INTERNSHIP REPORT

SUBMITTED BY:

MUHAMMAD AAMER WAQAS IDREES

INSTITUTE OF MANAGEMENT STUDIES

UNIVERSITY OF PESHAWAR

THE BANK OF PUNJAB

ISLAMIC BANKING

KARKHANO MARKET BRANCH (0705)

PESHAWAR

INTERNSHIP DATED:

3rd JULY – 3rd SEPTEMBER, 2013

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Contents 1. ACKNOWLEDGEMENT ....................................................................................... 5

2.SPECIAL THANKS ....................................................................................... 6

3.THE BANK OF PUNJAB: ....................................................................................... 7

3.1 VISION: ....................................................................................... 7

3.2 MISSION: ....................................................................................... 7

3.3 CORE VALUES: ....................................................................................... 7

3.4 HISTORY: .................................................................................................................... 8

3.5 INTRODUCTION: ......................................................................................................... 8

3.6 EXECUTIVE SUMMARY: ......................................................................................................... 8

3.7 AWARDS & ACHIEVEMENTS: ...................................................................................................... 9

4. BOP ISLAMIC BANKING BRANCH KARKHANO, PESHAWAR: ................................. 10

4.1 MANAGERIAL HIERARCHY: ..................................................................................................................... 10

4.2 FACTS & STATISTICS: ....................................................................................................... 11

4.3. ACCOUNT OPENING PROCEDURES: ......................................................................................... 12

4.3.1. ACCOUNT OPENING FORM: ..................................................................................... 12

4.3.2. COMPLETION & SUBMISSION OF ACCOUNT OPENING FORM: .......................... 12

4.3.3. SIGNATURE SPECIMEN CARD: ..................................................................................... 12

4.3.4. CUSTOMER VISIT REPORT / KNOW YOUR CUSTOMER /ENHANCED DUE DILIGENCE FORM: . 13

4.3.5. COMPUTERISED VERIFICATION: ..................................................................................... 13

4.3.6. VERIFICATION AND AUTHORIZATION: ............................................................................... 13

4.3.7. OPENING THE ACCOUNT: ..................................................................................... 13

4.3.8. ALLOTMENT OF ACCOUNT NUMBER: ................................................................................ 14

4.4 ISSUANCE OF LETTER OF THANKS: ..................................................................................... 14

4.5. ISSUANCE OF CHEAQUE BOOK: .......................................................................................... 14

4.6. ISSUANCE OF ATM CARD / PIN CODE: ............................................................................... 14

4.7 RETURN OF PIN CODE: ...................................................................................................... 14

4.8. DISPOSAL / DESTRUCTION OF ATM CARD: ........................................................................... 15

4.9 CHEAQUE BOOK CHARGES: ................................................................................................ 15

4.10 ATM CHARGES: ....................................................................................................... 15

5. CLEARINGS: ..................................................................................... 16

5.1. OUTWARD CLEARING: ..................................................................................... 16

5.2. INWARD CLEARING: ..................................................................................... 16

5.3. NIFT ( NATIONAL INSTITUTIONAL FACILITATION TECHNOLOGIES ): ......................... 16

5.4. INTER- CITY CLEARING: ..................................................................................... 16

5.5. IBC ( INTER BANK CLEARING ): ..................................................................................... 17

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5.6. OBC ( OUTER BANK CLEARING ): ..................................................................................... 17

5.7. SAME-DAY CLEARING: ..................................................................................... 17

6. DEFINITIONS: ..................................................................................... 17

6.1. ACCOUNT: ..................................................................................... 17

6.2. ACCOUNT OPENING FORM: ..................................................................................... 17

6.3. BUSINESS : ..................................................................................... 17

6.4. CUSTOMER : ..................................................................................... 18

6.5. HIBA : ..................................................................................... 18

6.6. INVESTMENT RISK RESERVE (IRR): ..................................................................................... 18

