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INTRODUCTION
In this section two topics are discussed. They are as under:

What is a Commercial Bank?

Banker and Customer Relationship

WHAT IS A COMMERCIAL BANK?

A bank is a financial institution which deals with money and credit. It accepts deposits from individuals, firms, and companies at a lower rate of interest and gives at a higher rate of interest to those who apply for loan. The difference between the terms at which it borrows and those at which it lends from the source of its profit. A bank, thus, is a profit earning institute. Any bank that

performs this functioning is called the commercial bank.

According to Crowther:
A bank is a firm which collects money from those who have it spare. It lends money to those who require it.

According to Banking Ordinance 1962:

According to Section 5(b) of Banking Ordinance 1962, meaning of banking is as under:

Banking company is a company which transacts the business of banking in Pakistan, mainly of accepting, for the purpose of lending and investments of deposits of money from the public, 2

repayable on demand or otherwise and withdraw able by cheque, draft, order, or otherwise

BANKER AND CUSTOMER RELATIONSHIP

The relationship between the banker and the customer are of utmost importance. Both serve the society and the economy to expand. Before we discuss the relationships between the banker and the customer, it seems necessary that the two terms banker and customer are made clear.

* Banker
A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the lender and the borrower and charges a definite amount of money which is the profit of his.

* Customer
A customer is a person who maintains a regular account with the bank, without taking into consideration the duration and frequency of operation of his account. The relations between the banker and the customer are generally studied as under:

*Debtor and Creditor

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The general relationship between banker and customer is primarily that of a debtor and creditor. When customer deposits money with a bank, the bank then is the debtor and the customer is the creditor. The customer expects from the bank that (I) his money will be kept safe by the bank, (II) it will be returned on demand within business hours. The position is reverse if the customer is advanced loan i.e. the banker becomes the creditor and the customer is the debtor.

*Principal and Agent

The special relationship between the customer and the banker is that of principal and agent. The customer (principal) deposits cheques, drafts, dividends etc. are for collection with the bank. He also gives written instruments to the bank to purchase securities, pay insurance premium, installments of loans etc on his behalf. When the bank performs such agency services, he becomes an agent of his customer.

*Bailer and Bailment Relationship

A bailment is the delivery of goods in trust. A banker may accept the valuables of his customers such as jewellery, documents, securities etc. for safe custody. In such a case the customer is the bailer and the bank is the bailee. It charges a very small amount of money as service charges for safe custody of valuables.

*Pledger and Pledgee

When a customer pledges goods and documents with the bank as security for an advance, he then becomes the pledger and the bank becomes the pledgee. The pledged goods are to be returned intact to the pledger after the debt is repaid by him.

*Mortgager and Mortgagee

Mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan. When a customer pledges specific immoveable property with the bank as security for an advance, the customer becomes the mortgager and the bank becomes the mortgagee.

*Bank as a Trustee
The bank acts as a trustee for his customers in those cases where he accepts other valuables for safe custody. In such case, the customer continues to be the owner of the valuables deposited with the bank.

*Executor, Attorney, Guarantor

The bank also acts as executor, attorney, and generator for his customers. 5

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OBJECTIVES OF STUDING THE ORGANIZATION

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OBJECTIVES

OF

STUDYING

THE

ORGANIZATION:
Being specialization in Marketing, I selected to do work in consumer finance Department of HBL to get practical knowledge. Following were the Objectives: To gain practical knowledge of sales department.\ Overview the organization Organizational structure Structure of the marketing department. Functions of the marketing department. Critical analysis of the theoretical concept & practical experience. Shortfalls / Weaknesses of the marketing department. To study how many strategies are applying in the organization? To improve my skill. To learn the methods how could we apply the theory of marketing in the organization? To learn factors which are the causes of changing strategies? To observe the results when we did not apply the theory of marketing. 11

 To learn the effect of good marketing strategies on business. To learn the results of good marketing.

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OVERVIEW OF THE ORGANIZATION
In this section following topics are discussed. The major topic

of this section are: BRIEF HISTORY OF THE ORGANIZATION HBL BRAND HBL VISION,MISSION AND VALUES RECRUITMENT CAREER OPPORTUNITIES BUSINESS VOLUME 12

PROFILE OF EMPLOYEE PRODUCT LINES

HISTORY OF BANKING IN PAKISTAN

The partition plan was announced on June 3, 1947 and August 15, 1949 was fixed as the date on which independence was to take effect. It was decided that the Reserve bank of India should continue to function in the dominion of Pakistan until September 30, 1948 due to administrative and technical difficulties involved in

immediately establishing and operating a Central Bank. At the time of partition, on Quaid-e-Azams personal request Habib Bank Limited shifted its Head Office from India to Karachi. Until unless State Bank of Pakistan was organized, HBL served the nation. Later on, the Governor General of Pakistan, Muhammad Ali Jinnah issued the order for the establishment of State Bank of Pakistan on 1st of July 1948. HBL established operations in Pakistan in 1947 and moved its head office to Karachi. Our first international branch was established in Colombo, Sri Lanka in 1951 and Habib Bank Plaza was built in 1972 to commemorate the banks 25th Anniversary. With a domestic market share of over 40%, HBL was nationalized in 1974 and it continued to dominate the commercial banking sector with a major market share in inward foreign 13

