Intrnshp Report on Kashf Micro-Finance Bank Ltd

Internship Report on

Kashf Micro-finance Bank Limited

Tayyaba Kanwal

University Of Gujrat

April 2010

Department of Management Sciences

Kashf Micro-finance Bank Limited Page 1

Kashf Micro-finance Bank

Limited

Internship report submitted to the department of the

administrative sciences in partial

Fulfillment

Of the requirement for the degree of Masters of

Business Administration.

April 2010

Faculty of Management and Administrative

Sciences


University Of Gujrat, HH- Campus

Kashf Micro-finance Bank Limited

Supervisors:

Signature:

Name:

Designation:

Chairman:

Signature:

Name:


Letter from the organization:


Preface:

Internship training program provide a chance to students to

make them familiar with the actual business environment. It

also provides an opportunity to study the theories of books in

practice. This is the reason why the student of University of

Gujrat (UOG) required completing the internship program at

any reputable institution/organization. After completing

internship it is required to write an internship report, covering

all the aspects of that organization. This is report written on

Kashf Micro-finance Bank Ltd, which is divided in to six parts

covering all the aspect, working and behavior of organization.


Executive summary:

Pakistan after getting its independence, did not inherit a

strong banking industry and since then saw a number of

events in the industry, like the nationalization of banks in the

1970’s. However today, the banking industry of Pakistan has

been growing over the past few years, mainly because of the

consistent policies implemented by the Government of

Pakistan, including the privatization of banks in Pakistan. Also

the State Bank of Pakistan’s, monetary policy has been very

friendly toward the banking industry. There are a number of

different banks established in Pakistan, including local

incorporated commercial banks, foreign incorporated

commercial banks, development financial institutions,

investment banks, housing finance companies, micro finance

banks and Islamic banksKashf Micro-finance Bank Limited

(KMBL) started its operations in December 2009, as a micro-finance bank of

Pakistan. institution. The majority share holding of Faysal Bank Limited is

held by Ihtmaar Bank B.S.C an investment bank listed in Bahrain, while it has

one subsidiary i.e. Faysal Management Services (Pvt.) Limited (FMSL). The

company is committed to its clients' best interests as well as preserving

a good relationship by defining realistic objectives. Faysal Bank is

continuously innovating, delivery creative and high-quality solutions which fit

best its clients’ needs.It maintains a high ethical standards and unconditional

compliance with regulations and laws. It values its integrity and actively

promotes the “know your customer” policy amongst Kashf employees to

ensure that the company is not involved in any money laundry operation.

Hiring and retaining the best people while respecting diversity,


encouraging self improvement, recognizing and rewarding merit are the key

values of Faysal Bank.

ACKNOWLEDGEMENTS

All praises for Almighty Allah whose uniqueness, Oneness and

wholeness is not challengeable. It is due to HIS unending

mercy that this work moved towards success. All respect for

his Holy Prophet Hazrat Muhammad (P.B.U.H) who enabled us

to recognize our creator.

I am very much obliged to my ever caring and loving parents

whose prayers have enabled to reach this stage.

I would like to thank to my lovely sister and brother for always

being there for me when I need them.

I am highly indebted to my instructor Mr. Adnan Bashir for

providing me an opportunity to learn about the Banking

system of “" which is vital ingredient of MBA program. I am

very great full to Mr. Khalil Tahir (CSO of KMBL) for helping me

to complete this report. I feel great pride and pleasure on the

accomplishment of this report.


Chapter one:

1.1. Introduction of internship report:

It is the requirement of the MBA course, University Of Gujrat.

that all students of MBA have to spend six weeks in any

organization to get practical exposure and to get familiarized

with the ways to live in the organizational environment which

is dramatically different from the educational environment.

That two months period called “Internship Period “, if spent

properly and sincerely, enables the students to be more

confident, more knowledgeable, more responsible and above

all, more committed to their work in the practical field. I have

also been assigned to do internship of eight weeks period in

Kashf Micro-finance Bank Limited, Faisal Gate circular road

Gujrat branch. It has enabled me to understand the practical

scenario and sharpen my decision making power and utilizing

the resources in an effective and efficient manner, so that our

resources generate maximum output.

In preparing this report, I have put all of my best efforts and

tried my level best to gain maximum knowledge about


practical work of bank. Despite of my all the coherent efforts, I

do believe that there will always be a room for improvement

in the efforts of learner like me.

1.2. Background of study:

The practical training is an essential exercise that all the

students are required to undergo during a specified period of

compulsory training in private or public organizations during

their studies.

