Bank Al Habib Ltd.pdf 3j2t3

INTERNSHIP REPORT ON

BANK AL-HABIB LTD Submitted By: MUHAMMAD SHAHEER JAVAID Roll No. 60 M.Sc (Insurance & Risk Management) Session 2013-15

BAHAUDDIN ZAKARIYA UNIVERSITY, MULTAN

i

First of all thank to whom who is most merciful and kind to all of his creations with out any discrimination and who make us able to Prepare this report

We are proud on following personalities for being our friends and relatives that guidance helps us in the preparation of this report

ii

DEDICATION TO MY BELOVED PARENTS

Who always wishing and praying for My success in every sphere of life I pray to Almighty Allah to Enable me to serve them So well and kindly as they did In my life especially in my childhood

Aamin!

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PREFACE The management student must have sound knowledge of some practical procedure and functions of s and Computer being performed by different types of organizations.

That’s why, every student of Management is sent to some

organization where he acquaints himself with practical aspect of his studies.

In order to meet this requirement, I was assigned to prepare Internship report on The Bank Al Habib. During the training, I tried my best to acquire maximum knowledge about the functions of the banking and there by learned a lot, which in my view would be much beneficial to me in my profession carrier.

I do not claim of this report to be comprehensive and detailed but I am confident that the reader, after studying this report, will be aware of BAH and about its different departments.

Suggestion to improve the working and prosperity of BAH are added at the end of this report making it more comprehensive to some extent and strategic.

Muhammad Shaheer Javaid

iv

ACKNOWLEDGEMENT All praise to Almighty Allah, the most merciful and comionate, who give me skills and abilities to complete this report successfully I am grateful to my parents who are always been a source of encouragement for me throughout my life and from start to the end of this report I am thankful to all my staff so Bank Al-Habib Ltd Old Bahawalpur Road Main Branch Multan. I found every one very co-operative and helpful for providing me the Theoretical as well as practical knowledge about the function and operation of the bank. I express my greatest gratitude to my kindhearted, who was the Person who made me able to write this report, His enthusiasm shows the way forward to me to achieve this success and who kept me in high spirit through his appreciation. He helped me a lot each time I went up to him. My Special Thanks: Mr. Mehmood Zahid

(Zonal Manager)

Mr. Hussain Haider Qureshi

(Branch & Chief Manager)

Mr. Fraz Haider Zaidi

(Operation Manager)

Mr. Muhammad Asghar

( Opening Officer)

Mr. Mujahid Haideri

(ATM & Cheque Book Dealing)

Mr. Muhammad Imran

(Remittance Officer)

Mr. Muhammad Naseer

(Clearing Inward Officer)

Mr. Tahir

(Clearing Outward Officer)

Mr. Umar Bukhari

(Car Financing Officer)

Mr. Muhammad Musa

(Foreign Exchange Manager)

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EXECUTIVE SUMMARY The main theme behind this report is to help understand the major functions of the different departments of BAH as I had the opportunity of interning at this bank. As we know that Internship experience is very important and helpful before anyone goes looking for a job.

Employers want people who have experience. Internship gives

students the opportunity to grow, academically and personally. When anyone initially starts out he is going to be doing the menial repetitive task that every new person had to do. However this is not necessarily negative as it teaches the person responsibility at the smallest level. The major part of my report is a training program; you could read all my tasks which I assigned during the internship. This report is typically has been made on the BAH different activities, its promotion, segments, and target marketing. Readers will be able to read BAH customers retain technique and how BAH deal with the customers.

BAH main objective are to provide its customers with safe, secure, valuable and reliable service through wide range of products. The report covers all the product information provided by the bank.

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TABLE OF CONTENTS

History of Bank Al Habib:

01

DAWOOD HABIB

02

History of Habib group in Pakistan:

02

Introduction of Bank AL_HABIB:

04

VISION AND MISSION

05

Our Services

06

OBJECTIVES OF THE BANK

08

Planning

09

Process of planning

11

Purpose of organizing;

12

Democratic leader:

13

Process of control:

14

ORGANIZATION STRUCTURE

16

BANKING OPERATIONS

17

DUTIES OF A BANKER

17

S OF CUSTOMERS

18

CHEQUES

19

KINDS OF CHEQUES

20

(I) DATE OF THE CHEQUE:

21

2. PAYMENT BY CHEQUE: -

22

BANKER'S AUTHORITY TO TERMINATE THE PAYMENT OF CHEQUES:ENDORSEMENT:

27

REQUIREMENTS OF VALID ENDORSEMENT:

28

CLASSIFICATION OF ENDORSEMENT

28

Islamic Banking

29

For Machinery & Equipment (Leasing):

32

Declaration of Profit

35

OPENING SECTION:

38

Bank Al-Habib Term Deposit

41

AL Habib Salana Munafa

43 vii

CLEARING SECTION

46

FUNCTIONS OF THE SECTION.

52

INTERNET BANKING

53

CASH DEPARTMENT

57

SECURITY ARRANGEMENTS KEEPING OF EXCESS CASH

58

PRICING

62

Apni Car

64

Swot Analysis

65

Pest Analysis

68

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History of Bank Al Habib: Habib Esmail, founder of Habib Group, started his career in Bombay in 1891 at the age of 13 on a salary of Rs. 5 per month in a firm that dealt in copper and brass utensils. He worked day and night, arriving before the shop opened, staying till late in the night, and then walking home to save money on conveyance. No wonder that in the short span of five years, at the age of 18, he was made a partner in the firm. Even at that young age, he had established an excellent reputation for honesty, hard work, fair play, trustworthiness, humility. These values continue to guide the activities of Habib Group to this day. During the next 17 years, he captured over 60 percent of the local utensils business and diversified into export of copper, cotton scrap iron and manganese ore, selling to East Africa, Italy, and Great Britain. Being a person of great insight, he sent his representatives to Europe in 1912 and established branch offices in Genoa and Vienna. Simultaneously, he initiated business relationships with Japan and China. His reputation for honesty and fair play was so well known that his customers and local merchants would leave their surplus funds with him for safe-keeping and investment, thus establishing the foundation of the family's banking business. In 1921, he started Habib & Sons. The firm traded in cotton, oil seeds, and bullion and acted as a merchant bank. It eventually became the flagship of the family and the parent family and the parent company of Habib Bank Limited

Introduction of Habib family The history of the House of Habib goes back to middle of the previous-to-last century when Esmail Ali of Jamnagar, India, set up a small utensil factory in Bombay. His son Habib Esmail, born in1878, founded the House of Habib. Habib was very young when his father died, forcing him to the business of his uncle Cassum Mohammad, owner of Khoja Mithabai Nathoo, merchant, and manufacturer of copper and brass utensils. It was because of hisassociation with Mithabai Nathoo that Habib Ismaeel came to beknown as Seth Habib Mitha.

1

DAWOOD HABIB Habib and Sons was formed in the 1920’s to trade in cotton, copper, oil seeds, gold bullion and other commodities and to act as a merchant bank. This in turn led to the formation in 1941 of Habib Bank Ltd. Bombay, as a public limited company.

Introduction of Habib groups of companies: The Origin of what is now known as the Habib Group of companies can be traced to Habib Esmail,and his association with the firm of Khoja Mithabani Nathoo, a leading metals dealer established inBombay in 1841. Habib ed the firm at the age of 13 for a monthly salary of Rs. 5. Through hishard work and determination he became partner at the age of 18 and also became the president of theCopper and Brass Merchants Association.Habib sent his representative to Europe in 1912 and followed that up by establishing branch offices inGenoa and Vienna. Simultaneously, he began business relationship with Japan and China importinghosiery, yarn, glassware and cutlery and exporting cotton.He started the firm "Habib & Sons" in 1921 and changed the family name to "Habib". His four sonsnamely Ahmed Habib, Dawood Habib, Mohammed Ali Habib and Ghulam Ali Habib ed the business. The firm expanded rapidly - banking remaining a core business.This in turn led to the formation in 1941 of Habib Bank Ltd. Bombay, as a public limited company.The bank was to become the flagship of the family’s industrial and commercial ventures. Prior to thecreation of Pakistan the bank moved its head office to Karachi and played a vital role in providing the basic banking and financial needs of this new country.A network of branches and training centers were established in former East and West Pakistan.When all banks in Pakistan were nationalized in 1974, Habib Bank was one of the largest commercial banks in South Asia with 875 branches in Pakistan and 44 branches overseas, including 20 in theUnited Kingdom.

History of Habib group in Pakistan: The House of Habib holds many distinctions in Pakistan's history. Habib Bank was shifted to Pakistan on the personal bidding of Quaid-e-Azam Mohammad Ali Jinnah and came to the aid of the nascent state "even before the Govt of Pakistan was ready to issue appropriate government paper" with a Rs 80 million loan when the Reserve Bank of India failed to deliver Pakistan share of Rs 750 million held by it. It is said

2

that Mohammad Ali Habib gavea blank cheque on Llyod Bank to the Quaid-e-Azam who wrote Rs 80 million in it. (Anarticle in Habib Bank Golden Jubilee Presentation and a letter to the Editor in daily Dawn,September 11, 1991).

Habib Family's Business Units BANKING & FINANCE; Bank AL Habib

(Pakistan)

Habibsons Bank (UK & Switzerland) Habib Overseas Bank (South Africa) Habib African Bank (Tanzania) Habib Banking Corporation (Bahamas) Habib Investment Corp. (FZE) (UAE) Habib Capital Advisors Ltd (BVI) INSURANCE; Habib Insurance Co. (Pakistan) Green shield Insurance Brokers (UAE & Pakistan) REA L ESTATE; Habib Properties FZC (UAE) Green shield DevelopersGreen

(UAE)

shield Real Estate Brokers (UAE) Gulf Properties International (BVI) OTHER; Habib Sugar Mills (Pakistan) Habib & Sons (Pakistan, UK & USA) Habib Motor Company (Pakistan) Habib Foods (Pakistan) Habib IT (Pakistan)

History of Habib group in Pakistan: The House of Habib holds many distinctions in Pakistan's history. Habib Bank was shifted to Pakistan on the personal bidding of Quaid-e-Azam Mohammad Ali Jinnah and came to the aid of the nascent state "even before the Govt of Pakistan was ready to issue appropriate government paper" with a Rs 80 million loan when the Reserve

3

Bank of Indiafailed todeliver Pakistan share of Rs 750 million held by it. It is said that Mohammad Ali Habib gavea blank cheque on Llyod Bank to the Quaid-e-Azam who wrote Rs 80 million in it. (Anarticle in Habib Bank Golden Jubilee Presentation and a letter to the Editor in daily Dawn,September 11, 1991)

Introduction of Bank AL_HABIB: Bank AL Habib was incorporated as a Public Limited Company in October 1991 and started itsoperations in January 1992. It is a venture of the Habib Group, which owns 50% of the shares - 20 %shares are owned bank AL Habib was incorporated as a Public Limited Company in October 1991 andstarted its operations by NIT and 30% are owned by the general public. The bank operates in the private sector, with 30 branches in the major cities of Pakistan, and has its principle office at Karachi.It is a scheduled bank principally engaged in the business of commercial banking with a network of 233 branches including a wholesale branch (in the Kingdom of Bahrain, a branch in Karachi ExportProcessing Zone and four Islamic Banking branches. The Bank has invested in 66.67% shares of ALHabib Capital Markets (Private) Limited.The principal objective of the company is to engage in the business of equity, money market andforeign exchange, brokerage, equity research and corporate financial advisory

and

consultancyservices.