remittances (55%) and loans to small industries, traders and farmers. International operations were expanded to include the USA, Singapore, Netherlands. On June 13, 2002 Pakistan's Privatization Commission Oman, Belgium, Seychelles and Maldives and

announced that the Government of Pakistan had formally granted the Aga Khan Fund for Economic Development (AKFED) rights to 51% of the shareholding in HBL, against an investment of PKR 22.409 billion (USD 389 million). On February 26, 2004,

management control was handed over to AKFED. The Board of Directors was reconstituted to have four AKFED nominees, including the Chairman and the President/CEO and three Government of Pakistan nominees. There were 14 Pakistani scheduled commercial banks

operating in the country on December 1973, the name of these were: 1. National Bank 2. HBL 3. Habib Bank (Overseas) Limited 4. United Bank Limited 5. Muslim Commercial Bank Limited 6. Commerce Bank Limited 7. Australia Bank Limited 8. Standard Bank Limited 9. Bank of Bahawalpur Limited 10. 11. Premier Bank Limited Pak Bank Limited 14

12. 13. 14.

Lahore Commercial Bank Limited Sarhad Bank Limited Punjab Provincial Co-operative Bank Limited

EFFORTS TOWARDS ISLAMIC BANKING IN PAKISTAN

Pakistan was created in the name of Islam on august 14, 1947. But since then, the interest is paying the cardinal role in resource allocation of the economy. The banking system in Pakistan based on interest divergences with Islamic ideology and is forbidden by Almighty Allah and His Prophet Muhammad (PBUH). Any government till now in the country except President Zia-ulHaq did not dare to change the well-digged system based on interest in banking in Pakistan. The only step taken under this direction is starting of PLS Deposits from January 1, 1982. Only PLS saving account and PLS term deposits shall be accepted on profit and loss sharing basis. The banks were allowed to meet the working capital requirements of their clients on the basis of Musharika, and Leasing, and Hire Purchase. Beside it, different efforts are made time by time in this respect but could not be acted upon at all.

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Recently in June 2002, the Shariah Applet Bench of Pakistan issued an order to all the banks in Pakistan to change the interestbased banking system to Islamic Modes but the lawyer from the government of Pakistan challenged it by saying that if any affair is in the favor of the public of the country and is also admired by the public then it cannot be abandoned by the government. So this issue is still not resolved.

HBL TO BECOME PRESTIGIOUS PAKISTANI BANK AFTER MANAGMENET TRANSFER TO AKFED

The privatization of Habib Bank Limited is a historic and the country's biggest strategic sale in the financial sector and we expect that the new buyer will improve the bank's network in central Asia, Europe and other parts of the world to turn the bank into a prestigious Pakistani Bank. Dr. Abdul Hafeez Shaikh stated this while addressing the ceremony held for the transfer of the management of Habib Bank Limited to Aga Khan Fund for Economic Development (AKFED) here today. He said that the Government of Pakistan still held 49 % of the shareholding in the bank and the government would benefit from the future earnings from the bank as recently witnessed in case of 22.5 % dividend from United Bank Limited. It would also improve the overall banking and the financial sector of Pakistan, he hoped.

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We had given protection to the employees and every organization required more employees to expand their area of activity and to generate maximum profits and obviously the best performers would get raise in their emoluments and advanced training to improve their skills, he stated. He further added that the upcoming transactions in the financial sector included Allied Bank Limited and National

Investment Trust, while other major transactions to be privatized include Pakistan State Oil, Jamshoro Power Company, Faisalabad Electric Power Company, Pakarab Fertilizers Company and Capital market transactions of Pakistan Petroleum Limited, Pakistan

International Airlines, Kot Adu Power Company and at a later stage the share offering of United Bank Limited. While expressing his thanks to the President General Pervez Musharraf and the Prime Minister Mir Zafarullah Jamali, Dr. Abdul Hafeez Shaikh said that without such top level commitment the completion of such historic transaction could not have been possible and the most transparent process at all levels appreciated by everyone was also a matter of satisfaction and encouragement. He said that the past 12 month were greater in the history of the country's privatization, when we were able to accomplish transactions worth Rs.42 billion. Addressing on this occasion Mr. Shaukat Aziz, Federal Minister for Finance said that the Privatization Program was the pillar of the 17

country's economic reforms and it was the policy of the government to put more assets for the private sector, which was a global phenomenon. HBL was an Icon of our structural reforms and we were handing over a jewel of our national assets with a bit of heavy heart and now the greater responsibility lie with the new

management. The government had launched a series of structural reforms, which had strengthen the institutions with independence and we were able to improve the environment for the banks to grow, he added. Mr. Ahmad Waqar, Secretary Privatization Commission said that the privatization of HBL was the manifestation of the government's commitment to the continuity of the economic reforms agenda. Later, Mr. Ahmad Waqar, Secretary Privatisation Commission and Mr. Sultan Allana, representative of Aga Khan Fund for Economic Development signed and exchanged the documents of the transfer of management agreement in the presence of Dr. Abdul Hafeez Shaikh, Federal Minister for Privatization & Investment, Mr. Shaukat Aziz, Minister for Finance, Mr. Iain Cheyne, Director AKFED and the senior officers of Finance Division, State Bank of Pakistan and HBL. On December 29, 2003, AKFED gave the highest bid of Rs. 22. 409 billion for acquiring 51 % Strategic stake and acquiring the