The student performance during the training is assessed and

considered as partial fulfillment of the requirements for award

of MBA Degree at UOG. However, industrial training is a

complement to the knowledge acquired in the four years of

classroom lessons. The training lasted for a period of eight

weeks from 30th July to 30th to November, 2009.

I have done two months internship in Kashf Micro-finance

Bank Limited Faisal Gate branch Gujrat because of feasibility

as this branch is situated at a walk in distance from my home

and there is not any inspirational factor to join this bank for


internship because at that time there was lack of vacancies in

other banks like Habib Bank Limited, Bank Of Punjab and as

KMBL is newly established bank, so that is why vacancies

were available in that bank and I am the first internee in the

branch.

1.3. Purpose:

The purpose of my internship is the implementation and

application of theoretical knowledge into practice. There is a

great difference in theoretical knowledge and its

implementation in practical field of life. During the period of

my internship, I have learnt a lot of things like dealing with

customers, satisfying their queries, fulfillment of official

documents, account opening, completion of files, which have

build a lot of confidence.

1.4. Scope:

An internship is a full time work experience, closely aligned

with the student’s major and arranged with an employer who

believes it is desirable to aid in the training and education of

the student. It is of a short duration, typically of three to four

months or one semester. The employer agrees to provide the

internee with a progressive educational experience, through

direct personal contact hours or through a training program,

and to aid the internee in developing a summary report of

his/her experience.

Kashf Micro-finance Bank LimitedPage 10

1.5. Objectives of Practical Training:

The primary purpose of this study is to fulfillment of the

requirements for the degree of MBA (Finance).For this

connection each student of this particular course is

required to undertake training in a relevant organization

selected by them, for a period of 8 weeks.

The secondary purpose of this internship is to

understand how the theoretical knowledge can be

applied to the practical situations and examine an

organization’s financial issues and identify its

opportunities/ problems and also suggest corrective

measures. This internship is also very necessary to gain

confidence and become aware of the mechanism of an

organization. As an internee I want to achieve following

objectives during my internship and organization study:

Internships will provide students the opportunity to

test their interest in a particular career before

permanent commitments are made.

Internship students will develop skills in the

application of theory to practical work situations.


test their aptitude for a particular career before

permanent commitments are made.

Internship students will develop skills and techniques


directly applicable to their careers.

Internships will aid students in adjusting from college

to full-time employment.


develop attitudes conducive to effective interpersonal

relationships.

Internships will increase a student's sense of

responsibility.

Internship students will be prepared to enter into full-

time employment in their area of specialization upon

graduation.

Internship students will acquire good work habits.

Internships will provide students with the opportunity

to earn a salary while pursuing educational goals.

Internship students will develop employment

records/references that will enhance employment

opportunities.

Internships will provide students with an in-depth


knowledge of the formal functional activities of a

participating organization.


understand informal organizational interrelationships.

Internship programs will enhance advancement

possibilities of graduates.

Internship students will have higher levels of

academic performance.

Internship programs will increase student earning

potential upon graduation.

Internship programs motivate students to continue

their education.

1.6. Methodology:

The report is based on my 8 weeks internship program in

Kashf Micro-finance Bank Limited. The methodology reported

for collection of data is primary as well as secondary data. The

biggest source of information is my personal observation while

working with staff and having discussion with them. Formally

arranged interviews and discussions also helped me in this

regards. Following are the sources of data collection:


1.6.1. Primary data:

Personal observation

Interviews of staff

1.6.2. Secondary data:

Manuals

Profiles

Annual reports

Internet

Summary:

In this chapter, I concluded that internship is a best way of

analyzing and understanding the market before the entrance

in market, during internship we see practically

implementations of our knowledge so we can say that

internship program is a good fortune for all of the students

during their studies, because it is an initial plate-form during

our study to analyze the market situations. Although there

were some restrictions during but I tried my best to full fill the

purpose and objective of the study.


Chapter 2:

2.1. Introduction of the Organization:

Following a decade of success by Kashf Foundation, Kashf

Microfinance Bank Limited (KMBL) was established in June

2008 with a vision to become Pakistan’s leading microfinance

bank serving all to become a prosperous, equitable and

poverty free Pakistan. KMBL will offer a diversified range of

financial products and services to low income wage earners as

well as the self-employed of Pakistan. It will leverage and build

on its associated company’s outreach and experience, as well

as charter new paths as a regulated, deposit taking entity,

maintaining the group’s commitment to financial services for

all.