6.7. LOSS / NET LOSS : ..................................................................................... 18

6.8. MUDARABA ..................................................................................... 18

6.9. MUDARIB ..................................................................................... 18

6.10. MUSHARAKA ..................................................................................... 18

6.11. PIN ..................................................................................... 18

6.12. PROFIT EQUALIZATION RESERVES ( PER ): ............................................................ 19

6.13. PROFIT / NET PROFIT: ..................................................................................... 19

6.14. RAB-UL-MAL: ..................................................................................... 19

6.15. SBP: ..................................................................................... 19

7. KINDS OF ACCOUNTS AVAILABLE: ..................................................................................... 20

7.1. ISLAMIC CURRENT ACCOUNT: ..................................................................................... 20

7.2. ISLAMIC PROFIT & LOSS ACCOUNT : ................................................................ 20

7.3. MINOR ACCOUNT : ..................................................................................... 20

7.4. PHOTO ACCOUNT: ..................................................................................... 20

7.5. JOINT ACCOUNTS : ..................................................................................... 21

7.6. DORMANT ACCOUNT : ..................................................................................... 21

7.7. CLOSING OF ACCOUNT : ..................................................................................... 21

8. PEST ANALYSIS: ..................................................................................... 22

8.1. POLITICAL: ..................................................................................... 22

8.2. ECONOMICAL: ..................................................................................... 22

8.3. SOCIAL : ..................................................................................... 22

8.4. TECHNOLOGICAL : ..................................................................................... 23

9. SWOT ANALYSIS: ..................................................................................... 23

9.1 STRENGTH : ..................................................................................... 23

9.2. WEAKNESS : ..................................................................................... 23

9.3. OPPORTUNITIES : ..................................................................................... 24

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9.4. THREATS : ..................................................................................... 24

10. COMPETITORS: ..................................................................................... 25

11. REFERENCES / BIBLIOGRAPHY: ..................................................................................... 26

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1. ACKNOWLEDGEMENT

IN THE NAME OF ALLAH, THE MOST BENEFICENT AND THE

MERCIFUL.

I would like thank my parents, teachers, fellows, managers, and all others who

directly or indirectly assisted me in accomplishing this knowledgeable and

learnable academic internship.

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2. SPECIAL THANKS

With due respect, I would like to thank the following staff members whose kind

supervision and humble mentoring made it possible to accomplish my internship purposefully:

Mr. IMRAN MOBEEN SHINWARI

( AVP / BRANCH MANAGER )

Miss. ASMA USMAN

( AVP / OPERATION MANAGER )

Mr. WAJAHAT HUSSAIN KAKAR

( OFFICER GRADE-II )

Mr. SAHIBZADA JAMSHID NOOR

( OFFICER GRADE-II )

Mr. HUMAYUN SHEHZAD

( OFFICER GRADE-III )

Mr. ARSHAD KHAN

( BUSINESS DEVELOPMENT OFFICER )

Mr. IMRAN KHAN

( BUSINESS DEVELOPMENT OFFICER )

Mr. SABIR ALI

( CASH OFFICER )

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3. THE BANK OF PUNJAB:

3.1 VISION: To be customer focused bank with service excellence.

3.2 MISSION: To exceed the expectation of our stakeholders by leveraging our relationship with the Government of Punjab and delivering a complete range of professional solutions with a focus on program driven products and services in the agriculture and middle tier markets through a motivated team.

3.3 CORE VALUES:

These are the values we celebrate.

Our Customers:

As our first priority.

Profitablility:

For the prosperity of our stakeholders that allows us to constantly invest, improve and succeed.

Corporate Social Responsibility:

To enrich the Lives of community where we operate.

Recognition And Reward:

For the talented and high performing employees.

Excellence:

In everything we do.

Integrity:

In all our dealings.

Respect:

For our customers and each other.

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3.4 HISTORY:

The Bank of Punjab started functioning with the inauguration of its first branch of 7-Egerton Road,

Lahore on November 15, 1989. The founder of the bank Mr. Nawaz Sharif performed the

inauguration.

The Bank of Punjab is working as a scheduled bank with its about 500 branches (round figure) in

all major cities of the country. The bank provides all types of banking services such as Deposit in

Local currency, Client Deposits in Foreign currency, Remittances and Advances to businesses,

trade, industry and agriculture. The Bank of Punjab has entered into a new era of science to the

nation under the experienced and professional hands of its management.

The Bank of Punjab has played a vital role in the national economy through mobilization of

untapped local resources, promoting savings and providing funds for investments.

The Bank of Punjab has the privilege to discharge its responsibilities towards national prosperity

and progress. Within the couple of years of its scheduling, the bank has not only carved out for

itself prominent niche in the mainstream banking of the country but in certain areas it has the

distinction of taking the lead. In short span of time the Bank has been able to evolve a distinct

corporate culture through of its owned-based policies, which are realistic and are on highly

professional footings.

3.5 INTRODUCTION:

The bank of Punjab (BOP) established in 1989 and got the status of scheduled bank in 1994. The

bank of Punjab offer number of products in their customer. There are more than 500 branches of

BOP in the whole country including conventional and Islamic banking branches. Functionally the

bank of Punjab is divided in the division and the each division is headed by the general managers.

