An Internship Report On Habib Bank

1
An Internship Report on
HABIB BANK LIMITED

BANK SQUARE BRANCH,MINGORA, SWAT
Submitted By
IRFAN ULLAH
Institute of Management Studies

University of Peshawar
Session 2004-05
Internship Report on Habib Bank Ltd.(Bank Square

Branch, Mingora)
HABIB BANK LIMITED

BANK SQUARE BRANCH,MINGORA
Internship report submitted to the Institute of

Management Studies, University of Peshawar, in
partial fulfillment of the requirements for the degree of
Master Of Business Administration.

Session 2004-2005
INSTITUTE OF MANAGEMENT STUDIES
Branch, Mingora)
UNIVERSITY OF PESHAWAR
RESEARCH AND DEVELOPMENT DIVISION
INSTITUTE OF MANAGEMENT STUDIES
UNIVERSITY OF PESHAWAR
HABIB BANK LIMITED

BANK SQUARE BRANCH, MINGORA
Supervisor:
Signature :
___________________
Name:
MR.Mehboob-ur- Rashid
Designation:
Lecturer
Coordinator Research & Development Division:

Signature:
______________________
Name:
Mr. ZIAUDDIN

Branch, Mingora)
Designation:
Lecturer

Branch, Mingora)

Branch, Mingora)
PREFACE
After studying so much about accounting, management and banking theoretically,
one always develops a desire to work in a bank. After completion of my coursework at the Institute of Management Studies I had a chance to work as an internee at
Habib Bank, Bank Square branch, Mingora Swat.
Banking is both a sacred and sophisticated profession. In Pakistan Habib Bank has
always been in the forefront of this profession.
During my stay at Habib Bank I tried my best to acquaint myself with the operations
of the bank and as a result learned a lot. What I have learned during my stay at the
bank is being presented here for the reader.
Banking industry has always played a vital role in the success of economies. The
practice is carried out since primitive ages. Multinational banks are now dealing
in money and are laying the foundations for countries to stand on their own feet.
The internship proved to be extremely helpful in learning about the functions and
operations of a bank and how different kind of procedures at bank are carried out.
Although and eight weeks internship is not enough time to know delicately about
every aspect, but somehow it had the initial touch of being in a practical world.
I owe very much to so many people whose help and support at different stages of
my work enabled me to write this report.First of all I would like to thank Mr. Latif
whos help made it possible for me to have an internship in HBL Bank Square
Branch,Mingora. I would also express my gratitude to my uncle, Mr. Aman Ullah
whos kind words are always guidelines for me. I feel proud also to mention my
father, Nadir Khan who is accountant in HBL & his endless support and
encouragement was a major reason that enabled me to do my internship. I would
also like to mention my younger uncle Nasir, support in this report.
IRFAN ULLAH
(JAN-2006)
Branch, Mingora)
TABLE OF CONTENTS
Preface
i
List of Tables
List of Graphs
vi
List of Charts
vii
List of Acronyms
viii
Executive Summary
ix
SECTION I
Chapter 1:
INTRODUCTION OF REPORT
Introduction of the Study
1.1
Background of the study
1.2
Purpose of study
1.3
Scope of work
1.4
Methodology of the report
1.5
Scheme of the report
1 .6
Merits of the study
SECTION II
Chapter 2:
Chapter 3:
REVIEW
Introduction of HABIB BANK LIMITED (HBL)
2.1
History of banking
2.2
Banking in Pakistan
2.3
History of HBL
2.4
Mission statement of HBL
Overview of HABIB BANK LIMITED

3.1
Organizational Structure
3.2
Marketing policies

Branch, Mingora)
3.3
Management policies
3.4
HR Techniques used in HBL
3.5
Organizational Units of HBL & their products
3.6
Technological Framework & equipments used in

HBL
Chapter 4:
Different Departments of HBL

4.1
Deposits department
4.2
Advances department
4.3
Remittance department
4.4
Bills department
4.5
Clearing department
4.6
Safe deposit-lockers department
4.7
Sales Department.
4.8
Cash Department.
4.9
Data Centers.
SECTION III
Chapter 5:
ANALYSIS
Critical Analysis
5.1
Financial Analysis
5.2
SWOT Analysis
SECTION IV
Chapter 6:
RECOMMENDATIONS
Recommendations
SECTION V
Chapter 7:
IMPLEMENTATION PLAN
Implementation Plan
Persons Interviewed
Bibliography
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LIST OF TABLES
Title
Page No.
1.
Balance Requirements for different accounts
2.
Financial Ratios
LIST OF GRAPHS
Title
Page No
1.
Gross profit margin
2.
Return on Assets (Before Taxes)
3.
Return on Assets (After Assets)
4.
Net Interest Income to Assets
5.
Assets turnover Ratio
6.
Fixed Assets Turnover
7.
Operation Cost to Assets
8.
Debt to Equity Ratio
9.
Operation Cost to Deposits
10.
Total Expenditures to Deposits
LIST OF CHARTS
1.
Organization Structure of
HABIB BANK LIMITED.

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10
LIST OF ACRONYMS
A/C
Account
ATM
Automated Teller Machine
DD
Demand Draft
DFIs
Developmental Financial Institutes
DSC
Defense Saving Certificate
FCY
Foreign Currency
FTS
Funds Transfer System
HBL
Habib Bank Limited
HMT
Home Mail Transfer
IBTS
Inter Branch Transaction services
LCY
Local Currency
L/C
Letter of Credit
MDI
Management Development Institutes
MT
Mail Transfer
OBC
Outward Bills for Collection
ODBC
Outward documentary Bills for Collection
RF
Running Finance
SSC
Special Savings Certificate
SBP
State Bank of Pakistan
SVP
Senior Vice President
SME
Small & Medium Enterprise
TC
Travelers Cheque

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11
TT
Telephonic Transfer
US $
United States Dollar
WAPDA
Water & Power Development Authority

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12
EXECUTIVE SUMMARY
Habib Bank is the largest and oldest bank among Pakistani Banks. Founded in 1941 it
emerged as a Muslim Bank in undivided India. In 1947, when Pakistan came into
being Habib Bank shifted its operations from India to Pakistan. Since then it is
carrying on its operations with more than 1424 local and 52 foreign branches.
1.
The purpose of this report is to evaluate the performance of HABIB
BANK LIMITED (HBL), Bank Square Branch,Mingora. The
internship experience of the students of Institute of Management Studies is
a partial requirement for the fulfillment of their MBA Program. The
internship experience in the form of an internship report also carries an
attempt to explain domestic as well as international banking operations of
Habib Bank.
2.
The report aims at appraising the working of HABIB BANK LIMITED,

its functions and operation and also attempts to asses its performance.
Certain recommendations are presented for the potential areas of
improvement. An implementation plan of the recommended steps is given
at the end of the report.
HABIB BANK LIMITED is the oldest & the first bank in Pakistan. Its
name is generally considered for quality and reputation. It offers a broad
range of products to target different market segments.

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13
Main problems indentified during the course of internship are as following

a)
b)
Absence of proper information technology tools

Lack of efficiency of employees.
c)
Presentation styles of bank specially at retail level is not good.
d)
Management style is centralized.
The recommendations are as follow:

a) Establishment of Data bank at Zonal office, so that information
can be obtained in time.
b) Proper designing of the jobs should be performed similarly clearcut division of work to increase efficiency.
c) Special attention should be given to exterior/interior layouts,
cleanliness and office furnitures.
d) Decentralization of authority at different level to fasten the
decision making process.

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CHAPTER 1
INTRODUCTION OF STUDY
1.1
BACKGROUND OF THE STUDY
It is a common practice at universities during the completion of the masters and

bachelors program to attain practical experience in different fields. Institute of
Management Studies, University of Peshawar requires students to undergo a eight
weeks internship program. The selection of the firm is based on the choice of the
student. The institute requires an internship report based on the theoretical and
practical learning of the student. The concern of this report is to study and analyze
the performance of HABIB BANK LIMITED (HBL) in the banking industry of
Pakistan.
HABIB BANK LIMITED is considered to be one of the most prominent
and outstanding bank as far its reputation and progress is been concerned. It
was established in 1941 and since then, it has expended its network,
becoming the largest commercial Bank of the country. It offers different
products of services to its customers.
1.2
PURPOSE OF STUDY
The purpose of the report is to review and analyze the functions performed by
HBL in Pakistan. The report also explores the strengths and weaknesses of the
HBL and also gives recommendation where any improvement can be possible.
1.3
SCOPE OF WORK

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15
This report is concerned with the performance of the HBL Bank Square
Branch,Mingora. It enlightens the consumer banking functions at the Bank Square
Branch,Mingora however the financial analysis is based on the national
operations of the bank.
1.4
METHODOLOGY OF THE REPORT
The biggest source of information is my personal observation while working with

staff and having discussion with them. Formally arranged interviews and
discussions also helped me in this regards.
Another methodology used for the collection of information and data was based
on the two primary modes of data.
Sources of Primary data:
Personal Observation.
Interviews of Personnel.
Sources of Secondary data:
Previous internship Reports & HBL Annual Reports.
Brochures.
Books & Magazines.
Web sites.
1.5
SCHEME OF THE REPORT
The report is arranged in the following sequence.

SECTION
This section has one chapter.

Chapter 1:

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16
This is an introductory chapter which describes the background, purpose, scope,

methodology, scheme of the report & merits of the study.
SECTION
II
This section includes the review of HABIB BANK LIMITED. This section is
comprised of three chapters.
Chapter 2:
These chapters encompasses a brief history of banking, and over all banking
sector in Pakistan. It also tells about the history of HBL, its mission statement
and its role in the economy of Pakistan.
Chapter 3:
This chapter goes in detail study about the organizational structure, an overview
of Management policies, Marketing policies, HR techniques applied and the
different banking groups of
tells about
the
HBL and the products it offers, additionally it
Technological Framework i.e the equipments
used and
services offered at HBL Bank Square Branch,Mingora.

Chapter 4:
This chapter is the lengthiest chapter of the report. It precisely tells about the
several departments working at HBL Bank Square Branch,Mingora and their
functions. The departments discussed are Deposits Department, Advances
Department, Remittance Department, Bills Department, Clearing Department,
Safe Deposit-lockers Department, Sales Department, Cash Department and Data
Centers.
SECTION
III

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17
This section also have one chapter and it is about the analysis of HBL.
Chapter 5:
This chapter makes the critical analysis of HBL. Financial analysis is made on the
National performance of the bank, followed by a SWOT analysis of the HBL
Bank Square Branch,Mingora.
SECTION
IV
This section also contains one chapter.

Chapter 6:
This chapter gives the recommendations based on the critical analysis of the
organization.
SECTION
This section contains the conclusive chapter of the report.

Chapter 7:
This chapter is about the implementation plan that has been devised for HBL
Bank Square Branch,Mingora on the basis of the room of improvements.
1.6
MERITS OF THE STUDY
The study done will benefit the finance students in particular and all type of
Management students in general, because the financial analysis section of this
report comprehensively encompasses all respects of financial analysis.

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18
Furthermore, HBL Bank Square Mingora, may also benefit from the
recommendations made at the end of the report.

