You are on page 1of 43

HBL

INTRODUCTION OF HBL

BRIEF HISTORY OF HBL

Habib Bank Limited (HBL), at its present position, has a long and rich history of
deeds and sacrifices. All this has been possible on the 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 business with in and outside the Indian
Sub-continent.

In 1891, a young Muslim Lad Habib Ismail got employment in this company. By the
dent of his ability and sincerity to duty, radiated his career and at the age of just 18
years, he not only became shareholder of the company but also President of the steel
market. His four children namely Ahmad Habib, Muhammad Ali Habib, Daud 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 four
sons ran the whole business. Mohammad Ali Habib was younger and rank third in the
age but was the most intelligent among his brothers and a successful businessman. At
that time there was no Muslim Bank in the Sub-Continent. Habib family established
the first financial institution of the Muslims with the name of “Habib Bank Limited”
on the 25th August 1941.

The first branch of Habib Bank Limited started functioning on 30 th August 1941 at
Muhammad Ali Road Bombay, where Quaid-e-Azam Muhammad Ali Jinnah first of
all opened his personal account. At the time of its inception, the bank’s total paid up
capital was Rs.2.5 Million.

Habib family migrated to Pakistan and later on shifted the Bank’s Head Office from
Bombay to Karachi on 7th August 1947 just one week prior to independence, to play
its pivotal role in the development of this newly born country. The mission statement
and its values of HBL are:

1
HBL

MISSION STATEMENT OF HBL


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 – shareholders, customers and employees.

VALUE OF HBL
HBL is firmly grounded with a corporate philosophy that incorporates five solid
values which each individual associated with the bank abides by.

 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.

2
HBL

ROLE OF HBL IN BANKING SECTOR


Habib Bank was the pioneer, which opened branches all over Pakistan in order to
provide finance and other facilities to the business community. HBL has introduced
certain new products and services after starting its operations in Pakistan. It was first
commercial bank to import the electronic machines that are in use in the leading
banks of advance countries. These machines have made easier for the bank to cope
with its expanding business and fast growing clientele.

The HBL has introduced new facilities like Evening Banking, Gift Cheques, Rupee
Traveler's Cheques, Credit Card System, Short Term and Long Term Schemes for
businessmen, Crore Patti Scheme, and Monthly Income Scheme. It also issues a
monthly publication with the name of Business News Service. Habib Bank is fully
geared to monitor the national economy and play its due role in bringing prosperity to
the country.

Habib Bank is playing a vital role in the Public Sector. After partition, the first major
association of HBL with the Government was the sponsoring of the Pakistan Finance
Corporation Ltd., jointly with the Central and Provincial Government for financing of
cotton. The bank always provided financial and technical support to public sector.
Bank also associated itself with large-scale projects such as Warsak Dams Project,
WAPDA, Pakistan Steel Mill, KDA etc. by providing finances and other facilities.

OBJECTIVES AND POLICIES OF HBL

Objectives of HBL
Objectives are the ends towards which organizational and individual activities are
directed. The goal of every manager is to create a "Surplus", and clear and verifiable
objective facilitates the measurement of the effectiveness and efficiency of managerial
actions. Objectives state the end results desired, and major objectives are usually
supported by sub-objectives. Thus, objectives form a hierarchy as well as a network.

As a Commercial Bank, Habib Bank has the following main objective:

1. Earning profits for the bank itself and for its Share Holders.

3
HBL

2. To promote banking business in the country.

3. To provide employment opportunities to the people.

4. To develop Industries both on Large Scale and on Small Scale in the country.

5. To provide self-employment schemes to people.

POLICIES OF HBL

Policies are identified as guide to thinking in decision-making. They assume that


when decisions are made, these will fall within certain boundaries. Policies don't
require action but are intended to guide Managers in their decision commitments
when they do make mistakes.

Policy is a limit within which a decision is to be made and assure that the decision
will be consistent with and contribute to objectives. Policies tend to pre-decide issues,
avoid repeated analysis, and give a unified structure to other types of plans, thus
permitting managers to delegate authority while maintaining control. Policies
ordinarily exist on all levels of the organization and range from department policies to
minor or derivative policies applicable to the smallest section of the organization.

1. Managerial Policy
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 Region is headed by Regional Chief Executive and assisted by

Regional General Managers. Each Regional Headquarter control branches in their


area of jurisdiction.

2. Marketing Policy
Marketing is the business function that identifies customer needs and wants
determines, which target markets the organization can best serve, designs appropriate
products, services and programs to serve these markets and calls upon everyone in the
organization to "think and serve customers". From a social point of view, marketing
links a society's material requirements and its economic patterns of response. Thus
marketing is a key factor in business success.

4
HBL

Habib Bank also adopts certain marketing techniques to enhance the image of the
bank. Most of the marketing takes place through various Deposit Mobilization
Schemes through advertising in Newspapers and other media and there is more
emphasis on Counter Service to have more satisfied clients who can recommend to
their associates and friends.

2.7.3 Operational Policy


Operational policies deal with the running or operation of the bank. It is about
introducing new schemes in order to improve HBL Operations and to take measures
for better services.

The operations can be divided into two:

2.7.3.1 Domestic Operations


The bank is quite successfully operating its domestic business. Habib Bank has the
largest domestic branch network amongst Pakistani Banks, which is in consistence
with the bank's policy to provide banking facilities at the doorstep across the length
and breadth of the country in conformity with the government’s socio-economic
objectives. The numbers of domestic branches as on 31.12.2016 were more than 1408.
HBL's domestic operations are carried out by Regional Headquarters comprising of
branches under their jurisdiction. HBL also established Corporate Centers in various
Regions to catch Industrial Clients and serve them better. The Corporate Major
Centers are 12 and the Sub Centers are 64.
The bank has presently one wholly owned subsidiary namely Habib Bank Financial
Services Pvt. Ltd. It has shown improved operational results during the year.