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management control in Habib Bank Limited (HBL), the country's first ever biggest transaction in the history of Pakistan's privatization. The State of Qatar Supreme Council for Economic Affairs Investment remained runner up with an offer of Rs. 21. 99375 billion while Central Insurance Company Limited did not turn up for the bidding. PC Board has given their nod for the highest bid while Cabinet Committee on Privatization gave approval to the bid and declared AKRFD as successful bidder. The pre-qualification committee, which included

representatives of Privatization Commission, Finance Division and the State Bank of Pakistan, had allowed three parties for prequalification for the bidding. The three parties included Agha Khan Fund for Economic Development, Central Insurance Company Limited and State of Qatar Supreme Council for Economic Affairs and Investment. All the key issues were resolved and the bidding process was made known to the potential pre-qualified bidders. Pakistan's Privatization Commission ("PC") had received

unprecedented interest from around the world by receiving 19 Expression of Interest (EOI) for the privatization of Habib Bank Limited ("HBL"), from reputed International and Pakistani parties (participating solely, or as part of a consortium) for entering the process towards acquiring the indicated shareholding in HBL for a better competition. 19

HBL is Pakistan's second largest commercial bank, having a countrywide and international branch network. HBL has full service licence covering commercial, retail banking, consumer and

investment banking activities in Pakistan and most of the other countries where it is present. HBL has an extensive domestic network consisting of 1,425 branches with a market share of approx. 20%. HBL operates a large international network of 48 branches in 25 offshore locations spread over Europe, the Middle East, Far East, Asia, Africa and the United States. It operates three wholly owned subsidiaries namely Habib Bank Financial Services (PVT) LTD. Karachi, Habib Finance International LTD (Hong Kong) and Habib Finance Australia Ltd. - Sydney; 2 Joint Ventures namely Habib Nigeria Bank Ltd. (40%) and Himalayan Bank Ltd. (20%). In addition, the Bank owns 90.5% shares in Habib Allied International Bank Plc, a bank incorporated in the UK. HBL also has 2 representative offices in Iran and Egypt.

OUR BRAND

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Our brand identity is the outward expression of what we stand for as an organization. This is summarized in our vision, mission and is supported by our values. Vision: Enabling people to advance with confidence and success Mission: To make our customers prosper, our staff excel and create value for shareholders Values: Excellence, Integrity, Customer Focus, Meritocracy and Progressiveness Our values are the fundamental principles that define our culture and are brought to life in our attitudes and behaviors. It is our values that make us unique and unmistakable. Our values are defined below: We are thethe core bank in Pakistan and The success This is at leading of everything we do. our markets depends upon trust. Our customers - and society in in which we operate are becoming increasingly general - expect us to possess and steadfastly adhere competitive, giving our customers an abundance of to high moral principles and professional standards. of choice. Only through being the very best - in terms We understand fully the needs of our customers and the service we offer, our products and premises - can adapt our products and services to meet these. We we hope to be successful and grow. always strive to put the satisfaction of our customers first. We believe in giving opportunities and advantages to 21

our employees on the basis of their ability. We believe in rewarding achievement and in providing first-class career opportunities for all. We believe in the advancement of society through the adoption of enlightened working practices, innovative new products and

processes, and a spirit of enterprise.

OUR RECRUITMENT

Meritocracy is an integral part of HBLs recruitment policy. Our merit-based recruitment process incorporates the principles of equal opportunity and leads to the appointment of the most capable candidate. This ensures openness and transparency, allowing greater confidence in the outcome of the selection process. Educational Background Skills and Competencies Abilities and Attitude Experience Interpersonal / Communication skills

Meritocracy is an integral part of our recruitment policy.

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We conduct campus visits to induct and groom fresh graduates.

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CAREER OPPORTUNITIES

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PROFILE OF EMPLOYEE
1 ... ... BOARD OF DIRECTORS 25

2 ... ... 3 ... ... 4 ... ...

SENIOR MANAGEMENT REGIONAL CHIEF EXECUTIVE R. G. MANGER OPERATION

5 ... ... R.G.MANAGER CREDIT 6 ... ... R.G.MANAGER AUDIT 7 ... ... 8 ... ... R.MANAGER H.R BRANCH MANAGERS

1.

Board of Directors

In the management of the banks, the board of directors is at the top of the controlling body.

Sultan Ali Allana Chairman

R. Zakir Mahmood President & CEO

Iain Donald Cheyne Director

Sajid Zahid Director

Mushtaq Malik Director

Ahmed Jawad Director

2.

