to see the potential
customer in order to achieve the targets.
 The promotion criterion of employees is made up of passing the
diploma examination of Pakistan institute of bankers.
 People have trust on The bank of punjablimited because Govt of
Pakistan give full guarantee about its investments.
 The network of overseas branches of the bank is expanding.

Fast Service
Another very important aspect of THE BANK OF PUNJAB is its fast
service. Every thing goes very quickly. If you are looking for a loan,
they can give it to you in only 4-5 days, and approval by head office.

Weaknesses
The bank of punjabLimited has following weaknesses.
 The bank of punjablimited is centralized. It means, authority is
not delegated to branch level. Manager can’t take initiative
regarding different decisions such that for giving finance.

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THE BANK OF PUNJAB.

 The bank of punjablimited officer’s salaries are low as compared


to other private banks.
 There is low level of motivation in the employee of the bank.
.
 Promotion activity of their services is very low.

Opportunities:

Following are the opportunities of The bank of punjablimited.


 The bank of punjablimited should start different schemes in order
to attract deposits from the pThe bank of punjabic.
 The bank should keep on filling the gap between customer and
the bank through consumer friendly attitude and efficient
services.

Government Policies

With the coming of new government, the economic and industrial


reforms brought into the country seem promising. The people within
and outside the country are now much more interested in investment.
So now is the time to avail this opportunity and attract those investors.

Threats

Following are the main threats for The bank of punjablimited.


 The concept of evening banking is emerging in Pakistan. The
bank of punjablimited should consider this option to compete in
future.

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THE BANK OF PUNJAB.

 Other bank are providing the automated teller machines credit


cards and telephone banking, The bank of punjablimited should
give attention towards these options
 Salaries of the employees of The bank of punjablimited are too
low as compared to other banks.
 Other local banks are expanding their business in Pakistan, it can
decrease the market share of The bank of punjablimited.
 Now customers are very well informed in Pakistan. They only can
be attracted by innovative and attractive services, which are not
present in The bank of punjablimited.

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THE BANK OF PUNJAB.

SUGGESTIONS & RECOMMENDATIONS

Following suggestion can be useful for The bank of punjabLimited.


 The political influence should be minimized on all type of the
operations of THE BANK OF PUNJAB.
 The customer satisfaction should be guaranteed through rapid
delivery of financial products and services.
 Implementation on the rules, regulation and policies should be
done at all cost.
 Advances of the non-productive investment should be stopped.
 The influence of the employees union should be minimized.
 The bank should develop a comprehensive recruitment policy in
order to recruit the competent people.
 The professional people should be recruited at least executive
level.
 The employees should be promoted according to their turn.
 In order to improve the productivity the pays of employees
should be compatible to banking industry.
 For checking the implementation of policies task force should be
formed.
 All the branches of THE BANK OF PUNJAB should be
computerized.
 The bank should spend more on the promotional activities.
 For the development of the Human capital the bank should
conduct a series of training program to achieve the mission.

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THE BANK OF PUNJAB.

ON FINANCIAL PERFORMANCE 2002


The bank achieved a post tax profit of Rs. 1.5 billion for the year 2002, which
depicts a healthy increase of 638% compared to last year. The key contributor to
this was the net revenue from funds, which posted an increase of 18% to Rs. 6.1
billion. The non-funded income also increased by 16% and stood at Rs. 3.4
billion at year end. The net interest margin rose by 7.9 percentage points to
52.5% of total interest income. Earnings per share stood at Rs. 0.62. The return
on assets (net of tax and extraordinary items) increased by 0.9 percentage points
and stood at 0.76%, whereas, the net of tax return on equity was a healthy
11.7%.
Total deposits grew by 15% to Rs. 162 billion. The total assets showed an
increase of 14% and stood at Rs. 192 billion. The performing loans and
advances showed a modest growth of 3% to Rs. 70.1 billion, primarily due to low
credit demand in the country.
The net non-performing advances showed a marked decline of 51% and have
been reduced to Rs. 5.7 billion. The NPL ratio decreased by 7.2 percentage
points and stood at 7.6% of the total loan portfolio.

NTERNSHIP REPORT
75

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