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CHAPTER 2
INTRODUCTION OF
HABIB BANK LIMITED
2.1 HISTORY OF BANKING
Banking in primitive societies also existed in some form. The greatest invention
of all times is considered to be the invention of wheel which made transportation
easy and transportation opened a gateway to business and exchange of goods
flourished. The initial business was done on barter which meant an exchange of
commodity for commodity. There is a myth also about the invention of money,
which tells that king Midas of Libya invented money in 800 B.C. Another
statement states that the king of Babylonian empire named as King Hummorabi in
1700 B.C. made all the rules and regulations of lending and borrowing and
interest etc. He wrote them on an eight feet stone in the center of the city. Two
famous temples are also remembered for the lending and borrowing in different
transactions. One was the temple of Ephesus and the second was known as the
temple of Delphi.
It is said that the first bank was established in Barcelona in Spain. Another
statement tells that Venice and Genoa were the hub of financial transactions
and the first bank was founded there in 14th century. The first public bank that was
formed was in Germany in later part of the time.
2.2 BANKING IN PAKISTAN

Before the partition of India and Pakistan in 1947, branches of British banks
dominated banking in Pakistan. The first domestic banking institutions emerged in
the 1940s, immediately after Pakistan's independence.These institutions include

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20
the Australasia Bank (today, Allied Bank Limited) , Habib Bank Limited, Muslim
Commercial Bank, and the National Bank of Pakistan (NBP). The NBP was
wholly government owned but prominent merchant families established the other
three. In 1948, the SBP was formed. It assumed the supervisory and monetary
policy powers of the State Bank of India. From 1960 to 1970, a number of
specialized development finance institutions (DFIs) such as Industrial
Development Bank of Pakistan and the Agricultural Bank emerged. These DFIs
were either controlled directly by the state or through the SBP, and were intended
to concentrate on lending to long-term projects in specific priority sectors.
Banking and Financial services sector in Pakistan comprises the commercial
banks and the non-banking financial institutions, including the development
finance institutions (DFIs), leasing companies, modarabas (Islamic Mutual Funds)
and investment banks. These are controlled and regulated by the State Bank of
Pakistan (SBP). Pakistan is in the process of adopting an Islamic (Shariah)
financial system, under which interest-based banking is not allowed. However,
this has not been made into a law as yet, and exists only on paper, and most banks
provide an anticipated profit rate in advance. Since 1990 the Government of
Pakistan has introduced various reforms in the financial services sector enhancing
the level of autonomy enjoyed by the SBP. The number of banks operating in
Pakistan has increased, which in turn has resulted in increased competition. The
banking sector, in general, has shown good progress during the last few years.
During previous five years, the combined total assets of domestic banks, showed
an average annual increase of 22 percent, while combined deposits have recorded
an increase of 27 percent per annum. A total of forty-six commercial banks,
including twenty-one foreign banks, are operating in Pakistan.
Additionally,
sixteen Investment Banks, twenty-nine Leasing Companies and fifty-three

Modarabas Companies provide a mix of financial services.
Opportunities for new foreign banks exist in consumer banking, corporate bonds,
investment banking, leasing and housing finance sectors.
Good reputation
enjoyed by the existing foreign banks will be helpful for new entrants. Some
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challenges, however, do exist in the form of weak economic conditions in

Pakistan and the turnaround possibilities in shape of privatization.
2.3 HISTORY OF HABIB BANK LIMITED

Habib Bank has a long and very rich history of deeds and sacrifices. All this has
been possible on account of sustained efforts. In 1841, a family business company
was established in the name of Khoja Mithabhai Nathoo in Bombay which was
dealing in steel within and outside the Indian Sub-Continent. In 1891, a young
Muslim lad Habib Ismail got employment, in this company. By dint of his ability
and sincerity to duty, at the age of just 18, he not only became share-holder of the
company but President of the Steel Market. His four children namely Ahmed Habib,
Daud Habib, Muhammad Ali Habib and Ghulam Ali Habib, after having educated
and grown up, were inducted in the business of the company and there-after the
name of the company was changed as "Habib & Sons".
Habib Ismail died in 1928 at the age of 53. After the death of their father, the
business was run by all the four brothers. Muhammad Ali Habib was younger and
ranked third in age but was the most intelligent among his brothers and a successful
businessman. Under his able guidance, the business made progress and expanded in
size. At that time there was no Muslim Bank in the Sub-continent. The Muslims
were a poverty-stricken and weaker nation. When Pakistan Resolution was passed at
Lahore, on 23rd March, 1940, the Quaid seriously felt the need of a Muslim bank. As
a result of the desire of Quaid-e-Azam, Habib Family established the first Financial
Institution of the Muslims with the name of "Habib Bank Limited" on 25th August,
1941. The establishment of a financial institution by a weak and subjugated Muslim
nation in the un-divided Hindu-dominated Sub-Continent was, in itself, a very great
achievement having far-reaching consequences.

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The first branch of Habib Bank started functioning on 30 th August, 1941 at

Muhammad Ali Road Bombay. The first account holder of Habib Bank was no less
than Quaid-e-Azam Muhammad Ali Jinnah. In those times in India, branch banking
was non existent, so like other sub-continental banks Habib Bank also has to carryout unit banking i.e. in which a bank has only one location (branch) to carry out its
operations. Since Habib Bank Ltd was founded at the advice of Muhammad Ali
Jinnah, so it was seen as a Muslim Bank by all other banks and financial institutions
in undivided India. And they tried their utmost to make it a failed project. For that
purpose they conjoined various stories about Habib Bank but the owners of Habib
Bank handled all the adverse situations professionally and proved their business
acumen.
After a few years of unit banking operations it was Habib Bank which started branch
banking with 34 branches at Bombay and outside it. In 1947 on the desire of Quaide-Azam, Habib family migrated to Pakistan and later on shifted the Bank's Head
Office from Bombay to Karachi on 7th August 1947, a week prior to independence to
play its role in the development of this newly born country. During the migration
process in 1947 many of its Muslim account holders put all their monetary assets
into it to be remitted to them in Pakistan. But due to the unfortunate incidents during
the course of migration in which hundreds of thousands of Muslims were killed,
many of the remitter and account holders could not claim back their amounts. And
even now so many accounts and other valuables in the from of gold, and silver etc
are lying at the bank's head office Karachi awaiting for claims to be lodged.
Habib Bank is the pioneer of Banking Industry in Pakistan. It has helped in the rebuilding of our country since its inception.
Since its inception in August, 1941, Habib Bank has played a memorable role in the
commercial and industrial life of Muslims of the Sub-Continent. It was the first

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Muslim financial institution that made its entry in the field of banking thereby
breaking the Hindu-British monopoly in this crucial sector.
After the inception of Pakistan on August 14, 1947 there were only two Muslim
Banks namely Habib Bank and Australasia Bank. The rest of banks were either
Hindu or foreign banks. Since State Bank of Pakistan was not founded so for the
first few months after the birth of Pakistan Habib Bank had to work as the banker to
the government and paid for its debts and liabilities. A few years later when a need
was felt to have a Muslim bank to help assist in international trade. Habib Bank
came to the fore and opened its branches in foreign countries with its first branch at
Colombo, Sri Lanka. On January 1, 1974 Habib Bank was nationalized by the
Bhutto government along with other banks. After nationalization its branch network
increased rapidly and so its assets and liabilities. At present Habib Bank has a very
large domestic branch net work, with 65 branches in all the continents of the world
making it a truly transnational company.
Habib Bank is the bank of many firsts in all the areas of banking. Habib Bank has
always introduced new vistas, be it the deposits side, the advances side, the
remittances side or social services to the community. Recently Habib Bank was the
first bank to offer a golden handshake scheme to its employees making the other
commercial banks to follow suit. Habib Bank has been a pioneer in providing
innovative banking services. These have included the installation of the first
mainframe computer in Pakistan followed by the first ATM and more recently,
internet
banking
facilities
in
all
the
domestic
branches.
Habib Bank has today 1424 branches, 48 zones, 9 regional general manager head
quarters and 2 subsidiaries. A part form these the banks overseas operations are
in 25 countries include 65 branches, 2 subsidiaries, 2 joint ventures and 2
representative offices.

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2.4 MISSION STATEMENT OF HABIB BANK LIMITED.
MISSION STATEMENT of HABIB BANK LIMITED
To be recognized as the leading financial institution of Pakistan and

a dynamic international bank in the emerging markets, providing our
customers with a premium set of innovative products and services,
and granting superior value to our stakeholders, customers and
employees.
OBJECTIVES OF HBL
Objectives are the ends towards which activity is aimed. These are the result to be
achieved. As a commercial bank the primary objectives of HBL is to earn profit
and maximize it as far as possible, keeping in view the society. The Habib Bank
Ltd has following main objectives.
To take measure to promote business in the country.
To procure beforehand self-employment schemes to the people.
To supply or provide employment opportunities to the people.
To help in development and industrialization of the country.
To earn profit for the bank itself and for its shareholders.
VALUES & POLICIES OF HBL

Policies & Values are general statements, procedures or
the understanding that
guide or channel thinking in decision making. It provides direction for action and
regularizes the decision making in certain circumstances. .A policy defines area
within which a decision is to be made, and ensure that the decision will be
consistent with, and contribute to , and objective.

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The HBL defines & practice its policies / values as :
Humility
We encourage a culture of mutual respect and treat both our team
members and customers with humility and care.
Integrity
For us, integrity means a synergic approach towards abiding our core
values. United with the force of shared values and integrity, we form a
network of a well-integrated team.
Meritocracy
At every level, from selection to advancement, we have designed a
consistent system of human resource practices, based on objective
criteria throughout all the layers of the organization. We are,
therefore, able to achieve a specific level of performance at every layer
of the organization.
Team Work
Our team strives to become a cohesive and unified force, to offer you,
the customer, a level of service beyond your expectations. This force is
derived from participative and collective endeavors, a common set of
goals and a spirit to share the glory and the strength to face failures
together.
Culture of Innovation
We aim to be proactively responsive to new ideas, and to respect
and reward the agents, leaders and creators of change.
References:
1.
Asrar H. Siddiqui. Practce and Law of Banking in Pakistan 5th Edition

Karachi: Royal Book Company. 1993

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2.
An internship Report on HBL by Mohd. Salman MPA, 1997-99, pp-4
3.
Mushtaq A Khan, Success Story of Habib Bank Ltd. And Presentation

Volume, 1991, pp 142-143
4.
An Internship Report on HBL by Amir Nadeem, MPA, 1998-99, pp5
5.
HBL, Presentation Volume Karachi 1993, pp 47
6.
Annual Report 2004, HBL. Pp 32-39

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CHAPTER 3
OVERVIEW OF HABIB BANK LIMITED, BANK
SQUARE BRANCH,MINGORA,SWAT
The HBL Bank Square Branch,Mingora is headed by the manager. He is the
responsible person for any activity that is happening inside the premises of the
bank. He looks over different issues in the bank. There are also sub managers
heading each department. The manager of the bank heads the front office and the
back office is headed by another senior member of staff. However detailed
description about the organization is presented here below & overall
organizational structure is focused rather than the branch`s structure.
3.1 ORGANIZATIONAL STRUCTURE
Organizing is a function of management. Organization is end result of organizing. So
organizing is a part of management that involves establishing intentional structure of
roles for the people to fill an enterprise. It is a process of breaking down the overall
tasks of the enterprise into individual assignments/ activities and then getting them put
together in units or department or groups along with the delegation of authority to a
manager of a unit/ department/ group.
Organizational structure implies a formalized intestinal structure of Roles/ position.
This is not the end in its self, rather mean which help achieve certain objectives.
A well-developed and properly coordinated structure is an extremely important

requirement for the successful operation of any organization. It provides the basis
framework with in which functions and procedures are performed. The
organization structure of Habib Bank is described on the next page.

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ORGANIZATIONAL STRUCTURE
of
HABIB BANK LIMITED
PRESIDENT
Board of Directors
Director
Director
Director
Director
Director
Director
Member
Member
SEVP
SEVP
Clerical Staf
N.C.S.
CHAIRMAN
Member
Member
SEVP
SEVP
OGI
Executive Committee
Member
Member
SEVP
OGII
SEVP
E.V.P.
S.V.P
V.P.
A.V.P
OGIII
3.2 MARKETING POLICIES:

Marketing is the process of playing
and executing the conception, pricing,
promotion and distribution of ideas, good and services to create exchanges that
satisfy individual and organizational objectives.

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HBL also adopts certain marketing techniques to enhance the image of the bank.
Most of the marketing takes place through various deposits mobilization schemes
through advertising in news paper and other media and there is more emphasis on
customer services to have more satisfied client who can recommend to their
associates and friends. The HBL has recently launched a strong marketing
campaign through the electronic media(net, television etc) which encompasses the
different products offered to different segments.
3.3 MANAGEMENT POLICIES:

Managerial policies, are those, which deals with the management issues and
formulation of strategies.
HBL is headed by a president, then there are 5 banking groups, each one headed
by a group executive. Each group executive has the client responsibilities for his
group. Similarly these group are also
responsible for developments in their
respective fields. This new structure was developed 1997, prior to which bank
was working on geographical basis . According to this structure affairs of Habib
Bank are controlled though President and Members Executive Committee who are
normally Senior Executive Vice Presidents of the Bank based at head office. Each
province has a provincial head quarter headed by provincial Chief and assisted by
regional general managers. Each provincial headquarter control branches in their
area of jurisdiction through circle offices. Each circle office supervises various zones
headed by zonal chief comprising 25 to 40 branches in each zone.
.
3.4 HUMAN RESOURCE MANAGEMENT / POLICIES:

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Human Resource Management has always been the key factor in an organizations
achievements. The employees of an organization forever determine the route of
success for the business. The primary concern of HRM has been on the subject to
mould the personality of employees in a manner which formulates the individual
goal of the staff into the organizational objective.
HBL has devised its own policies for the recruitment, training and motivation of
employees.
3.4.a RECRUITMENT OF STAFF

Recruitment is the development of a pool of applicants for a job. The selected
ones serve the organization with their skill and qualification.
The requisites of HBL recruitment policy are as follows:
Qualification requisite is Masters in Business or Public Administration,
Management Sciences, and Honors/first degree from International
Universities.
3rd Division or D- Grade in any examination after Matriculation onwards
of is unacceptable.
26 years is the age requirement.
Method of Recruitment
HBL has started a banking course in association with Institute of Business
Administration (IBA), Karachi. When the graduates of IBA completes their
degree program, they find a number of vacancies at HBL waiting for them. The
interested candidates apply against the seats. A few steps are involved in the
recruitment process of IBA Graduates.
The interested candidates are called of for an interview at the Head Office
in the initial process of recruitment.