SENIOR MANAGEMENT
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R. Zakir Mahmood Sohail Malik Sima Kamil Nauman K. Dar Ayaz Ahmed Abid Sattar Zafar Aziz Osmani Mudassir H. Khan Jamil Iqbal Faizan Mitha Salim Amlani Aslam Gadit Management Tulu Islam Mirza Saleem Baig Kashif Shah Nausheen Ahmad Jamil A. Khan Aly Mustansir

President & CEO Group Executive, Risk Management Group Executive, Corporate Banking\ G.E.,Int Banking&CEO, Habib Allied Int. Bank Plc., UK Group Executive, Chief Financial Officer Group Executive, Retail & Consumer Banking Group Executive, H. R. & Organizational Development Group Executive, Global Operations Group Executive, Chief Compliance Officer Group Executive, Global Treasurer Group Executive, Audit, BRR & Investigation Group Executive, Asset Remedial

Group Executive, IT & Systems Group Executive, Commercial Banking Group Executive, Investment Banking Company Secretary & Head of Law Division Group Executive, Admin. & Services Group Head of Marketing & Brand Management

3.

REGINNALCHIEF EXECUTIVES

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HBL 23 regional offices in Pakistan RCE are total in charge of the region. Corporate group, retail group, and audit department all work under control of RCE

4. R.G.MANAGER OPERATIONS
Regional general managers are responsible of all operational jobs with in regions. They are also responsible of audit category of branches.

5. R.G.MANAGER CREDIT
Regional general manager credit look after the credit affairs of the region. All jobs related to financing are look after by regional general manager credits. Sanction of fresh loan and adjust mint of all mature finances is their great responsibility. Because advances are main source for bank so at least svp are appointed for this assignment.

6. R.G.MANAGER AUDIT
Under control of regional general manager audit the working of branches is checked on periodically bases .AUDIT department is very important department because with out help of audit it is impossible for bank to stop frauds and forgeries. Audit department bunds the branches to work according to SBP rules and regulations that why most senior banker are appointed for this title Each commercial bank has a number of circles placed directly under the control and supervision of Chief Executive. 28

7. R.MANAGER H.R
All matter related to employees are handle by regional manager H.R. Employees are asset of any organization. HBL has established a separate department for their care.

8. Branch Managers
Regions consist of branches. Actually banking start from branches all branches are responsible their income and expenditures. Branch Managers are the persons who look after the performance of employees. Employees annual performance is judged the branch managers. Hence they are very important for HBL. Branch performance depends on manager. Because manager is leading figure in branch.

PRODUCT LINES
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JAHAN KHAWAB WAHAN HBL

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HBL MUNAFA PLUS

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A BANK OF GENERATIONS

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ORGANIZATIONAL STRUCTURE
In this section following topics are discussed:

MAIN OFFICES

MARKETING OPERATIONS

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ORGANIZATIONAL STRUCTURE OF HBL 1. ASSETS REMEDIAL MANAGEMENT GROUP

ARM CORPORATE GROUP ARM RETAIL DIVISION ARM FINCON DIVISION AUDIT AND INVESTMENT GROUP

2. FINANCIAL CONTOL GROUP

FINCON DIVISION PAK ACCOUNT RECOCILIATION DIVISION

3. GLOBAL OPERATIONS GROUP

ENGINEERING AND MAINTANACE GROUP GENERAL ADMINISTRATION DIVISION INTARNAL CONTROL DIVISION LAW DIVISION

4.

MARKETING AND COMMUNICATION

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 DIVISION

PUBLICITY AND PUBLIC OPERATIONS

SPORTS DIVISION OPERATIONS MANAGEMENT DIVISION GLOBAL COMMUNICATION DEPARTMENT

5.

HUMAN RESOURCES GROUP

PERSONNE DIVISION POLICY PLANNING AND IMPLEMENTATION INDUSTRIAL RELATION AND DISCIPLINARY

ACTION

6. MANAGEMENT AND ORGANIZATION DEVELOPMENT DIVISION

MDI ISLAMABAD MDI LAHORE MDI KARACHI

7. INFORMATION AND TECHNOLOGY GROUP

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COMPUTER OPERATIONS DIVISION SYSTEM DEVELOPMENT DIVISION COMMUNICATION DIVISION

REGIONAL STRUCTURE REGIONAL CHIEF EXECUTIVE

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REGIONAL REGIONAL HEAD MANAGER

MISYS/BPR COMPLIANCE

REGIONAL MANAGER
ADMINISTRATION

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BRANCH STRUCTURE
CHIEF MANAGER

MANAGER OPERATIONS

MANAGER CREDIT

MANAGER
TELLER

TELLER
REMITTANCE

AFO

RECOVERY
OFFICER

CASHIER ASSISTANT

CASHIER

ASSISTANT

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MAJOR OPERATIONS OF HBL

In this section a number of topics are discussed. The major topics of this section are:

Functions of HBL Cash Department Deposit Department Different Types Deposit Department Clearing Department Advances and Credit Department Securities Types of Advances Other Services

Different schemes conducted by HBL

FUNCTIONS OF HBL
HBL is a commercial bank, in modern time it plays a very vital role and its functions are manifold. The main functions are as under: 48

(1) (2) (3)

Accepting various types of deposits. Granting loans and advances. Undertaking of agency services and also general utility functions, few of these are as under:-

a ... ... customers. b ... ...