5
HBL

ORGANIZATIONAL REVIEW OF HBL

ORGANIZATIONAL STRUCTURE
Habib bank is the oldest and largest bank of Pakistan and it operates the largest
network of branches in Pakistan. Historically its organization was managed on
geographical basis. But many problems raised with the passage of time and with the
growth of branches network, such as, lack of coordination among branches as well as
high offices, delay in communications, long times lapses in important decision –
making, also problem of proper monitoring, evaluation, and compensation of the
employees. The old structure was such that at the top was Head Office Karachi, after
that 4 provincial Head Quarters, then Circle Office, then Zonal Offices and in the last
were the Branches.

However, in 1997 organizational changes were made to reposition the bank and
overcome the above problems and also to give new smart and corporate shape to the
activities of the bank. The organization changed the structure on functional lines. Thus
various groups have been created to carry out different services and functions within
the bank. Following are the various groups, whish are created:

1. Corporate & Institutional Banking Group (CIBG)


2. Retail Banking Group (RBG)
3. Asset remedial Management Group (ARM)
4. International Operations & Overseas Banking Group.
5. Finance & Audit Group.
6. Credit policy group.

Each group is headed by the group executive and they form policies and strategies.
Each group executive is very experienced and knowledgeable person in his or her
relevant areas of specialization.

6
HBL

DIVISION OF HBL’S OFFICE

There are three types of offices in HBL.


1. Head office.
2. Regional Head quarters.
3. Branch offices.

1. Head Office
Head office of HBL is located in Karachi. It exercises overall control over the bank
and other areas of administration and operations. The head office (HO) has various
functions.

Functions
1. It formulates policies and ensures its implementation by field offices.
2. It supervises and controls operations of RHQ.
3. It deals with foreign donors.
4. Sanctioning of loans.
5. Deals with ministry of finance.
6. Recruitment, training and management of human resources.

2. Regional Head Quarters


The number of RHQs of HBL in the country is ten.

Functions of RHQ
The functions of RHQ of HBL are:
1. To implement the policies of Head office (HO).
2. To extend the credit facilities by keeping in view all the prescribed conditions.
3. To recover/collect the existing long-term financial assistance extended by the bank
as per schedule.
4. To extend working capital facilities.

3. Branch Offices
HBL has today 1456 branches inside the country, 65 branches outside the country and
17 subsidiaries. Other than this the bank has its overseas operations in 25 countries

7
HBL

includes 65 branches, 17 subsidiaries, two Joint Ventures and two representative


offices.

8
HBL

HBL’S ORGANIZATIONAL HIERARCHY

Chairman

Board of Directors

Senior Executive Vice


President

Executive Vice President


Error: Reference source not found

Vice President

Assistant Vice President

Officer Group-1 Officer Group-11 Officer Group-111

9
HBL

ERROR: REFERENCE SOURCE NOT FOUNDHBL


PRODUCTS AND SERVICES

In order to provide innovative financial products and services at competitive prices


Habib Bank Ltd. offers wide range of banking services and products. These
services /products include:

1. Corporate Banking

2. Investment Banking

3. International Banking

4. Commercial Banking

5. Retail Banking.

The following are brief descriptions of various products and services offered by HBL
to its customers:

CORPORATE BANKING
Corporate Banking provides financial institutions a way to deliver a complete set of
online money movement services to corporations.

Cash Management
Cash management is the strategy by which a company administers and invests its cash
or controls its cash collections.

Trade and other Finances


It is the strategy by which a company administers and invests its financal resources
and trade.

INVESTMENT BANKING
Habib Bank Limited (HBL) has positioned itself to be a leader across all investment-
banking products from mergers and acquisitions and strategic advice to Equity Capital
Markets, Debt Capital Markets, Private Placements and Leveraged Finance.

10
HBL

HBL’s Investment Banking capabilities are designed to leverage its large capital base,
product expertise and human capital to help its clients in meeting their strategic and
operational objectives. HBL Investment Banking Division is well positioned to
service even the most sophisticated Investment Banking client.

HBL’s Investment Banking team is equipped to work on the following types of


transactions on a domestic or cross-border basis:

1. Mergers, Acquisitions, Divestitures, Spin-offs, Equity Carve-Outs, Leveraged


Buyouts, Strategic Alliances, Joint Ventures and Privatization.

2. Private Equity, Merchant Banking, Venture Capital and Financial Sponsors.

3. Initial Public Offerings, Secondary Offerings and Equity Private Placements.

4. Domestic Bonds, Euro Bonds, Loan Syndications (> one year), Medium Term
Notes (TFCs), High Yield, term Loans and Debt Private Placements.

5. Structured Products, Project Finance, Asset Backed Securities and Lease


Finance.

6. Asset Management Companies and Funds.

COMMERCIAL BANKING
The Commercial Banking at Habib Bank Limited focuses on small and medium sized
businesses. This segment is the traditional stronghold of HBL with proven expertise
and market knowledge.

Units dedicated to service small and medium sized business are located at Karachi,
Lahore, Faisalabad, Gujranwalla and Sialkot. Each unit has Relationship managers
with in-depth knowledge of the market. These relationship managers assist existing
and potential customers with their financial needs.