The government of the Punjab holds the majority of the shares in BOP. It is doing business in

commercial banking and the retail banking. Corporate banking treasury and investment and trade

finance. The shares of BOP are traded in all three stock Exchanges of the Pakistan.

3.6 EXECUTIVE SUMMARY:

As the bank is mostly owned by the government of Punjab, therefore it is directly being governed

by the government of Punjab. A President is being appointed by the provincial government. A

Deputy President is there to assist the President.

Apart from this there are certain group heads in the management hierarchy of the bank. Head

Islamic Banking Division, Group Head Retail Banking, Group Head Human Resources, Group Head

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Administrative Support, Group Head Special Projects & Legal, Group Head Commercial Banking,

Group Head Retail Finance etc. are few prominent top management of the bank.

Also there is a panel of Board of Directors for any legislation or other decisive and administrative

prospects and perspectives of the organization.

3.7 AWARDS & ACHIEVEMENTS:

EXCELLENCE AWARD BY THE CENTRAL BOARD OF REVENUE

The Central Board of Revenue presented "Excellence Award" to the Bank of Punjab in recognition of the contribution made by the bank towards Government exchequer.

3RD KISSAN TIME AWARDS

In recognition of Bank's contribution in development and growth of agricultural sector, the Bank

honoured with "Top Bank for Agriculture Loans" and "Best Bank Crop Insurance" under 3rd

Kissan Time Awards year 2006.

BEST CORPORATE REPORT AWARD

Annual Report of the Bank for the year 2005 won 5th position for "The Best Corporate Report Award" for the financial sector, adjudicated jointly by the Institute of Chartered Accountants of

Pakistan and the Institute of Cost and Management Accountants of Pakistan.

16TH BOLAN EXCELLENCE AWARD

The Bank was awarded Best Bank Award under 15th Bolan Excellence Awards distributed in

2006.

ACHIEVEMENT AWARD

The Lahore Chamber of Commerce & Industry (LCCI) awarded the Bank "LCCI Achievement Award" 2006.

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4. BOP ISLAMIC BANKING BRANCH KARKHANO, PESHAWAR:

This branch was initially launched over conventional banking system. Later on the branch was

converted into Islamic Banking on June 17th , 2013. The branch is currently offering limited

products and services. Details of the branch are given as:

4.1 MANAGERIAL HIERARCHY:

MANAGER

IMRAN MOBEEN SHINWARI

OPERATIONS

-WAJAHAT HUSSAIN

-SAHIBZADA JAMSHID

CASH

-HUMAYUN SHEHZAD

-SABIR ALI

MARKETING

-ARSHAD KHAN

-IMRAN KHAN

OPERATION

MANAGER

ASMA USMAN

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4.2 FACTS & STATISTICS:

The branch started its operations in conventional banking system in October 2012. In June

2013 it converted into Islamic Banking branch. Presently the branch is still introducing itself into the

market because a number of competitors exist in the market far earlier than it.

Besides these the branch's marketing department is quite pro-active in grabbing the potential

customers of the region. Following are the statistics of the branch as on 3rd September, 2013:

• ISLAMIC CURRENT DEPOSIT

• ISLAMIC PROFIT & LOSS

TYPE OF ACCOUNTS

• 294 (as on 3rd Sep, 2013)

NO. OF ACCOUNTS

• 72 Million (approx.)

NET DEPOSIT AT BRANCH

• N / A

FINANCING PLANS

• N / A

LEASING PLANS

• RIBA FREE CERTIFICATES ( Quarterly, Semi-annually, Annually. )

PROFIT INSTUMENTS

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4.3. ACCOUNT OPENING PROCEDURES:

Whenever a person has to use the services of a bank, he / she have to open an account with

any of the banks available at region. A bank normally entertains two kinds of account holders. First,

those who are walk-ins and secondly the one who are being marketed by the bank's marketing

departments. Whatsoever, all have to follow the same procedures for opening an account. Account

opening procedures are being discussed step-vise below in detail:

4.3.1. ACCOUNT OPENING FORM:

When the Customer approaches to bank for account opening purpose, an Account Opening

Form is provided to him. He / she have to fill in the form the required data and information being

asked in different sections of the form. Also the form has to be signed by the customer at various

sections marked by the concerned Banking Officer. Incase if the customer is illiterate or is not able to

read / understand English, the banking officer facilitates him / her in this matter too. Besides these

photocopies of certain other requirements have to be attached with the form while submitting it

back to the banking officer.