Collecting cheques and bills of exchange for the

Collecting interest due, dividend, pensions, and

other sum due to customers. c ... ... Providing safe custody and facilities to keep

jewellery, documents, and securities etc. d ... ... e ... ... customers. f ... ... Issuing of travelers cheques and letters of credit Transfer of money from place to place. Acting an executor, trustee or attorney for the

to give credit facilities to travel. g ... ... customers. h ... ... i ... ... j ... ... to customers. Purchasing shares for the customers. Undertaking foreign exchange business. Furnishing trade information and tendering advice Accepting bills of exchange on behalf of

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For proper functioning of all these activities, the bank has divided its operations into different departments that would be discussed next. These departments are as under: (1) Cash Department (2) Deposit Department (3) Clearing Department (4) Advances and Credit Department (5) Remittance Department (6) Foreign Exchange Department

CASH DEPARTMENT
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The following books are maintained in the cash department:-

1 ... ... Receiving Cashier Books 2 ... ... Token Book 3 ... ... Paying Cashier Book 4 ... ... Scroll Books 5 ... ... Cash Balance Book

When cash is received in counter, it is entered in the Scroll Book and Receiving Cashier Book. At the close of the day, these are balanced with each other. When the cheque or any negotiable instrument is presented at counter for payment, it is entered in the Token Book and Token is issued to the customer. The Token and the cashier make entry in the Payment Book and the payment is made to payee. At the close of the day, the Token Book and paying Cashier Book is balanced. The consolidated figure of receipt and payment of cash is entered in the Balance Book and drawn closing balance of cash.

OPENING BALANCE + RECEIPT PAYMENT = CLOSING BALANCE

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This is very important department because cash is the most liquid asset and mostly frauds are made in this department, therefore, extra care sis taken in this department and no body is allowed to enter or leave the area freely. Mostly, cash area is grilled and its door is under the supervision of head of that department. Officer checks the books maintained in this department.

* DEPOSIT DEPARTMET IMPORTANCE

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Bank deals in money and they are merely mobilizing funds within the economy. They borrow from one person and lend to another, the difference between the rates borrowed and lend from their spread or gross profit. Therefore, we can rightly state that deposits are the blood of the banks which cause the body of an institution to get to work. These deposits are liability of the bank so from the viewpoint of bank we can refer to them as liabilities.

TYPES OF DEPOSITS
Deposits can be segregated on two bases, one is the duration in which these funds are expected to be with the bank, and second is the cost of getting these funds. So we can divide deposits into two classes according to duration: 1 ... ... Time Deposits 2 ... ... Demand Deposits And on the basis of the cost of acquire these funds, a deposit can be classified as any one of the following four:

a ... ... High Cost b ... ... Medium Cost c ... ... Low Cost d ... ... No Cost

Bank has different kind of deposit schemes in order to induce deposits. These schemes are a mixture of the above mentioned two 53

types of deposits with and addition of different services and requirements, mode of transactions, basis for calculation of profit, deduction, additional benefits, and eligibility for different groups. In the similar fashion, HBLhas large variety of deposit schemes and some of these are as follows:

(1) CURRENT ACCOUNT

In this type of accounts, the client is allowed to deposit or withdraw money as and when he likes, but there is requirement of maintaining the minimum balance of Rs. 20000/- other wise Rs.50/will be deducted every month. Usually the businessmen open this type of account and the bank pays no profit on it. These types of deposits are also exempt from compulsory deduction of Zakat.

(2) PLS SAVING BANK ACCOUNT

This type of account is for those persons who want to make small savings. This type of account is opened with a minimum deposit if Rs.1000/- If the balance in the account falls below the minimum requirement then a flat charge of Rs. 10000/- is made in the account once in a half year. Zakat and other withholding taxes are deducted as per rules of the government.

(3) FIXED DEPOSITS

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In this type of account a certain amount is deposited for a certain period such as six months, one year, two year or longer. A fixed deposit receipt is issued in the name of the depositor. The receipt is signed by the officer in charge and the bank manager. A notice is given to the depositor on a prescribed from two weeks before the Fixed Deposit Receipt (FDR) falls due, requesting the depositor to withdraw his money or to renew his deposits. The interest is allowed on fixed deposit varies with the period for which the deposit is made.

(4) SHORT NOTICE TERM DEPOSIT

This kind of deposit is for a short period as the name indicates. The depositor may withdraw his deposit at any time by giving seven days notice to the banker. This type of deposit facilitates the trader to withdraw his amount with interest of the deposited period.

(5) CALL DEPOSIT

Call Deposits are the sorts of deposits, which are deposited with the banker against any tender. This is with out interest deposit, this may be with interest provided with the depositor has agreed to keep this amount with the banker for some fixed period.

(6) CUMULATIVE DEPOSIT CERTIFICATE

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This is just like of fixed deposit. In this kind of deposit, the rate of interest is higher as compared to other kind of deposits, which are mentioned previously. The rate of interest rises gradually as the period extends. Its period ranges from three month to twenty years.

(7) MONTHLY INCOME SCHEME

HBL has also introduced Monthly Income Scheme for the benefits of its customers. An individual or institution, company, corporation etc. can take the advantage of this scheme.