1. Finance for Working Capital:

2. Trade Finance Facilities:

3. Finance for Capital Investment:

4. General Products

11
HBL

5. Other products & services

6. Investment assistance (A.I)

5.4.1 Finance for Working Capital

i. Running finance: for Working Capital requirements. (RF)

ii. Cash finance: for Inventory financing. (CF)

RETAIL BANKING
Retail banking is typical mass-market banking where individual customers use local
branches of larger commercial banks. Overall services offered by HBL include:

1. Habib Bank Auto Finance


2. Habib Bank flexi loans
3. hbl Phone banking.
4. Current Account
5. Profit & loss sharing
6. Payment of utility Bills
7. Value Visa Debit Card
8. Lifestyle
9. House Finance
10. HBL Credit card
11. Lockers
12. Hajj/ Umra services.
I will discuss services offered by HBL in university campus Branch, university of
Peshawar.
Habib Bank Flexi Loans

Habib Bank Flexi Loans is a personal loan product, which is available for salaried
individuals for a variety of reasons. Whether it is for a child’s education, a much
needed vacation, a daughter’s wedding or even just a shopping spree, HBL Flexi
Loans is a flexible financing scheme which can actually provide the much needed
cash to fulfill all such requirements.

Salient Features of HBL Flexi Loans

12
HBL

1. Low Mark-ups leading to affordable monthly installments. Mark-up slabs vary


for various categories of salaried individuals

2. Financing from Rs. 10,000 to Rs. 500,000/-

3. Available throughout Pakistan from over 400 designated Habib Bank branches

4. Tenures ranging from 12 to 60 months

5. Low Processing Charges

6. Full Credit Life Insurance.

Current Account

Deposit Slab

Minimum Balance: 1000 Rs

Eligibility:

1. All Pakistani’s Resident/Non-Resident, Individuals (Single-Jointly)


Companies/Firms etc. can open and operate the Account.

2. Any Foreign National Individuals (Single-Jointly) having valid Resident


Pakistan VISA/Work Permit can open and operate the Account.

Features

1. Account can be OPENED with Minimum Balance Rs. 1000/- with no


maximum limit.

2. Checking Account

3. No profit is paid.

4. Service Charges Rs. 52/- per month if average balance is less than Rs. 20,000/-

5. Statement of Account dispatched on quarterly basis or as requested.

6. There is no restriction for withdrawals of amount and number of cheques.

13
HBL

Profit and Loss Sharing

Table Profit and Loss Sharing

PLS saving account PLS –7/30 days special notice time & PLS

PLS term deposit receipt (PLS TDR) PLS KHAS term deposit receipt (PLS KHAS TDR)

PLS special saving deposits (SSD F.I TDR (3 months financial institution TDR)

PLS monthly income scheme *rate of return on PLS deposit July-Dec 2005.(3 years)

Payment of Utility Bills

Habib Bank also provides payment of utility bills services to its valued customers.

HBL Debit Card

Debit cardholders. Your Card entitles you to discounts and savings on your purchases
at your favorite outlets. Thus, not only do you enjoy convenience, safety and
international acceptability on your Card, but also you can save on your daily
purchases. So, make each shopping spree exciting by availing Value offers at our
partner shops and outlets.

HBL Credit Card


Habib Bank MasterCard opens a world of convenience for customers. Be it shopping
or traveling or medical expense, HBL MasterCard sets customer free from the hassles
of carrying cash on hand.

14
HBL

It gives customers Convenience, security, affordability, cash advance, balance,


transfer facility and internet shopping

Facilities

1. Worldwide acceptability

2. Up to 30% of your spending limit as cash advance

3. Travel accident insurance coverage worth Rs. 2.5 million

4. Photo feature to help avoid misuse.

Hajj/ Umra Services

Habib Bank also provides Hajj / Umra services to its customers. All branches of
Habib Bank Limited are now equipped with special Hajj/ Umra customer, where one
cannot only get Hajj/ Umra forms but helpful officers assist in filling in the relevant
details.

15
HBL

MY WORKING AT
HBL MAKHDOOM PUR BRANCH

General banking refers to the day-to-day business of bank, under the supervision of
manager of a branch. General or day-to-day banking of HBL consists of various
departments, which are explained below:

DEPOSIT DEPARTMENT
Deposits are the lifeblood of banking industry. The basic function of bank is to accept
the surplus of individuals, public sector, and public institutions and to honor cheque
drawn upon them.

Account Opening Procedure


The applicant is provided an application form to open an account. The applicant in a
manner prescribed and duly signed by the applicant fills this form. An existing
account holder of the bank must introduce the applicant. A copy of Identity card is
attached with the specimen signature card.

The application is presented at the branch with the initial amount of deposit for credit
of his account. The amount is centered in the passbook and is singed by the
responsible officer of the bank; finally a checkbook is issued to the account holder, for
withdrawal of money. Minimum Amount required for opening an account in HBL is
Rs. 1000 presently.

Documents Required for Account Opening


Following are the various kinds of documents that are required to open account. These
documents covers document requirement for individual, companies and partnership
accounts.

1. Attested photocopy of N.I.C/passport of Account holder(s), Proprietors, Partners,


Directors and Office Bearers as the case may be.

2. Certified true copy of the certificate of incorporation or registration (in case of


companies and registered bodies only).

16
HBL

3. Certified true copy of the certificate of commencement of business (in case of


public limited companies only).

4. Certified true copy of the memorandum and articles of association (in case of
limited companies).

5. Certified true copy of rules and regulations or By-laws (in case of association etc).

6. Certified true copy of the resolution of the board of Directors/Managing


Committee/Governing Body regarding conduct of the account.

7. List containing names and signatures of the Directors/office bearers duly certified
by CLA/Registration Authority.

8. Letter of partnership or certified copy of partnership deed (in case of partnership).

9. If the signatures are Shaggy (that is the person is unable to write proper and
distinct signatures) three attested pictures of the individual/s opening account are
taken.

10. Letter of employment in case of individual account opening who are employed
somewhere.

11. Students opening accounts are need to show their student card showing that they
are students of a particular institute.

Classification of Deposits
The deposit can be classified under three main heads.
1. Current Account
2. Saving Account.
3. Term deposit.