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The committee including the Manager of Retail Banking services and

Treasury manager evaluates the candidates on the basis of personality,
communication skill and educational qualifications.
Short listing restricts a small group of candidates selected for the final
interview. The committee including Chief Manager Administration seeks
the potential candidates, evaluating their subject knowledge, analytical
experience, general know how and particular information about the job.
The successful candidates are enlisted for the job.
The selected candidates go through a medical check up as well. After that
they are engaged in a 3 months service training program. This enables
them to get acquainted with all the functions in the bank. Their
appointment as Grade 7, Sub Managers is made eventually.
3.4.b TRAINING AND DEVELOPMENT

Training enables the employees to explore their potential; development polishes
that talent and skill, as well as it seeks the opportunities to use their expertise
professionally. HBL exercise many kind of training and development programs
for the employees. There are three staff training centres of Habib Bank in Pakistan
located at Karachi, Lahore and Islamabad. These centres are called Management
Development Institutes (MDI). Every MDI has a faculty of staff with the principal as
its head. The teaching staff are called directing officers. The principal is always a
person of the level of Vice-President, with sound knowledge of all aspects of
banking. The directing officers are well versed in their fields of specialty.
The various training programmes available at Habib Bank Management
Development Institutes.
Basic Banking Training.

Branch, Mingora)
32
Training Course In International Banking.
Short Courses Offered.
Basic banking training

This is the most important training programme available, with a duration of six
months. This training is imparted to the newly recruited officers in Grade III & II.
Apart from them the newly promoted officers from clerical cadre also get this basic
training.
In this programme the entire operations of domestic banking are explained to the
trainees, in detail. The various subjects/courses taught in this program are, (1)
Deposits (2) Advances (3) clearing (4) Bills (5) Remittances (6) General
administration and staff matters (7) Business communication (8) Accounting
The main theme of this training course is that about 30 trainee officers are selected
for a class. All the above mentioned subjects are not taught at a time but are taught
one after another. For a week or two a subject is taught theoretically in the class
room and then all the trainee officers are sent to various branches of the bank where
they get a practical touch of all those taught in class-room. And the same method is
repeated for all the subjects. At the return of trainees from branches, they are put to
test by taking their examination. Question papers are mostly objective type, having
one hour time duration to solve. All the papers carry a maximum of 100 marks.
Marking of the papers is done not by a single person but every directing staff is
responsible to mark his own section of the paper, which is normally having 25
marks. This is done to keep the examination system transparent. Then the marks of
papers are totalled and result declared. Answer sheets are handed-over to the trainees
to look into the mistakes they have made and they are allowed to raise objections if
they do not agree with the marking of their papers.

Branch, Mingora)
33
Those students who get failed in three subjects are sent back to their places of
posting and are not considered fit for training. If they are fresh recruits they are sent
back home during their probation period.
Pass percentage in examination is 60%. Those trainees who secure 70% or above
marks are awarded one grade increment. Trainees getting first and second position in
the group are awarded three and two grade increments respectively. At the end of six
months training there is a passing out ceremony; and then all the trainees report back
to their zonal offices for further placement in various offices and branches.
Training course in international banking

This is a three months training course in foreign exchange and International
Banking. The first five trainees from various groups of basic training are selected for
this course. In this programme only the dynamics of international banking and
international trade are touched upon. The main topics of this course are (1) Imports
(2) Exports (3) Inward remittances (4) Outward remittances (5) Foreign currency
deposits.
These trainees after getting theoretical knowledge of the subject for a week or two
are sent to foreign exchange dealing branches to get practical training of whatever
they have learnt in the institute.
After completion of the said course trainees are posted in various foreign exchange
dealing branches.
Short courses
Apart from the above, various short and refresher courses on various topics/subjects
are arranged by MDIs throughout the year. Their time duration varies from three to
15 days. These course can be
Branch, Mingora)
34
Short/refresher course on advances for officers dealing in advances.
Short/refresher course in foreign exchange for the personnel working

in foreign exchange department.
Short/refresher course on audit, for internal auditors of the bank, in

which various ways and means are taught to the auditors, how to
carry out a successful audit of a branch.
Short/refresher course for managers of branches to refresh their

memories about the modus-operandi of how to better manage a
branch.
Short/refresher course for staff-officers and admin. officers, on how

to manage human resources of the bank in a better way.
Short/refresher course on business communication and presentation

skills.
Seminars on various new developments in banking industry, like new

currency exchange rate system.
Seminars on the introduction and process-flow of various new

products of Habib Bank like Carore-Pati Deposit Certificates,
Muhafiz traveller cheques, Visa Cards,ATM etc.
Seminars on customer service, and complaint handling.
Seminar on cash management.
These short-courses and seminars are held by Management Development Institutes

in a continuous manner, and officers from various branches/offices are constantly
coming to and going form MDIs.
Besides this the MDIs arrange training courses for clerical and non-clerical staff in
which various functions of the clerical and non-clerical staff are taught; how to deal
bank's customers in a better way. The non-clerical staff are trained how to give

Branch, Mingora)
35
courteous service to staff members and customers and how to take care of security
of branch premises.
Apart from MDIs, zonal and regional offices also arrange short training courses at
local levels, on various topics/subjects, according to the needs and requirements of
the zone and region concerned.
3.4.c TECHNIQUES OF TRAINING

All the known and recognized techniques of pedagogy are used while imparting
training to the trainees at Habib Bank Management Development Institutes.
-
Lectures - The directing staff deliver lectures to the trainees in class

rooms, on daily basis. Time duration of a lecture is 1 hour. There
are four lectures a day.
Question/Answer - Trainees are encouraged to put questions at the

end of each lecture.
Presentations - Trainees are called upon to present various

topics/subjects before the class.
-
Projectors - Projectors are used to explain intricate problems like

exchange rates.
On job training - Trainees are sent to branches to practice what has

been taught to them in class room.
3.4.d MOTIVATION
Motivation refers to forces that energize, direct, and sustain a persons efforts. A
highly motivated person will work hard towards achieving performance goals.
With adequate ability and understanding of the job, such a person will be highly
productive.
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36
Diverse techniques are exploited at HBL for the motivation and performance
appraisal of employees. The procedures are as follows:
Audit Report
These reports are prepared by auditors and are sent to the Head Office for
performance appraisal.
Salaries
There is no preset pay scale in HBL Many people obtain dissimilar salaries even
though they had been chosen for the same batch under similar conditions with
identical qualification.
House Rent Allowance
House Rent allowance is paid to all categories of staff This allowance is not
payable to those who are provided with accommodation by the bank.
Sanctions
Punishment may be conferred in case of misconduct by halting promotion and

bonus. Its an efficient means for improving the performance of the employees.
Inspections
Inspection teams are sent from time to time from the Head Office to check the
performance of various employees and identify any irregularities to take steps
accordingly.
Medical Allowance
The Bank compensate the expenses of medical advice and medicines, claimed by
the employees for themselves and their dependants up to a maximum amount of

Branch, Mingora)
37
Rs,2500. On production of medical certificates by employees indicating payment

made by him the bank compensate the charges.
Promotion
Promotion is chiefly on the base of capability, aptitude, talent and performance of

the employees.
3.5 THE DIFFERENT BUSINESS UNITS OF HBL

3.5.1 Retail Banking Group:
1.a Consumer Financing
Consumer financing is relatively new phenomena & is still in infancy.This area of
financing is currently enjoying the high priority among the financial institutions in
the country.The expansion of consumer financing in the past two years has been
an important factor in driving the overall economy forward. The overall demand
of durables, housing, automobiles units etc has increased & as a result the
production level has increased which has led to the creation of greater
employment opportunities.
HBL has taken a lead role in this segment as it continues to capture additional
market shares. In this endeavor HBL has developed a complete range of products
to meet the requirements of all the segments.
This segment of HBL include the following products
Auto Financing.
House Financing.

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38
Consumer Loans. (Flexi-Loans,Top-Up-Facility,Running Finance etc)
Consumer Durable Finance. (Life Styles, Fast Transfer etc )
Balance Transfer Facility.
Internet Banking.
Online Banking.
ATM/Debit Cards. (Visa Cards,Value Cards,Auto Cash, iCards)
1.b Agriculture Financing

In this sector HBL has disbursed over Rs 13 billion during the year & has proved
the largest contributer to agriculture financing in Pakistan. Through the bank`s
wide network of branches of which 52% are located in rural areas, the bank
enhanced its products offering to retain its lead position in the market. The bank
offers products to support all facets of this industry. Specially it provides facility
for a period of 3 years instead of financing being confined just to harvest season,
in this way farmers find convenient to this condition & this has a wide
acceptability in the market. HBL intervention has enabled the industry to develop,
by bringing within the reach of thousand of farmers access to modern farming
technology, which was not previously available to them.
This unit of the HBL offers the following products
3 year Revolving Finance
Tractor Lease Finance
Livestock Finance
Fish Farming Finance

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39
Combined Harvester Finance
1.c Commercial Banking

The Commercial Banking division serves clients mainly comprising of mid sized
businesses that consist of manufacturers, traders , importers & exporters of
engineering products, sports goods, & textile made ups. Commercial Banking
operates through 18 branches which are spread throughout the country. Over
1500 middle market customers have benefited from banks dedicated support.
Overall HBL remains a market leader in this sector & has a total disbursements of
over Rs 19 billion. HBL stands side by side with the Govt to promote this sector.
SME Financing
Long Term Fix Assets Finance
Trade & Working Capital Finance
Import & Export Finance ( Receivables, Pre & Post Shipments)
3.5.2. Corporate & Investment Banking

HBL has an integral development partner for corporates in Pakistan since 1947.
The Bank has remained at the forefront of financial support by assisting in the
development of the country industrial sector & the fuel and energy sector. In the
early days of WAPDA, HBL provided support by establishing Letters of Credits
and providing capital of millions for its several projects such as Warsak Dam,
Mangla Dam, Tarbela Dam. The bank has continues this tradition & today is a key

Branch, Mingora)
40
partner not only in Govt sponsored projects but also in rapidly developing private
projects such as telecommunication, power, oil & gas & construction.
The Corporate division operates in 10 branches & it serves over 500 client.
Industrial & Project Finance
Structured Trade Finance
Capital Market Investments
Cash Management Services
PC Banking
3.5.3. International Banking

HBL has the largest international branch network with presence in 25 countries.
HBL is synonymous with Pakistan in the international banking arena.
The international banking division of HBL is known as active trade finance
facilitator for Pakistan`s trade partners. Over the year HBL has provided a one
window financing facility to meet local & foreign currency requirements for
corporates in Pakistan. In the year 1990 HBL was the first Pakistani bank to start
dollar financing for the needed imports, its was such an era where there was a
shortage of foreign exchange in the country.
Home remittances form an integral part of the country`s foreign exchange
reserves & the bank has devoted considerable efforts to enhance the inflows in a
secure manner. In this regard the bank has introduced the IBTS(inter branch
transaction services) at the dedicated branches that ensures timely credits to the
beneficiary accounts. In the year 2004 ,out of $ 3.9 billion, ,$ 799 million

Branch, Mingora)
41
remittances was through HBL branches. In this way HBL has proves a true global
relationship to its corporate, institutional and individual clients.
Trade Finance
Retail / Consumer Banking
Multi-currency Payments & Clearing Service
Home Remittances
Treasury & Investment Services
3.5.4. Technology
HBL remains committed to service its clients with banking system based on state
of art technology. Over the past years the bank has taken strategic decision to
concentrate on upgrading the domestic & international operations. More than US$
15 million have been spended on sourcing and implementing the MISYS system
throughout the HBL network. The system helps to centralize data from HBL`s
1424 domestic branches to the head office. This struggle also have benefited the
clients to access their funds through the 119 ATMs which are located at the
different branches of HBL across Pakistan. HBL is also the member of the 1
Link ATM switch network that ensures the customers to access 508 locations
throughout the country.
Centralized Data Processing

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42
VPN Connectivity of the 1424 domestic branches
State Of The Art Banking (-trade finance treasury branch automation

CRM)
3.5.5. Corporate & Social Responsibility

HBL is a responsible corporate citizen and is conscious of the role it needs to play
in the field of social development, such as health, education & sports etc. HBL
actively supported the recently victims of the earthquake. It has been an active
sponsor of sporting event since its inception. In 1969 the bank formed its own
Hockey team.
In 1975 the bank established its separate sports division with the specific aim of
participating in the sporting events at domestic and international level. Over the
years HBL has actively supported sports such as Cricket, Hockey, Table Tennis,
Football, Badminton & Golf.
The contribution of this unit are in the fields of
Education
Health & Medical
Environment
Sports
3.6 TECHNOLOGICAL FRAMEWORK AT HBL

HBL has been trying to cope up with competitors like Citibank, Bank Alfalah,
Faysal Bank and ABN Amro Bank in the technological field since a long time.