4.3.2. COMPLETION & SUBMISSION OF ACCOUNT OPENING FORM:

After being completely filled and duly arranged the requisites for opening an account, the

customer has to submit the account opening form to the concerned banking officer at the branch he

has obtained form from. The banking officer duly checks and verifies all the information filled by the

customer in the form.

4.3.3. SIGNATURE SPECIMEN CARD:

Signature specimen card is compulsory for opening an account in the bank. Without getting

signature of customer you cannot open the account. This card holds the authorized signatures of all

the account holders of that particular account. This card is then being signed and verified by the

concerned manager. After completion and authentication of the card, it is being uploaded on the

database. In this way any authorized banking officer is able to verify any customer's signatures

whenever his signed instrument is introduced in the bank. Thus, to ensure more customer privacy

and security.

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4.3.4. CUSTOMER VISIT REPORT / KNOW YOUR CUSTOMER / ENHANCED DUE DILIGENCE FORM:

This is the most essential and delicate report that has to be maintained by either the manager

or the designated officer about each and every customer who is opening an account with the bank.

The officer will have to visit the business or office address of the customer that he / she have

mentioned in the Account Opening Form. Officer will be completing a few formalities in order to

verify that nothing in being wrongly stated by the client in the form and all that he / she have stated

are being verifiable and true. This form has to be signed and completed by the banking officer, and

then it has to be sent to the concerned Regional Head / Chief / Manager for final approval and

remarks.

4.3.5. COMPUTERISED VERIFICATION:

The customer's identity and all criminal / defaulter record is being verified through online

verification system. An online database is being provided by NADRA to the bank to verify each

customer's identification online. The concerned banking officer performs this job. Also the officer

finds and ensures that the customer is not wanted by the Govt. in any case through NAB/OFAC

verification system available with the concerned officer.

4.3.6. VERIFICATION AND AUTHORIZATION:

After all the formalities are being completed, and receiving of the authorization from the

Head / Chief / Manager, all the documents / forms / verifications are being organized and stapled in

sequence with the Account Opening Form for final review and authorization from the Branch

Manager & Manager Operations. In case of any shortage or incompletion of any record, the form is

directed to the concerned officer for completion.

4.3.7. OPENING THE ACCOUNT:

After successful completion, verification, review and authorization, finally the customer

qualifies to open an account in the bank. The concerned officer uploads the data into electronic form

available to him / her in the Bank's Operating System. The officer uploads all the data mentioned in

the Account Opening Form to the system.

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4.3.8. ALLOTMENT OF ACCOUNT NUMBER:

After being uploaded and final supervision by the Operation Manager, the system

authenticates and allots an account number to the customer against his account opening request.

Now he / she can operate the account.

4.4 ISSUANCE OF LETTER OF THANKS:

After the account is being opened, a letter of thanks is being issued to the customer for

showing his interest in requiring our banking services. One copy of this letter is being attached with

the Account Opening Form, while the other is dispatched by postage mail to the customer.

Another purpose of this letter is that it has to be produced in front of the Banking Officer at

the time of receiving Cheaque Book from branch.

4.5. ISSUANCE OF CHEAQUE BOOK:

The "Cheaque Book" request is uploaded to the system online the very next day of opening of

an account. Cheaque Book is issued to the customer from the branch itself. It is not being dispatched

to the customer. Normally it take 4-7 working days for the issuance of cheaque book to the customer.

4.6. ISSUANCE OF ATM CARD / PIN CODE:

If a customer requires ATM service, either he has to mark the option in the Account Opening

Form while submission of it, otherwise an additional form is to be filled out by the customer for

acquisition of the ATM card. It is then uploaded to the online database by the concerned banking

Officer. Normally it takes 7-10 working days for the receipt of both ATM card and PIN code. PIN code

is directly dispatched from ATM generation cell to the customer's postal address. While ATM is sent

to the branch and handed over to the concerned banking officer. He / She is responsible for the

handing and possession of the card unless the customer walks-in and receives the card himself /

herself.

4.7. RETURN OF PIN CODE:

It happens usually that the PIN code thus sent to the customer's postal address directly by

ATM generation cell returns back undelivered. This might happen due to any of un-favorable reasons.

In that case, the ATM generation cell sends it back but this time to the concerned branch in which the

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customer holds an account. The banking officer thus informs and hand it over to the customer when

he / she walks in.