AL

Habib

Capital

Markets

(Private) Limited (the Company) was incorporated in Pakistan asa (Private) Limited Company on 23 August 2005 under the Companies Ordinance, 1984 and startedoperations from14 December 2005.AL Habib Financial Services Limited is a wholly ownedsubsidiary of the Bank. The principal objective of the company is to engage in arranging / advising onfinancial products and services. AL Habib Financial Services Limited was incorporated in Dubai on05 March 2008.Its commercial banking services also include acceptance and placement of funds in the interbank market; purchase and sale of foreign currencies; trade information and research; remittances andtransfer of funds; purchase and sale of government securities; Sui gas bills collection; and MCB rupeetraveler cheque services.

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VISION AND MISSION

VISION STATEMENT

TO BE A QUALITY FINANCIAL SERVICE PROVIDER MAINTAINING THE HIGHEST STANDARDS IN BANKING PRACTICES

MISSION STATEMENT TO BE A STRONG AND STABLE FINANCIAL INSTITUTION OFFERING INNOVATIVE PRODUCTS AND SERVICES WHILE CONTRIBUTING TOWARDS THE NATIONAL ECONOMIC AND SOCIAL DEVELOPME

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Our Services What can Home Remittance Division of Bank AL Habib do for you? Home Remittance Division at Bank AL Habib facilitates instant transfer of money sent by overseas Pakistanis through our dedicated agents free of cost to the remitter and the beneficiary. We are also facilitating Money Gram beneficiaries at our counters. Bank AL Habib holders will have their remittance directly transferred to their s whereas Cash Pick up facility is provided at all our branches. Furthermore, holders with other Banks are also facilitated.

How can you get your payments? For Bank AL Habib holders As soon as the remittance is received for our holders, we aim to credit the funds on an instant basis. Upon availability of correct mobile number SMS alerts are generated to the beneficiaries for their convenience.

For Cash Over Counter Payments / Cash Pick up Beneficiaries can collect their cash payments from any Bank AL Habib Home Remittance dedicated counter throughout Pakistan. For Branch network click here. You can receive your remittances for cash payments through the following three simple steps.

Step 1 Ask the sender / remitter for the reference number / PIN code.

Step 2 Visit any Bank AL Habib branch throughout Pakistan with the given reference number / PIN code and your original CNIC or port.

Step 3 Fill a simple form and collect your payment instantly from the designated Home Remittance counter.

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Upon availability of correct mobile number SMS alerts are generated to the beneficiaries for their facilitation.

For Other Bank Holders If you are maintaining an with any other bank, funds will be transferred to your accordingly.

Product As defined by State Bank of Pakistan – (Small Enterprises) A small enterprises (SE) will be a proprietor or a partnership concerns which meets the following parameters, as per new SBP PR, are as follows: 

Number of Employees upto 20.



Annual Sales Turnover upto Rs.75 Million.

As defined by State Bank of Pakistan – (Medium Enterprises) Medium Enterprises(ME) means an entity, ideally not a public limited company which meets the following parameters, as per new SBP PR, are as follows: 

Number of Employees from 21 to 250 (Manufacturing & Services MEs)



Number of Employees from 21 to 50 (Trading MEs)



Annual Sales Turnover upto Rs.400 Million.

Recognizing the economic and regulatory importance of the Small Enterprises & Medium Enterprises, the facts and figures around the world reveal that being engine of economic growth, SE & ME sectors are considered to be the hub of employment creation and resource mobilization activities. The SME Division was established with an aim to provide SE & ME Banking and undertakes to strategically serve this important segment. BAHL believes in simplification of procedure and reduction in turnaround time and quality services.

We offer the following facilities to the customers: 

Working Capital Financing.



Procurement of Inventory,



Receivable Financing.



Procurement of Machinery. 7



Expansion of production facilities



BMR.



Import / Export.



Guarantees.



Auto Leasing

OBJECTIVES OF THE BANK Commercial Banks operate under profit motive and perform various functions in a modern society. Bank al habib of Pakistan is a commercial Bank till with socioeconomic objectives e.g. to earn profit and at the same time develop the economy of the country and uplift the socioeconomic status of community. The main objectives of the Bank are as follows-

1. MAXIMUM PROFIT As the name of the Bank indicates that it was established to finance the nation. As a Business organization its objective is to earn more and more profit by the least expenditures.

2. GOOD ISTRATION. A good istration is an objectives of the Bank. Without proper istration no organization can run successfully. A good istration should have the following qualities:a:

Quick decision.

b:

Correct decision.

3. CUSTOMER SERVICE. The main objective of the Bank is to serve his customers. It serves the customers on both directly and indirectly. Bank collects money from an individual, firms, and limited Companies etc. It also gives loan to the people.

4. DEVELOPMENTS. Banks spending large amount of its profit for its own development. Therefore, the large amount of its profit is spent on opening the new branches of the bank and 8

increasing the work efficiency of the Bank.

5. EXPENDITURE DISCIPLINE. Bank is trying to minimize its expenditure. So, it keeps strict control over expenditure and avoids wastage of money at every stage.

6. ZONAL INSPECTION. Every branch should be inspected by Zonal inspector at least once a month as directed by Principal Office under B.D. may from time to time.

7. MAXIMUM UTILIZATION OF STAFF. The staff requirement of the most branches is sufficient. However, services should be utilized systematically for effective functioning. 

Management function



Planning



Organizing



Leading



Controlling

Planning Planning is Defining organization goals and objectives.Establishing overall strategies for achieving those goals.Developing a comprehensive set of plans to integrate and coordinate organization work.

Types of planning: Bank Al Habib us e both formal and informal types of planning;

Informal; In informal planning, their planning is not written down, short term focus and specific toan organizational unit.

9

Formal; In formal planning, their planning is written down, specific, long term focus and involvesshared goals for the organization. Goals and objective: 

Financial strength and profitability by making profitable advances.



Customer satisfaction by providing higher quality of services at an affordable cost.



Growth by expending branch network and deposit base.

Short term objective; 

Profitability

Long term objective; 

Profitability



To optimize the use of resource

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Process of planning Mission: To be a strong and stable financial institution offering innovative products and services

whilecontributing

towards

the

National

economic

and

social

development”. Strategies Strategies of bank Al Habib are giving loans and accepting deposits.Types of strategies used by bank Al Habib; cost leadership strategy, differentiation strategy, focusedstrategy and etc. Plans Plans of bank Al Habib are short-term and long-term advances & deposits. Programs Programs of bank Al Habib are up to one year or more then one year advances, fixeds, and etc. Policies: Policies of the bank Al Habib are profitability, by making profitable advances and customer’ssatisfaction by providing best services at an affordable cost. Rules: The rules are define the upper level management according to situation. Budget: Bank Al Habib always met its budget Organizing Managers work in organization. But what is an organization?An organization is an arrangement of the people to accomplish some specific purpose. Your colleges,university, banks, governments departments are all organizations because they have three commoncharacteristics.First; each organization has a distinct purpose. This purpose is typically expressed in of a goalor set of goals that the organization hope to accomplish.Second; each organization is composed of people. One person is working alone is not an organizationand it takes people to perform the work that’s necessary for the organization to achieve its goals

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Purpose of organizing; Divide work to be done into specific jobs and departments in bank Al Habib. Assign tasks and responsibilities associated with individual jobs in bank AlHabib. Coordinates diverse organizational tasks in Bank Al Habib. Establish relationship among individuals, groups and departments in Bank Al Habib.

Types of organization I. Tall vs. Flat: Bank Al Habib is a tall organization. II. Multinational vs. National: Bank AL Habib is a multinational organization. III. Single vs. Branch: Bank Al Habib is a branched organization. IV. Mechanistic vs. Organic: Bank Al Habib is an organic organization. V. Big vs. small: Bank AL Habib is a big organization.

Leadership: “The process of influencing a group of people towards the achievement of pre selected goalsis called leadership”. & “The person who makes this process or who can influence others / group of people and who has managerial authority is called a leader”. Traits & skills of Leader: The leaders of bank Al Habib have the following Traits & Skills in themselves. 

Decision making



Risk taking and risk bearing



Stress taking & stress bearing



Communication power



Motivation power



Honesty



Strong vision

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

Interpersonal skills



Market forecasting skill



Consistency



Step forward



Discipline



Competitive skills

Types of leader: There are three basic types of leaders; 

Dictator



Democratic



Laissez-fair

NOTE: But the Bank Al Habib has the democratic leaders.

Democratic leader: The leaders, Bank Al Habib have, are the types of “Democratic. Because the major portion of the bank is “decentralized”, that’s why the each leader has the complete power of decision making, but they are working “collaboratively” in whole organization with each other. All leaders of bank are involved in decision making, delegating their authorities to their higher qualified employees, encouraged the participation of their employees in work and gives them opportunities of coaching in well manners.

Motivation: Motivation is the very important skill of the leader, without the motivation skill the leader does not work effectively in the organization. Motivation of the employees to done the certain task and achieve the organization goals is too much important in the organization for its operations. Motivation is the duty of the leader toward his subordinate to do for the certain task to accomplish the organization goals.

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Control: Control is the process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviation.

Importance of control; Control is very much important because it is the final link in the management functions. It is the only way mangers know whether organizational goals are being met and, it not, the reasons why. The value of control function lies in its relation to planning, empowering employees, and protecting work place. In Bank Al Habib the importance of control can not be neglected because it’s a service base organization and deals with finance. Every employee in this organization has direct of indirect interaction with financial activities and finance play the key role in the progress of the bank. That’s why there is significance importance of a good control over all the activities in the bank for progressing on the right path.

Process of control: A three-step process including measuring actual performance, comparing actual performance against astandard and taking managerial action to correct deviation or inadequate standards.

I. Measuring actual performance: To determine what actual performance is managers must acquire the information about the actual performance of the workers who are working in the organization and overall performance of theorganization. In Bank Al Habib managers get prepared statistical and financial reports about the employees and progress of the bank to see that where organization is going. In statistical reports there is all mentioned about the progress of employees that which employee have achieve how much targets at the end of the month which were given by there bosses

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II. Comparing actual performance with standards: The comparing performance determines the degree of variation between actual performance and the standard performance. Standards; In Bank Al Habib following standards are set to compare actual performance! General standard; 

Compliance with law



Reasonable assurance and safeguards



Integrity, competence, and positive attitude

Specific standards; 

Internal control system and all transaction and significant events must be clearly documented, and the documentation readily available for examination.



Transaction and other significant events are to be without delay recorded and properly classified.



Transactions and other significant events are to be authorized and executed only by authorized persons.



Key duties and responsibilities in authorized and executed only by authorized persons.



Qualified and continued supervision is to be provided to ensure that internal control objectives are achieved.



Access to resources and records is to be limited to authorized individuals and ability for custody and use of resources is assigned and maintained.



Managers are to; evaluate promptly findings and recommendations reported by reviewers. Determine proper actions in response to findings and recommendations, and complete, with in established time frames, all actions that

correct

or

otherwise

resolve

the

matters

brought

to

management’s attention.

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III. Taking correct actions: Corrective action in the organization corrects problem at once to get performance back on track. Management of Bank Al Habib revise the results from the comparison of the actual performance with the standards and then takes the corrective actions to solve that particular problem to ensure the achievement of targets in the organizations.