KMBL has initiated its lending operations from 1st November

2008 and is now geared to commence liability operations with

18 branches. Initially, our presence is in 13 cities of Pakistan

and an additional 14 branches will be opened this year taking

the network to 32 branches by end of the year. In 5 years, we

plan to open 100 branches across 31 cities reaching out to

more than 1 million clients.

2.2. Products:

2.2.1. Lending Products

Kamyab Karobari Karza KMBL’s first product was piloted earlier by Kashf


Foundation in 2005 to cater to the financial needs of micro and small

enterprises. The product mainly targets small businesses that have a fast

turnover through a unique loan appraisal methodology. It focuses on

experienced entrepreneurs. The maximum loan size limit is of Rs. 150,000,

with only 20% of loans with balances between Rs. 100,000 and Rs. 150,000

as per requirement of SBP’s prudential regulations:

Purpose of Loan:To meet working capital or fixed assets requirements

only.

Loan Amounts

First Loan Cycle: Second Loan Cycle: Third Loan Cycle:

Rs. 25,000-Rs.100,000 Rs. 25,000-Rs.100,000 Rs. 25,000-Rs.150,000

Tenure

First Loan Cycle Second Loan Cycle and beyond:

6 months – 12 months 6 months – 18 months

Age of the

clients:

For the first loan cycle: 25-58 (at the time of sanction of

the loan)

For the second loan cycle: 25-60 (at the time of sanction

of the loan)

Age of the

Guarantor:

Age of the guarantor: 25-65 (at the time of sanction of

the loan)

Business: It should be an operational business owned by the client.

Type of Activity: Trade, production, services or livestock raising

Experience: At least 2 years of experience in the same business.

Business

Location:

Business operating in the same location for at least 1

year.


2.2.2. Deposit Products:

Kashf Ahtimad Bachat account, a checking, basic low balance savings

instrument. This product represents KMBL’s standard savings product,

primarily targeted at the KMBL’s borrowers and the general public. While

there will be no minimum balance requirements, profit will only be payable on

minimum balances greater than Rs. 25,000.

At the same time, Kashf Microfinance Bank Limited plans to market this

product more aggressively to the general public, increasing general outreach

amongst the communities in which the Microfinance Bank operates. The

average balance for such accounts is projected to be approximately Rs. 4,000.

Features:

Initial deposit to open account is Rs.100/-

No account opening charges

No minimum balance required

Profit bearing checking account

2.2.3. Kashf Sahulat account:

Kashf Sahulat account, a basic non interest-bearing, karobari current checking

account. A standard checking account, this product is expected to be a

prerequisite requirement for all the lending products. As such, it is assumed

that by the end of the first year, all such clients will have Sahulat Account. As

with the Kashf Aitmad Bachat account, this product will be aggressively

marketed to the general public.

Features:

Initial deposit to open account is Rs. 100/-


No account opening charges


2.2.4. Kashf Tahaffuz:

Kashf Tahaffuz, a term deposit account offering three tiers ranging from one

months to thirty six months tenure with profit payable on monthly, quarterly,

bi-annually and yearly basis. Balances will be kept in the three tiers of Rs. 1 to

Rs. 25,000, Rs. 25,001 to Rs. 50,000 and Rs. 50,001 to Rs. 500,000. In

addition, the general public is targeted for this product, assuming an average

balance of Rs. 2,000.

Features:

Minimum investment of Rs.1,000/-

No account opening and closing charges


Reward Program

2.2.5. Kashf Kamaal committee:

Kashf Kamaal committee, a programmed savings goal oriented account. The

purpose of this account is to encourage savings for different occasions and

necessities e.g. marriage, old age benefit, education, transportation, consumer

durables, Hajj, Umara etc. This will serve as a substitute for committee

system. An edge that this product has over the traditional committee system is

that profit will be given on the deposit. Investment limits range from Rs. 500 -

Rs. 5,000 while the tenure for this product is 1,3,5,8 and 10 years.

Features:

Minimum investment of Rs.500/-




Reward Program

2.2.6. Kashf Winspiration:

Kashf Winspiration Institutional, a term Deposit for institutional depositors.

Term deposits will be targeted at larger investors, including schools, hospitals,

and other NGOs who are seeking attractive returns, yet also seek to support

KMBL’s mission. Balances kept in this account will be divided into three

tiers, Rs. 500,001 to Rs. 2,000,000, Rs.2, 000,001 to Rs. 5,000,000 and the

third tier will be for balances in excess of Rs. 5,000,001. The tenure for this

product ranges from 3 months to 60 months.