4.8. DISPOSAL / DESTRUCTION OF ATM CARD:

After the receipt of ATM card to the branch, the concerned banking officer informs the

customer to receive the card to the earliest possibility. The officer has to inform the customer

multiple times as instructed in the operations manual. He / she also have to issue a written warning

to customer in case if the customer is not collecting his / her ATM card within the prescribed time

slot. After meeting all the procedures, if still the customer has not yet collected the ATM card, then

as mentioned in the Operations Manual, the concerned banking officer has to destroy the card after

90 days of its issuance. Terms and procedures are mentioned in the operation manual available with

the Manager / Operation Manager at the branch. After the disposal of ATM card, the customer is no

longer to avail ATM facility. He / She has to submit a request again for the acquisition of the card.

4.9 CHEAQUE BOOK CHARGES:

The cheque is charged against the number of leaves available in the cheque book. Its Rupees

5/- per leaf. There are various sizes of cheaque books available. For example: 05 leaves, 25 leaves, 50

leaves etc. Any customer has the freedom to order a cheaque book of his / her own desire and need.

4.10 ATM CHARGES:

ATM card has annual charges as mentioned in the schedule of charges issued by the Head

Office to all the branches. These charges are deducted once in a year. Besides these there are no

additional charges that a customer has to pay for having ATM facility.

If the customer is having transactions from the ATM of any branch of The Bank of Punjab, no

charges are deducted over that regardless of any geographical access of ATM. In case if the customer

is accessing ATM facility from any other bank's ATM machine, then an additional charges mentioned

in the Schedule of Charges is automatically debited from the customer's account.

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5. CLEARINGS:

If a customer receives a cross cheaque from an account holder of another bank / branch, and this

customer of ours produce the cheaque to our branch with the purpose to deposit it in his / her

account or vice versa. Then in such case this cheque is to be sent by post to the concerned bank

branch for clearance purpose. Once the cheaque is sent and then received back, the amount is

transferred to the depositors account. This service is carried out through an institution named as

NIFT. It has certain charges mentioned in the schedule of charges.

There are two types of clearings:

5.1. OUTWARD CLEARING:

When the cheaque of our branch is being presented in some other bank / branch by either our

customer himself or some other person authorized by our customer, then such kind of clearing is

drawn by us. This is called Outward Clearing. Cheaques received in this case are normally being

presented to us by representative of NIFT early morning. In this case, the customer's account is

debited.

5.2. INWARD CLEARING:

When our customer deposits cheaques of some other bank / branch with us, this is called

"Inward Clearing". Such cheaques are being stamped in the date of next working day and handed

over to NIFT representative. Its clearing report is received on the next working day. If the report

is clear, our customer's account is credited.

5.3. NIFT ( NATIONAL INSTITUTIONAL FACILITATION TECHNOLOGIES ):

NIFT stand for National Institutional Facilitation Technologies. Clearing house of State Bank of

Pakistan has shifted a part of its work to private institution named as NIFT. NIFT collects

cheaques, demand draft, pay order, travelers cheaques etc. from all branches of different banks

within city through its couriers and send them to the branches on which these are drawn for

clearing. NIFT prepare a sheet for each branch and send it to each branch as well as to State Bank

of Pakistan where accounts of Banks are settled.

5.4. INTER- CITY CLEARING:

When a cheaque is presented outside the city in which the Bank's branch is located but within

the country, such type of clearing is called as Inter-city Clearing. It is also carried out through

NIFT. Each branch is provided a separate inter-city clearing envelope for several cities by NIFT.

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The concerned clearing banking officer has to enclose each and every such cheaque in its

respective envelope.

5.5. IBC ( INTER BANK CLEARING ):

It happens when a cheaque of same bank is presented in another branch in such a city where

there is no service of NIFT. Then such a clearing process would be called as IBC. Its charges are

mentioned in schedule of charges displayed at each branch / bank.

5.6. OBC ( OUTER BANK CLEARING ):

It is the same as IBC but the main difference here is that in this case the cheaque is not of the

same bank. It is of some other bank and branch is in such a city in which there is no facility of NIFT. Its

charges are also mentioned in the schedule of charges manual at the branch.

5.7. SAME-DAY CLEARING:

It is a service provided by NIFT to its member banks / branches in order to clear a cheaque for

the funds to be transferred at the same day when the cheaque is being presented by the customer.