1. Current Account or Demand Deposit


Current accounts are usually opened by business organizations, businessmen,
corporate, etc. There is no limit for the withdrawals in no. & amount. Current account
or demand deposit can be withdrawn by Cheque or transferred to someone else by the
depositor at any time without prior notice to the bank.

17
HBL

a. Current Account is opened, on proper introduction and submission of required


document along with initial deposit prescribed from time to time. Current
Accounts are opened for individuals (single or joint), firms, joint stock companies,
local bodies, autonomous bodies, associations, educational institutions etc. and all
other cases where the accounts are to be opened under the order of a competent
court of law.

b. No profit is paid on the balances of current accounts.

c. The bank is authorized to honor, whether the account is in credit or not cheques,
bill of exchange, notes or other orders drawn, accepted, accept endorsement, act
on any instructions, and accept any receipts or other documents relating to the
account signed or made by authorized person(s) on behalf of the
firm/company/association.

PLS Saving Account


For the convenience of small savers HBL offers PL S saving account. In this account
profit is paid on the average balance semiannually. These days no notice is required
for withdrawals and there is restriction of the number of with drawls.

The customer is bound to follow the rules and regulations of the bank.

a. PLS saving accounts are opened on proper introduction and submission of


required documents, along with an initial deposit prescribed from time to time for
each category.

b. PLS saving accounts are opened for individual (single or joint), charitable
institutions, provident and other funds of benevolent nature of local bodies,
autonomous corporations, companies, associations, and education.

c. There is no restriction on maintaining the upper limit of deposit and withdrawal of


amount and no. of cheques from PLS saving account.

d. Profit is calculated on daily product basis.

e. Payment of profit will be on monthly basis subject to adjustments on declaration


of actual profit rates after six-month closings.

18
HBL

f. Zakat wherever application shall be deducted on valuation dates from account


having balance in excess of the exempted limit as declared for the particular Zakat
year.

BANK’S PROCEDURE AND INTERNAL WORKING AFTER OPENING


AN ACCOUNT

1. Entry in Account Opened and Closed Register


Every current & saving account is numbered in numerical serial order. The account
no. allocated to the new account is written on the account opening form, specimen
signature card and cheque book requisition slip. Similarly when an account is closed
information is stored in the related registers.

2. Supply of Deposit Slip and Authentication


The customer is supplied with pay in slip and requested to deposit the money with the
cashier, who put his signature on counter foil of the slip, which must be countersigned
by an authorized officer. This procedure also applies to all subsequent
deposit/withdrawals.

3. Issuance of Cheque Book


Cheque Book is issued only after the account opening form has been completed in all
respects. The excise duty is recovered from the account to whom cheque book is
issued. Cheque Book series is entered in the chequebook issuance register.

4. Send the Documents to Officer in Charge


The account opening form, specimen signature card remain in the custody of officer
in charge current/saving deposit. This officer sends “LETTER OF THANKS” to the
new account holder. Specimen signature cards and other documents are kept under the
joint custody of the manager and account/second officer.

5. Maintaining Record of Accounts


After opening a current account, issuing deposit slip and chequebook the staff
concerned is required to:

1. Send letter of thanks to the introducer of new account holder.


2. Send letter of thanks to new customer in order to verify his or her address.

19
HBL

3. Recording information of customers in computer through “MISYS”.


4. Current account holder can get his or account statement on daily basis, weekly
basis or monthly according to his or her requirement.

6. Account Opening Forms File


This file contains all account opening form of the branch. Account opening forms of
the closed accounts are also retained in the file except that the word “COSED” is
written in hold letters across such forms. Memorandums & Articles of Association
and any particular document is filed with its account opening form. Forms are filed
according to serial number of accounts.

7. Specimen Signatures Card File


Cards are maintained for all operational accounts according to the serial no. of the
accounts. All operational cards are kept in special cabinets designed for the purpose.
Specimen signature cards are scanned and the pictures are stored in computer through
separate software of MISYS.

8. Maintenance of Computerized Records


After opening a new account, all rest of the maintenance of the account’s transactions
is done by the MISYS system itself. It is software that has multiple functions like
opening account, debiting, crediting, LC opening, Demand depositing etc etc.

20
HBL

ACCOUNTS DEPARTMENT

HBL accounts department is responsible for:


1. Balance and Maintenance of books.
2. Preparation of Statements.
During the course of daily business of a branch, a number of transactions take place.
Accounts department maintains a record of these transactions in computers or books
on a daily basis. For this purpose usually two books are maintained in this department.
1. Cash book cum general ledger.
2. Profit and Loss Account-Income and Expenditure ledger.

Balancing of cashbook means that all transactions have been properly recorded with
their respective vouchers.

Account department also prepare weekly and monthly statements to reflect the
efficiency and financial position of a particular branch.

Weekly Statements
Following weekly statements are submitted at the Zonal Office by the branch.

1. Statement of Affairs
This statement includes the assets and liabilities of the branch, trends in deposits,
finances, income and expenditure of the week etc.

2. Statement of Expenditure over Budgeted Limits


The administration of bank allocates budgets for different expenditures expected to be
incurred during the year. If any branch exceeds that limit, it has to justify the excess
expenditure and has to send a statement disclosing the reasons, at the end of each
week.

Monthly Statements
At the end of each month, these statements are submitted at the Zonal Office.

1. PAK Account Reconciliation Statement

21
HBL

The inter branch transactions don’t involve physical transfer of funds from one branch
to another. In fact all branches have their account at HBL Head office in Karachi;
these accounts of branches are called PAK ACCOUNT of the branch. For this
account, two bulks namely Pak Account Extract and Responding Extract are kept.
Whenever a branch sends funds to another branch it is required to deliver advice to
that branch, the advice is prepared in triplicate i.e. one copy is the responding branch
advice cum voucher, second copy is Pak account department copy and third one is
issuing branch’s copy. Daily statement of all the originating entries and responding
entries is sent to PAK DEPTT; at the end of each month the PAK DEPTT. Send
reconciliation statement to each branch in order to reconcile the account as normal
account holder do with their banker.

