Functions : Accepting Deposits : Most Important activity of CB is to Mobilize surplus funds

2nd important is to give advances and loans Purpose period

Current

: Can be withdrawn by depositor ANYTIME No INTEREST

Saving : meant for individuals who wish to deposit small amounts out of their current income
(with or without cheque book facility & Savings account holders are also allowed to deposit cheques, drafts, dividend drawn in their favour for collection by the bank)

Fixed or Time : Fixed deposits are most useful for

a commercial bank. Since they are repayable only after a fixed period, the bank may invest these funds more profitably by lending at higher rates of interest and for relatively longer periods

Call Deposit specific type of interest bearing investment account that allows a person to withdraw their money from the account without a penalty. money can be withdrawn

from a Call Deposit account without prior notification to the bank. Interest depends on : Purpose Period Repayment Mode
Cash credit is an arrangement whereby the bank allows the borrower to draw amounts upto a specified limit. amount credited to account of the customer. customer can withdraw this amount as and when he requires. Interest is charged on the amount actually withdrawn. Cash Credit is granted as per agreed terms and conditions with the customers

cash credit the security is inventory of the company while under overdraft security is generally the fixed assets of the company (sometimes bank give overdraft facility to the company without any security which is called clean overdraft facility).

Discounting of Bills : Short-term finance, making payment of the amount before the due date of the bills after deducting a certain rate of discount.

LC : reassurance of payment for the goods.

Bank drafts:

A bank draft is a bill of exchange drawn by a bank on itself, or on a correspondent bank in another city or country. Demand Drafts and Pay orders:

A method used by individuals to make transfer payments from one bank account to another

Pay orders is done for third party within city

Telegraphic Transfer or Telex Transfer - transferring funds overseas Wire Transfer - from one person or institution (entity) to another.

Offshore Banking - Deposits in Bank located outside the country of residence of the depositor

Low tax jurisdiction (or tax haven) Luxembourg, Switzerland and etc Greater privacy

Protection against local political or financial instability

Deposits rate

avg min 5.8 5.7 2010 4 7 7.3 5.8 2011 4 8

ma x 5.9 1 6.1 8

Lending Rate Avg min max

20 10 20 11

13. 39 13. 65

13. 32 13. 52

13. 52 13. 81

Investment : Fedral Government securities prize bonds, PIB, national saving schemes Others shares, debantures, TFC, sukuk, mutual funds and modaraba certificate

spread - Normally, the banking spread should be between 3-4 per cent. The depositors get a negative rate of return after adjustments against inflation and the borrowers get a high priced credit because of the huge spread and inefficiency of banks. The high interest rates are creating bad debts for the banking system.

They are investing heavily in risk-free government papers. There are giving up their traditional role of intermediation between depositors and borrowers.

Conclusion

Had it been not relaxed, there might have been more than just three banks amalgamated together.

 Not just the mergers have made meeting this requirement possible but along with that at the directives of State bank of Pakistan, right shares also assisted in making this possible. Took too long after the approval by State Bank Pakistan and handing over the management of Atlas Bank Limited to the newly formed Summit Bank Limited. And during that time span a lot of development took place in Atlas bank with previous management. A great number of loans were issued with no serious attitude and as said by CFO of summit bank during the report assessment meeting with us, still number of big and bad provisions are coming, thanks to the last and late management of Atlas Bank Limited.

merger of Atlas Bank into Summit Bank rather made difficult to achieve the required minimum capital, so much so that additional right shares issue was done by summit bank to meet the enhanced and challenging position. But this has been merely a time, with only one or two years of amalgamation of banks one cant say that it was complete failure or success factor; success factor will be only judged when the merger has passed its gestation period and Summit Bank has achieved what its mission statement is, because at the end of the day Summit bank Limited strives to be one of the leading and preferred bank in Pakistan by consumers.