As far as BOP Karkhano Branch is concerned, it is not available there because they are not the

members of this service. Whatsoever, its charges are also mentioned in the schedule of charges at

each bank. A cheaque presented under this service is stamped for the same day's date because it is

to be cleared and funds are to be transferred on the same day of its presentation.

6. DEFINITIONS:

6.1. ACCOUNT: It means basic banking, savings or current (Pakistani Rupee or foreign currency) account(s) maintained by the customer with the Bank.

6.2. ACCOUNT OPENING FORM: It means the form prescribed by the Bank, as modified or amended from time to time, which is

to be completed by the customer for opening an account.

6.3. BUSINESS : It means business, transactions and products approved by the Shariah Advisor, for the

purpose of making investments from funds available in the pool(s).

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6.4. CUSTOMER : It means any individual person, firm, company or any other association or organization,

maintaining an account with the Bank, and includes (where appropriate) any person authorized by the customer to give instructions on customer’s behalf in relation to customer’s account.

6.5. HIBA : It means a part of profit that is due to the Bank, which the Bank may relinquish, on the date of

distribution, in favor of depositors.

6.6. INVESTMENT RISK RESERVE (IRR): It means the amount appropriated by the Bank out of the income of investment account

holders, after allocating the Mudarib share on the basis of Tabarru, in order to cater against future losses for investment account holders.

6.7. LOSS / NET LOSS : It means loss of respective Pool(s) after charging all direct expenses and write offs (if any),

which shall be calculated on an accrual basis and in conformity with the generally accepted accounting principles applied on a consistent basis.

6.8. MUDARABA It means a form of partnership where one party provides the funds while the other provides

expertise and management. Any profits accrued are shared between the two parties on a pre-agreed basis, while loss is borne by the provider of the capital.

6.9. MUDARIB It means the party in a Mudaraba agreement that provides the expertise and management for

managing the funds of the person who provides the funds.

6.10. MUSHARAKA It means a relationship established under a contract by the mutual consent of the parties for sharing of profits and losses in the joint business. It is an agreement under which the Bank provides funds which are mixed with the funds of the business enterprise and others. All providers of capital are entitled to participate in management, but not necessarily required to do so. The profit is distributed among the partners in pre-agreed ratios, while the loss is borne by each partner strictly in

proportion to respective capital contributions.

6.11. PIN It means Personal Identification Number initially assigned by the Bank at the time of issuance

of ATM Card and includes such other code as may be subsequently adopted by the customer for accessing the Bank’s ATM Services.

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6.12. PROFIT EQUALIZATION RESERVES ( PER ): It means the amount appropriated by the Bank, from net income of the pool on the basis of

Tabarru, in order to maintain a certain level of return in investment for investment account holders and increase owners’ equity.

6.13. PROFIT / NET PROFIT: It means profit of respective Pool(s) after charging all direct expenses and write offs (if any),

which shall be calculated on an accrual basis and in conformity with the generally accepted accounting principles applied on a consistent basis.

6.14. RAB-UL-MAL: It means the party in a Mudaraba agreement that provides the funds and accordingly shares the accrued profit with the Mudarib on a pre-agreed basis and solely bears the loss (if any) faced by

the Mudaraba.

6.15. SBP: It means the State Bank of Pakistan, established under the State Bank of Pakistan Act, 1956,

and includes it successors in- interest.

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7. KINDS OF ACCOUNTS AVAILABLE:

7.1. ISLAMIC CURRENT ACCOUNT: Current Account is opened on the basis of Qarz-e-Hasna and offers the account holder the

flexibility to withdraw funds from time to time at his / her convenience. There is no profit payable to the depositor in such an account. The deposits being brought in by the customer in such can be used by the Bank for its business purposes including investments and financing under Shariah complement modes in any many after the approval from Shariah Advisor.

7.2. ISLAMIC PROFIT & LOSS ACCOUNT : In case, where the Bank’s equity is comingled with the customer’s fund in a pool; the Net

Income / loss of pool would be allocated between the Bank’s equity and customer’s fund in proportion to the respective share in pool. Such type of account is called "Islamic Profit & Loss Account". Profit and loss on the Mudaraba based deposits are computed and distributed on the basis of average daily balance in customer’s account during the profit computation period. At the end of each calendar month; Bank and the pool members share Profit or Loss accruing from Business(es) after deducting all direct expenses pertaining to the Mudaraba at actual as mentioned in the schedule of charges and terms and conditions provided to the customer at the time of account opening.