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43
New banks are emerging and with modern day equipments the atmosphere is
getting more competitive than ever. HBL has also become online, which means
that all the branches of HBL access one central database and customers can
retrieve information of other branches from the local ones. The overall
computerization system at HBL comprise of the following equipments.
3.6.1 Equipments Used At HBL

A diverse variety of useful machinery is brought into practice at HBL to help the
employees of different departments in handling varied tasks. Some of the
equipments provided to the staff are as follows:
POS Machines
POS stands for Point Of Sale. This machine is used for the credit cards.
Whenever sales are made on credit cards, it is used to record the sales.
Validator
This is a small sized electronic device used for checking the dollar currency
whether genuine or fake The Bank is mostly in the business of currency. Validator
makes the job easier for the cashier, because he is always involved in money
payments and receipts.
FAX Machine
Fax machine is used to communicate the messages from one Bank to another, for
sending important letters or any other, documents for correspondence.

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44
Auto Telex
This machine has increased the efficiency of service. In 42 hours message or telex
reaches the required destination. But this arrangement is only within the HBL
Branches not with other banks.
Scanner
Bank makes the use of scanner for verification of the customers signatures in the
computers. The customers signatures are scanned with the help of this appliance,
so that signature can be confirmed every time customer makes transactions in his
account.
ATM Automated Teller Machine
This machine is used by the customers to make transactions in their accounts even
after banking hours.
Signature Card
This instrument is used to keep a record of the customers signature. This card is
filled by the customer at the time of account opening. It consists of the customers
name, account number, amount, and specimen signature. All the signature cards
are kept in the stationary in the order of account numbers. So whenever the card is
needed for any purpose, it can be easily found.

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References
1.
Hienz Weihrich and Harold Koontz. Management, 10th Edition ,

New York: Mc. Graw Hill Inc. 1994: pp-122
2.
Ibid, pp-123
3.
HBL Annual Report 2004, pp.21--30
4.
Joel R. Evans and Barry Borman. Marketing, 4th Edition , New York; Mac
Millan Publishing Company, 1990, pp-8.
5.
Naz, Nadia, Internship Report on HABIB BANK LIMITED, Department

of Public Administration, IMS, Section 1999, p.30

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46
CHAPTER 4
DIFFERENT DEPARTMENTS OF HBL
Every organization is divided into definite departments. Each department perform
different kind of job and requires staff with specialized skill to handle the
particular job. This increases the efficiency of workers and makes the job of the
employees easier.
There are several aspects on which departmentalization in an organization can be
based. The division can be done on the basis of functions, product, customers or
geographical location.
The Bank Square Branch,Mingora of HBL is comprised of several departments.
The division is made on the basis of functions and job they perform. Hence it can
be
concluded
that
HBL
has
adopted
to
the
policy
of
functional
departmentalization.
The main departments at the HBL are mentioned below. Also included is the
detailed study at the specific function these departments perform.
1) Deposits Dept.
2) Advances Dept.
3) Remittances Dept.
4) Bills Dept.
5) Clearing Dept.
6) Safe-deposit lockers etc Dept.
7) Sales Dept.
8) Cash Dept.
9)
DataCentre

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47
4.1 DEPOSITS:
Accepting deposits is one of the two basic functions of a bank. The other being
advances. So the mainstay of Habib Bank as like other banks is deposits. Because
with out deposits any bank can not even think of its existence. Deposits is a trust
reposed in a banker by the deposit holders who are commonly the people at large.
With the initial deposit of money by a person with a banker the Banker-customer
relationship comes into being. To establish this relationship one has to open an
account with a bank.
Opening of an Account
This is the most important and basic contract between a customer and a banker. A
customer offers money to the banker to be kept as a deposit and the banker accepts
that offer and a contractual relationship develops. To open an account with Habib
Bank one has to deposit Rs 5000/- as initial deposit. Below this one can not open an
account in HBL. Previously even Rs. 100/- were enough to open and maintain an
account with Habib Bank but the new management after assessing the book keeping
cost has come to the conclusion that it is not economical to open and keep an
account with a balance less than Rs. 5000/-. To keep an account alive and earn profit
on it one has to retain an average balance of Rs. 5000/-. If the average balance is less
than it, Rs. 150/- will be deducted as incidental charges after every six months.
To be able to open an account with Habib Bank one should be sane, major (18 or
more years of age), solvent and not debarred by law from opening a bank account.
The account opening form is a very simple document wherein one has to put in his
signature, and has to arrange for his introduction to the banker through an old
customer of the bank.

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48
After depositing money and signing the account opening form a cheque book is
issued to the account holder through which he can withdraw his money from the
bank as and when he requires. The form for ATM is also filled by the customer, but
it is optional. An account holder can use this advantage any time with a Rs 200
charge per year.
Accounts can be of three categories.
a
b
c
Current account
Saving account
Fixed deposit account
a) Current account is zero profit account and is mostly opened by businesses. There
is no limit/bar on withdrawal of money from a current account. Deposits in current
account are considered demand liabilities of a bank, because such deposits can be
withdrawn at any time, without any prior notice to the banker.
b) Saving account is a profit bearing account. Profit, as certain percentage is given to
saving account holders, after every six months. Saving deposits of a bank have both
the characteristics of current and fixed deposits, i.e. some portion of these deposits is
demand and other portion is time liabilities . An account holder can draw cheque on
his saving account freely but not like a current account. A major chunk of the
deposits of Habib Bank are saving deposits. The current profit rate on saving
accounts is 7% per annum, which can increase or decrease with profitability of the
bank's operations. Saving accounts are called Profit- Loss Sharing (PLS) account,
meaning that the account holder will take the profits and incur/bear the losses if the
bank earns profits or makes losses, respectively. Uptill now Habib Bank have never
declared loss and is continuously giving profits to its account holders.
Term deposit accounts as the name indicates are fixed for a certain period of time.
They are considered as the time liabilities of a bank as the banker knows as to when
a certain deposit is going to be withdrawn. Fixed deposits can be of various types
depending upon the nature and time duration of deposits. Time duration of fixed

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49
deposits at Habib Bank ranges from one week to five years. Fixed deposits with time
duration and profit rates are shown here under.
1.
Short Notice Time Deposit (SNTD-7): Time duration 7 days profit rate 6%
2.
Short Notice Time Deposit, (SNTD-30) 30 days, 7 %
3.
TDR (Term Deposit Receipt) (3 months) profit rate 8%
4.
TDR (6 months) P.rate 9%
5.
TDR (12 months) P.rate 10 %
6.
TDR (18-24 months) P.rate 10.50 %
7.
TDR (30-36 months) P.rate 11 %
8.
TDR (42-48 months) P.rate 11.50 %
9.
TDR (60 months & above) P.rate 12.50%
Profit on these deposits is paid out on six monthly basis, while the principal amount
is paid at maturity.
Khas term deposit receipt (KTDR)

It is like a term deposit receipt but profit is paid at the time of encashement, and not
on six monthly basis. The rates of profit are as like TDR.
Golden investment scheme (GIS)

The life period of these deposit certificates is three years. The main feature of this
scheme is that profit is paid on monthly basis, and hence the effective rate of profit is
increased.
Monthly income scheme (MIS)

Life period of these deposit certificates is three and five years. As its name indicates,
profit is paid on monthly basis, and with this the effective rate of profit is increased
from the actual rate i.e. 14.5%.
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Carore Pati Deposit Certificate

The new craze in deposit market is the recently introduced product, the Carore Pati
Deposit certificates. This product has set new standards of popularity and success. It
is one of the many firsts by Habib Bank Ltd in the deposit sector of banking. It is a
highly innovative product, no one has ever thought of it before. The name of the
product "Carore Pati" is at the same time highly expressive and attractive. This
product has driven the depositors and savers' market crazy. And everyone is trying to
become "Ratoon Raat Karore Pati".
Habib Bank is carrying on a very aggressive and effective advertising strategy using
electronic and print media at the same time. This product is so heavily advertised
that almost all the people having bank accounts anywhere in Pakistan in any bank
are aware of its attractive features.
The target market for this product is the middle and upper classes of society. People
who can afford to part-away with Rs. 50,000/- of their savings for at least 3 months
can avail of this product. The salient features of this product are
-
Face value of Carore Pati deposit certificate is Rs. 50,000/-
Time duration is 3, 6 and 12 months.
Rate of profit is 6, 7, 8% respectively.
Lucky draw is held on every 15th day of each calendar month.
A certificate purchased on or before last of preceding month is eligible to be

included in the up coming draw.
Bumper prize is Rs.10,000,000/- grand prize is Rs.500,000/- and a number

of other small prizes which total comes to 67 prizes.
Habib Bank has received deposits of Rs. 20 billion under this scheme. Seeing the
amazing results of this product other banks have also started similar schemes, like
UBL Caramad, UBL Zaramad and MCB Malaamal.

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51
Due to these schemes national savings have increased and liquidity problem of
commercial banks solved resulting in easy availability of credit to the traders and
businessmen.
4.2 ADVANCES
To advance loans and to finance businesses and in return to earn mark-up is the main
operational activity of Habib Bank. Deposits are a liability on which a bank has to
pay profit to its account holders. Unless and until these deposits are advanced in the
form of loans to traders, these are a burden for a bank.
Advances / finances can be of two types.
Fund-based financing
Non fund based financing
Fund-based Financing
In this case funds of a bank or financial institution are involved or in other words we
can say that there is an actual outflow of cash from the bank. It has various types.
(i) Running finance (ii) Demand finance (iii) Over draft (iv) Purchase and
discounting of bills
Running Finance
This is the most common type of finance availed by businessman to meet their
working capital requirements. It is extended for a period of one year. Securities
against such finance are normally hypothecation of stock, mortgage of property etc.
The rate of mark-up is 50 paisa per 1000 per day which comes to 18.25% per
annum. A certain limit is sanctioned by the bank upto which the trader can withdraw
funds from his finance account, for which a cheque book is issued to him.