2. Statement of Fluctuation in Deposits


The branch is required to report at the end of the month that fluctuation of deposits
increase and decreased along with the reason of fluctuation and the type of deposit in
which fluctuation occurred.

Computerized Statement of advances


In this statement following facts are disclosed:

a. Number and amount of new loans sanctioned during the month.


b. Amount of installation recovered during the period.
c. Any irregularity in payment of installments by any borrower.
d. Number and amount of loans adjusted during the month

State Bank of Pakistan Returns (SBP Return)


SBP return is a printed form, which must be completed and handed over by the branch
at the end of the month to Zonal office, which sends to head office a compiled
Performa of the zone for onward submission to State Bank of Pakistan. Following
information is provided in the SBP return:

1. Total amount of advances made by the branch at the end of the month.
2. Progress in the specific sector financing such as agriculture.
3. Position and amount of stuck advances in the branch.
4. Provisioning against stuck up advances.

22
HBL

Statement of Term Deposits


The branch is required to report the figure of term deposits issued and matured during
the month for a consolidated record at the zonal and Head office level.

Statement of Profit and Loss


This statement shows the total income earned during the month and the source of
income. In the same ways total expenditure is also reported and their nature. The
statement reports not only the profit/loss of the current month but also profit/loss
since beginning of the current year.

23
HBL

BILLS DEPARTMENT

Ordinary bills is a document giving the relevant details of similar goods sold but in
banking by bill, we mean the bill of exchange and other similar instrument received
for collection. The collection of cheques and bills on behalf of the customer is an
important product of almost every modern bank, which can hardly be dispensed with
because of the following reasons.

Function of Bills Department

a. Out ward bills for collection


 Bills/Cheques drawn on and sent to our branches.
 Bills/Cheques drawn on the other banks collected through our branches.
 Bills/Cheques drawn on other banked collected directly through them at present.

b. Inward bills for collection


 Bills/Cheques received from our branches located and drawn on us..
 Bills/Cheques received from our branches drawn on other banks.
 Bills/Cheques received directly from other banks.
 Bills/Cheques received from parties such as post parcels.

24
CRITICAL ANALYSIS

Critical analysis is based on the general observation and point out towards the short
comings/weaknesses of HBL as observed during the internship. These observations
generally reflect the different aspects of HBL and weaknesses in different areas,
which needs to be overcome. Following are the critical analysis of HBL university
campus branch Peshawar.

HBL is the largest bank of our country with an excellent network of branches but it
has certain flaws even in management functions.

1. The leaders or managers at upper level are having expertise in their fields but
branch leadership is not very well and often the managers don’t have even the
basic knowledge of management and communication.

2. In the function of organizing delegation of authority is a problem, especially in


retail banking; a branch has fewer powers to deal with customers.

3. The branches are staffed with usually old employees, who have the ability to
carry out routine works excellently but there is lack of new ideas or these
employees needs further training.

4. HBL is not keeping pace with the changing market environment, the main
reason for which is lack of new policies, and also the existing policies remain
unchanged for a long period of time.

5. Top management is having a lot of influence in all decision-making and usually


don’t consult the lower level.

6. In advances department, the processing of loan is very lengthy, which is


problem for businessmen.

7. The foreign exchange department is usually staffed by one officer, thus his
absence causes problem for the customers.

8. Employees are lacking motivation, due to fear of downsizing.

25
9. Employees also complaint that employments and promotions are made on
favoritism and nepotism.

10. Although in HBL, there are computers in different offices, but they are not
utilizing this tool in full capacity and are using it for typing and calculation
only.

11. Counter services are not satisfactory and usually process at counter takes more
time, than it should have.

12. Branch’s internal seating arrangement and environment is also not satisfactory
in most of the branches.

13. Similarly for customers, usually less sitting places are available and that are
also in deteriorate condition, furniture is also not neat and clean in most of the
branches.

14. The necessary stationary for the use of customers are also not adequate at the
peak hours.

15. Brochures are also found to be available in lesser quantities and usually not
provided in time to customers.

16. Informing customers (i.e. bank statements etc) are also done at long intervals (6
months), which is too long interval.

17. The behavior of the staff is also not according to the marketing approach to
words the customer. They usually behave in very bureaucratic way; they are
not providing personalized banking, as the new private banks do.

18. The employees of the bank are also experienced but most of them are not well
educated i.e. most of them are graduates but they are not aware of the modern
business administration knowledge and updates.

19. Similarly the outlook of the staff is also orthodox and don’t present to the
customers a smart image of the bank but rather presents a dull image, unlike
private banks where presentation style is also of great importance.

26
20. The bank lacks an information center, wherefrom the researches can get data.
Even there is so much lack of information, that at branch level the employees
are not aware of the basic decisions and information.

SWOT ANALYSIS
SWOT is an acronym for an organization’ strengths, weaknesses, opportunities and
threats. A SWOT analysis consists of sizing up a firm’s internal strengths and
weaknesses and its external opportunities and threats. It is a tool, to get a quick
overview of a firm’s strategic situation. In the following lines the SWOT analysis of
HBL is given;

STRENGTH
1. The largest bank in Pakistan with largest number of branches through out the
country.

2. Has market leadership in providing products and services to the customers over
the year.

3. Due to advancements in IT technology, HBL uses many s/w in different


departments i.e. in Remittances department, in Account opening department,
for posting of checks, for jotting purposes etc.Which is a positive factor in their
competing sector.