Features:

Minimum investment of Rs.500,000/-


Relationship Manager for each account

Kashf is a pioneer in extending access to financial products to poor customers.

2.3.1. Organization Information:

Board Of Directors:

Ms. Sadia Saeed

Mr. Makhdoom Ali Khan

Ms. Fatimah Afzal

Mr. Salim Nooruddin Jiwani

Mr. David Jacob Oser

Ms. Mary Ellen Iskandrian

Ms. Mariloe Hendriette Gerarda

Elisabeth van Golstein Brouwers

2.3.2. Our Investors:


Kashf Holdings (Pvt) Limited

International Finance Cooperation (IFC)

Shore Cap International, Limited

WWB Microfinance Equity fund, L.P

Triodes Fair Share Fund and Stitching Triodes- Doen

2.3.3. Executive Committee:

Chief Executive Officer - Ms. Roshaneh Zafar

Chief Operating Officer- Mr. Ghazanfar Azzam

Chief Financial Officer- Mr. Khalid Kabeer

2.3.4. Head Office:

387-E, Johar Town

Lahore, Pakistan

2.4. Overall respective sector in Pakistan:

It was very difficult for Pakistan to build up its own Banking system

immediately after independence without sufficient resources. Following the

announcement of the partition plan in June 1947 there was a haste movement

on the parts of banks to transfer their funds and accounts across the borders.

The banks having their registered offices in Pakistan were transferred to India.

In an effort to bring about the collapse of the new state by the persecuting an

international policy of withdrawal, the Indian bank offices closed quickly.

Those banks, which stayed, were considering the winding up of their business.

Today there are more than 18 branches of micro-finance banks along with an

established network of supplementary financial institutions. All this

development in the banking sector is the result of constant efforts of the

management team and the founder of Kashf micro-finance bank limited.


2.5. Role of organization in Pakistan:

Microfinance in Pakistan is relatively a new concept as compared to other

countries in the region. The NGOs and Rural Support Programs has been the

major player in the sector since early 1980s covering about 5% of more than

6.5 million poor households in the country. Recognizing microfinance as an

important poverty alleviation tool, the Federal Government has adopted a

microfinance policy that mainstreams the concept of sustainable microfinance,

recognizes the private sector’s role in poverty reduction and encourages its

entry into banking with the poor.

It has enacted a legal framework, the MFIs Ordinance 2001, for establishing

Microfinance Banks in private sector with twin objective of substantially

increasing outreach of microfinance services in the medium term and giving a

model institution to the private sector to follow.

The MFIs Ordinance 2001 inter alia stipulates the functions, capital

requirements, ownership structure, terms and conditions for establishing

Microfinance Banks/Institutions in the country, audit and disclosure

requirements and winding up procedures. The provisions of the ordinance are

applicable on microfinance banks mobilizing savings from public to finance

their operations. The operations of NGOs and other programs providing

microcredit and allied services through sources other than public

deposits/savings are not covered under the ordinance.

2.6. Overall organization and functions of

organization in Pakistan:


The target market of microfinance sector is estimated to be 25 to 30 million

borrowers and government has set the outreach goal posts to at least 3 million

by 2010 and moved it further to 10 million by 2015. To increase outreach the

sector adopted extensive growth strategy and the overall growth rate of

outreach varied from 100 percent in 2004 to a low level of 36 percent during

2005-06 and later to 52 percent in 2007. Outreach in terms of number of active

borrowers increased from a low base of 240000 in 2003 to 1.27 million in

2007. Gross loan portfolio increased from Rs. 2.3 billion in 2004 to 12.7

billion in 2007, loan size also increased from Rs. 6,629 in 2004 to Rs. 10,000

in 2006 and 2007. The number of savers increased from 888000 to 1.14

million in 2007 and investment in the sector is as high as $ 400 million

between 1999-2005 (Pakistan Microfinance Network, 2007).

Despite progress made over the past few years, outreach of the sector is just

40% of the target outreach of 3 million poor. Growth of the sector is largely

led by a few unsustainable institutions that lack operational and financial

sustainability. The financial self-sufficiency of the sector is as low as 76

percent and the average return on assets(AROA)of the sector remain negative.

Instead of laying emphasis on intensive growth strategy of utilizing the

existing capacity to improve productivity and efficiency and reliance on

mobile offices, the sector focused on extensive expansion in terms of fixed

branches and offices which led to high operating and financial costs of

majority of the institutions.