7.3. MINOR ACCOUNT :

Deposit may be accepted from minors provided the account is opened and operated through a guardian. The Account thus opened is operated upon by the guardian even if the minor attains the age of majority. The necessary consent to this effect is obtained at the time of opening of the account.

7.4. PHOTO ACCOUNT:

This kind of account is similar to others, the main difference here is that the customer has to

submit his photograph at the time of opening of such an account. The need for this account arises

when the customer is unable to sign appropriately, his signatures differs all the time he do so, he

uses thumb impressions instead of signatures, or by the request made by the customer himself /

herself at time of opening due to some kind of reasons. Such an account is identically operated. The

customer has to be present himself / herself while making any deposits / withdrawals / transfers

from or into such an account.

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7.5. JOINT ACCOUNTS :

If an account is opened in the names of two or more persons, the balance to the credit of that account and any accruals there on at all times belong to the persons who are signatories to the account opening form. Such persons are also jointly and severally liable for all liabilities incurred in relation to the account and the services. The customer authorizes the Bank to pay or deliver to either or survivor(s) of the person(s) in whose names the account has been opened, or the legal representative(s) of such survivor(s), any monies, securities or properties standing to the credit of the joint account or held by the Bank.

7.6. DORMANT ACCOUNT :

All depository accounts like current / savings etc. which remain non operative for a period of six months in case of current and for a period of one year in case of saving account, are classified as dormant accounts. Such accounts are then dealt according to the intructions stated in the Operations Manual available with the Operations Manager / Branch Manager.

7.7. CLOSING OF ACCOUNT :

The Bank may at its sole and absolute discretion close any account, which is not being operated in a manner satisfactory to the Bank or for any other reason whatsoever, with or without any prior notice to the customer. The Bank also reserves the right to terminate, at the Bank’s sole discretion, any other type of relationship(s) with the customer, e.g. lockers, safe custody, relationship

cards, etc. at any time without assigning any reason. In case the account is closed the balance is remitted to the depositor at the address given by the account holder(s).

Secondly, if the Account Holder(s) wishing to close the account, they must withdraw the

outstanding balance, if any, after depositing account closing charges as stipulated by the Bank. All accounts where there is no customer's initiated operation since two years and have nil balances, can be closed by the bank without giving any notice.

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8. PEST ANALYSIS:

During my internship tenure, I found few external and internal factors that are or are going to

effects the business operations of BOP Karkhano Branch. Those are dicussed and analyzed in this

analysis as follows:

8.1. POLITICAL:

The Bank of Punjab is owned by the Govt. of Punjab as they holds most of its shares. This a

surety factor for the investors / depositors available around the bank. But unfortunately, the branch

is still not been given complete product line as it is still passing through its inauguration stages.

Politically, The bank of Khyber holds most of the market here in Khyber Pakhtunkhwa because it is

owned by the local government. To beat this edge, the BOP Karkhano branch has to be given most of

the product line to compete in local market.

8.2. ECONOMICAL:

In banking perspective, I would analyze the economical aspect of the branch in terms of

deposits and business made by it. Considering its deposits, number of accounts, market share and

inauguration period, it is performing good. As compared to other branches of The Bank of Punjab in

the region, it has got up with a boom. The branch is competing in market already saturated by a

number of banks operating since a couple of years in the region. The customers has to go through

tough screening instructions framed by the top management of the bank besides those incorporated

by SBP. Therefore, the branch has potentially secured customers in all aspects.

8.3. SOCIAL :

Socially The Bank of Punjab has certain excellence. It has represented and assisted the Govt.

of Punjab in all kinds of initiatives in the last decade. It has relieved farmers by issuing low interest

agricultural loans. It has been a pioneer investor in Govt. of Punjab's youth initiatives. It has been

sponsoring certain national, international and provincial events. But as far as its cross provincial

projects are concerned, it does not have remarkable history though. Therefore, socially the branches

of BOP do not have a competitive edge in KPK region. This factor do not dominates the market as

other banks are having.

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8.4. TECHNOLOGICAL :

Technologically, the bank is dominating in certain sectors while in others it is lacking behind.

One of its edges is that, the bank is completely centralized. All of the cheaque clearings, online

transfers are performed through centralized networks.

The software thus used in its internal is based upon DOS technology. It is quite outdated in

the market. Banks are having customized user friendly software for their operations. Although it has

been modified time to time but still it needs to be replaced because banking has gone modernized

and due to the non-availability of certain options and automation it is affecting the operational

efficiency of the staff within the branch.

9. SWOT ANALYSIS:

Following are the conclusions based upon experiences and learning during the internship.