ORGANIZATION STRUCTURE BOARD OF DIRECTORS

EXECUTIVE BOARD

CHIEF EXECUTIVE

DIVISIONAL CHIEFS

PROVINCIAL CHIEFS

CIRCLE CHIEFS

ZONAL HEADS

BRANCH MANAGERS

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BANKING OPERATIONS The Bank provides a wide range of facilities for transacting money in and outside the country. Being' custodian of the money, it manages the assets in such a way that the Bank remain solve and liquid to a high degree so that it is able to meet the demand of the customers for cash payments. In the operation of a Bank, there i£~ a close relation between the Banker and the customer.

BANK AND CUSTOMER

Banker is a person, whether corporate or not who carries on the business of the banking. The customer is a person who has some sort of either current or fixed o~ some similar relation with a banker.

BANKER AND CUSTOMER RELATION

The relationship between Banker and customer is primarily that of debtor and creditor with the rules reserved where the customers are relying on a loan from the banker.

DUTIES OF A BANKER 1. To honor a customers cheques. The Banker's duty is to honor the cheques of the customers. i.

They are properly drawn.

ii.

The customers has balances to his credit.

iii.

The loan contract has been signed.

iv.

There is no legal bar attaching to the customers funds.

2. Standing orders:The Bank abides by the standing orders of the customers in making periodical payments on his behalf such as club, library and insurance perineum etc.

17

3. Secrecy of the customers. : The Bank owes a contractual duty not to disclose the customers financial position with out his consent.

4. Valuables for safe custody:The Bank takes care of the property deposited with it by the customers with or without charge. When a Bank does not charge, the Banker is called gratuitous bailey and when a specific charge is made, the Banker is then a paid bailey.

S OF CUSTOMERS A Bank should not open an for a customer unless his integrity and responsibility is duly authenticated by a responsible person known to the Bank.

By

opening of an , the Banker usually gets the specimen signatures on cards.

a. Authorities to sign an . - If a customer desires that his agent also operate on his , the Bank should get a precise written mandate from his customer. The person to whom the authority has been delegated will continue operating the till the authority is revoked in writing.

b. Mental patients: If the Bank comes to know of a customers lunacy, the Bank will immediately suspend the OPERATIONS on the until the court gives order or the Bank has full proof that his customer has fully recovered. When the customers is mentally unsound, the court appoints a receiver who operates the s under the direction of Master in Lunacy.

c.

Husband and wide : If husband and wife both open an it will be considered an ordinary t

by the Bank. At the death of the husband, the widow is fully authorized to withdraw the balance.

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d. Infants:An infant can open an with a Bank, but he is not allowed to overdraw the . If the infant customer wishes to have an over draft, an adult should draw and sign on indemnity contract.

e.

Partners:When an is opened by the partner they are to sign a mandate authorizing

any or all of their member to make with drawls. The partners are tly responsible for all the loans and other obligation incurred by the firm.

f.

Societies, Clubs etc:If an incorporate body opens an in a Bank, the committee of management

deputes certain of lice bearers to operate on the . The bank obtains a copy of the resolution of the society or clubs appointing certain to istrative funds.

If there is any change in the committee of management, it is notified to the

Bank immediately. The. of the society who are operating the or not liable for any draft.

g. Death of a customers:If a Bank receives the notice of a customers death , all operations on the are suspended until the executors or s produce the probate. All credits received after the notice of the death of customer are placed in a new for disposal by the executor or later.

CHEQUES A cheque is a bill of exchange drawn on a Banker and payable on demand. According to Dr. Hard, "A cheque is an unconditional order in writing drawn on a Banker signed by the drawer, requiring the Banker to pay on demand a certain sum in money to or to the order of a specified person or to learner." Cheque is merely an order on a Bank by its clients to pay a sum of money to himself or to a third party on demand.

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There are three parties involve in a cheque: (i)

The drawer.

(ii)

The drawee and

(iii)

The payee.

The drawer is the person who signs the cheque. The party which is authorized to pay back the money is called drawer. The person to whom or to whose or order the money is to be paid is called payee. A cheque in order to be valid must bear the signature of the drawer. It should be in writing preferable by means of a pen.

KINDS OF CHEQUES There are three kinds of cheques : 1.

Bearer Cheque:

ii.

Order Cheque: and

iii.

Cross Cheque:

(i) Bearer cheque: Bearer cheque is that which can be cashed from a Bank by any person who possesses the cheque and presents it at the counter.

(ii) Order Cheque: If the word bearer is struck off from the cheque, it then becomes an order cheque. Order cheque is a safe form of payment because it can not be encashed unless it is ascertained by a Bank that it is paid to the right person. If cheque is drawn payable to the order of a specified person the Bank will make the payment only after the identification of the specified person.

(iii) Cross Cheque: If the parallel lines are drawn across the face of the cheque and the words "& Co" are written between them, it becomes a crossed cheque. The payments made by the crossed cheque are the safest forms of payments because a cheque can only be deposited in the payee's or it can be endorsed to somebody's else by

20

the payee. The crossed cheque can not be cashed when it is presented at the counter of the Banker.

(I) DATE OF THE CHEQUE: (i) Undated cheque: If a cheque does not bear any date, the holder of the cheque can insert the date and cheque will quite valid.

(ii) Post dated cheque: The post dated cheque is, infect, not a cheque because it is not payable on demand. It is equivalent to a bill of exchange, when the cheque is due for payment, the cheque will be honored by the Bank.

If a Bank makes payment of post dated cheque before it falls due, the Bank would be liable to the drawer for the amount.

(iii)

Stale and Over due cheque: If a cheque is in circulation for an unreasonable period of time, the cheque is said

to be stale or over due. Normally, if the cheque is presented six on seven months after the date, it is marked as "Stale" or "out of date". The out of date cheque requires the confirmation of the drawer. (iv)

Alterations on a cheque: If the drawer is to make changes in the date or amount or in the name of the

person then full signature must be obtained on all the material alterations made on the cheque.

(v) Mutilated Cheque: If a cheque is torn in two or more than two-pieces and after pasting the pieces together is presented to the Bank for payment. the Bank would return it to the drawer marked, "Multitude Cheque". If the drawer confirms the mutilated cheque, the Bank's position is then quite safe.

21

2. PAYMENT BY CHEQUE: (i) Conditional payment: A cheque or bill of exchange is not a legal tender money. A debtor, therefore, can not compel a creditor to accept the cheque or bill of exchange as a means of payment. When the cheque is honored and payment is made by the Bank, the date is then effectual discharged.

(ii) Cheque through the post: If a cheque or other negotiable instrument is sent by post and is lost in transit and is presented and paid by the bank, the loss if any rests on the sender. However, if the creditor requests the debtor to send the cheque by post, than the risk is to be borne by the creditor.

(iii) Cheques as evidence of payment: When the payee receives the amount written on the cheque from the Bank, it serves prima face as evidence of receipt.

THE PAYING BANKER: 1. The obligation to pay: the paying Banker or the drawer Bank is under legal to honor his customer’s cheque provided:a.

There is sufficient credit in the of the customers to cover the amount written on the face of the cheque :-

b.

The cheque are properly drawn:

c.

Are not stale or over due: and

d.

There is no legal prohibiting the Bank to make payment.

2. Time Allowed for Payment: When a cheque is presented over the counter, the following rules are usually observed: a.

If a cheque is properly drawn and is complete in every respect it must ordinarily be said or dishonored at once.

22

b.

If a cheque is presented through a clearing House, then the rules of the Clearance House regarding time are to be observed.

c.

If the cheque of a customer is sent by another commercial Bank is to send the notification of payment or dishonor within 24 hours of the receipt of the cheque to the presenting Bank.

d.

If the holder of a cheque presents it through the post to the paying Banker the usual practice for drawer Bank is to send back the cheque instructing the holder to either present the cheque in person or the collection should be made through another Bank.

3. Payment in Due Course :If a cheque is drawn in proper form and is paid by the paying Banker in good faith the Bank does not incur any liability.

4. Protection of paying Banker: If the paying Banker makes payment of a cheque drawn on him with forged signature of the drawer, He will not be held responsible provided: a.

The payment is made in good faith.

b.

The payment is made in the ordinary course of Business.

Similarly, in case of crossed cheque, the drawer Bank is protected of the forged document only if a.

The payment is made in good faith:

b.

In the ordinary course of Business:

C.

Without the negligence of the Banker: and

d.

According to directions contained in crossing.

5. Fraudulent Alteration of amount:If a drawer draws the cheque in such a manner that it makes room for alternation of the amount, or hi signs a Blank cheque, and the Bank pays in good faith the amount which is fraudulently increased, the Bank will not be held responsible for the customers loss.

23

BANKER'S AUTHORITY TO TERMINATE THE PAYMENT OF CHEQUES:1. Countermand of payment: The drawer of a cheque can stop the payment of a cheque by informing the Banker either on telephone or through a special message or in writing. The Banker will mark on the orders not to pay or payment countermanded by telegram payment postponed pending confirmation present again:. If the cheque has been presented and cashed before the countermand is received in time, the Banker will stop the payment of the cheque even if he was about to pay.

In all such cases, where the payment is stopped well in time, the operative signatures are cancelled and the cheque is returned with a marked "Cancelled in error, payment countermand."

2. Customer's Balance:The Banker can refuse to make the payment of a customer's cheque1 if his balance is not sufficient to cover the cheque. However, if the Bank has allowed the facility of overdraft, the Banker is bound to make the payment provided the amount is within the limit of the overdraft.

3. Cheque is not an assignment of funds:A holder of a cheque can not ask the Banker to earmarl. credit balance of the drawer in his favor. If the customer's balance is sufficient to cover the cheque, the payment will be made. The cheque will be dishonored if the Balance available for drawing the cheque is not sufficient. The holder of the cheque can not either have an equitable claim against the drawer Banker.

4. Payment in due Course:The Banker will refuse to make the payment. of a cheque if : i.

It is not in accordance with the drawers instructions and

ii.

It is also presented after office hours or is not in the ordinary course of

24

Business.

5. Advising Fate By Telegram:If cheques are presented direct to the -Banker or through the collecting Banker with a request to wire fate and the paying Banker's answer is in the affirmative then the Banker has to make the payment even if he receives the countermand of payment written or oral from the Customer.

6. Marking Cheques:A drawer may get a particular cheque 'Marked' from his Banker. The Banker will retain the amount in order to honor the "marked" cheques. If' the other cheques issued by him are not covering his credit Balance, Bank will dishonor them for want of funds.

7. Forgery of the Drawer's signatures:If the Banker is doubtful of the drawer's signature of in the alternation of amount the Bank can refuse to make the payment.

8. Notice of Customers Death:The Banker will terminate the payment of a cheque if he receives the notice of the customer death.

9. Bankruptcy Petition:If the customer is unable to pay his debt i.e. he is insolvent, then he or his creditors present as petition to the court to take over the debtors, property for distribution among creditors. If the Bank receives a notice of t he refuse to honor the cheque forthwith.

10. Making of a Receiving order:If the customer is satisfied that the cu-stomer appears to be insolvent, it will immediately issue a receiving order. The Bank will refuse to make payment on the ment of receiving order of its customer in the news paper or on direct intimation from the court.

25

11. Trust Funds:If the Banker is satisfied that his customer by breach of trust is crediting the trust fund to his , the Banker may refuse to pay the cheques.

12. Garnishee Order:If the creditor of Banks customer gets a garnishee order from the court, the customer is not allowed to operate the by the Bank.

13. Closed:If the drawer has closed his , the Bank will dishonor the cheque presented to the Bank.

14. Mutilated Cheques:If a cheque is mutilated, torn or cancelled, the Bank will refuse to debit the of the customer. The payment on. the torn cheque can, however, he made, if it is confirmed from the drawer or from the payees Banker.