As a result the sector remains dependent on external support, subsidized credit

and tax exemptions etc. Besides paid up capital financially majority of the

institutions rely on donor funds and subsidized debt as the major source of

funding. This implies future growth of the sector is conditional upon the

availability of donor funds or subsidized credit, otherwise growth of the sector

may slow down.


Moreover, besides the issues of outreach and sustainability, the recent slow

growth of GDP and high inflation may also impact the progress of the sector.

2.7. Organization office in which you are

working:

Branch Name Faisal Gate Branch

Branch Code 20311

Address Faisal Gate, circular Road, Gujrat

Phone 053-3523467

Province PUNJAB

Email www.kmfbanh.com

The branch in which I have done internship was inaugurated

on 9 March, 2008. It is playing an important role in the

development of Gujrat city because it is providing loans to the

needy people to expand their business, to purchase fixed

assets, and many more other products which are beneficial for

the bank itself and also for the customers to meet their needs.

Kashf Micro-finance bank is also playing an important role in

the improvement of living standard of the society by providing

funds and many other services as its competitors do.

People prefer this bank to obtain loans because it impose less

restrictions as compare to its competitors Tameer Bank, KASB

Bank because it does not require any collateral for lending

funds, it just takes guarantee of a businessman who has an

existing business for minimum three years and twelve Post


Dated Cheques (PDCs) for each month installment which is an

evidence against the amount taken by the customer as loan

and if the customer does not pay installments, the bank files a

case against that customer and the evidence of PDCs is

presented in court.

2.8. Summary:

Chapter Three: Organization

3.1. Introduction:

3.2. Brief History of the organization:

The Kashf (“miracle” or “revelation”) Foundation commenced

operations in 1996 as an action research program aimed at

demonstrating the credibility and economic competence of

impoverished women residing in the district of Lahore. Fifteen

women utilised Kashf first round of micro credit to start small

income generating activities. Since 1996 client of Kashf base


has rapidly expanded to encompass over 60 000 members.

The Foundation addresses social needs of women through a

creative and interactive economic empowerment strategy

including non-financial and financial services, which are

delivered in a financially and operationally sustainable

manner.

Kashf is now considered one of the leading microfinance

providers in Pakistan, increasing rapidly its outreach and

sustainability while maintaining a very low risk on its loan

portfolio and constantly improving its services through

innovation.

KMBL has been established with a paid-up capital of Rs. 750m,

enabling the bank to operate on a nation-wide basis. The

capital of KMBL has been contributed by a diverse group of

investors. The bank has projected rapid growth in resource

base over the next 5 years, with deposits to act as primary

catalyst for funding operations. The deposit mobilization

strategy of the bank is centered on the concept of leveraging

on the existing clientele of Kashf Foundation (KF), an associate

concern.

The ability of the bank to garner micro-savings will pave the

way for future business growth. Alternatively, greater reliance

may need to be placed on commercial sources of funding

which may have an adverse affect on the projected bottom

line profitability. Realization of growth targets would also


require additional capital injection over the medium to long

term.

Purchase of loan portfolio from KF has provided the bank with

a revenue stream from the on-set of operations. At year end,

marginal infection was noted in the portfolio. The bank has

taken adequate measures to keep portfolio infection at

sustainable levels. The bank is currently operating with a

network of 18 branches. Roll out of an integrated banking

application both at the Head Office and the branches have

already been achieved, allowing for real time connectivity.

Figure 1.0


Board of Directors

President

Chief Executive Officer (CEO)

Internal Audit DeptInternal Audit Manager

Finance DeptChief Financial Officer

Board Internal Audit Committee

Operations DepartmentManager Operations

Information Technology Department Head

HR Manager

Research Development Unit


Operations Structure

Figure 2


Manager OperationsData Analyst

Poverty Lending Programme

Assistant ManagerAssociate

Associate

Area ManagersBranches (6-8)

Branch ManagersBusiness Sarmaya

ProgrammeAssistant Manager

Associate

Associate

BranchesBranch Manager

Growth ManagementTeam

DelinquencyManagemetTeam

3.3. Our Vision:

KMBL’s vision is to be Pakistan’s leading Microfinance bank serving all to

build a prosperous, equitable and poverty-free Pakistan.

3.4. Our Mission:

KMBL will become the provider of choice by offering a full range of financial

services to micro and small entrepreneurs, especially women, to equitably

expand economic opportunities and to maximize value for all stakeholders.