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52
Upon sanctioning of the loan the borrower withdraws funds from the Running
finance (RF) account according to his daily requirement and is free to deposit the
funds back when he is no more in need of these, thus bringing back the outstanding
balance in the account to the minimum possible. Mark-up is applied on the resultant
balance of each day. The advantage of such finance for a trader is that he can use
funds of the bank upto his need level and can deposit surplus funds thus saving
himself from the extra mark-up. Mark-up on R/F account is applied on monthly
basis and recovered on quarterly basis.
Demand Finance
This finance is also sanctioned for a period of one year. In this case the entire
amount of finance is credited to party's personal account by debiting finance
account, and mark-up is applied on the entire amount of finance. Installments are
fixed to be recovered on monthly basis, along with mark-up.
Temporary Running Finance
This is also a common form of bank lending when a borrower requires temporary
accommodation, he is allowed to withdraw on his account in excess of the balance
which the borrowing customer has in credit and an overdraft occurs. This
accommodation is generally against collateral securities, when such securities are
present it is called secured overdraft and when no securities are there, it is called
clean overdraft. The borrowing customer is in advantageous position because he has
to pay mark-up only on the balance outstanding against him.
Purchase & Discounting of Bills
Habib Bank purchases outstation cheques from its reliable customers. These cheques
can be in the form of clean bills drawn on an account or trade-bills accompanied by
documents of title to good called documentary bills. Clean bills and documentary
bills of exchange are paid to the customer in full or discounted (as per arrangement)

Branch, Mingora)
53
and mark-up is applied on the amount disbursed upto the day when these cheques or
bills are realized.
Non-fund-based Finances
In this case funds of the bank are not involved rather the bank undertakes to pay upto
a certain amount at the happening of an event. In other words it is a contingent
liability of the bank.
Letter of Credit
Documentary letter of credit is a bank's written undertaking given to the exporters
for payment of certain sum of money on behalf of the importer provided the exporter
tenders to the Bank or its overseas agents the specified documents within a specified
period in accordance with terms of L.C. The L.C. may be Inland as well as well as
Import at sight or usance basis. L.C. will be called restricted if specific Negotiating
Bank is mentioned therein, otherwise it will be considered as unrestricted and freely
negotiable in country of beneficiary.
Sight L .C
In this form of credit, the exporter draws a sight or demand draft payable at the
counter of advising Bank or the Bank specified in teh letter of credit. The draft is
paid on presentation provided that all the other terms and conditions of L.C. have
been complied with. In this case the negotiating Bank can either reimburse itself or
demand reimbursement from opening Bank depending upon terms of L.C.
D.A. Or Usance L .C
Where L.C. stipulates payment to the exporter upon maturity of bills of Exchange, it
is called usance credit. In this form of credit, exporter draws draft for particular
usance i.e. 30, 60, 90 or even longer period payable upon either the correspondent
Bank or opening Bank. However, the exporter can get the bill discounted at fine

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54
rates of presentation of shipping documents at counter/or after acceptance of draft by

opener as per terms of Letter of Credit.
SECURITIES
Sight LCS
1.
Cash Margin
2.
L.C. application
3.
Personal guarantee of third party of from directors in case of limited

companies.
USANCE L/C
1.
Cash Margin
2.
L.C. application
3.
Accepted Bills of Exchange
4.
Collateral acceptable to Bank
5.
Personal guarantee of third party or directors in case of limited companies.
LETTER OF GUARANTEE
A Bank Guarantee is a legal document which may be defined as an irrevocable
undertaking of a bank to pay to the beneficiary of the guarantee a certain amount of
money if the expected result of a transaction does not occur or in the event of nonperformance of a contractual obligation of a third party by specific time. However,
with a bank guarantee, the bank does not guarantee the success of the transaction
itself. guarantees are as a rule, subject to the laws of the country in which the issuing
bank is located.
Salient Features
It is a non fund based remunerative facility.
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The parties involved are: (1) The beneficiary (2) The principal (3) The guarantor
(Bank) LG's categorized as
i. Demand Guarantees
ii. Conditional Guarantees
Securities for Advances

Habib Bank obtains following types of securities from the borrowers while
advancing loans. (1) Hypothecation (2) Pledge (3) Mortgage (4) Guarantee (5)
Charges (6) Lien
Hypothecation
In hypothecation the property in goods is charged as security for a loan, from the
bank but the ownership and possession of goods remain with borrower. It is a
weaker security and is mostly accepted for running finances, as a certain percentage
of loan amount. To create this charge a letter of hypothecation on a stamped paper is
signed by the borrower.
Pledge
Section 172 of the contract Act 1872, defines a pledge thus"The bailment of goods
as security for payment of a debt or performance of a promise is called pledge". In
case of pledge the ownership remains with the pledger, but the pledgee has the
exclusive possession of property until the advance is repaid in full, while in case of
default the pledgee has the power of sale after giving due notice.
Mortgage
Section 58(a) of the transfer of property Act, 1882 defines that, "A mortgage is the
transfer of an interest in specific immovable property for the purpose of securing the
payment of money advanced or to be advanced by way of loan, and existing or
future debt, or the performance of an engagement which may arise to a pecuniary
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liability". In Habib Bank Ltd., Peshawar two types of mortgages are in practice.
Legal mortgage and equitable mortgage. The main difference between the two is that
the prior one is to be registered with the registrar of properties even if the amount is
less than Rs.100/- and this requires a handsome amount of fees to be paid to the
registerer office while in equitable mortgage the mortgagor deposits title deeds of
properties with the banker, with the specific purpose of creating a mortgage. Here no
fees are to be paid to the government. In Habib Bank, for the facility of borrowers,
certain portion of property is mortgaged by way of legal mortgage and the rest by
equitable mortgage thus saving the borrower from paying extra fees to the registrar
of properties.
Guarantee
Section 126 of the contract Act 1872, defines guarantee , "A contract to perform the
promise or discharge the lability of a third person, in case of his default" when an
applicant for an advance can not offer any tangible security he is asked to provide a
guarantee, which can be personal or third party, to protect the bank against any loss.
Charge
It is a right of payment out of certain property. The charge is created by the act of
parties i.e. the borrower and the bank. Charge on property is created when extending
loans to private or public limited companies, on company's assets. Such a charge is
registered with registrar of companies with in 21 days of creation of charge.
Lien
Lien is a right of the banker to retain the property of the borrower until the claim on
the property is paid. Banker's lien is applicable to all documents or properties which
come into the banker's hands in the course of his normal business as the banker to
his customer. Lien is marked on financial instruments pertaining to the borrower at
the time of advancing a finance facility.

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4.3
REMITTANCES
It denotes transfer of money from one place to another. Banks are the most important
players of money market, and one of the characteristics of a developed money
market is that transfer of funds from one place to another should be cheap and
speedy. Habib Bank has a very wide network of branches throughout the length and
breadth of country, that is why it has got an edge over other commercial bankes in
Pakistan in the field of remittances. Several modes of remitting funds are available at
Habib Bank which are explained below:
Demand Draft (DD)
It is a bill of exchange in which a branch of the bank orders another branch of the
bank to pay a certain sum of money to the order of a person. Demand draft is the
classical way of remitting funds from one place to another. For this purpose remitter
comes to a branch and fills up a request from for the purchase of DD, in which he
mentions the amount of money, name of the beneficiary and place of beneficiary and
puts his signatures. The branch officials after charging bank commission, withholding tax and excise duty, hand over a printed demand draft with the particular of
beneficiary given in and signed by two attorneys of the branch.
The remitter after receiving the same, sends it to the beneficiary through mail or if
he himself is a beneficiary takes it with him to the city where he is going and after
presenting it at the counter of the drawee branch receives payment. The drawer
branch after handing over the draft to the purchaser prepares an advice and mail it to
the drawee branch, giving particulars of the beneficiary therein. In case of a draft of
Rs.25000/- or more, test is applied and written down on the advice which is a coded
message and testifies the bonafides of the instrument. In case of a draft of Rs.
50000/- or more instead of sending advice through mail coded telegraphic message
is conveyed to the drawee branch.

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Telegraphic Transfer (TT)

It is a much more faster way of transferring funds from one place to another. In this
case all the other formalities are just like a demand draft, but in the application form
the purchaser specifies that he wants a telegraphic transfer. No demand draft is
issued but a TT message is prepared in coded form and transmitted to the drawee
branch through telegraph office. A TT message is invariably tested and coded. For a
TT an extra Rs. 50/- are charged by the bank, being cost of the telegraphic message.
Mail Transfer (MT)

It is almost same like the other two modes of remittance. The only difference is that
the bill of exchange issued by the bank is not handed over to the purchaser but sent
through mail by the banker himself. MT's are normally issued for the customers
who has given standing instructions to remit funds to a beneficiary on regular basis.
Muhafiz rupee traveller's cheques
It is yet another innovative product of Habib Bank Ltd, in the field of remittances.
The name Muhafiz indicates the safety in carrying these travellers cheques instead of
cash. These cheques can be purchased free of cost and is the easiest and cheapest
way to transfer funds.
These cheques can not be purchased by firms, companies and other legal bodies.
Only individuals can enjoy this facility. The strategy behind such decision is to
attract individual and walk-in customers towards the bank.
Although Habib Bank do not charge any commission but due to this product it is
getting several other benefits, which are:
-
Cash inflow to due sales of Muhafiz.
Contact of the bank with the people who are not regular customers

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a positive image build-up.
This product was for the first time introduced by Habib Bank Ltd. So other
commercial banks are following suit.
To increase its market share Habib bank has introduced a new scheme of prizes for
the purchasers of Muhafiz Travellers' Cheques. A total of 1000 prizes are available
ranging from tape-recorder to 1600 CC car.
The sale and purchase of Muhafiz Travellers' Cheques is very easy and consumer
friendly. One has just to sign an application form and hand over cash to the banker,
and the banker will issue a Muhafiz T.C. These cheques are available in
denomination of 100, 500, 1000, 5000, 10000, 25000, 50000, 100000). The
purchaser had just to sign in the cage given on the face of cheque. When Muhafiz
Travellers' Cheque is to be encashed at another branch counter, the purchaser has to
countersign in the other cage given on the face of the cheque and he gets cash from
branch counter.
Muhafiz Travellers' Cheque can be purchased from 700 branches and can be
encashed at 1700 branches of Habib Bank throughout Pakistan. Muhafiz Travellors'
Cheque has given immense relief to traders from the tension of carrying cash with
themselves from one city to another.
4.4
BILLS DEPARTMENT
A banker acts as an agent to its customers. In this agency arrangement the banker is
the agent and the customer is the principal. Habib Bank also carries out the same
function, by acting as a collecting agent for its customers when various customers of
the bank deposit outstation cheques in their accounts the branch collects the
proceeds of the same on behalf of its customers. Cheques or other documents
deposited by the customers are called bills. Cheques or drafts are called clean bills
while bills of exchange accompanied by documents of title to goods are called
documentary bills. This function of collecting bills is done by the branches for a
commission and it is done on behalf of the customers at his risk and responsibility.
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Bills are deposited by customers. On receipt of a bill, the customer is issued a receipt
and the bill is lodged in books as outward bill for collection (OBC) in case of clean
cheques and outward documentary bill for collection (ODBC) in case of
documentary bill. Bills are a contingent liability for a bank. Every bill received is
specially crossed by a special crossing stamp of the branch which denotes that the
bill in now a property of the bank branch. Then a discharge is given at the back of
the instrument by putting a stamp which says that payee's account will be credited
on realization. The bills are then sent to the drawee branch which sends back a credit
advice to the sending branch upon realization of the bill.
5. SAFE-DEPOSIT LOCKERS
It is also a very important facility provided by Habib Bank, since bankers are the
custodians of public wealth so they provide safe deposit vaults to the people to put in
their valuables. For this purpose three types of lockers are available at Habib Bank
branches, viz, small size, medium size and large size. A person who wants to get a
bank's locker has to sign a form which is a sort of a contract between the banker who
is licensor and the customer who is licensee. The licensee gets a license to use bank's
locker after signing the contract. He has to deposit a certain sum of money as a
security which is called key deposit and has to pay an annual rent. The licensee is
allotted a locker and a key is handed over to him both carrying specific numbers.
The master key remains with the banker. The customer is allowed to operate the
locker during bank's counter hours. When a customer wants to operate a locker he
comes to the banker and signs in a an attendance register. Then the banker applies
his master key to the locker and then the customer applies his own key and the
locker opens. After putting in his valuables the customer closes the locker with his
own key. When the customer wants to end this relationship he surrenders his key and
the key deposit which was kept with the banker as a security is returned back to him.