15. Difference in words and Figures, :If the amount stated in words differ from the amount expressed in figures, the Bank will refer the cheque to the drawer remarking: amount in words and figures differs.

16. Irregular endorsement:Ii the endorsement on the chequ-e is irregular, the Bank will not make the payment on the cheque presented to it.

17. Lost or Stolen Cheque:If a cheque is lost or stolen and the drawer informs the Bank well ii. time, the Bank will refuse to honor the cheque if presented after the receipt of the notice.

18. Stop Cheque note:If a customer informs the Bank orally or verbally for stopping the payment of the particular cheque, the Bank will obey the instructions and will put "Stop Cheque Notice" in red ink in the of the drawer. 26

19. Receipt of Notice of Indemnity:If the Bank comes to know that a particular customer has become insane or is of unsound mind and the Bank is satisfied that hi customer is unable to act rationally, the authority of the Bank to act as agent will then cease. If the Bank receives the lunacy order from the court, the cheques will be returned with the remark "refer to drawer.

20. t :If there is a t the Banker will get definite instructions as to how the is to be operated upon whether all of them shall operate the or delegate the authority to one. On the death of any party to a t , the balance rests in the surveyor or surveyors subject to an expressed authority on the contrary.

21. Partnership :-

In case of a partnership firm, every partner can open an in his name. But the Banker would not allow until and unless it is signed by all partners, giving the manner of operation. The death or retirement of a partner dissolves the partnership then the Bank should not allow any operation on such an .

22. Company :If the Company or a corporation wants to open an with the Bank it would provide a copy of resolution ed by the Board of Directors appointing it as a Banker to the Company, naming the person or persons authorized to operate the . If any authorized person draws a cheque on behalf of the company, then it would be dishonored.

ENDORSEMENT: A cheque or a bill is endorsed when the transfer puts his signature on the back or an along of a cheque and a bill as a part of its negotiation. If the cheque is bearer, it needs no endorsement. However, in our country, the Banker insists on getting the endorsement (signature) on the back of the cheque. If the holder of the cheque does not agree to put his signature, then he shall have to give a properly stamped receipt for

27

the amount paid to him. If the cheque or bill is drawn payable to order, it requires the endorsement of the transferor, so that the payment is made in due course

REQUIREMENTS OF VALID ENDORSEMENT: The main requirements of endorsement to be effective are as follows; 1.

The endorsement must be on the back or on an along of the cheque or bill. If the endorser simply put down his signature on the back of the cheque, the endorsement is valid.

2.

Endorsement may be made in ink, print, pencil or with a rubber stamp. The Bank prefers the endorsement to be wholly in ink as it is not liable to obliteration as well as alteration.

3.

The endorsement must be of the entire value of the Cheque and bill. Partial endorsement which may be in the name of one endorsee or more than one endorsees separately is not legally valid.

4.

If the number of endorsees or payees is more than one on the bill then all the payees are the endorse unless one endorsee has the authority to

endorse on

behalf of other payees as it is generally in partnership. 5.

Another important requisite of valid endorsement is that the endorsement must correspond with that of the drawing. For instance, if the name of the endorsee is misspells. The payee should also endorser the bill in the misspells version. However, the endorsee can at the proper signature, if he so desires. If the names of the payees are two or more than two, the endorsement should also be in the same order, which is penned down on the back of the bill.

CLASSIFICATION OF ENDORSEMENT The Main classification of endorsement are as follows:

1. Conditional endorsement : -If the endorsement makes the payment of a bill subject to the fulfillment of a condition or conditions, the endorsement is called conditional endorsement. The Bank or the payer can disregard the conditions and make the payment to the endorsee and the payment will be considered valid.

28

2. Blank Endorsement :It the endorser signs his name on the bill but does not give the name of any other person to whom he wishes to transfer the cheque, the endorsement is called blank. When there is no endorsee specified on the bill, it becomes payable to bearer even though it may be originally drawn to order.

3. Special Endorsement : -An endorsement which

specifies the name of the transferor for the payment of

the bill is called special endorsement. Special endorsement is payable to order. 4. Restrictive Endorsement: A restrictive endorsement is one which restricts or prohibits the further negotiation of the bill. For instance, pay to Hamid only signed by Rafique.

5. Partial Endorsement:If the bill purports to be endorsed for a part of the amount payable, the endorsement is called partial endorsement is legally in effective. This department consists 'if the following sections:1. opening section. 2. Deposit section. 3. Clearing section. 4. Remittance section. 5. s section.

Islamic Banking Bank AL Habib Limited is a well established commercial bank in Pakistan, which has also been licensed by the State Bank of Pakistan to undertake Islamic Banking through its Islamic Banking branches. Bank AL Habib’s Islamic Banking Branch offers Deposit Schemes and Islamic Financing for Individuals / Traders / Industries which are completely based on Islamic Shariah principles.

All arrangements / documents relating to above are Shariah compliant and have

29

been approved by our Shariah Advisor. He will regularly monitor all Deposits and Financing to ensure that these are Shariah compatible. Introduction to Shariah Advisor – Mufti Dr. Ismatullah Mufti Ismatullah is the Shariah Advisor of Bank AL Habib Islamic Banking. He is a PhD in Islamic Economics. His thesis – Zar (Money) in light of Shariah – is considered as one of the useful researches of Islamic Economics. Mufti Islamtullah holds the degrees of “Aalim-e-Deen” and “Takhassus Fil Fiqh” from Jamia Dar-ul-Uloom, Karachi. He has been teaching Quran, Hadith, Fiqh, Philosophy and Arabic Grammar in Dar-ul-Uloom since 1993. Mufti Sahab has a vast experience in issuing Shariah rulings (fatwa) and is currently serving Dar-ul-Ifta’ of Dar-ul-Uloom. So far he has issued about 20000 Fatwas regarding different topics and Shariah issues.

He is a renowned research scholar, his research papers have been published in Monthly “Al Balaagh”. He wrote a book “Guide to Takaful or Islamic Insurance” which will be published very soon.

Mufti Sahab is also a member of Shariah Advisory Board of Pak Qatar Takaful Group.

All products are approved by our Shariah Advisor and all transactions are personally supervised by him.

Islamic Financing We also offer Islamic Finance for Individual / Traders / Industries, etc. These finances are offered in the following forms: 

Murabaha Finance



Ijarah Finance (Leasing)



Diminishing Musharakah Finance



Istisna Finance

30

All arrangements / documents relating to above are Shariah compliant and have been approved by our Shariah Advisor.

a) Murabaha Finance A contract between the Bank and a Customer under which the Customer first purchases certain goods/commodities/assets as an Agent of the Bank, and the Bank after taking possession of the goods/commodities/assets sells it to the same Customer by adding certain profit margin to its cost.

Murabaha Financing is available for: 

Local purchase of Assets/Commodities/Goods.



Imports under Letter of Credit/Firm Contract.



Purchase of raw material for exports.



Local purchase of raw materials for production of Goods/Assets.

Shariah Compatibility: 

Assets must be Shariah compatible.



All agreements/documents approved by our qualified and experienced Shariah Advisor and regular monitoring/checking of Murabaha transactions by the Shariah Advisor.

Customer’s Guidance: 

Murabaha is always allowed for fresh purchases.



Goods shall not be used by the Customer before the Murabaha offer and acceptance are signed.



Rollover in Murabaha is not allowed. However, fresh purchases can be made under new Murabaha arrangements.



Murabaha price once fixed cannot be changed.



In case of late payment, Customer will have to pay certain amount to charity fund as per Murabaha Agreement.

31

b) Ijarah Finance (Leasing) Ijarah is basically the transfer of usufruct of a fixed/durable asset to another person for an agreed period, at an agreed consideration. Under Ijarah agreement the asset will be given to the Customer on rent for the period agreed at the time of contract.

For Vehicles (Commercial/Personal use): 

Ijarah agreement and other document approved by our qualified and experienced Shariah Advisor.



Periodical rentals to be fixed according to Customer needs at very competitive .



Regular monitoring and checking of Ijarah transactions by our Shariah Advisor.

For Machinery & Equipment (Leasing): Machinery (for small, medium and large industrial units) and office equipment. 

Lease agreements and other documents approved by our qualified and experienced Shariah Advisor.



Periodical rentals to be fixed according to Customer needs at very competitive .



Regular monitoring and checking of Ijarah transaction by our Shariah Advisor.

c) Diminishing Musharakah Finance (For Shirkat-ul-Milk) Diminishing Musharakah is a form of partnership in which one of the partners’ promises to buy the equity share of the other partner gradually until the title of the equity share is completely transferred to him. This transaction starts with the formation of a partnership, after which buying and selling of the equity takes place between the two partners. Diminishing Musharakah can be used for plant & machinery, equipment, buildings and automobile financing.

Principles of Diminishing Musharakah (Shirkat-ul-Milk): 

Diminishing Musharakah (DM) is a form of co-ownership in which the client and the bank share the ownership of a tangible asset in agreed proportion and the client undertakes to buy in periodic installments of the proportionate share

32

of the bank until the title to such tangible asset is completely transferred to the client. 

Diminishing Musharakah can be created only in tangible assets. Diminishing Musharakah shall be limited to the specific asset(s) and not to the whole enterprise or business.



A DM would consist of the following three steps



Creation of t ownership between the bank and the client.



Renting out by the bank undivided share in the asset owned to the client.



Selling its share in periodic installments by the bank to the client.



All other and conditions as are essential to co-ownership, Ijarah and sale shall be fulfilled in respect of different stages in the process of DM arrangement.



Proportionate share of the client and the bank must be known and defined in of investment.



Loss, if any, shall be borne by the bank and the client in the proportion of their respective investments.



The amount of periodic payment would go on decreasing with purchase of ownership units by the client.



Each periodic payment shall constitute a separate transaction of sale.



Separate agreements/contracts shall be entered into at different times in such manner and in such sequence so that each agreement/contract is independent of the other in order to ensure that each agreement is a separate transaction.



Following are the documents to be executed in DM Financing;



Diminishing Musharakah Agreement



Rental Agreement for moveable/Immoveable Assets



Agreement for purchase of Musharakah Units



In case a client fails to honor the undertaking, as aforesaid with regard to the periodic payment and purchase of sale of units as the case may be, the asset may be sold in the open market and the bank aggrieved by such failure shall be entitled to recover:



Actual loss, defined as the difference between the market price and price mentioned in the undertaking, if any, not being the opportunity cost.



ny gain on sale of property, shall be shared by the bank and the client in proportion of their respective investment at the time of such sale. 33



The bank shall be entitled to recover outstanding periodic payments in respect of the period for which the client has actually used or possessed the asset which shall be payable to the bank.

d) Istisna Finance Istisna is a contract of sale of specified item(s) to be manufactured or constructed. It is an order to a manufacturer to manufacture a specific commodity for the purchaser. It is necessary for the validity of Istisna that the price is fixed with the consent of the parties and that the necessary specifications of the required items are fully settled between them. The Istisna price can either be paid in advance, or in installments or at the time of delivery of goods.

Istisna Financing is available for: 

Manufacturing of specified item(s).



Construction of buildings, plants, highways, bridges, under Build, Operate and Transfer arrangements.



Manufacturing of aircrafts, ships, machines, plant/factory and equipment.

Shariah Compatibility: 

Goods/Material/Specified items that require manufacturing or construction must be Shariah compatible.