LEDGERS OF DEPOSIT DEPARTMENT

The following types of ledgers are concerned with deposit department: 1 ... ... 2 ... ... 3 ... ... 4 ... ... 5 ... ... 6 ... ... 7 ... ... 8 ... ... Saving Ledgers Current Ledgers Profit and Loss Sharing Ledgers Fixed Deposit Register Cumulative Deposit Certificate Register Cash Book Daily Profit and Loss Summary Book Voucher Register

* CLEARING DEPARTMENT
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Every banker acts both as a paying as well as a collecting banker. It is however an important function of crossed cheques. A large part of this work is carried out through the bankers clearing house. A clearing house is a place where representatives of all the banks of a city get together and settle the receipts and payments of cheques drawn on each other bank. As the collecting banker runs the certain risks in receipt of their ownership, the law has provided certain protections to the banks.

TYPES OF CHEQUES
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COLLECTED

(1) TRANSFER CHEQUES

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

(2) CLEARING CHEQUES

Clearing Cheques are those cheques which are drawn on the branches of some other bank of the same city or of the same area which covers a particular clearing house.

(3) COLLECTION CHEQUES

Collection Cheques are those cheques which are drawn on the branches of either the same bank or of another bank, but branches are not in the same city or they are not the members of clearing house.

* ADVANCES AND
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CREDIT DEPARTMENT
The function of Advances and Credit Department is to lend money in the form of clean advances, against the promissory note, as well as secured advances against tangible and marketable securities. The bankers prefer such securities, which do not run the risk of general depreciation due to market fluctuations. Common securities for the bankers advances are as under:

SECURITIES

(1) BANKERS LIEN

(Moveable property possessed to the lender cannot be sold in case of default) Lien is the bankers right to hold the property until the claim on the property is paid. The bankers look at their lien as a protection against loss on loan or overdraft or any other credit facility. In ordinary lien, the borrower remains the owner if the property, but the actual or constructive possession remains with the creditors, though he has no right to sell it.

(2) GUARANTEES

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When an application for an advance can offer any tangible security, the banker may rely on personal guarantees to protect himself against loss on advances or overdraft to the applicant.

(3) MORTGAGE
(Immoveable property possessed to the lender can be sold in case of default) A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, and existing of future debt, or the performance of an engagement, which may rise to a particular liability. The person in whose interest the property is transfer is called mortgagee.

(4) HYPOTHICATION
(Immoveable property possessed to the borrower can be sold in case of default) When property in the shape of goods is charged as security for a loan from the bank, the ownership and possession is with the borrower, the goods are said to be hypothecated. The essence of hypothecation is that neither the property in goods nor the possession of them passes to the lender, but the security is granted by means of letter of hypothecation which usually provides for a bankers charge on the hypothecated goods. 60

(5) PLEDGE
(Moveable property possessed to the lender can be sold in case of default) In a pledge, the ownership remains with pledger

(borrower), but the pledgee has the possession of property until the advance is repaid in full. While in case of defaulter, the pledge has the right of sale after giving due notice.

TYPES OF ADVANCES
1 ... ... 2 ... ... 3 ... ... 4 ... ... 5 ... ... 6 ... ... Demand Finance(Ordinary Loans) Running Finance(Overdraft) Cash Finance Small Finance Finance against Bills Agriculture Loans

(1) DEMAND FINANCE (ORDINARY LOANS)

These are those advances which are allowed in lump sum for a fixed period and are repayable in lump sum or gradually in installments.

(2) RUNNING FINANCE

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Running finance are advances, which are gradually given to meet temporary requirements of the customers. A good customer uses the banks running finance limit, as a mean of protecting his credit in the market and as a line of second defense to meet his commitments. There are two types of running finance:

1) UN-SECURED
Under this type of overdraft, the bank relies upon the personal security of the customer or customers account.

2) SECURED
Under this type of overdraft, the bank allows his customer to withdraw more than his deposit after giving security against the amount overdrawn. The securities against which they are given are as under:

a ... ... Share Certificates b ... ... Savings Certificates c ... ... Deposits d ... ... Mortgage Property e ... ... Guarantee of a person

(3) CASH FINANCE

These types of loans are given against the following: 62

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

Against locally manufactured goods Cash finance against rice and paddy Against pledge Against commodities Besides advances against the above commodities bank may be approached by parties for advances against other commodities like tobacco, oil, etc.

6 ... ...

Against Trust Receipts

(4) SMALL LOANS

Loans are allowed to contractors clearing and forwarding agents. These loans are repayable within a year.

(5) FINANCE AGAINST BILLS

The advances are allowed both on local and foreign bills such as: a ... ... Bill of Exchange and Invoices b ... ... Bill of Landing

(6) AGRICULTURE LOANS

Agriculture loans are given to the farmers with holding up to 25 acres for meeting their short medium and long term production requirements such as:

a ... ... Agriculture inputs b ... ... Tractors instruments c ... ... Tube wells 63

d ... ... Live stock farming e ... ... Land Improvements

(7) OTHER SERVICES

* UTILITY BILLS COLLECTION

For the convenience of the customer, HBL also collects different kinds of utility bills such as: Electricity Bills, Sui-Gas Bills, Telephone Bills etc.

* HBL MUHAFIZ RUPEE TRAVELLER

CHEQUE
HBL Muhafiz Rupee traveler Cheque is better than cash, because you get the power to purchase as well as your money can be refunded in case you would loss your cheque. It is a safe and convenient way of purchase.

