KARACHI UNIVERSITY BUSINESS SCHOOL UNIVERSITY OF KARACHI

MBA BANKING AND FINANCE

Course Title : BANKING OPERATIONS & MANAGEMENT MBF - 7 03

Course Number : Credit Hours :

Objective

In business banks play a very important role. Transaction in funds through different bank account operations help business organization to perform their activities. A number of functions are rendered by different kinds of banks and their operation is controlled by the State Bank of Pakistan. Another important aspect of this course is to make the students learn about the management of these banks. Since many activities are performed by these banks their proper management is essential. Competition among the banks is increasing day by day and therefore efficient management has become necessary for the survival of the banks. In this course it is expected that the students will learn both the operational as well as management aspects of banks.

Course Contents
Introduction 1.1 Banking System in Pakistan 1.2 Role of the State Bank of Pakistan Banking Customers Relationship 2.1 Types of Customers 2.2 Accounts of Customer General 2.3 Accounts of Special Customer 2.4 Account Opening Precautions
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Cheques and Their Payment

3.1 3.2 3.3 3.4 3.5 3.6 Countermands of Cheque Endorsements Types and Characteristics of Endorsement Crossing of Cheque : General and Special Crossed Cheques and Their Collection Paying and Collecting Banker
Case Study Workshop Session
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Negotiable Instrument Act I Negotiable Instrument Act II Lending 6.1 Principles and Forms of Lending 6.2 Characteristics of Good Lending 6.3 Securities for Advances 6.4 Characteristics of Good Securities Case Study Workshop Session Treasury and Fund Management Revenue for the Bank : Fund and Non-Fund Based Foreign Trade Operations Evaluation of Interest-Free Banking (Islamic Banking) 10.1 Assets Side Products in Islamic Banking 10.2 Liability Side Products of Islamic Banking State Bank Prudential Regulations
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Recommended Books Siddiqi, Asrar H., Practice and Law of Banking in Pakistan, (Latest Edition), Royal Book Company, Karachi. Roger Le Roy Miller & David D. Van Noose, Modern Money & Banking, (3rd Edition) McGraw-Hill Book Co., Singapore. Negotiable Instrument Act With Commentary
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INDORSEMENTS

It means anything written or printed upon the hack of a deed or writing Definition: Section 15 of the Negotiable Instruments Act. 1881, defines "Indorsement" as under:

When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation. on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to he completed as negotiable instrument. he is said to indorse the same, and is called the 'indorser

CLASSIFICATION OF INDORSEMENTS
There are five main classes of indorsement: :

In blank' & `In full' Indorsement Section 16 of the Negotiable Instruments Act, 1 S81. reads: "If the indorser signs his name only, the indorsement is said to be in blank, and if he adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person, the indorsement is said to be in full', and the person so specified is called the 'indorsee' of the instrument
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'General Indorsement'. It consists of the bare signature of the indorser, and the instrument so indorsed becomes payable to bearer.

Special Indorsement, It specifies, in addition to the signature of the indorser, the person to whom or to whose order the instrument is payable.

Restrictive Indorsement

Under Section 50 of the Negotiable Instruments Act, this is an indorsement which prohibits further negotiation of the instrument. For instance, if a cheque is indorsed; "pay X only" or "pay X for the account of Y" etc. the indorsee has no power to transfer this rights to any one further.

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Partial Indorsement

Under Section 56 of the Negotiable instruments Act, 1881. this is an indorsement which purports to transfer to the indorsee only a part of the amount payable on a hill of exchange or promissory note.

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Conditional Indorsement

Under Section 52 of the Negotiable Instruments Act, it is an indorsement which makes the transfer of the instrument from the indorser to the indorsee after the fulfillment of stated conditions. For instance. the holder of the bill indorses: "Pay accounts or order without recourse to me" or "Pay or order at his own risk".

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`Sans Recourse' Indorsement

When an indorser wants to exclude his liability to the indorsee or subsequent holder he indicates it clearly on the instrument by writing the words. 'SANS RECOURSE. or 'Without Recourse'.

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PRINCIPLES OF INDORSEMENTS

Bankers in Pakistan generally observe the following principles:

The name of the indorser must appear exactly in the same spelling as written in the instrument as the payee or the indorsee. Indorsement in pencil is legally valid but it should be discouraged: bankers must insist on indorsements in ink. Indorsement made by an imprest stamp or in any other form of facsimile signature should not be accepted.

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Indorsement made in typewriting or printed form is not treated as valid unless the payee gives a satisfactory evidence or confirmation about its genuineness. An indorsement made in a language not spoken in the area and which the paying banker also does not understand. should not be accepted without a certified translation. However. in the presence of a collecting banker's confirmation. certified translation is not necessary. It is not essential that indorsements, if more than one, should appear in the same serial order in which they were made.

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