All agreements/documents approved by our qualified and experienced Shariah Advisor and regular monitoring/ checking of Istisna transactions is being done by the Shariah Advisor

34

Declaration of Profit Declaration of Profit on various Deposits for the Quarter ended June 30, 2014 Bank AL Habib Limited – Islamic Banking has declared the following Profit Rates: Products

Profit Rates

Saving Deposit (1 – 999,999)

5.31%

Saving Deposit (1,000,000 – 9,999,999)

5.46%

Saving Deposit (10,000,000 – 49,999,999)

5.68%

Saving Deposit (50,000,000 & above)

6.06%

Mahana Savings

6.44%

AL Habib Tijarat (Current Remunerative)

0.02%

Term Deposit - 7 Days

6.52%

Term Deposit - 1 month

6.82%

Term Deposit - 3 months

7.58%

Term Deposit - 6 months

8.19%

Term Deposit - 1 year (profit to be paid on monthly)

8.49%

Term Deposit - 1 year (profit to be paid on maturity)

8.94%

Term Deposit - 3 years (profit to be paid monthly)

9.10%

Term Deposit - 3 years (profit to be paid on maturity) 9.32%

Term Deposit - 5 years (profit to be paid on maturity) 9.40% Foreign Currency Saving (USD)

0.66%

The above profit rates have been approved by our Shariah Advisor.

35

Profit Sharing Mechanism for Distribution of Profit for next three months i.e. from July 1, 2014 – September 30, 2014.

The Bank is currently offering Term Deposits and Saving Deposits under the principle of Mudarabah. The Bank will calculate the profit of the deposit pool after every quarter. Profit will be distributed at the Net Income level i.e. Gross Income less direct expenses, write-offs/charge-offs and loss on sale of investments. In case of comingling of Bank’s equity with depositors’ fund in pool, the Net Income/Loss of Pool shall be allocated between the Bank’s equity and the depositors’ fund in proportion to their respective share in pool. Net Income of the deposit pool will be shared between the Bank (Mudarib) and depositors (Rab ul Maal) on the basis of a pre-determined profit sharing ratio. The Bank’s profit sharing ratio will be 50% of the Net Income and Depositor(s) profit sharing ratio will be 50% of the Net Income after the allocation of profit to Bank’s equity in proportion to the respective share in the pool. The profit is distributed among the holders on the bank’s predetermined weightages, announced at the beginning of the quarter based on their respective category/tiers. At the end of the period, the Bank may unilaterally reduce its profit sharing ratio for the benefit of all the deposit categories in a pool. In case of a loss, as per the rules of Mudarabah, the deposit pool will share the loss in the ratios of investment of depositors.

36

Weightages declared for the 3rd quarter i.e. (1st July, 2014 – September 30, 2014) are:

S. #

Products

Weightages assigned

1

Saving Deposit (1 – 999,999)

0.70

2

Saving Deposit (1,000,000 – 9,999,999)

0.72

3

Saving Deposit (10,000,000 – 49,999,999)

0.75

4

Saving Deposit (50,000,000 & above)

0.80

5

Mahana Monthly Saving

0.85

6

AL Habib Tijarat (Current Remunerative)

0.002

7

Term Deposit - 7 Days

0.86

8

Term Deposit - 1 month

0.90

9

Term Deposit - 3 months

1.00

10

Term Deposit - 6 months

1.08

11

Term Deposit - 1 year (profit to be paid monthly)

1.12

12

Term Deposit - 1 year (profit to be paid on maturity) 1.18

13

Term Deposit - 3 years (profit to be paid monthly)

14

Term Deposit - 3 years (profit to be paid on maturity) 1.23

15

Term Deposit - 5 years (profit to be paid on maturity) 1.24

1.20

For Foreign Currency Deposit Pool The Bank’s profit sharing ratio will be 90% of the Net Income and Depositor(s) profit sharing ratio will be 10% of the Net Income. The above mechanism has been approved by our Shariah Advisor

37

OPENING SECTION: A. HOW TO OPEN AN There are certain formalities which are to be observed for opening of a current or saving with a Bank. These formalities in brief are as under-

i.

FORMAL APPLICATION: The customer is to filling " Opening Form 11 It is a formal request by a

customer to the bank to allow him to have and operate the current or saving .

ii. OBTAINING INTRODUCTION:The bank before opening , and obtains introduction of the customer from old customer, responsible person etc.

iii. SPECIMEN SIGNATURE when the Banker is satisfied about the integrity of the customer, he agrees to open the . The Banker obtains the specimen signatures of the customer on the signature book or on card.

IV. MINIMUM INITIAL DEPOSIT:In Pakistan the current can be opened with a minimum of Rs. 500/- and PLS Saving with a minimum of Rs 100/- These amounts are also the minimum balances to be maintained by the holders with the Bank.

V. OPERATING THE . When an is opened in a Bank, the Banker gives to the customer. i.

Pay in slip book.

ii.

Cheque Book and book with a view to operate it.

IV. PRECAUTIONS IN PREPARING THE BOOK:The Banker should be careful in preparing the book However, the customer himself should.

38

i.

Send the book for making entries and also periodically check up them.

ii.

He should also see that the entries are initialed by the ant.

iii.

The customer should the entries with own books of .

iv.

In order to safe guard the secrecy of the , the customer should receive the book in closed cover.

B. WITH-DRAWL. Withdrawal is made on cheques supplied by the Bank. A new cheque book is issued only on receipts of the requisition slip attached to the cheque book issued previously and this presented along with the depositor book for entire against cheque book challan. Cheque book is issued on discretion of the branch manager.

C. INTEREST. The current rate of interest allowed on deposit in saving Bank is ascertained at the Bank. This rate is subject to change. The amount of interest is calculated for each calendar month on the lowest balance at credit of an between the close of the sixth day of a month and the end of the month and only on every complete sum of ten rupees. Every is made up half yearly to 30th June 31st December, and the interest calculated as above is added to the balance of each as on these dates.

D. TRANSFER OF AN . can be transferred to any other branches of N.B.P. free of charge. If a depositor wants to transfer his , he presents his book personally or sends it to Bank and writes an application for the transfer of an .

E. CLOSING OF AN : A depositor willing to do ,e his must present his book in order that with drawls and the amount of interest due on the is entered therein and final balance stuck. This balance is then paid to the depositor and his receipt is taken, the book is canceled, unused cheque forms on hand are also surrendered at the same time.

39

F. SECRECY: The secrecy of depositor’s is the. responsibility of every official engaged in the Bank service.

G. MONEY DEPOSITED OR DRAWN BY POST: When money is sent by post for deposit, the book and a letter starting the amount of the deposit and the number of the accompany it. When a depositor wishes to withdraw money by post he must forwards his book with a letter starting the number of his , the amount to be drawn and either the money is to be remitted by money-order or in currency notes ed.

H. TYPES OF BANK . i.

Saving Saving is that in which customer puts his surplus money which

he saves from his daily expenditure. The can be operated by depositing a minimum cash of Rs. 5/-. Small percentage of interest is allowed on the balance of this .

ii. CURRENT : The current is that one which the customer draws his daily cheques and is normally operated by the Business-men. It can be operated by minimum amount of Rs. 500/-

Any number of cheque amounting undue minimum balance limit can be

issued by the holder for withdrawal or for payment. No interest is allowed on this .

iii A t occurs when two or more than two customers have one . The parties to a t are considered in law as they are one person.

iv. PROFIT AND LOSS SHARING . This can be operated by ~ person, firm or organization by depositing Rs. 100/- or above. The holder of this will get profit of his amount, or he will bear the loss as the case may be. So an individual is equally participant in profit and loss.

40

The holder of can withdraw upto Rs. 15,000/- per month is eight withdrawals, in case of higher withdrawal, seven day prior notice is necessary. This is operated under interest free system.

v.

FIXED DEPOSIT . In this an amount is deposited into the Bank for a fixed period of time. The

fixed period may be three months, six months, one year, two years, five years and more. The Bank allows a higher rate of interest for larger period. At the time of operating on the Bank issues deposit certificates for the period and amount. The holder can not withdraw his amount before the specified period, but the same Bank will allow loan against that certificate. Bank is liable to give interest on this on maturity date.

2. DEPOSITS SECTION: There are two types of deposits i.e. current and saving There are different forms present in the section of or deposits. 1.

Current form.

ii

Saving form.

iii

Private or individual form

iv

Private firm form

In he above mentioned forms, the bank makes an agreement with his customers.

Bank Al-Habib Term Deposit Bank Al-Habib is currently offering the best term deposit for the one year tenure. Their product, Salana Munafa is presently maintaining the highest profit payout rate when compared to all other one-year term deposits. With markup rate as high as 11% per annum, Bank Al-Habib term deposit offers flexible conditions to its customers with easy balance maintenance requirements. Some of the impressive features of this term deposit are highlighted below. 

Minimum balance requirement as low as Rs. 25,000. This condition helps expand the potential depositor base as lower and middle income individuals can avail this product for a low volume term deposit as well.

41



One year tenure is an optimal time period for fixing ones savings in a term deposit. Lower tenures pay lower markups and higher tenures increase the risk of breaking the term deposit and further foregoing accrued profits.



Each individual has the option to avail a line of credit equivalent to 90% of their deposit amount. This facilitates the fixture of an individual’s savings for the one year tenure.

Deposit Schemes Bank AL Habib Limited, Islamic Banking Branch, invites participation in the following deposit schemes: 

AL Habib Current s



AL Habib Saving s



AL Habib Term Deposits

The above deposit schemes are based on the Islamic Shariah principles and have been approved by our qualified and experienced Shariah Advisor.

a) AL Habib Current s 

It is non-profit earning with cheque book facility.



ATM, Debit Card and Online Banking facilities are available.



Funds will be used for investments and providing finances to trade and industries on fully Shariah compliant basis.



Regularly reviewed by qualified and experienced Shariah Advisor.

b) AL Habib Saving s 

Based on Islamic principles of Musharakah / Mudarabah.



Profits and Losses to be shared as per prescribed rules.



Profits to be paid every six month in January and July.



Profit to be calculated on the basis of weightages, to be announced at periodic intervals.



ATM, Debit Cards and Online Banking facilities are available.



Funds will be used for investments and providing finances to trade and industries on fully Shariah compliant basis.



Regularly reviewed by our qualified and experienced Shariah Advisor.

42

c) AL Habib Term Deposits 

Based on Islamic principles of Musharakah / Mudarabah.



Available in tenures of 3 months, 6 months, 1 year, 3 years and 5 years.



Profit to be paid periodically or on maturity as per rules.



Profit to be shared according to a system of weightages, to be announced at periodic intervals.



Funds will be used for investments and providing finances to trade and industries on fully Shariah compliant basis.



Regularly reviewed by our qualified and experienced Shariah Advisor

Mahana Munafa Mahaha Munafa can be opened with an amount of Rs. 25,000/-. Profit will be paid on the 1st working day of each month. 90% financing allowed against deposit. Deposit will be rolled over on maturity for same period at prevailing rates unless otherwise requested by the customer. Profit may be drawn through Cheque or ATM at any branch of Bank AL Habib. Profit is subject to Zakat, Withholding Tax and other Government Levies unless exempted. If the deposit is encashed before completing tenure, the profit on such deposits will be calculated as per rate of last nearest completed tenure plus profit on the remaining number of days deposit held as per prevailing savings profit rate

AL Habib Salana Munafa 

AL Habib Salana is a deposit and can be opened with Rs, 25,000/-



All other rules applicable to PLS Savings will also apply to AL Habib Salana inculding Zakat, Withholding Tax and other Government Levies unless exempted.