3.5. Relationship of the head office to the branch

offices:

There is a good relationship between branch and head offices

because the communication system is smooth and evidence

based because of using email as a mode of communication.

3.6. Number of departments:

There are three numbers of departments:

Cash department

Operations department

Sales department

3.6.1. Cash department:

3.6.1.1. Functions of Teller:

Handles the cash management system within the branch to take payments

from the customers and to make payments to the customers. Cancellation of

cheques and other instruments after proper scrutiny. Reconcile all cash

transactions at the end of the day. Ensure transactions and activity reports are


accurate and complete. Ensure loyalty to all regulatory guidelines while

making/receiving payments.

Handles all customers’ requests in timely manner. Looks for ways to improve

efficiency and reduce turnaround time. Ensure that the instrument for payment

is in order/valid and carry no defect. Maintain and balance petty cash vouchers

on monthly basis balancing the cash books before leaving the seat temporarily

during the day and at the day end. Lodgment of outward clearing instruments

and scrutiny of inward clearing instrument. Ensure establishment and

maintenance of the strong rapport with the client. Ensure post sale service to

the client.

3.6.2. Operations department:

3.6.2.1. Functions of Operation Manager:

Managing cash requirement of the Branch in liaison with HO. Responsible for

supervision of all operations functions like account opening documentation, /

Loan documentation, cash receipt/payments, clearing/remittance, branch

security and cleanliness/general maintenance etc, Ensuring correct and timely

implementation of HO circulars.

Supervise custody and record keeping of Cheque Books / Security stationary /

Loan documentation. Ensure that all the processes are completed successfully

before the end of the day. Supervise branch administration related work.

Ensure service delivery within the agreed turnaround time. Ensure secure

maintenance and restricted access of all customers’ account/signature

documentation. Ensure all operations staff is aware of internal and external

regulatory framework and it complied with Monitoring of all outstanding

suspense accounts. Immediate reporting and follow-up of fraud / forgery,

litigation and AML, KYC, policy deviation with RO/HO. Ensure timely

reporting of different periodical statements/returns to RO/HO or any other


information asked for time to time. Ensuring resolution of compliance

observation / audit reports.

3.6.2.2. Functions of Branch Manager:

Enhance the branch’s business by increasing the number of profitable

accounts/relationships and increase revenue & profit. Along with the Regional

Executive, plan, manage and execute a strategy to achieve target financial

results and a quality of service superior to competitors which is in line with

KMBs service quality benchmarks. Ensure adherence to KYC and Anti

Money Laundering guidelines while initiating and reviewing customer

relationships. Act as mentor to all staff in the Customer Services by answering

queries in relation to procedures, policy etc. Maintain high level of staff

morale through support, direction and coaching. Ensure a high level of

customer service. Ensure compliance to internal policies and procedures.

Achieve an overall favorable audit/compliance rating. Discuss and set

Specific, Measurable, Attainable, and Realistic & Time based goals for staff

working under him and monitor their performance in line with their set

objectives. Discuss and undertake the annual appraisals of all reporting staff.

Retain and grow share of existing customer base to sustain and increase

profitable business by:

Retaining profitable existing set customers by consistently meeting or

exceeding customer expectations.

Pro-actively developing and maintaining a detailed understanding of

customers business and financial service needs.

3.6.2.3. Functions of Customer Service Officer:

Retaining profitable existing set customers by consistently meeting or

exceeding customer expectations. Pro-actively developing and maintaining a


detailed understanding of customers business and financial service needs.

Responsible to guide customers about different products, Bank policies and

requirements regarding different types of accounts. Replying to customers

queries regarding Account opening Form.

Account Opening Form, receipt of initial deposit, input into the system,

generation of Account number. To make sure that KYC should be properly

filled in. To make sure that the entire specimen signature cards should be

scanned properly. Issuance of different types of certificates. Responsible to

process and check that all cheque books are delivered on time without any

printing error. Responsible for all account closing and to make sure that the

charges should be deducted and profit (if any) paid before closure. Ensure

establishment and maintenance of the strong rapport with the client. Ensure

post sale service to the client

3.6.3. Sales Department:

3.6.3. 1. Functions of Loan Officer:

Find potential clients individuals or businesses in need of loans. Establish

strong rapport with the clients. Act as salesperson, persuading clients to obtain

loans. Help clients apply for loans. Analyze and verify the application to

determine the client's worthiness. To complete documentation as per banks

policy. To get the approval before disbursement from the BCC. Disbursement

of loan after complete satisfaction of related formalities. Help client

understand loan repayment schedule. Manage the repayment schedules of

customers for timely recovery of their monthly installments. Follow up on

delayed installments. Initiate collateral liquidation if a client defaults on a

loan.