4. Have more deposits than other bank in the country.

5. Largest customer base in the country.

6. Has more branches and therefore accessible to more potential customers than
any other bank.

7. HBL is ahead on experience curve than any other bank in Pakistan Has
experienced, world-class top management.

8. Have product innovation skills and resources.

9. HBL has the ability to cope with the pressure of competition and has several
times out of competition successful.

27
10. It has modern technology and resources to cater to its customers.

11. Staff is rich in experience.

12. HBL has the goodwill of the people and it is also an asset to it.

13. Has presence in all parts of the world. Thus also providing services to
Pakistanis outside the country.

14. Offer attractive schemes and more saving for customers from time to time.

15. HBL’s credit card is more acceptable than any other Pakistani bank credit card.

WEAKNESSES
1. Marketing skills of the bank are good but they have little presence at different
medias.

2. The lower level management lacks clear direction and is not having the
managerial depth.

3. Employees are lacking motivation.


4. They also fear of downsizing.
5. Have more employees, causing financial burden on the bank.
6. Bank is not utilizing its IT tools to its full limit and thus reducing the
efficiency.

7. Problem of unionism from employees.


8. Highest number of branches, affecting the maintenance of consistency and
same working atmosphere at everywhere.

9. Branch’s internal environment don’t presents smart image of the bank in most
of the cases.

10. Communication gap between different levels of management.


11. Most of the bank staff is computer illiterate.

12. More complicated and long procedure of account opening then any bank in the
country.

28
OPPORTUNITIES
1. Add new products/services to its product line.

2. Bank should take interest in the new market segments like IT business,
software business etc.

3. A big opportunity is to become innovator in introducing” Internet Merchant


Accounts” in the country.

4. Extending banking hours and providing more on branch facilities to customers.

5. Increasing credit facilities to lower groups, thus reducing the risk of loss and
also improving the image of the bank.

6. If new schemes are introduced for the overseas Pakistanis, then bank can get
the business of remittances more than any other bank or ”Hundi Business”.

THREATS
1. Increasing no. Of private/foreign banks in the country.
2. Global technological advancement.
3. Political –economical situation of the country.
4. Reduction in the business activities in the country.
5. Reducing rates of the savings in different segments of people.
6. Deteriorating confidence of people in banks.
7. Uncertainties of the investors.
8. Provision of better services by the private banks.
9. Lacks of consistency in Govt. Policy.

For SWOT analysis, we can conclude that the management of the bank should adopt
systematic planning for the bank’s growth, taking with them all management levels of
the bank, discover new segment of the customers, offering newer schemes for its
customers. Similarly HBL has more customer and their needs, then it will become
again the market leader.

29
HBL

ANALYSIS OF FINANCIAL RATIOS

RATIOS
Ratios are a valuable analytical tool when used as part of a through financial analysis.
They can show the financial standing of a particular organization, with in a particular
industry. But ratios alone can sometimes be misleading.

Ratios are just one piece of the financial jigsaw puzzle that makes up a complete
analysis. They cannot be used in isolation. Seasonally can distort ratios, as a
demographic and economic factor like cyclicality.

Many balance sheet ratios are not as helpful with service organizations that don’t
carry much inventory in interpreting financial ratios to assess the firm’s performance
and status. The basic inputs to ratio analysis are the firm’s income statement and
balance sheets for periods to be examined.

GROUPS OF FINANCIAL RATIOS


Financial ratios can be divided for convenience into the following groups:

1. Liquidity ratios

2. Debt ratios

3. Profitability ratios

Liquidity, activity and debt ratios primary measure risk. Profitability ratios measure
return. In the near term the important elements are liquidity, activity and profitability,
because these provide the information that is critical to the short-run operation of the
organization.

Analyzing Liquidity
Liquidity of the organization is measured by its ability to satisfy its short-term
obligations as they come due. Liquidity refers to the solvency of the organization
overall financial position-the case with which it can pay its bills.

30
HBL

The two basic measure of liquidity are:

1. Networking capital.
2. The current ratios.
TABLE

2016 (In 000 2017 (In 000 Rs)


Rs)

Current Assets 88825654 84136498

Current liabilities 525040105 608810966

Current Ratios
A measure of liquidity calculated by dividing the organization’s current assts by its
current liabilities i.e.

Current ratios=current assets/current liabilities.

The current for the previous year that is 31st December 2016.

Current ratio =88825654/525040105

Current ratio=0.170

The current ratio for the year that is 31st December 2017.

Current ratio=84136498/608810966

Current ratio= 0.138

Conclusion
The ratio is showing that in 2016 for every Rs 1 of liabilities the bank had Rs. 0.170
of assets as compared to 0.138 rupee for every 1 rupee in the year 2017 . The
liquidity ratio of the bank has declined but it is not at all danger sign if we consider
the economics ups and downs that affected the industry as a whole.

Analyzing Debt
The debt position of an organization indicates the amount of other people’s money
being used in attempting to generate profits. In general, the financial analyst is most

31
HBL

concerned with long-term debts, because these commits the organization to pay
interest over the long run as well as eventually repaying the principal borrowed.
Because creditors claims must be satisfied before the distribution of earning to
shareholders & prospective shareholders pay close attention to degree of indebtedness
and ability to repay debts. Lenders are also concerned about the organization’s degree
of indebtedness and ability to repay debts, because the more indebted the
organization, the higher the probability that the organization will be unable to satisfy
the claims of its creditors.

Management obviously must be concerned with indebtedness in recognition of the


attention paid to it by the stockholders and the increased interest in keeping the
organization solvent.

There are two general types of debt measures:

1. Debt to total Assets ratio.


2. Debt to share holder equity ratio.

Debt to Total Assets Ratio


The debt ratio measures the properties of the total assets financed by the
organization’s creditors. The higher this ratio, the greater the amount of other people’s
money being used in an attempt to generate profits.