If the deposit is encashed before maturity, profit will be calculated and paid for the period held at the rate applicable to Savings .



AL Habib Salana profit is paid on yearly basis.

43



The indicative return payable on "AL Habib Salana " deposit effective July 01, 2014 is 9.10% per annum. (The rate of profit on deposit schemes are current and subject to change)



Up to 90% financing allowed against deposit

Young savers ; Young Pakistanis, Bank AL Habib has designed a new specially for you, ...your own Young Savers . Features; 

This is an for Young Savers of up to 18 years.Visit the nearest Bank AL Habib branch with your parent/guardian to open your Young Savers . You can open an with as little as Rs.5/=



Rate of return on Young Savers is expected to be well above the return on normal savings s. Currently indicative rate of return on balances

up

to

Rs.500,000 is 10%

P.A

and for

balances over Rs.

500,000 is 5% P.A, payable six monthly. 

Young Savers will have Internet Banking facility and ATM Debit Card available to your parent/guardian



Young Savers

of 16 years and more will also be eligible to receive ATM

Cards and can withdraw money through ATMs, if specifically authorized by their parents/guardians (certain conditions apply). 

Until you the Young Savers are a minor, i.e., below 18 years, the will be operated by your parent/guardian. When you attain majority, the balance in the will be transferred to a new which you will open and operate after completing required formalities, including the concurrence of your parent/guardian.



Bank officers will also visit your school to help you open Young Savers and collect your deposit

PLS saving : 

Profit is paid out to your on six-monthly basis.



There is NO Minimum Balance requirement for PLS Savings .

44



The indicative Return Payable on "PLS Savings " deposits with effect from July 01, 2008 is 5.00 % per annum.



Free Life and Disability Insurance cover for holders.

Monthly profit plan: 

This plan adds to the earning ability of your PLS Savings with Bank ALHabib.



Your profit is paid out / credited every month to your instead of six-monthly as in case of PLS Savings .



NO Special forms or applications, NO Minimum Balance requirement.



The indicative Return Payable on "Monthly Profit Plan" deposits with effect from July 01, 2008 is 5.00 % per annum.



Free Life and Disability Insurance cover for holders

Treasurer’s call; Corporate societies, trusts and even individuals have large funds which are generallyidle. Such funds can be put to This plan is open to Current Deposited . Access to such funds requires only a 24 hour notice. Profit is calculated on a daily product basis and credited to your monthly. The applicable rates for the Treasurer's Call Deposited ,effective January 1, 2005 are: work to earn handsome profits via the AL Habib Treasurer's

Growth certificates Bank AL Habib has now introduced “5 Years Growth Certificates” for its customerswhich are for a longer tenor at very attractive rates. Receipts may be issued on PLS TermDeposit Receipts clearly marked “5 Years Growth Certificates”.

Super saving Bank AL Habib has introduced Super Saving to meet your needs.

Features of Super Saving . 

Profit is Paid to your on a quarterly basis.



Minimum Deposit in the must be 500,000 or above.

45

Her mah munafa imdani main izaffa: AL Habib Mahana Munafa High Returns Reliable and Convenient

Senior citizen ; High Returns Reliable and Convenient 

In case of a t the Senior Citizen will be the primary holder and other t holders must be between 18 and 60 years of age.



Profit will be paid on the first working day of the next month



Up to 90% financing allowed against deposit..



The indicative return payable on "Senior Citizen's " deposit effective November 01,2008 is 11% per annum.



Free ATM Card.



Profit may be drawn through Cheque or ATM from any branch of Bank AL Habib.



Profit is subject to Zakat, Withholding Tax and other Government Levies unless exempted.

CLEARING SECTION Every Bank performs the paying and receiving functions. Cheques are collected which are drawn upto Banks for customers. Similarly the cheques drawn on different Banks and deposited by Banks own customers for collection within the city is know as clearing The functions of receiving and paying is mostly done through the clearing house. A clearing house can be defined as "AA place where that representatives of all Bank get together to settle the receipts and payment of cheques drawn on each other" Clearing House provides the facility which can hardly be dispensed with especially, in case of crossed cheques. There are two main types of clearing. i Outward clearing ii

Inward clearing.

46

i.

OUTWARD CLEARING: It includes those cheques and other instruments which are sent by the Bank to the

Banks for payment on behalf of its own clients. Cheques are sent to clearing house thorough local main branch. A delivery message from the local main branch comes to every branch at a fixed time to pick its outward clearing or outward returns as the case maybe.

Outward Clearing At Branch a.

number of payee/endorsee is written on the back side of the cheques.

b.

The instrument and the paying in slips are separated.

c.

The instruments are sorted I Bank-wise and branch wise.

d.

Schedules are prepared.

e.

Jotting of all the schedules are taken in the clearing House statement. Amount of the cheques in written in the "Delivered" and to pay column.

f.

After balancing the outward clearing, the pay in slips are released to C.D. department.

g.

After balancing, a transfer debit voucher is prepared.

h.

The instrument, schedule. etc. are delivered to the messenger from the main branch.

ii. INWARD CLEARING. The cheques drawn is called inward clearing. drawn on National Bank through its representatives on the Bank presented by other Banks for payment It includes those cheques and other instruments of Pakistan branches which other Banks present at the clearing house.

Inward Clearing At The Drawn Branch a.

Number of instruments noted in the schedules are verified immediately. on receipt.

b.

The amount's of all the instruments are jotted down and totaled. If should be equal to the amount mentioned in schedule from the local main branch.

c.

The amounts are debarred to the relevant s if otherwise in order.

d.

The IBCO is prepared crediting the amount of the main branch. 47

e.

If there is any return, that is deducted from the total and IBCO prepared for the remaining amount.

TYPES OF CHEQUES COLLECTED BY CLEARING SECTION. 1. TRANSFER CHEQUES. These are the cheques which are collected and paid by same branch of N.B.P. For example Mr. Ali is a customer of N.B.P. of Khaplu branch and draws a cheque in favor of Mr. Hussain who is also the customer of the same branch.

2. TRANSFER DELIVERY CHEQUES. The cheques which are collected and paid by two different branches of a Bank situated in the same city. for example a person draws a cheque on N.B.P. main branch, DIKhan in favor of another person who maintains an with N.B.P. Rakh Mandra branch, DIKhan.

3. CLEARING CHEQUES. When the payee/endorse and the drawer of cheque maintains with different Banks, the collection Bank in any one of the following methods:a.

it can collect cash by sending its representative with the cheques to each of the paying Banks. It is not so much appropriate.

b.

the Bank maintains an with the paying Bank.

c.

the cheques can be exchanged by representative of the various Banks who meet at a fixed time and at a fixed place. This is the most efficient method of collection and paying cheques.

FUNCTIONS OF CLEARING SECTION IN A BRANCH. a.

To accept transfer, transfer delivery and clearing cheques from the customer of the branch a~ d to arrange for their collection.

b.

To arrange payment of

cheques drawn on the branch and gives for collection

to any other branch of BAH or any other member or such member of local clearing house. c.

To collect amounts of cheques drawn on of the local clearing house

48

sent for collection by BAH branches not represented at the local clearing house.

PROCEDURE FOR CLEARANCE OF CHEQUE. The customers are provided with the copes of pay4n-slip, whenever the customer wants to deposit any cheque, he fills in the pay in slip himself and hands it over the counter along with the instrument.

REMITTANCE SECTION Remittance means transfer of money from one place to another place. It is of two kind. I.

Inland remittance.

II.

Home remittance.

1. INLAND REMITTANCE. An inland remittance means a transfer of money payable at a certain place within the country. Inland remittances can be classified as under:a.

Within locality.

b.

Out side locality.

a. WITHIN LOCALITY When a branch situated in DIkhan is required to send drafts to any other branch situated in the same city The process is know as within locality. For example BAH Main Branch, DI Khan sends any draft to BAH Rakh Mandar branch ,DI Khan.

b. OUTSIDE LOCALITY. Outside locality is an important type of inland remittances, which means the transfer of money payable outside the city. For example, BAH Main Branch DIkhan sends any draft to a Branch situated at D.I.Khan. It is commonly done through the following three means:i.

Telegraphic transfer (T.T)

ii

Mail Transfer (M.T)

iii

Demand Draft (D. D)

49

i.

TELEGRAPHIC TRANSFER In telegraphic transfer, the Bank takes commission and telegram charges from the

sender.

A receipt is issued to the sender for the value received.

The Bank itself transfer the funds to the drawee branch though a coded message in telegram, confirmatory of which is also sent through routine dak mentioning all details. All bank Branches have been provided with their code books name Bank Keys Code Book where from the coded message is agreed by the drawee branch. T.T. can be sent open, which may be paid in cash in drawee branch, or may be direct y creditable to relevant .

ii

MAIL TRANSFER (M.T.) The Money can be remitted through this means also. In this case the payable

amount at the drawee branch can only be transferred to an , amount can not be paid in cash. Other procedure is same as T. deposit of money at sending branch. Difference is only of postage and. telegram charges. The M.T. which in its self is an advice also is sent by ed post, while T.T. is sent through telegram.

iii DEMAND DRAFT (D.D) Demand draft is a written order by a branch of a specified Bank, drawn on another branch of the same Bank to pay a certain sum of money only to or to the order of the Payee. Demand drafts are purchased by the clients and after receipt of money Bank issues and delivers the D.D. to the purchaser, who himself sends it to the payee. In D.D. the Banks do not recover postal charges as it is payable by the purchaser. The Bank, after deliver of D.D. to the purchaser also sends its own advice called IBCO (Inter Branch Credit Order) to the drawee branch mentioning therein all details of issued draft.

SECTION. Every Business organization deals in money matters. Bank also deals in money and more over since the money belong to the depositors therefore, it is of utmost importance to keep systematic and correct record.

50

Further-more, the Banks are commercial institutions and its main objective is to earn profit, therefore, then record of all incomes and expenditures are kept correct an(t systematically. In BAH the responsibility for maintaining necessary ing data and to keep upto date records In a systematic manner has been assigned to the s Department. The Branches of Bank Pt perform their daily routine work and deal in money that belongs depositors. Here department hold great importance in banking, because it keeps all the ing records properly.

S The department maintain all the ing records properly There are certain ing which are defined into the following-

1. A summary of all debit and credit transaction pertaining to a similar nature or to an individual or body of persons is called an .

2. VOUCHERS A written evidence recorded on a price of paper in respect of a money transaction is called voucher.

3. GENERAL LEDGER. Main ledger is a book, where various s of different type are kept. Generally this book is in binded form containing several sheets for several s.

4. SUBSIDIARY LEDGER. Where a main head has got different sub-head of it: subsidiary leader are maintained. These subsidiary ledgers are maintained from the main ledger.

BOOKS AND STATIONERY The department uses the following books and stationerya.

Cash book cum-general ledger.

51

b.

Abstract book.

c.

Income and expenditure ledger.

d.

of vouchers

e.

Transfer book.

f.

Receiving cashier book.

g.

Paying cashier book.

h.

Supplementary sheets.

i.

Different vouchers.

FUNCTIONS OF THE SECTION. The main functions of the section of a branch are as follows: 1.

Balancing and maintenance of books.

11.

Preparation of statement.

During the course of daily business of the branch, a number of cheques are presented by customer for cash payment, though transfer, delivery and clearing cheques at the counter. Also a number of new s are opened and cash is deposited by the customers. A number of new vouchers are ed by the branch by debiting, one and crediting another .

So in order to ensure that during the day all the transactions have properly been recorded and they are complete in all respects and are recorded in proper books by the branch this recording is done on daily basis and maintained by section.