3.6.3. 2.Functions of Saving Officer:


To arrange for appointments and visit existing and new potential clients. To

sell the liability products to the existing and potential clients. To resolve

customer queries and present acceptable solutions. To provide marketing and

promotional material to prospective clients. To achieve all business targets

within allocated time. To search for references from existing clients.

To maintain call memo file on daily basis and to provide deposit mobilization

progress sheet on weekly basis. To actively participate in all the Bank’s

promotional activities. Ensure establishment and maintenance of the strong

rapport with the client. Ensure post sale service to the client.

3.7. Offices or field offices:

3.7.1. Nature of Business:

Kashf Microfinance Bank Limited (the Bank) was incorporated

on June 26, 2008 as a public limited company under the

Companies Ordinance, 1984. The Bank is a subsidiary of Kashf

Holdings (Private) Limited. The Bank received the license to

operate the company for banking business from the State

Bank of Pakistan (SBP) on August 12, 2008 under the

provisions of Microfinance Institutions Ordinance, 2001 and

certificate of commencement of business on September 4,

2008 from Securities and Exchange Commission of Pakistan.

On October 27, 2008 the Bank received the certificate of

commencement of business from the State Bank of Pakistan.

The Bank’s principal business is to provide microfinance

services to the poor and under-served segment of the society

as envisaged under the Microfinance Institutions Ordinance,

2001.

The registered office of the Bank is situated at 87 - Tariq

Block, New Garden Town, Lahore, Pakistan. The Bank is

licensed to operate nationwide. As at December 31, 2008, the


Bank had 18 Branches operating in the province of the Punjab

and Sindh. Kashf Microfinance Bank Limited signed a

Memorandum of Oral Assignment with Kashf Foundation to

acquire outstanding Business Sarmaya Loan Portfolio for an

amount of Rs.534, 105,899, the book value of the portfolio, as

at October 31, 2008. Terms of the transaction were approved

in the board of directors meeting held on November 28, 2008

and an extraordinary general meeting of members held on

December 22, 2008. The State Bank of Pakistan has granted

its approval for the purchase transaction.

3.7.2. Branches:

KMBL has now geared to commence liability operations with

18 branches. Initially, our presence is in 13 cities of Pakistan

and an additional 14 branches will be opened this year taking

the network to 32 branches by end of the year. In 5 years, we

plan to open 100 branches across 31 cities reaching out to

more than 1 million clients. Following are its branches

currently performing its operations in Pakistan.

FEROZPUR ROAD, LAHORE

343 Main Ferozpur Road, Near Babra Market Stop,

Lahore.

GUJRANWALA I

1208 GT Road, Opposite WASA office, Near Sheikh Younas Shell

Petrol Pump,

Gujranwala.

MULTAN ROAD, LAHORE

44-A, Urdu Nagar Road, Gulshan-e-Ravi,

Near Akbar-e-Azam Shadi Hall,


Lahore.

GUJRANWALA II

Shop No. 45, 34A, 34B, 34C, Trust (GDA) Plaza,

GT Road,

Gujranwala.

DHARAMPURA, LAHORE

242 Kamal Plaza, Allama Iqbal Road Mustafabad, Opposite Police

Station, Dharampura,

Lahore.

Church Road, Near Qayyum Hospital,

Sahiwal.

RAVI ROAD, LAHORE

48 Ravi Road, Lahore.

MULTAN I

Ali Arcade, Near Nadra Office, LMQ Road,

Chowk Kecheri, Multan.

TOWNSHIP, LAHORE

284 B-II, Barkat Chowk, Township,

Lahore.

MULTAN II

Sheerin Commercial Center, Jail Morr, Vehari Road, Near Ghalla

Mandi, Multan

ICHRA, LAHORE

G - 2, Nazir Centre, Ichra Morr,

146 Ferozpur Road, Lahore.

FAISALABAD I

Ward No 2, Block 3, Chak No 212/RB, Circular Road, Faisalabad.


KASUR

Chandni Chowk, Dosehra Ground, Kasur.

FAISALABAD II

Near MCB Bank, Abdullapur, Faisalabad.

SARGODHA

Azad Road, Block No 15, Sargodha

JHANG

Session Road, Near Sheikh Iron Store, Old Punjab Bank Building,

Jhang Sadar.