* FOREIGN CURRENCY ACCOUNTS

Launched to attract deposits in foreign currencies like US Dollars, Pound Sterling, Dutch Mark, and Japanese Yen. Whether you are a resident or a non-resident of Pakistan, HBL invites all to operate in a foreign currency account.

DIFFERENT SCHEMES CONDUCTED BY HBL

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HBL always makes efforts to improve its goodwill in the general public. It introduces different kind of schemes time to time.

The most popular schemes conducted by HBL are as under:

1 ... ... 2 ... ... 3 ... ... 4 ... ...

Hajj Scheme HBL Flexi Loan Scheme Bancassurance Basic Bank Account

(1)
SCHEME

HAJJ

For the convenience of a person with a limited income who desire to perform Hajj, Hajj Scheme is introduced. Moreover, HBL process the Hajj applications of thousands of people successfully more than any other bank in Pakistan.

(2)
FLEXI LOAN SCHEME

HBL

Do you need urgent funds? If yes then head to HBL and avail HBL Flexi Loan Facility, which allow you to draw sixteen months salary in one go. This facility is available to permanent employees of the:1 ... ... Federal and Provincial governments 65

2 ... ...

Semi-governments,

autonomous,

semi-

autonomous, local bodies, and government corporations 3 ... ... Other corporations approved by HBL

No guarantee, collaterals, or insurance is required to avail this scheme. HBL gives the facility to repay the excessive amount within 12 to 60 months. The procedure is very easy, just fill the application form and choice between 12 to 60 months and take your HBL Advance Salary within 3 days after submitting your request application form.

(3)
SURANCE

BANCAS

Introduction
New Jubilee Insurance (NJI) incorporated in Pakistan in June

1995. It started operations in June 1996. It is subsidiary of Aga Khan Fund for Economic Development (AKFED). AKFED operates as a network of affiliates with more than 90 separate project companies employing over 30,000 people in 16 countries, with annual revenues in excess of US$ 1.5 billion. Paid Up Capital of New Jubilee Insurance is PKR 627 million which is the highest amongst all Life Insurance companies in Pakistan. The company has over 40,000 individual customers. It is only life insurance company in Pakistan with a dedicated banc assurance department to cater banking sector 66

requirements.

Banc assurance coordination centre in Lahore and

Karachi ( setting up in Islamabad soon). NJI is pioneer of Banc assurance and Credit Life business in Pakistan and is backed by one of the worlds strongest reinsures - Munich Reinsurance Company.

* Insurance
Insurance can be defined as a risk transfer mechanism against loss in which a number of individuals agree to pay certain sums of money, called premiums, to create a pool of money which will use these contributions to pay for the losses caused by events such as fire, accident, illness, or death.

(4)
BANKING ACCOUNT

BASIC

HBL Basic Banking Account is most popular deposit scheme of HBL.Silent features of this scheme are (1) Initial depsitRS.1000. (2) Two withdrawals are allowed in a month (3) No limit on depositing cash (4) No minimum balance required for this account. (5) No profit will be paid on this account (6) No service charges will be recovered on this account. (7) This scheme is for retired employees. (8) RS.50. Will be recovered if more then two transaction accord with in a month. (9) No charges will be recovered on close of account. (10) Account will be closed by the Bank if account is showing zero balance. 67

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SWOT ANALYSIS

In this section four topics are discussed. They are as under:

Strengths Weaknesses Opportunities Threats

SWOT ANALYSIS

STRENGTHS
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HBL JAHAN KHAWB WAHA HBL

HBL is newly denationalized bank owned by AKFED (Agha Khan Fund for Economic Development) that is why Pakistani nation has a trust on the bank that their deposits are secured. Due to this reason the deposits of the banks are increasing with the passage of time.

Deposits
HBL is the largest commercial bank of the country and has Total Deposits of Rs.531, 298 million and becomes leader of banks in Pakistan banking industry

Profitability
The pre-tax profits of HBL have gone up to Rs. 15,145 million

TOTAL BRANCHES
HBL now has 1,489 branches with in country which make it a big financial institution in Pakistan.

Comprehensive Range of Financial Products

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In order to facilitate the customers, HBL is offering the comprehensive range of financial products which are as follows: Credit Card Debit Card LFT/FFT SWIFT Foreign Exchange Bearer Certificates HBL Munafa Plus Accounts Pak Rupee Muhafiz Travelers Cheques etc.

Investing in Capital Market

HBL has decided to diversify the fund base by investing in capital markets not only in Pakistan but also in the foreign countries.

HBL STAFF
HBL has 14,552 staff members to facilitate its customers

HBL TRAINING CENTERS

HBL HAS 3MDI training institutes to provide its staff members on job trainings and update their knowledge

FOREIGN BRANCHES
HBL has 59 branches in different foreign countries

TOTAL ASSETS
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HBL has assets of RS. 691,992 million

WEAKNESSES Communication Gap

There is big communication gap between field functionaries and top management.

Poor Working Conditions

Due to big net work of 1,489 branches it was difficult to maintain good working conditions in all branches.