1. BALANCING AND MAINTAINING OF BOOKS. Balancing the cash book means that all the transactions have properly been recorded and there is no mistake in any of these vouchers. 1.. Arrangement of voucher. 11. Preparation of suplimentaries. 111. Preparation of summary. iv. Agreement of total of the summary, with the total of transfer book.

52

2. PREPARATION OF STATEMENTS. To Judge the performance of branches, the Head Office requires periodic statements from them. Through these statements the top management watches the progress of the branches and they provide them necessary guidance, The top management decisions depend upon these statements also. The following are the important statements prepared by the section: a.

Balance sheet on daily basis.

b.

Pak on daily basis.

c.

Provisional income and expenditure statement on monthly basis.

INTERNET BANKING What is Internet Banking? Internet banking is a real-time solution that allows you to access your s 24 hours a day, 7 days a week. You may do your banking from the convenience of your own home or office without visiting the branch or ATM. You may check your balances; view your statements and transaction history for your various s. You can also transfer money between your s, change your etc over the Internet all in a secure manner.

What do I need to make use of this service and how does it work? Our Internet Banking is easy to use. All you need is a personal computer or laptop that is connected to the Internet.

What are the requirements to use Internet Banking? 

You need a Bank AL Habib .



You must be a customer who has ed for our Internet Banking service.



You need a PC/ Laptop with Internet access.

How do I for Internet Banking? If you are already a customer with Bank AL Habib, here are the things you need to do: your concerned branch, where your is maintained, for the Internet banking application form. Upon filling the form, your name and

53

will send to you, after 5 working days, from the date of submitting the application form. You can also print the Internet Banking Application Form from online, www.bankalhabib.com Please read the & conditions carefully and print a copy and/or retain the information electronically for future reference.

I'm already signed up for Internet banking. How do I sign-on? As long as you have Internet connection, log on to Bank AL Habib website and click on the Internet Banking. Enter your name and at the prompt.

What banking transactions can I perform with Internet Banking? Internet Banking enables you to manage your s and investments more easily. It also gives you greater control over balances, transfers and fixed deposits. The following services will be available for customers:

Info and Other Services 

Balance Inquiry



Statement



Cheque Book Request



Fixed and Call Deposit



Cheques in Clearing



Change



Address Change Request



Funds Transfer



Bill Payment



Remittance Request



Usage

Credit Card Services 

Balance Inquiry



Transaction details



Credit Card Payment



Change



Usage 54

How secure is Internet Banking? The information you provide is kept strictly confidential. And the latest electronic encryption technology ensures the secure transfer of information over the Internet. Because security is important to us, we have built safety measures into Bank AL Habib which reflect the importance of this issue. You'll be allowed to change your own , and all information sent and received is encrypted.

How does the Bank AL Habib make sure that only I can access my s? You must enter Internet Banking every time you access the system. The is known ONLY to you.

What can I do to maximize security? 

Keep your secret.



Never leave your computer unattended while logged on to Bank AL Habib Internet Banking service.



Don't use your date of birth, telephone number, address, your name or the name of a friend or relative in your .



Lock your when you from Bank AL Habib Internet Banking service.

How often do I have to change my ? We recommend that you change your frequently. Your is your 'key' to Online Banking, so it's important that you take precautions to keep it safe. Under the Online Banking Conditions of Use, you are obliged to protect your . To change your , use the 'Change ' link within your Online Banking session.

How secure is Online Banking on a shared computer? As long as you log off properly and maintain appropriate personal security procedures, your Online Banking can be just as secure on a shared computer as a personal computer.

55

Does Bank AL Habib charge to use the Internet Banking Application? No

What if I forget my name and ? If you forget your name and , You should your concerned branch, where your is maintained during banking hours or call anytime at 111 -014 – 014 for assistance.

Can I view all my s via the internet? Yes, you can view all your various s.

What do I do if I notice an unauthorized transaction has gone through my ? If you believe your Internet Banking information has been negotiated or you notice a transaction you did not initiate, you must your concerned branch, where your is maintained or call 111-014-014.

If I transfer money today, can I take it out at the ATM? If you transfer funds to your Bank AL Habib s, which allow access via the ATM, you will be able to withdraw any available funds immediately.

Can I transfer money overseas? No. To arrange an International Telegraphic Transfer, please your concerned branch, where your is maintained.

Whom should I talk to when encountering trouble in using Internet Banking during banking hours or after banking hours? You should your concerned branch, where your is maintained during banking hours or call anytime (24 hours a day, 7 days a week) at 111 -014 – 014 for assistance and . We look forward to serving you.

56

CASH DEPARTMENT PROCEDURE OF CASH RECEIPTS AND PAYMENTS The cash department is the largest department in Banking. The basic goals or objective of the Bank are to earn profit. Therefore, receive money from their clients and invest in business. The adopted in the Bank is as under

TOKEN The payments are made only against the tokens. The tokens are issued by the clerk deputed for this job. The branches have code numbers of There own branch engraved on the existing stock of tokens. When the cashier makes payment against tokens, he ensures that beside, the token number, the Code number is also correct. The token are checked daily by the officer responsible for checking of cash and he tallies the number with the number shown in the stock on hand in the furniture and fixture .

CASH RECEIVED STAMP. "Cash Received Stamp" remains under the custody of an Officer only. Cashier is not allowed to handle the stamp. The stamp is affixed and under officer signs in the paying-in-slip or voucher only after satisfying himself that such paying-in-slip or voucher in properly signed in full by the cashier or the Officer receiving cash in token of having received the cash. An appropriate sign board which displayed at cash counters in the branches which clearly gives indication to the depositors that such Cash Receipts will not be valid if signed by one signatory only. The depositors thoroughly check their receipt of cash deposits that these bear two authorized Signature.

At branches where then is no cashier, this stamp remains in the custody of an officer other than the person who receives cash.

In the afternoon, the stamp is safe

in along with the cash in hand. Entries in the Receiving cashier's Book is initialed by the Officer holding the "Cash Received" stamp only after tailing the figures in the ed with the figures given in the vouchers or the pay-in-slip.

57

RECEIPTS AND PAYMENTS Before payments of all cheques, the cashier or paying officer satisfies himself that the cheques have between duly posted, supervised and cancelled by authorized persons It is the responsibility of the Manager or the Sub-Manager who check the cash, and the totals of the receiving and paying cashier's Book.

SAVING-IN-CASH-CHECKING THEREOF The Manager or the officer checking the cash, checks the cash physically in the afternoon before the cash is safed in. Loose and unstitched notes of all denomination as well as stitched notes of Rs. 100/- denomination are physically counted.

In addition, the number of sticked

bundles and sealed bags containing coins are properly checked and tallied with the cash position before the cash is safe-in. It is the personal responsibility of the Manger and Sub-Manager to see that till such time the cash is safe-in, One Officer always remain in the branch. The branch hours of the officers art so fixed that at least one officer remains in the branch till the cash is safe-in. When the cashier goes to lunch, be safes-in the cash properly and does not leave it in his drawers or in box. All the branches are given a limit permission for keeping cash. No branch is allowed and are strictly prohibited to keep excess cash to its prescribed limit.

DEFECTIVE AND CUT NOTES Defective and cut notes are not issued by the Bank to the public. Branch collects sufficient fresh and re-issuable notes from State Bank of Pakistan to meet the requirement of The customers in particular and public in general.

SECURITY ARRANGEMENTS KEEPING OF EXCESS CASH The branches takeout, in ~e morning that cash from the safe which is needed for days transactions, keeping in mind that some payments could be made from receipts also. During transaction hours large receipts are transferred to the safe immediately to

58

void accumulation of cash in the department. The Manager of the branch checks the armed Guard who remains in the branch or accompany the cash actually know how to handle the gun. At night a Guard sleeps in the branch premises as the wage commission award if called upon, he is bound to do round the clock duty. During counter hours no other work is taken from the Guard except to guard the premises. The Guard stands behind the counter and in a position that they can not be over powered easily. In the case of robbery the Guard has within his

rights and is

fully protected if he opens fire with a view to injure or even to kill the Dakotas at the time of commission of robbery or when they are escaping with the loot. The Guard care instructed by the Zonal Chief on the Manager of the Branch.

CASH-IN-TRANSIT At the time of feeding cash to the branches or lift surplus cash from the branches the cash is accompanied with a gun-man an Officer and a cashier. The boxes containing with cash are locked. Whenever The cash is transferred from the van to the branch or vice versa, the gun-man accompanying the cash and of the Guard Branch are standing on Guard at some distance with loaded gun so that any attempt of robbery may be failed. Cash is not taken out from the cash trunks in the van but the locked cash trunks are taken inside the branch, the necessary amount of cash is delivered. The branch Manager thoroughly checks up the antecedents of the occupants of the adjacent shape; boarding the walls of the branches in order to ensure that a burglary by breaking the wall or digging a tunnel underneath is avoided.

PETTY CASH. An advance for petty cash is given to the cashier on the first of each month by debit to suspense . Advance for "Petty Cash" payments. form petty cash are made on the authority of the Manager givens on the relative petty cash Memo.The cashier maintains a petty cash statement/. The supervisory Officer checks the regularly and initialed on it. The advance is kept separate from other money in cashier’s hand, At the end of the month

the Suspense entry is adjusted by

debiting the amount expended to Expenditure under relevant sub-heads.

59

The petty cash Memos are attached with the relative expenditure voucher. At least once in a week the balance of the advance given for petty cash is verified by a supervisory officer on different day. Similar verification is carried out by the Manager or second officer at least once a month on different days.

EXCESS/SHORT CASH At the time of Balancing the cash by the Cashier if the Manager finds that the cash is in excess. In such cases, the excess is kept in Sundry Deposit sundry Creditors by ing a credit voucher. If any claim there after is received by branch it is paid to the claimant after thorough scrutiny by reversing the entry of Sundry Deposit-Sundry creditor . Similarly in case of short cash, a voucher debiting Suspense Sundry Debtor is ed by the branch. The short cash is immediately report to Zonal and as per instruction of Zonal Office/Head Office the entry of Suspense Sundry Debtors is reversed.

CASH BALANCE BOOK Daily cash balance with the details of The denominations of notes is recorded in the cash balance book, which is signed by the cashier and Manager of the Branch, who have checked the cash. In this connection the branches are instructed that the cash balance book should be kept in steel cabinet under lock and keys and it should never be kept in the cash safe of the branch. A memo of such cash balance duly signed by Manager is also prepared and attached to the General vouchers of the branch.

CASH FINANCE The smartest way of fulfilling your personal & family needs, while keeping your savings intact. Now take advantage of a hassle-free personal loan at the most competitive rate against your National Savings Certificates, Pak Rupee/Foreign Currency Deposits & First Habib Cash Fund units. The AL Habib Cash Finance is a secured personal loan which offers both Running Finance Facility (RF), which is

60

a Revolving line of Credit with quarterly mark-up servicing, and a Term Finance Facility (TF), for a period of 1 Year to 5 years, to make your repayments easier with equal monthly installments.

SALIENT FEATURES 

Prompt & Hassle Free Processing



Balance Transfer Facility is also available



No Processing Fee



Documentation Charges (At Actual).



No Pre-payment Penalty



Third Party security of Bank AL Habib Deposit is allowed



Free ATM/ Debit Card



Free Online Banking



Free e-Statement/ Internet Banking Facility

ELIGIBILITY CRITERIA 

All Resident Pakistani Individuals such as Salaried, Self Employed & Business Persons.