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4.5 SALES DEPARTMENT

The job of sales department is to identify possible customers and then attract them
towards the bank so that they open account with the bank. Sales Department in
Bank Square Branch,Mingora, HBL is headed by Mr. Wasim Jan. Including him
the sales force is comprised of 3 personnel. Two of these people looks for possible
clients and visits different people from varied professions, which include doctors,
engineers, architects, businessmen, forces personnel and store owners. The job of
the remaining person is to attend customers when they make a visit to the bank
and to convince them for the banks varied product.1
MARKETTING STRATEGIES
The foremost job of the sales force is to bring new customers to the bank. The
marketing strategies devised by the sales personnels include a few steps.
Market Segmentation
The market is divided into three parts. The upper class, the middle class and the
lower class. The upper class and the middle class are targeted directly as they can
have the possible customers of the bank. The lower class is targeted indirectly as
these people are exploited to reach the likely customers of the above classes.
Information collected from the lower class which comprise news hawkers,
shopkeepers, and other clerical staff proves very handy in distinguishing
customers.
4.6 CASH DEPARTMENT

Cash Department deals in receiving cash and giving cash. At the cash counter,
Foreign Currency (FCY) and Local Currency (LCY) receipts and payments are

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managed. Cheques are received and presented for transfer or collection purpose.
The employees at cash department also handle credit Card payments.
The money is kept in the vault which is built along with the cash department.
Cash counter is also termed as teller counter. Department is supervised by a Chief
Teller. Every Cashier is provided with a specific amount of money in the morning
from the vault. The cashier makes payments to the customers from that money At
the end of the day the cashiers check their balances and the remaining amounts is
placed back in the vault.
Cash handling is sensitive work. Every body at the bank is not allowed to enter
the cash department premises. The names of the authorized personnel who are
allowed in cash department are mentioned on the entrance door of the cash
department. Internees are not allowed to enter the cash department.
4.7 DATA CENTRE
Data Centre is the place where the computer section of the bank is located. This is
a very sensitive section of the Bank and only authorized personnel are allowed to
enter this section. It has an automatically locking system at the entrance door and
the authorized personnel are provided with a specific code. When they punch the
specific code, only then the door gets unlocked and they can enter. Internees are
not allowed to enter the data center. The data centre consists of very sophisticated
computer involving all the data of the bank assets and customer deposits and
lending. In other words this section regulates every information that is fed by
employees into their computers.
Back-up for all the computer systems is
maintained in this section. Every employee is given their personal code which
they feed into the system when they work. This code is the identification of an
employee. This code is recorded at the data centre and it records every transaction
made by any code at any time. Other than recording every transaction the data
centre also performs the following functions.
Hardware and Software trouble shooting.
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Installation of new hardware and software.

Start of day procedure and end of day procedure i.e. downloading all
the data from Karachi Head Office in the morning and, sending all the
data back at the end of the day
Keeping inventory of all the hardware installed
Contacting dealers for maintenance of computers.
Taking back-ups on daily basis.
Training computer users.
The setup of data centre includes the following functions.

Setting file servers.
Satellite communication equipment.
Handling the printer setup in front office as well as back office.
Maintaining the back up tape devices.
In other words maintaining every technical aspect of the bank comes in the
responsibilities of the data canter. A well trained personnel is employed to look
after the operations in data centre. The HBL Bank Square Branch,Mingora is
also assisted by the HBL Mardan Branch in the data center department. Highly
qualified recruits from HBL Mardan Branch makes their visits to the HBL Bank
Square Branch,Mingora for assistance.

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References
1. Interview with Mr. Wasim Jan, Officer Sales Department, HBL Bank
Square Branch,Mingora, April 30 2002.
2. (On-line) Available www.habibbank.com <Accessed on jan, 2004>
3. Ibid.
4. Ibid.
5. HABIB BANK LIMITED, (2040). Brochure Account Terms &
Conditions. Bank Square Branch,Mingora.
6. Prof. Nasir, M. Saeed. (1998). Banking Currency and Finance, Lahore:
Pakistan Kitab Markaz. p.26
7. Interview with Mr Shah Jehan , Officer Remittance Department, HBL
Bank Square Branch,Mingora, April 30 2002
8. Interview with Mr Mumtaz , Officer Autoloans Department, HBL Bank
Square Branch,Mingora, April 30 2002
9. HABIB BANK LIMITED (2000). Brochure Autoloans. Bank Square
Branch,Mingora.
10. Ibid.
11. Ibid.

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CHAPTER 5
CRITICAL ANALYSIS
Analysis is the most important part of the report, because it depends on the
personal observation of the author, only a good, keen and comprehensive analysis
leads to good recommendations & helps for the improvement of the existing
conditions.Critical Analysis of an organization discovers its potential areas of
improvement and evaluates its performance of the past period. It identifies the
possible solutions to problems faced inside the bank and gives an insight of the
opportunities, which can be exploited to reap benefits. The critical analysis of
HBL Bank Square Branch, Mingora is divided in two parts.
1.
Financial Analysis.
2.
SWOT Analysis.
The financial analysis is based on the national performance of HBL. The different
Ratios calculations are taken from the annual balance sheet for the year ended
December 31, 2004.
5.1
FINANCIAL ANALYSIS
Financial analysis of an organization expresses the performance of the bank for

over a period of time. Different ratios analyze the banks capabilities. Varied
relations are drawn on the basis of this analysis.
Financial ratios have their own importance in analyzing the firms performance.
An increase or decrease in one ratio does not mean anything good or bad. It is
always linked to another one, that is more important. Considering the example of
higher interest, if the bank want to have most of the deposits of the market, it has
to offer higher interest rates. This would bring the deposits, thus deposits will
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increase, but on the other hand it will have to pay higher interest as well, thus
decreasing the profit ratio. Relativity is the prime factor in evaluation of ratios.
The financial ratios of the HBL reflects its stronger position in the market. The
banks deposits have increased it has also increased the profits. Advances have
been made which have resulted in the fall of cash. The overall financial position
shows that the bank is growing and is on upward direction in profitability as well.
The financial Analysis is as follows. Different values comes out from the
calculations for year 2003 and year 2004.
Ratios
2003
2004
Gross profit margin
31.97%
40.91%
Return on Assets (Before Taxes)
2.81%
2.56%
Return on Assets (After Assets)
1.18%
0.98%
Net Interest Income to Assets
3.91%
3.99%
Assets turnover Ratio
0.12
0.10
Fixed Assets Turnover
21.87
17.04
Operation Cost to Assets
2.97%
3.82%
Debt to Equity Ratio
25
43
Operation Cost to Deposits
4.25%
4.86%
Total Expenditures to Deposits
16.15%
12.20%
The graphical representation of these ratios is given separately.

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5.2
SWOT ANALYSIS
The SWOT analysis comprise of the strengths it has, the weaknesses that are a
part of it, the opportunities that it can exploit and the threats it faces from
competitors. However its also encompass generally the Bank Square Branch,
Mingora. Certain factors are already attached with the name of HBL, whose
benefit or loss is automatically the part of HBL Bank Square Branch, Mingora.
HBL has some unique factors like being the oldest bank of the region, which adds
to its value. Its background and role in the economy of the country creates
attraction for people. The formal SWOT analysis constitutes of four different solid
parts.
5.2.1 STRENGTHS
HBL benefit from a few points which ultimately makes its backing strengthened.
Some of these points are as follows:
REPUTATION
HBL is a renowned bank all over the world. Its branches are spread across all the
continents. It is the oldest & first bank in Pakistan as well. In Pakistan it has a
1424 branches network. This has enabled customers to make transaction more
easily throughout the country. It also has agency arrangements in areas where it
does not have any branch. This old presence of HBL in the region makes its
reliability and its name is generally considered a name of quality and trust.
ECONOMIES OF SCALE
The merger with SCB has alleviated the financial position of the bank. It has
increased the operational efficiency and has resulted in reduced risk. The better
financial position has opened the way for access to capital markets. As the bank
has expanded, the bank is now enjoying economies of scale.

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OUTLOOK
The outlook of an organization plays important role in portraying its image to

customers. The HBL Bank Square Branch,Mingora has a well built and decked
building. The interior of the bank gives a neat look. The atmosphere is
professional. It is centrally heated and air conditioned, so as to provide customer
and staff with better working condition in every climate. More over the main hall
and departments are all announced as no smoking zones. Staff members or
customers who want to smoke may go out of the banks vicinity.
HUMAN RESOURCE MANAGEMENT
HBL believes in hiring active and inspired candidate. Experience is not an

important requirement for recruitment. The qualification, criteria for selection of
employee are MBA,MPA or any other related degree from reputed universities. At
HBL Bank
Square
Branch,Mingora,
most
of
the
management
have
communication skills in local as well as foreign languages.

The HBL attracts qualified pool of applicants by offering a superior salary to their
staff. Most of the applicants want to join HBL because of the rewarding salary
structure of the Bank. The HBL pays satisfying salaries to its employees with
many other incentives like house loans, medical facilities etc.
The performance appraisal of the employees is a regular feature of the HBL. The
performance appraisal report is sent to the Karachi Head Office regularly. This
performance appraisal report determines their promotions and endorsements.
The timings of the bank are strictly observed by the staff. All the staff members
are supposed to reach the bank at the specified time. Being punctual is a normal
practice at HBL.

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SERIES OF PRODUCTS
HBL practice the introduction of new products for its customers to suit their
needs. The bank emphasis on consumer banking by providing them with
innovative savings scheme, products and services suiting best to their life style.It
offers various kinds of accounts with varying features and interest rates. From
small accounts to large accounts the profit increases gradually. Its Master card and
VISA card also give privileges to its customers. With more than 10,000 outlets in
Pakistan and over 18 million VISA establishments around the world HBL VISA
can be a handy card in buying anything. HBL ATM is also a valuable service. It
allows customers to withdraw money from their accounts round the clock for 24
hours. Maintain the foreign currency accounts is another factor that attracts
customers who wants to make transactions in dollars or pounds or deutschemark,
etc. Recently the launch of Auto Loans department has attracted a number of
customers, who want to buy new cars. The Auto Loans section of the bank
provide loans for buying different kind of cars.
NEW TECHNOLOGY
The bank has attention and sensitively to competition prevailing in the country.
Therefore, It has made all the branches of the HBL online which means that they
are interconnected with each other and in full coordination. The bank has been
provided with new branded DELL computers lately. All the work is done by the
employees on computers. In order to get benefit of being in touch with the latest
technologies. In Pakistan, where banking is still done on archaic methods, HBL
has tried its best to introduce new technologies for the betterment of its customer
services.
HANDSOME STIPEND
Internees at HBL are paid a handsome stipend per week. They normally are
provided with support and encouragement, which has its effect on their
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performance. It motivates the internees to work efficiently because they know that
they would be appreciated and paid for their efforts. The stipend is regularly given
to the internees on every weekend.
5.2.2 WEAKNESSES
Weaknesses, like strengths are a part of almost every organization. These
weaknesses points out the potential areas of improvements and make the
organizational behavior intelligent. A cumulative effort to overcome these flaws
makes success possible.
During the internship period the weaknesses that generally surfaced and were
visible at HBL Bank Square Branch, Mingora are as described below in detail.
UNDERSTAFFED DEPARTMENTS
The root problem at HBL Bank Square Branch, Mingora which is normally
ignored is that it is understaffed. Thus several departments are over loaded with
extra work. This overburdens the employees which leads to frustration and anger,
provoking several other problems. This problem is explained in detail in the later
part of the report.
PERFORMANCE APPRAISAL
Performance appraisal is generally considered a motivational as well as evaluative

tool. At HBL its use is normally made in an exploiting fashion. Evaluation is
made on the basis of the achievements of market targets. Unfortunately the market
targets are always unachievable. Thus employees face the condition of being
called inefficient at times. This is an annoying factor for some of the employees
which leads towards de motivation and anxiety.
HOSTILE EMPLOYEE RELATIONSHIP

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A pleasant operational atmosphere develops the efficiency of the staff and also
boost the employees motivation. Unfortunately at HBL Bank Square Branch,
Mingora employees are not in good relations with each other. Back biting is a
normal and well practiced art. Most of the employees have their pros and cons
kind of colleagues in the staff. This factor is generally boosted by the extra load of
work that some departments faces. The burden of work escalates the tension of
the staff members. This also give rise to bad mood and irrational behavior
amongst the employees with each other. Other than this there are several
additional prominent grounds for these reduced relationships, which are discussed
below.
Promotion
The employees of the bank consider their future vague due to uncertain promotion
forecasts. The organizational structure of the bank has ranked the officers in
similar rankings. So whenever there is a chance of promotion, the competitive
environment generally ends up giving birth to new hostilities among the
employees.
The promotion is mainly based on the performance appraisal, which in itself
needs a change. The promotion of many officers of Bank Square Branch,Mingora
is delayed because of the impractical tasks given to the employees.
Employee Development
Through employee development, the skills of employees are polished for the
future job requirements of the organization. Although there is a firm criteria
designed for the employee development program at HBL but sometimes its not
carried out soundly. Employees are not completely aware of the kind of activities
the bank might expect them to perform in the future. Thus they find themselves in
vagueness and uncertainty about job requirements sometimes. Although the
employees at the bank are educated, but there are situations where they do not