Average Services
In HBL, services are average not excellent which is the need of time.

Incompetent Staff
Most of HBL staff members do not know the use of computer hence they are not fit for their assignments.

Higher Management Cost

In HBL management is very high which is disturbing HBL organizational structure. HBL has 23 regional offices and other supporting offices.

Slow Promotion Policy

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In HBL promotion policy is very slow and lengthy. Due to this reason, there is no substitute of HBL Br. Manager and other key positions in HBL.

Delay In On Line Banking System

HBL has almost 500 on line branches from its 1489 branches due to this reason it is to much difficult to face the competitors in market.

Strong Impact of Unionism

Union has strong impact on performance of HBL. So the top management is unable to punish the violators and shrieks.

Traditional Organizational Structure

In this organization the structure is traditional I-e top to employees So feed back is poor and improper and management face problems in right decision making.

OPPRTUNITIES Restart of Consumer Banking

HBL should restart its consumer products like salary finance House Finance and Auto Finance and house finance schemes so that 73

the customer can fill there basic need. That is a very broad field and HBL can earn a lot of profit and can capture this big market one again.

New Branches
HBL can open new branches in rural areas of the country so that bank can expand its market. Because our economy depends on agriculture and eighty percent comes from this field.

Investment Banking
Until recently the bank perceived as purely commercial banking entity so in order to expand its business the bank may start investment banking by investing in the portfolio of handsome return.

MONTHLY INCOME SCHEMES

HBL can launch monthly income schemes because most retired employees are profit conscious and they depends on monthly profits to fill there Basic need so bank can start new monthly income and can oblige its customers

Self Employment Schemes

HBL can start self employment schemes but this is a big market and HBL can earn much profit from this scheme.

Evening Banking
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HBL can restart evening so that the pressure on branches can be reduced. in this way bank can facilitate its old customers and new customers

Mobile Banking
Bank can start mobile banking to capture the market share..

Driveway ATM Machines

Bank can expand its business by fixing ATM machines along with roads/parks and near restaurants.

THREATS Political Instability

Political instability in Pakistan is very big challenge for industry .Political instability can destroy the structure of No

organizations. Future decisions require political stability.

organization can in disturb political conditions. So this is big threat for banking industry.

GOVERNMENT POLICIES
Govt. policies have great impact on institutes. Government policies may be favorable or unfavorable. Government policies have effect on the savings of people and banking industry basically 75

depends on amount deposited by people. Hence government policies has affect on organization.

Inflation
In our country inflation rate is very high. Inflation rate reduced the saving capacity of people. With out saving we can do nothing.

SBP Monitory Policy

Policies of central bank have great impact on commercial banks because central bank has to make policies to control inflation /deflation rate.

Competition
Increasing competition has affected the banking industry and competition is increasing day by day. Major competitors of HBL are NBP, Bank ALFALAH, MCB, UBL, and ABL.

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RECOMMENDATION S
In this section only one topic is discussed that is: Recommendations

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RECOMMENDATIONS

REDUCTION IN MANAGEMENT COST

HBL reduce its management cost so that bank can facilitate its customers in a better way. Bank should spend this saving on its customers .By reducing management cost bank can increase profit rates and can expand its business.

REGULAR ON JOB TRAINING

Bank should provide on job training on regular basis so that their professional knowledge and skill can be improve. On job

training give them the opportunity to know more about their products.

ADOPTION OF ADVERTISING
Bank should launch advertising campaigns through out the year to promote the habits of savings in the people. Bank should open more branches in the remote areas of the country to get deposits 78

and idle resources. Bank should provide similar facilities to all its branches in big cities. The standard of service and other facilities are far better as compared to smaller cities.

PROPER GUIDANCE
Bank should adopt such an induction plan that when a customer opens his account with the bank, he should be supplied with a booklet which enables him to know the procedure of filling the cheques and pay-in-slip etc. It will save a lot of time of the bank staff afterward during of the conduct of the account of that customer.

DIVISION OF WORK
The billing system of HBL must be improved to facilitate the customers and workers. The work should be divided among the staff e.g. collection of bills, countering of cash and then entry of these.

CHECK ON EXPENDITURES
Expenditures must be controlled which are very high and unnecessary.

BORROWING AT LOW COST

Deposits must be taken at a lower cost and given at higher interest rate.

CASH AWARDS TO STAFF

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Bank should give cash awards to employees so that they can perform well for their organization.

STAFF MOTIVATION
Motivation is necessary to improve performance of employees. So HBL should motivate its employees by giving them fine rewards of their performance. Motivate employees do better then that of unmotivated employees.

JOB SECURITY
Job security increase the confidence of employees and confident employee can do better then that of other employees. So job security is much necessary for employees

and also for HBL.

REFERENCES AND SOURCES USED:

Following references and sources were used: Annual Report 2010 Retail Department of HBL at Regional Office, Multan. Marketing Management by Philip Kotler. www.HBL.com.pk On the job experience in HBL. 60 days basic banking training at MDI KARACHI HBL Monthly edition (WE) HBL VOLUME 1 80

 HBL VOLUME 2 HBL Orientation Booklet 2007. HBL Brushers on different topics HBL senior staff HBL OD circulars

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