Satisfactory Credit History

Required Documentation ALHABIB CASH FINANCE Application Form Copy of CNIC BBFS Latest salary slip / Salary Certificate (For salaried person) Bank Statement for last six Months (For Business Person) Any other document of income proof, if available Currently Liability declaration *As per the prescribed SBP format)

FINANCE AMOUNT 

Minimum Finance amount is Rs. 50,000/-



Maximum (90% against PKR Deposits / Encashment value of Securities and 85% on FCY Deposits)

61

PRICING 

Financing upto Rs. 5.0 Million Against Bank AL Habib PKR Deposits



Running Finance: 2.00% over Deposit Rate



Term Finance: 1.50% over Deposit Rate



Financing upto Rs. 5.0 Million (Against FCY Deposits and Permissible Government Securities)



Running Finance: 2.00% over 3 Months Kibor



Term Finance:l 1.50% over 1 Year Kibor



For Financing of over Rs 5.0 Million



Running Finance: 1.50% over 3 Months Kibor



Term Finance: 1.25% over 1 Year Kibor



Aggregate Debt Burden 50% of net disposable income

FAQs Q. What kind of financing facility does the Bank provide under AL Habib Cash Finance? A. We offer both Term Finance (TF) & Running Finance (RF) Facility for individuals for meeting their personal, family or household needs.

Q. What is the amount of financing offered under AL Habib Cash Finance? A. Minimum Finance amount is Rs. 50,000/- . Maximum (90% against PKR Deposits / Encashment value of Securities and 85% on FCY Deposits).

Q. What is the mark-up rate? A. For amount up to 5 Million: In case of PKR Deposit with BAHL taken as security minimum 2.00% spread on deposit rate for Running Finance and 1.50% on deposit rate for Term Finance. In case of FCY Deposits and Permissible Government Securities taken as security minimum 2.00% over on 3 Months KIBOR for Running Finance and 1.50% on 1 Year KIBOR for Term Finance. B.

For

amountRunning Finance: 1.50%

over 5 Million :

over 3 Months Kibor Term

Finance: 1.25%

over 1 Year Kibor

62

Q. What is the frequency of mark up repayment? A. Quarterly mark-up payable in Running Finance is payable within 15 days of its becoming due. Monthly mark-up payable will be included in Equal Monthly Installment for Term Finance. Late Payment charge of Rs. 500/- shall be applicable after due date.(in case of Post Dated Cheques)

Q. What is the security that I will have to offer to avail AL Habib Cash Finance? A. Defence Saving Certificates, Special Savings Certificates & Regular Income Certificate issued by the Government of Pakistan under the National Saving Schemes and purchased through Banks, State Bank of Pakistan Offices and National Saving Centers shall be acceptable as security.

Q. Will third party security be acceptable? A. Yes, it shall be only acceptable if the third party is a BAHL holder.

Q. Will the facility be extended against third party certificate holders? A. No. Only certificate holder shall be facilitated.

Q. Can my Behbood Certificates be considered as security? A. No. As per SBP regulations, only DSCs, SSCs, RICs are acceptable.

Q. What is the processing fee for this facility? A. There is no processing fee for the AHCF Facility; however, documentation charges are at actual.

Q. What conversion rate would be applicable on FCY Deposit? A. Bank would be taking prevalent selling rate (applicable on the day) for calculating the facility limit.

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Q. How is the loan entitlement calculated? A. AL Habib Cash Finance shall not exceed 90% of the encashment value of the security offered. In case of financing against Foreign Currency Deposit the maximum financing should not exceed 85% of the deposit encashment value.

Q. What is the clean-up requirement under AL Habib Cash Finance? A. There is no clean-up requirement.

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SWOT Analysis:

SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.

a)-Strength: Attributes of the organization that are helpful to achieving the objective. Strengths of bank Al Habib are as follows:  ATMs at bank Al Habib are secured friendly and easy to access.  Younger’s of the bank Al Habib is good source of promotion for bank Al Habib.

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 Bank Al Habib’s brand name is itself a strength  Bank Al Habib provides online as well as physical training for its employees all over world  Bank Al Habib have the more then 230 branches in Pakistan  There is a huge variety of products and services  They do not consume to much capital on the marketing of their product  Less risk in their banking system because they are not easily give the credit facilities to the customer  Brand name is also the strength of the bank Al Habib.  Decent way of dealing with the customers.  Rapidly expansion of branches in the different cities of Pakistan.  To much focus on the development and the promotion of the employees.  Proper online banking system.  No too much threat of the political environment.  Sufficient liquidity position.  Do well socially 

Habib schools 50% concession for the poor peoples

 Current ratio is above 20% of the total deposits  Controlling Standards

b)-Weaknesses: Attributes of the organization those are harmful to achieving the objective. Weaknesses of bank Al habib are as follows:  Bank Al Habib is not quick to give loans and cards.  Not Easy application is for applying for a credit card  No marketing for the promotion of their marketing.  They are not high risk taker In business activities but in business the term is used “high risk high profit, low risk low profit”  Too much poor Self Marketing Department.  Low incentives like bonuses overtime pay etc.

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c) – Opportunities: External conditions those are helpful to achieving the objective. Opportunities that Bank Al Habib can avail are as follows:  There is a lot of cushion available for Bank Al Habib in of expanding its network of branches up to 230 but all this depends on stability of the Pakistan economic and political situation  The opportunities available for Bank Al Habib are financing to SME’s (Small and Medium Enterprises) in Pakistan.  Bank Al Habib can also look for small holders  Bank Al Habib has an opportunity to merge with some other bank to increase the number of its branches in Pakistan.  Attractive salary packages should be awarded.  Marketing department should be started in order to promote the name of Bank Al HAbib.  On the job training & coaching sessions can be conducted.

d)- Threats: External conditions which could do damage to the business's performance Threats that could affect Bank AL Habib in negative way are as follows:  Day by day competition is increasing not only of the expansion of the banks but also due to the launching of the new bank in the market e.g. Barclays.  Circumstances of Pakistan are a great threat for the existence of the Bank Al Habib.  More and more banks are launching there operations in Pakistan which is increasing competition for the Bank AL Habib.  The conventional banks those having high growth rate and high market share are always being a threat.  Large business parties have fewer attractions in being a client of BAL-IBD, mainly because of excessive amount of documentation.

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PEST analysis:

Political forces; The events in the last couple of years; the bomb blast of May 28th 1998 and the subsequent freezing of the FCA’s, the declaration that Riba is Un-Islamic, and a volatile political scenario that saw the overthrow of the Nawaz Sharif regime, all contributed in highlighting the important role of government in the local economy. The freezing of the FCA’s destroyed the confidence of foreign depositors.

Also, the

declaration that Riba is against the Sharia, is likely to cause tremendous uncertainty in the banking sector. After this Pakistan’s army totally holds on the government and push back the economy. Stability under the new regime is also very important for the economy as a whole. Continuous political changes have disrupted the policies and objectives as each regime brings with it its own agenda. Organizations need time to 68

adjust to one regime and then work with it towards economic enhancement. Due the wrong policies of the government the talibanization also develop in Pakistan and become the international issue in Pakistan and badly affected the Pakistan repute in the world and promote the uncertain conditions for the business in the Pakistan. Due to this the investors are not interested in the Pakistan.

Economic factors; The Pakistan economy is more controlled economy, then one where market forces reign supreme. Several key institutions are stated owned. Thus a discussion of the economic forces that influence the private organization such as bank Al Habib cannot ignore the substantial role played by the government in determining the state of the economy. The biggest indicator of the heavy role enjoyed by the government was evidence when foreign currency s (FCA’s) were frozen on the orders of the ministry of finance in the wake of explosion tests on may 31st 1998. This and the recent efforts by the state bank to artificially lower the interest rates by revising the repo rates downwards and encouraging lower bids for T-Bill, highlights the overwhelming role of the government in the economy. Badla rates are a true indication of market rates at which financial intuitions are willing to lend but the government, under the dictates of the IMF wants to artificially lower the interest rates so as to provide investment liquidity within the economy. General Musharaf period of government putt back the economy of the Pakistan due to the wrong policies of the government for the economic growth in the Pakistan. Pakistan economy destroyed badly in that 10 to 11 years of the government, and investors hesitated to invest in the Pakistan, and also the load shading is another factor that effect the Pakistan economy badly. This not the end of the story after this Pakistan’ economy face lot of problems like bomb attacks in Pakistan no electricity and the unstable government, due to this the investor are not invest in the Pakistan and the existing business men finish their business unit due to the loss.

Social forces: A low saving culture has offset the huge population advantage this is enjoyed by Pakistan. Also culture is dedicated by the religion, and in Pakistan a significant

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segment of the population is loath to accept interest for their deposits due to the negative religious implications of such an act. About 70% of Pakistan’s population is based on rural areas, thus making it harder for banks to mobilize their deposits within these regions.  Habib group also started a school system in Karachi for the cherty purpose.  They give the funds to the poor person on the daily basis

Technological forces: Banks in the developed world have been turning to heavy IT investments, which differentiate their products, provide response times, enhance accessibility and improve customer satisfaction. Though investing in state-of-the-art host banking solution (Fiserv, Kapiti, etc) , ATM and POS ( point of sale) networks, visa, MasterCard, and Amex switches, smart cards, telebanking and now internet banking are common IT investment in the developed world, it is now that these products and services are gaining faster acceptance in Pakistan. Bank Al Habib change their technology in IT sector due to the requirements of the current time, before this they have the poor technology of the IT and un less skilled person in that field but at this time they replace it with the heavy installation of the IT instruments. They hired new skill employed and trained them for the efficient and effective work.

Porter’s five forces analysis: The model of the five competitive forces was developed by Michael E. Porter in his book “Competitive strategy: Techniques for Analyzing Industries and Competitors” in 1980. Porter’s model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment.

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I. Rivalry Among Competing firms; Bank Al Habib limited is facing a strong competition from other private Pakistani banks like Metropolitan bank. Soneri bank and Askari Commercial bank. The improved performance of the nationalized commercial banks (NCBs) is also the threat for the bank Al Habib. Foreign banks are also competing with the bank for same small medium sized companies. The bank is overcoming the incentive competition due to its strong reputation as a renowned financial group in Pakistan and a long history of experience in the banking sector.

II. Potential entry of new competitors; The entry barriers in this market are high. The new banks need permission from SBP so entry of new banks is restricted. Also the paid up capital requirement is likely to be raised from Rs.500 million to Rs.1 billion.

III. Development of substitute products; The non banking financial institutions including development finance institutions (DFIs), private sector investment banks (PSIBs), leasing corporations (LCs) and 71

Modarbas are almost in the same line of business and can be treated to the bank. Other substitutes that compete include the national saving certificates, the stock market, its ing industry and brokerage houses. IV. Bargaining power of suppliers; The main suppliers in the banking sectors are depositors. Although the bank is given higher return then any other bank (12% per annum) to attract the depositors but the low innovation in the product and also low investment in the marketing sector of the bank may provide difficulties in coming years. The regulatory bodies could also be the suppliers as they provide guidelines to the bank from time to time. These include the State Bank of Pakistan (SBP), The Corporate Law Authority (CLA), The Ministry of Finance and the religious board. V. Bargaining power of customers; The main customers are small traders and exporters based in Karachi and Lahore, majority of whom deal in textile related commodities. Since the bank is targeting the short-term trade finance market, the bargaining power of customer is substantial as other banks within the same sector like Habib bank, Bank Al Falah and Metropolitan are fast catching up with the Bank Al Habib in providing services to the traders.

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