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understand some terminologies or procedures related to banking. This presents a

dire impression in front of the clients.
CARELESS ATTITUDE
Business organizations generally acts on the formula of customer is always

right. However it appears that HBL Bank Square Branch, Mingora has an action
logo of its own. It works on the principle which says, customer is sometimes
right. Customers at HBL are occasionally neglected. The unprofessional attitude
shown by some staff members leaves a number of customers angry. Queries by
patrons are not entertained often. This practice is hurting the image of the bank.
Secondly, the bank applies the status policies intensely. Clientele with small
deposits are not given proper attention and consideration. The upper class clients
with large deposits are shown good behavior and courteousness. This
discriminatory behavior of employees is surely objectionable.
Last but not the least the bank employees show irresponsible behavior while
making use of bank resources at times. Stationary, for example is wasted in
abundance. Phone lines are kept busy due to personal chats and irregular absence
from the seats is experimented.
UNFAIR ALLOCATION OF WORK
Work distribution at HBL Bank Square Branch,Mingora is unbalanced. Some

departments like remittance department used to be under extra load of work. On
the other hand lending department had comparatively a small amount of work.
Over burdening some employees creates resentment in their hearts for their fellow
employees with less work.
CASH COUNTER QUEUES

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73
Long queues at cash counter is a regular sight at HBL Bank Square Branch,
Mingora during the first section of banking hours. It is quite a shocking view for a
new visitor who enters the bank. This presents and unsophisticated look.
WEAK POLICIES
HBL Bank Square Branch, Mingora several policies which have the capacity of
improvements. More refined strategies if adopted will raise the banks outlook
and will polish its image. Some of them are described below.
Concealed Expenses
HBL charges its customer for various services provide. The mild tone of some
employees at times detracts customers from the charges of services offered and
when the customer comes to know about their account being credited, they gets
distressed. Most of the VISA Card members who did not had an account in HBL
were not aware of the fact that they are charged 100 rupees for each transaction
they make. This would normally create confusion between the customers and the
staff. Several accounts holders accounts with low balances were closed at the
cutover with any prior notice to them. Other than this the bank charges for making
drafts were high too.
Non Participative Decision Making
It was observed that the top management made one-sided decisions. Occasionally
the employees were just informed about their new tasks and targets. Often the
bank employees use to complain about the inconsiderate nature of the decisions
which they considered thoughtless, and termed them an imposition by the upper
management.
Internees Selection Process

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74
HBL claims to be an organization which offers internships purely on merit basis.

Regrettably the original situation is totally different. Firstly, there is no specific
merit basis which can be termed as grounds for internship. Secondly, an
acknowledged reference is must for an entry into HBL. The bank have its claims
that all the Curriculum Vitae (CVs) of applicants are sent to Karachi Head Office
and the decision is made there. This also is a strange claim as Karachi Head
Office has no measures to check the credibility of the CVs. Also noted was the
fact that no interviews are conducted from the applicants. All that one needs for
obtaining internship in HBL is an accredited reference. This prejudiced practice
does not match the reputation of HBL as it leaves competent candidates out of a
chance to have an experience of working in a multinational organization.
5.2.2 OPPORTUNITIES
Success, more than anything is all about converting into opportunity what
everybody else considers danger. Opportunities, when exploited properly reap
profits and earn success. They are almost always a matter of time. They are to be
sought, picked and made use of, before any body else gets up and do so. Its just
about being smart and accurate. HBL also have some opportunities it can utilize
and obtain good market position. Some of the opportunities HBL can make use of
are hinted below.
STABLE ECONOMIC CONDITION
The new Govt have turned fruitful for Pakistans economy. The United States of
America has provided Pakistan with additional loans without interest, which have
boosted Pakistans economy. Thus the forthcoming picture seems one with
economically more stable Pakistan. In this period Pakistani nationals living in
foreign are bringing money back home. Foreign investors are getting encouraged

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to bring money and invest it here in Pakistan. New NGOs are taking birth.
Several countries companies are coming to Pakistan to help the Afghan people.
HBL with its reputation can take benefit out of these circumstances. It can
mobilize its sales force and can design new marketing policies to attract new
customers in a situation when people are bringing money. It can use several steps
to attract domestic as well as foreign investors.
It can intensify its marketing strategies. It can employ more people to
target these firms and individual investors.
It can relax its loan strategies, so the investor can be attracted to the
flexible policies.
It can provide special relaxations to NGOs and companies of foreign
countries working for the betterment of Afghan people.
All of such activities are a matter of time. HBL has to seek these opportunities
and make use of them before they are no more.
5.2.3 THREATS
Threats, are the unseen, futuristic, probable events that can occur and prove
dangerous in consequences. Every organization is faced by some category of
threats in its operations and functions. Opening new outlets, altering existing
policies, designing fresh marketing strategies, bringing change in physical
structure, almost every activity that an organization do face some kind of threats,
just like the benefits it seeks.
HBL also faces some threats which can just prove minor assumed fears; as well as
can become events with grave consequences. The prevailing condition indicates
the following as the possible threats.
LAW AND ORDER SITUATION
The government must maintain the law and order situation in order to attract
foreign investor. The bomb blasts in cities, which kills hundred of innocent people
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76
creates an atmosphere fear amongst the foreigners residing in Pakistan. Incidents

like these enormously affect the economies of countries. If the foreign investor
wont feel safe in Pakistan, then how come it is possible that he will invest money
here. HBL seems to lose a number of possible foreign clients because of the
uncertain law and order situation prevailing inside the country. The government
must take appropriate actions in this concern to make sure the safety of all
foreigners residing in Pakistan. This will help our economy to boost up as well as
it will popularize out countrys name.
COMPETITORS
HBL also faces competitors in the market. CITIBANK and ABN Amro Bank are
already online. HBL has become online since 30th June 2000. These two banks
also enjoys sound financial backing and comes from a rich background. Also
working are other foreign banks like Bank Alfalah, Emirates Bank and Faysal
Bank. Bank Alfalah propose serious threats to HBL in its auto loans market.
Various domestic banks like MCB and others have also shown improvements. To
survive amongst all these competitors, HBL needs to keep in touch with modern
technology, keeping flexible and customer oriented policies, and adopting the
latest trends of banking.

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References
Jain, N.P. (1995). Business Thoughts. , New Delhi: Shri Jainendra Press

Branch, Mingora)
78
CHAPTER 6
RECOMMENDATIONS
Advice is seldom welcome; and those who want it the most always like it the
least. Recommendations suggest improvements in areas which have room for
polishing and progress.
Criticizing several factors at HBL Bank Square Branch, Mingora does not mean
that these aspects are permanent flaws of the branch. Instead, it is intended that
these mistakes be removed. For the confiscation of these errors, certain
recommendations are forwarded.
6.1
QUEUING MODELS FOR CASH COUNTERS
The long queues at cash counter gives an awkward look. This problem can be
solved by using the Queuing Model concept. These models are proposed to
facilitate organizations control waiting lines. Through this approach, the bank can
decide the best possible number of checkout stands. The number of checkouts
should balance personnel cost and customer waiting time.
6.2
CUSTOMER ORIENTED ATTITUDE
The bank staff should be properly educated about the customers value. The bank
should use the marketing approach and customer satisfaction should be taken into
account. There should be no status discrimination between customers. The bank
staff should be courteous to all customers. A customer is fascinated and brings
other customers also to the bank if the service is efficient and courteous. Being
courteous does not cost anything instead it makes one more human. The banks
staff should be courteous with everyone regardless of the volume of their deposits.

Branch, Mingora)
79
6.3
PROPER SEATING ARRANGEMENT
Customers, waiting for their turns, should be provided with proper seating
arrangements. Often it was visible that during peak banking hours many
customers use to stand anywhere they wanted to. This created stress for the
employees as well as other customers waiting for their job getting done. A specific
place should be reserved for the customers by placing chairs there. The staff
should politely tell the customers to be seated till their work is ready. This would
ease the job of the employees as well as clients wont bear the pain of being
standing still and waiting.
6.4
EDUCATION
The bank have some senior employees who have a great deal of knowledge of the
banking field but there are some staff members who needs to be educated about
the delicacy of certain matters. Although the bank provide on the job training
as well as orientation training to its employees, there are some who still need a
good training program, which can directly educate them specifically about the
bank policies and operations. They should be presented with focused technical
functions and banking knowledge .
6.5
TRAINING AND DEVELOPMENT PROGRAM
The HBL claims of training and educating its employees but practically speaking
it should initiate a good employee training and development plan. This would help
employees to know more about their specific job and its actual requirements. The
employees can be given chance to serve in different departments, hence they can
become aware of the mutual requirements and importance of the coordination
between the different departments of the bank. Thus they can work in harmony
and collaboration with each other. This would develop the proficiency, insight and
administrative capabilities of the employees. This also helps in avoiding
monotony of performing the same job again and again. This would also be a

Branch, Mingora)
80
factor of motivation for the employees who works in over loaded departments.
The rotation would provide them all with equal chances of serving in same kind
of working conditions.
6.6
PERFORMANCE APPRAISAL
The practice of performance appraisal should be made a serious and mature

process which can identify an employees potential accurately. Giving
unachievable tasks to employees discourages them and they dont strive for the
achievements of those tasks. If targets which are practical are given to employees
and any bonus or reward is announced on the achievements, this would greatly
influence the performance of employees. It can be possible only then that the
employees will take their performance appraisal serious and would yearn for
betterment.
6.7
PROMOTION
An established performance appraisal system would automatically open the doors

for the promotion of employees. At HBL it was generally observed that some
employees used to complain that no promotions are given. The staff remains
where they started from. New upper management comes and no one from the
bank is promoted to the managers post. Secondly the promotions in the so called
performance appraisal system are based on the achievements of impractical
targets, which creates frustration and anxiety amongst the employees. Proper
system, practical targets and promotions jointly can be used as motivational tools
for the employees. This will enhance their working abilities and they will also feel
more secured and safe.
6.8
MARKET SEGMENTATION
The general target market of HBL is the upper class of the society. The sales force
is often busy in looking at probable clients with large amount of money. It can

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81
also prove costly when sometimes another potential customers gets deviated
because of the less attention paid to him. Also concentration in one market
segment bears high risk and can lead to huge losses if a deposit is withdrawn. The
bank should also offer some products for potential customers with comparatively
low-income level. Most of the potential customers cannot fulfill, the high balance
requirements and high service charges. Bank should revise its policies on charges
for services it provides. This will result in more satisfied and trustworthy
relationship between clients and employees.
6.9
EQUITY CONCEPT
All the departments should be given with an equivalent load of work This would
result in a friendly relation between employees as well as it will boost the
coordination between different departments. Another suggestion would be that the
staff should be involved in the decision making process. So that they can make
arguments about their status of work after accepting the new responsibilities. This
would also clarify the issue between staff members and responsibilities and
authorities will be properly delegated, resulting in the ending of the confusions
about work and responsibilities. It would also give a feeling of own ness and
security to the workforce of being very much a part of the bank.
6.10 FRIENDLY UPPER MANAGEMENT

The upper management should keep friendly relations with all the staff members.
It would result in the feeling of equity amongst members. It was observed at HBL
that the upper management favored some staff members and used them for spying
purposes against other members. This provoked severe resentment amongst the
employees for each other.
6.11 FAIR INTERNEE SELECTION PROGRAM

Branch, Mingora)
82
A fair internees selection system should be established for selection of internees.

Instead of sending CVs to Karachi Head Office, the applicants should be
interviewed locally in the branch on some specific date. Aptitude and competence
of the candidates should be considered and there should be merit for selection
instead of their references. Bank administration should give proper training to the
internees. They should educate them about the purpose of all the functions they
perform. HBL also give internship generally for six weeks and for the maximum
of eight weeks. This is a problem for HBL itself. Thus during the six or eights
weeks duration when an internee gets some know how about the banks operation,
his time completes; and when he can be more useful than ever, he is asked to
leave. If HBL increases its internship period for a quota of seats, it will help HBL
in taking much use of internees it trains for work.
6.13 EDIFICE CONSTRUCTION

Some departments like the Auto Loans department was not given enough space in
the banks vicinity. A room that previously was used for photocopying was given
to the Auto Loans personnel. The employees of the specified department
grumbled against this. A proper, well-decorated office should be provided to the
Auto Loans staff. That would need some building construction on the upper floor.
The rest of the officers also spend most of their time at the bank. Those staff
members who want to offer their prayers face difficulty in doing so because there
is no specific place for the officers to pray. A prayer room should also be
constructed on the upper floor along with offices for the staff members who dont
find office for themselves.