Debit ratio=Total liabilities/Total assets

2016 2017

Total Debt 540618282 628754092

Total Assets 594061648 691991521

The debt total assets ratio for the previous year that is 31st December 2016.

Debt to total assets Ratio=Total Debt/Total Assets

Debt to total assets Ratio=540618282/594061648

Debt to total assets Ratio=0.91

32
HBL

The debt to total assets Ratio for the year that is 31st December 2017

Debt to total Ratio assets Ratio=628754092/691991521

Debt to total assets Ratio=0.9086

Conclusion
In the year 2016, for Rs. 1 assets to debt is Rs. 0.91, where as in the year 2017, for Rs.
1 assets, debt stands at Rs 0.9086

So this ratio shows that the bank has effectively used the assets in the year 2016.

2. Debt to Share Holder’s Equity Ratio


2016 2017

Total Debt 540618282 628754092

Total Equity 45177664 55063125

The debt to shareholder’s equity ratio for the previous year that is 31st December
2016.

Debt to equity Ratio=Total Debt/Total Equity

Debt to equity Ratio=540618282/45177664

Debt to equity Ratio=11.966

The debt to equity Ratio for the year that is 31st December 2017

Debt to equity Ratio=628754092/55063125

Debt to equity Ratio=11.42

Conclusion
This means that for each Rs. l brought by shareholders, the Creditors have brought Rs. 11.966 and
Rs. 11.42 during the years, 2016, and 2017 respectively, to finance Habib Bank limited. In 2017 the
debt of the bank has increased which is not a good sign. The bank thus, should bring some more
equity in order to be more stable.

33
HBL

Analyzing Profitability
There are many measures of profitability. Each relates the return of the organization’s
to its sales, assets equity or shares value. As a group, there measures allow the analyst
to evaluate the organization’s earnings with respect to a given level of sales, a certain
level of assets, the owner’s investment, of share value. With profits, an organization
could not attract outside capital. Moreover, present owners and creditors would
become concerned about the organization’s future and attempt to recover their funds.
Owners, creditors and management pay close attention to boosting profits due to the
great importance placed on

The main two ratios are;

1. Return on total investment (ROI)


2. Net profit margin
3. Return on shareholder’s equity ration (ROE)

Return on Total Investment (ROI)

The return on investment (ROI), measures the overall effectiveness of management in


generating profits with its available assets. The higher the organization’s return on
total assets, the better.
The return of total investment is calculated as;

Return on total investment (ROI) =net profits after taxes/total assets.


2016 2017

Net Profit/loss after 12700315 10084037


taxes
Total Assets 594061648 691991521

The return on total investment for the previous year that is 31st December 2016

Pr ofit / Loss after Taxation


Return on Investment Ratio = Total Assets

Return on Investment Ratio =12700315/594061648

Return on Investment Ratio=0.0213

34
HBL

Return on total investment for the year that is 31st December 2017

Return on Investment Ratio =10084037/691991521

Return on Investment Ratio=0.0145

Conclusion

This ratio shows that the Bank has earned 0.0145 Rupees for every 1 Rupee
investment in Assets in the year 2017 as compared to the 0.0213 rupees in the year
2016.

Net Profit Margin

2016 2017

Net Profit after taxes 12700315 10084037

Revenue 30481703 31327064

The net profit margin for the previous year that is 31st December 2016

Net profit after taxes


Net Profit Margin =
Re venues

Net Profit Margin Ratio=12700315/30481703

Net Profit Margin Ratio=0.4166

Net Profit Margin Ratio for the year that is 31st December 2017

Net Profit Margin Ratio=10084037/31327064

Net Profit Margin Ratio=0.322

Conclusion

This ratio indicates the net income per rupee of revenue. In 2017 1 rupee of revenue
contributes 0.322 to net income while in 2016 it was 0.4166.

35
HBL

Return on Equity (ROE)


It measures the earning power on shareholders’ book value investment. A high return
on equity often reflects the firm’s acceptance of strong investment opportunities and
effective expense management. Higher the ratio more the risk for entity, and more
returns for shareholders.

The return of equity ratio is calculated as;

Return on equity (ROE) =net profits after taxes/shareholder’s equity.

2016 2017

Net Profit after taxes 12700315 10084037

Shareholder’s Equity 45177664 55063125

The return on equity for the previous year that is 31st December 2016

Return on equity Ratio = net profit after taxes/shareholder’s equity

Return on equity Ratio =12700315/45177664

Return on equity Ratio=0.28

Return on equity for the year that is 31st December 2017

Return on equity Ratio =10084037/55063125

Return on equity Ratio=0.18

Conclusion

This ratio shows that there is 28% return on equity in the year 2016 as compared to
the 18% in the year 2017.

36
HBL

FINDING AND SUGGESTION

As we seen from the previous analysis of the financial statements we have


realized that that Habib Bank is performing very well since its inception. It is quite
difficult to give suggestion to improve the banking conditions Habib Bank Limited.
As we know that nothing is perfect, there is always a room for improvement, so I have
found during my internship can be made up taking into account the following findings
and suggestions.

INNOVATION:
First and the foremost thing I have found out is that the process of innovation is slow.
They can offer a lot new products and services in the country being one of the
strongest institutions of the country. E.g. they can make use of mobile technology for
facilitating their customers which have been started by some banks but they can offer
even new services by its use.

MARKETING OF HBL:
As we know by now that HBL is a very prestigious bank of Pakistan, in my view the
attention they pay to Marketing should be much more than what they are doing right
now. This does not mean that they are not doing well. My suggestion is that they also
emphasize on the new product that make them different from other banks of the
country. They should also educate through their adds that how much they are
important internationally.

IMPROVEMENT OF WORKING CONDITIONS


Working Condition in the branch should be improved, which will attract customers.
The attitude of staff, especially of the peons towards the customers & then officials
must be improved for the development & improvement of bank.