SWOT analysis is used to analyze the strengths, weaknesses, opportunities and threats to the bank in

existing market. These are discussed as below:

9.1 STRENGTH :

Strength of the branch in Karkhano Market region is that it is an Islamic Banking Branch. The

region mostly occupies business men belonging from traditional Islamic families. One may found

them mostly interested in Shariah permitted dealings. Therefore, the BOP Karkhano holds an

important factor to attract their customer. Those who are interested in Interest / profit / Riba free

investments could be brought in and served accordingly.

9.2. WEAKNESS :

The branch is operating with a very few number of products. for most of the services the

customers are either referred to any other branch of BOP in the region or they returns back taking

away their investments. This is for sure baldy affecting the branch's market share. Its product line

should be increased to attract all kinds of customers. Moreover the non-availability of ATM machine

is also a negative element in the marketing of the branch. Still phone banking and e-banking service is

not made available to the customers while the competitors are running even SMS alerts in the same

scenario. Therefore, it is adding to the weakness of the branch specifically and ultimately to the Bank

of Punjab.

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9.3. OPPORTUNITIES :

Lots of opportunities exist in the market for the Bank of Punjab in general and BOP karkhano

in particular. Since the market is near to the industrial state of Peshawar, and the branch is located in

an international trading market. Therefore traders and merchants from all over the country including

Punjab trades from here. If the higher authorities provide a vast product line to the branch, they can

introduce themselves to the potentially eligible customers who are trading from Punjab to KPK. They

will have the surety that it is the bank of their province, they can easily transfer funds through

Intercity, Online transfers and even through Inter-Bank clearings easily and swiftly from / to Punjab to

their vendors / dealers / merchants.

Providing the customers an e-banking, phone banking and SMS alert service will also be in

favor of the bank. Also an ATM machine can bring on the customers of such banks who are not

having an ATM machine at their branch. This can help increase walk-in customers for opening an

account.

9.4. THREATS :

Dealing with outdated software, limited products, rare services, certain taxes and charges that

other banks do not collect nowadays in order to facilitate their customers are real threats for the

Bank of Punjab in today modernized banking culture. Today's customer is in search of better service,

fast response at cheap expenses from his / her own pocket. Therefore, it has to be planned to

subsidize the customer to the most possible way. Moreover, the competitors are in the market with

such a product line that has supplementary for each and every kind of product. Once a customer gets

in, he / she can never step out without satisfaction from the product line. Therefore, BOP karkhano

should be given an identical product line to penetrate with in the market.

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10. COMPETITORS:

The Bank of Punjab, Islamic Banking Branch Karkhano has got to deal with a lot of competitors

in its market. It has got certain emerging banks of the country who are making far more market share

not only in this region but also all over Pakistan due to their enhanced product line, excellent

customer oriented policies and market forecasting abilities. The eminent competitors are :

Bank Alfalah Limited.

UBL Ameen (Islamic banking Branch).

Bank Al-Habib.

MCB (Islamic Banking Branch).

JS Bank.

The Bank of Khyber.

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11. REFERENCES / BIBLIOGRAPHY:

Mr. Imran Mobeen Shinwari. - Regarding Islamic Finaning / Banking.

Branch Manager, BOP Karkhano Peshawar.

Miss. Asma Usman. - Regarding Branch Operations / Terms / Procedures.

Branch Operations Manager, BOP Karkhano Peshawar.

Mr. Wajahat Hussain Kakar. - Regarding Operations / Clearings / Reportings.

Officer Grade-II, BOP Karkhano Peshawar.

Mr. Sahibzada Jamshid Noor. - Regarding Operations / Vouchers / Administration / Filings /

Recordings / IT affairs.

Officer Grade-II, BOP Karkhano Peshawar.

Mr. Arshad Khan. - Regarding IT / Account Pre-requisites / Customer Service.

Business Development Officer, BOP Karkhano Peshawar.

Mr. Imran Khan. -Regarding Customer Services / Forms completion.

Business Development Officer, BOP Karkhano Peshawar.

Mr. Humayun Shehzad. - Regarding Cash matters.

Cash Incharge / Officer Grade-III, BOP Karkhano Peshawar.

Mr. Sabir Ali. - Regarding Cash matters.

Cash Officer, BOP Karkhano Peshawar.

http://www.bop.com.pk/

http://www.google.com.pk/

http://en.wikipedia.org/wiki/Bank_of_Punjab

http://www.sbp.org.pk/

www.investopedia.com/‎

THE END