Branch, Mingora)
83
References
1.
Jain, N.P. (1995). Business Thoughts. , New Delhi: Shri Jainendra Press

Branch, Mingora)
84
CHAPTER 7
IMPLEMENTATION PLAN
Analyzing the banks performance in several departments and evaluating the
strengths and weaknesses leads to some proposals. The implications of these
suggestions are
more important. HBL Bank Square Branch, Mingora is
generating profits and is targeting the market efficiently with its energetic young
sales force. Its location at the centre of business sector in Swat is also adding to its
easy accessibility by customers. Thus the outlook requirements of the bank are
almost complete. The place for improvement in the bank is inside.
The underlying problem of several other problems that was observed during the
internship period, was that HBL Bank Square Branch, Mingora is and
understaffed bank. It has enough vacant room for new employees. This hitch is
the root cause of many other problems. The situation that was taking shape of this
inability is as follows:
7.1
OVER LOADED STAFF
The under staffing directs to unfair work distribution. Several employees, gets
load of work which is beyond their capacity. This leads towards errors and
irregularities in their work. It was observed that some employees used to
complain openly about the extra load of work. They very clearly wanted
assistance in their work, so that their burden can be shared. Some of the tasks
would not even complete even still working for 4 hours after the bank working
hours had ended.
7.2
POOR CUSTOMER SERVICE
Efficient, competent and proficient customer service specifically at the counters

and down the line in an organization shows its benefit and compensation later.
Branch, Mingora)
85
The understaffed situation at HBL Bank Square Branch, Mingora led the
employees to adopt aggressive attitude with clients. Certain queries would not be
entertained because the staff would all the times be worried about their own work
and would not take time to attend and guide the customers friendly. Customers
would not be listened with concentration and modesty. It was visible that often
some customers would roam around with deposits, cash or VISA payment slips,
they wanted to get filled properly. It was also noticed during the handling of other
customers, like filling fresh accounts form, that customer would wait for
assistance which they would rarely get. This basic reason behind this was the
extra load of work, which did not allow the employees to indulge in un necessary
talking. Ultimately it was giving rise to the poor customer service.
7.3
SEVERE TIES BETWEEN EMPLOYEES
The understaffing was also the major reason for the acrimonious relations
between the bank employees themselves. As discussed earlier back biting was a
very normal practice at HBL Bank Square Branch, Mingora. The whole
atmosphere would some time seem of uncertainty and ambiguity. Understaffing
was the major reason of this because most of the conflicts that arose would relate
to the work of employees. Over burdened employees would always seek chances
to avert responsibilities and hold somebody else accountable for any mistake that
would have occurred. This was a grave problem that was taking its roots deep
inside the bank environment.
7.4
CONCLUSION
Considering the prevailing circumstances at HBL Bank Square Branch, Mingora

and taking a broad overview of the possible solution, one would surely come up
with the idea of employing fresh energetic workers. This would root out the
above-mentioned problems. Additionally an employee in the cash department
would lessen the burden of the already working tellers as well as it would help in

Branch, Mingora)
86
the reduction of long queues at the cash counter. A member at remittance

department would surely prove helpful as to share the workload of the already
overstrained staff. Although help desk was maintained at HBL Bank Square
Branch, Mingora but that normally was an inexperienced internee who, most of
the time instead of helping would just direct the questioner to another department.
Thus the help desk, instead of providing true help, would waist the time of
customer as well as add more to the work of other members of staff. Thus if an
experienced and well-educated employee is given the responsibility, that would
help both the customers as well as the colleagues.
7.5
IMPLEMENTATION PLAN
Thus now when the basic area of problem is identified, the understaffing, several
measures can be taken into account to deal with this problem. There are two plans
which are suggested for dealing for this problem.
Short Term Plan
Long Term Plan
The two plans devised will be effective in results and they both match the banks
image and perspective of banking. Both are described in detail below.
7.5.1
SHORT TERM PLAN
The short term plan is devised for employees who would be given the chance to
serve in the bank for a limited period. This can be done in the following two
methods.
Longer Duration Internship Program
The bank normally offers a 6 weeks internship program. At the maximum this
duration stretches to 8 weeks. During this period the employees of the bank helps
the internees to understand various procedures regarding different departments.

Branch, Mingora)
87
After the coaching and teaching of these 6 or 8 weeks the internee is able to
comprehend most of the functions of the bank and he or she is able to follow the
appropriate procedures which is to be followed for the completion of that
function. So at a time when an internee learns most of the jobs and can prove
more beneficial to the bank than before, he is supposed to leave. The bank can set
a particular quota for a long internship duration. Many graduates after the
completion of their degree roam around and wander uselessly.
The bank can introduce a long internship program for its own benefit as well as
these graduates. To keep the normal internees unaffected, it can reserve a special
quota for these kinds of long duration internees. The selection can be made in the
local branches. A specific date can be set for interviews and the applicants may be
chosen on merit. The bank can offer a six months or a year internship program.
The bank can make a promise that at the end of the program it can give a
recommendation report about the applicant. To get good recommendation on this
kind of a report the applicant will be motivated and will work hard. This will help
him in getting experience as well knowledge about the delicacies of practical job.
Most of the organization requires earlier experience in the field, thus HBL can be
helpful in developing the youth into a positive direction as well. Since the name
of HBL already means quality, this will build many peoples career in good
organizations. The bank will benefit in the shape of obtaining a motivated and
energetic employee and that also at a lesser cost than the normal employees. The
cost would be less because since these would be fresh graduates seeking
experience and recommendation, hence they can taken as internees. They can be
paid the internees stipend and the main purpose of these internees would be to
achieve experience and recommendation, not salary. Thus they can prove
economical workers for the bank. they would prove useful because after the initial
2 months period the applicant will be aware of the banks policies , he can be of
great use to the bank. He will also be more devoted towards the customers, to win
their recommendations and sympathies. More customer devoted staff will
improve the banks image also. If the worker shows extraordinary performance,
Branch, Mingora)
88
the bank can also take him as a permanent employee. Since his last one years
performance and his attitude towards fellow colleagues and customers will be
proofs of his ability or inability, the bank will find it easier to decide about him.
Contract Workers
The bank can also employ contract workers also. If the bank wants to be careful in
choosing a better lot among the pool of candidates for its operations, it can offer
contract seats. Contracts seats will be for applicants who will be employed on
contract basis. This program will be different than the long internship program as
the above program will be just meant for fresh graduates and new applicants who
will get recommendation and will be paid the internees stipend. However, full
salary will be paid to contract workers. This program will include other banks
personnel as well as experienced people. This can be a sort of brain drain
technique that the bank can use. This will bring experienced, energetic and
capable employees to the bank, who can work hard and share the responsibilities
of the other workers. As they will be on contract basis, so if the bank, after the
completion of the contract period wants them to leave, it can exercise the liberty
to ask them to leave. Or if the bank considers them worthy and wants to take use
of their expertise, it can reassign them some job as well.
7.5.2
LONG TERM PLAN
The long term plan would be designed for the permanent employees of the bank,
so that they can prove beneficial to the bank in future. This program would
include picking up the most competent employee amongst the employee and
sending him for further training and higher studies about the bank policies. Now
the question arise that how can he be of any use to solve the problem of
understaffing. The answer is that a more efficient, able, experienced and
motivated employee can handle the job of several persons. The bank can make the
selection amongst the employees on the basis of the performance the employees
show and on achieving targets.
Branch, Mingora)
89
When a selection about an employee is made, thus he will be send for a period of
time to get training and education. More emphasis is to be given to the
sensitivities and delicacies involved in the operations of different functions. He
would be taught specifically the policies about the bank, the broader goal the bank
want to achieve and the ways of cumulative efforts that are required. His
appointment is to be made rotational, thus he would work in other branches too
and would understand the inner environment of the branches, and he will work in.
This will help him in dealings in future. This kind of training program would
enable the employee to understand the whole banking structure precisely. When
returned to the branch, he can be of great use as his expertise on many issues will
be authentic and accurate. The bank will bear all the expenses that are to be made
during the training program. The employee in return is to be made bound to stay
with the bank for over a period of time.
This practice will create a more motivated, efficient and skillful staff. Also will it
produce a competitive and healthy environment. A skilful employee would be
more efficient and productive. Hence his expertise would replace any additional
employee place. This indirectly will replace the expenses, the bank has endured
during the training and development program.
The above plan if implemented can produce better results for the bank. The shortterm plan would save the bank from unnecessary costs. The long internship
program is economical as well as beneficial. Similarly the contract workers can be
experienced workers, whose expertise will valuable to the bank. The long-term
plan would surely cost a little, but the bank can reap its fruitful benefits in the
long run.

Branch, Mingora)
90
PERSONS INTERVIEWED
Name of Organization
Designation
Name of Person
Habib Bank Limited
Officer Autoloans
Mr
Department
Shah Jehan
Officer Remittance
(senior)
Mr
Department
Sher Bahader
Officer Sales
Mr
Department
Wasim Jan
Habib Bank Limited
Habib Bank Limited
Date
August 12 2005
August 24 2005

Branch, Mingora)
July 18 2005
91
BIBLIOGRPAHY
Bateman, Thomas S. and Snell, Scott A., (1996). Management
Building Competitive Advantage. Third Edition. USA: Richard D. Irwin, Times
Mirror Higher Education Group, Inc.
Gul, Amber, ANZ Grindlays Bank, A Case Study Of Peshawar
Branch, Department of Public Administration, IMS, Section 1998.
Naz, Nadia, Internship Report on HABIB BANK LIMITED,
Department of Public Administration, IMS, Section 1999.
Prof. Nasir, M. Saeed. (1998). Banking Currency and Finance, Lahore:
Pakistan Kitab Markaz.
HABIB BANK LIMITED, (2000). Annual Balance Sheet. BANK
SQUARE BRANCH,MINGORA.
HABIB BANK LIMITED, (2000). Brochures. BANK SQUARE
BRANCH,MINGORA.
Van Horne, James C. and Wachowicz, Jr., John M., (1998). Fundamentals
of Financial Management. Tenth Edition. USA: Prentice Hall, Inc.
(on-line). Available.http://www.grindlays.com.
(on-line). Available.http://www.pcglobal.com.
(on-line). Available.http://www.standardchareted.com.
(on-line). Available.http://www.standardchartedgrindlays.com.

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HABIB BANK LIMITED

Institute of Management Studies

Internship Report on Habib Bank Ltd.(Bank Square

HABIB BANK LIMITED

Internship report submitted to the Institute of

Master Of Business Administration.

HABIB BANK LIMITED

Coordinator Research & Development Division:

Internship Report on Habib Bank Ltd.(Bank Square

Internship Report on Habib Bank Ltd.(Bank Square

Internship Report on Habib Bank Ltd.(Bank Square

Background of the study

Methodology of the report

Scheme of the report

Merits of the study

Mission statement of HBL

Overview of HABIB BANK LIMITED

Internship Report on Habib Bank Ltd.(Bank Square

HR Techniques used in HBL

Organizational Units of HBL & their products

Technological Framework & equipments used in

Different Departments of HBL

Safe deposit-lockers department

Balance Requirements for different accounts

Gross profit margin

Return on Assets (Before Taxes)

Return on Assets (After Assets)

Net Interest Income to Assets

Assets turnover Ratio

Fixed Assets Turnover

Operation Cost to Assets

Debt to Equity Ratio

Operation Cost to Deposits

Total Expenditures to Deposits

HABIB BANK LIMITED.

Internship Report on Habib Bank Ltd.(Bank Square

Automated Teller Machine

Developmental Financial Institutes

Defense Saving Certificate

Funds Transfer System

Habib Bank Limited

Home Mail Transfer

Inter Branch Transaction services

Management Development Institutes

Outward Bills for Collection

Outward documentary Bills for Collection

Special Savings Certificate

State Bank of Pakistan

Senior Vice President

Small & Medium Enterprise

Internship Report on Habib Bank Ltd.(Bank Square

United States Dollar

Water & Power Development Authority

Internship Report on Habib Bank Ltd.(Bank Square

The report aims at appraising the working of HABIB BANK LIMITED,

Internship Report on Habib Bank Ltd.(Bank Square

Main problems indentified during the course of internship are as following

Absence of proper information technology tools

Presentation styles of bank specially at retail level is not good.

Management style is centralized.

The recommendations are as follow:

Internship Report on Habib Bank Ltd.(Bank Square