37
HBL

FAVOURITISM AND NEPOTISM:


Another finding is that of nepotism and favoritism in HBL. I met employees that have been
hired only because they are “sons” of the employees who had worked once in the bank.
This can be good to employ people from known background but this can be harmful as
talented people might not be given chance, and in our culture these kinds of employees are
sitting almost idle within the banks as they know no one can fire them from the job. The
upper management should keep friendly relations with all the staff members. It would result
in the feeling of equity amongst members.

USE OF COMPUTERS:
Computers have been provided to the employees of all the branches and departments
of the bank this device helps the employees in efficiency of their work i.e. completing
their work wit accuracy and in less time. Secondly it can maintain work and records
without any extra cost. Some of the softwares have been installed for the purpose.

ATMs
ATM has facilitated the customer to draw the required amount without facing any
difficulty from the bank within the 24hrs. as and when he/she wishes to draw amount
from that bank and its branches in the country. Askari Bank has recently introduced
mobile ATMs. HBL should introduce mobile ATMs in order to compete their
respected competitor.

Clearing House
If bank uses modern IT technology in their clearing House department (to send the
checks to different branches of same bank within the city). It will save the time.

Employee’s Track Record


Every bank should introduce IT technology (software) to keep record of their
respected employees i.e. Personal data, casual leaves, medical leaves etc, and so many
other advancements in technology.

38
HBL

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 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.

QUICK PROCESS OF CUSTOMER SERVICE

Delays in any form should be avoided, so that customers are not discouraged from the
bank services. And the full attention must be given to the customers because they are
often right.

WEAK CHECK AND INSPECTION

General banking department, particularly account opening section is not performing


well. In the absence of head of the section, they showed poor performance. I observed
that they did not accept one rupee and coins from their clients. Audit &inspection
division should be strengthened so that the branches should be frequently inspected &
the inspecting parties should especially see the public dealings of the employees.

PROMOTION

Promotion is not made on seniority or merit basis. Junior people having family
background or relatives of bank executives arrange their promotions through back
door thus depriving people from their due right. The strict rules & procedures should
be formulated to discourage this practice.

39
HBL

PERFORMANCE APPRAISALS

Evaluation of efficiencies & performance should not only be based on the total
volume of deposits; but it should be based on complete budgeting, profit earned or
loss incurred i.e. how much new customers are attracted to the bank.

40
HBL

CONCLUSION

The HABIB bank which was established in Bombay in 1941 with a paid up capital of
Rs 25,000 only, was shifted to Karachi, it was registered as a joint stock company for
carrying on all types of banking activities.

In early years, it has been largest subscriber to the Pakistan govt. & provincial
government’s loan and treasury bills, but with the passage of time it becomes more
enterprising in the credit field.

The banking system of Pakistan was badly disrupted immediately after independence.
Vigorous efforts were made to rehabilitate the system, with the Habib bank playing a
pivotal role in the scheme of re-organization of commercial banking.

The bank was nationalized in 1974 and from that year onward & to date is operating
as a public sector institution.

This has been providing credit facilities to a number of sectors at subsidized rates
under various arrangements. Export finance, local manufactured machinery,
government borrowing for commodity operations, mandatory production credit to
small farmers & direct industrial investment. The bank has been providing one
window financing facility to meet the local and foreign currency requirement of the
industrial projects & thus proved to be a successful vehicle to transform the
government policy of rapid industrialization into reality.

As a responsibility of using the various foreign currency credit lines, provided by the
World Bank & Asian Development Bank, the bank has been discharging its obligation
in a manner satisfactory to the financing agencies & to the best interest of the country.

In the conclusion one can say that the Habib bank has played a big role in the creation
& development of the country.

41
TABLE OF CONTENTS

INTRODUCTION OF HBL...............................................................................1

BRIEF HISTORY OF HBL............................................................................1

MISSION STATEMENT OF HBL.................................................................2

VALUE OF HBL............................................................................................2

ROLE OF HBL IN BANKING SECTOR......................................................3

OBJECTIVES and POLICIES OF HBL............................................................3

Policies of HBL..............................................................................................4

ORGANIZATIONAL REVIEW OF HBL..........................................................6

ORGANIZATIONAL STRUCTURE.............................................................6

DIVISION OF HBL’S OFFICE.....................................................................7

HBL’S ORGANIZATIONAL HIERARCHY.................................................9

hbl products and services...................................................................................9

HBL Credit Card..........................................................................................14

mY WORKING AT HBL MAKHDOOM PUR BRANCH............................16

DEPOSIT DEPARTMENT..........................................................................16

Bank’s Procedure and Internal Working After Opening an Account.............19

ACCOUNTS DEPARTMENT.........................................................................21

Bills Department..............................................................................................24

CRITICAL ANALYSIS...................................................................................25

SWOT ANALYSIS..........................................................................................27

STRENGTH.................................................................................................27

82
WEAKNESSES...........................................................................................28

OPPORTUNITIES.......................................................................................29

THREATS....................................................................................................29

ANALYSIS OF FINANCIAL RATIOS...........................................................30

RATIOS........................................................................................................30

GROUPS OF FINANCIAL RATIOS...........................................................30

Conclusion...................................................................................................31

Conclusion...................................................................................................33

Conclusion...................................................................................................35

Conclusion...................................................................................................37

FINDING AND SUGGESTION......................................................................38

Innovation:...................................................................................................38

Marketing of HBL:.......................................................................................38

IMPROVEMENT OF WORKING CONDITIONS......................................38

Favouritism and Nepotism:..........................................................................39

Use of COMPUTERs:..................................................................................39

TRAINING AND DEVELOPMENT PROGRAM.......................................40

PROMOTION..............................................................................................40

PERFORMANCE APPRAISALS................................................................41

CONCLUSION................................................................................................42

83

You might also like