SIALKOT I

Shahab Pura Road, Near MCB Shahabpura, City Tower, Sialkot.

SIALKOT II

Circular Road, Islamabad Chowk, Near Royal Baker, Sialkot.

GUJRAT

Faisal Gate, Circular Road, Gujrat.

WAZIRABAD

GT Road, Opposite Fire Brigade & Rescue 15, Wazirabad.

RAWALPINDI

134-B, Satellite Town, Rawalpindi.

HARIPUR

Rehana Plaza, G.T.Road, Haripur

CHAKWAL

B-IV-86, Near Alliance Travel Services, Adjacent UBL,


Talagang Road, Chakwal.

MANSEHRA

Abbottabad Road, Mansehra.

KARACHI I

A-76, Indus Mehran Society, Soudabad, Malir,

Karachi.

KARACHI II

18/1, Sector 5-E, New Karachi,

KHANEWAL

Block No 8, Opposite GPO, Khanewal.

3.8. Current Staff according to designation and grade:

Current staff:

Name Designation Grade

Arsal Mehmood Branch

manager

C3

Shehzada

Muhammad Adil

Operation

manager

D1

Khalil Tahir

Sandhu

Customer

service officer

D2

Shamaila Khan Customer

service officer

D3

Adeel Ahmad Teller D3

Sana Saleem Teller D3

Muhammad

Shehbaz

Loan Officer D3

Muhammad Asif Loan Officer D3

Umar Farooq Loan Officer D3


Zeeshan Ahmad Loan Officer D3

Salman Azam Saving Officer D3

Usman Umar Saving Officer D3

Sidra Sayed Saving Officer D3

3.9. Current staff of branch according to qualification

and experience:

Current staff:

Name Designation Experience

Arsal Mehmood Branch

manager

8 months

Shehzada

Muhammad Adil

Operation

manager

10 months

Khalil Tahir

Sandhu

Customer

service officer

1 year

Shalala Khan Customer

service officer

1 year, 4 months

Adeel Ahmad Teller

Sana Saleem Teller

Muhammad Loan Officer 1 year,


Shehbaz

Muhammad Asif Loan Officer

Umar Farooq Loan Officer

Zeeshan Ahmad Loan Officer

Salman Azam Saving Officer

Usman Umar Saving Officer

Sidra Sayed Saving Officer

Note:

The above mentioned experience of employees is just in

KMBL, some employees have experience in other banks as

well.



Learning:

The learning team conducted internal trainings for employees and 33 staff

were sent for external trainings

New modules for trainings of Branch Managers i.e. team building &

communication skills, winning attitude, motivations skills were developed

In-house and on-job training plans of Area Controller, Regional Manager and

head office level Manager positions were designed

Identification of Training branches was completed

Trainings sessions were organized in all the new districts to facilitate the

field teams

3.10. Training received by number of people or number of

employees:

Activity # of Training

Orientation

LO 3

CO 3

BM 1

Teller 2

GAD workshopLO, CO, Teller 4LO 8BM 2

LO, CO 1

1

Report Writing 2

Accounts/ Finance Session 2

BM 1

3.11. Workload (it is based on number of hours

worked)

The banking hours for customers are from 9 am to 5 pm, so

the employees working times are from customers timing as

well as until the completion of pending work of account

opening and other operations and until the closing of branch,

the working hours are heavy for employees to perform their

duties, so there are high work-load for the employees of the

bank because of more working hours as compared to

employees working in other service industries.

3.12. Salary structure:

Current staff:

Name Designation

Basic Salary + Mobile

Allowance

Arsal Me mood Branch

manager

45,000

Shehzada

Muhammad Adil

Operation

manager

28,000

Khalil Tahir

Sandhu

Customer

service officer

14,500+1,500


service officer

12,300+800

Adeel Ahmad Teller 10,300+800

Sana Saleem Teller 10,300+800

Muhammad

Shehbaz

Loan Officer 10,300+800

Muhammad Asif Loan Officer 10,300+800


Umar Farooq Loan Officer 12,300+800

Zeeshan Ahmad Loan Officer 10,300+800

Salman Azam Saving Officer 12,300+800

Usman Umar Saving Officer 10,300+800

Sidra Sayed Saving Officer 12,300+800

3.13. Promotion system:

Promotion system of the employees based upon the

performance and experience but performance is mainly

considered according to the amount of deposit taken by the

employees by their personal references rather than the duties

assigned to the employees in their job description.

3.14. Incentives & motivation:

If the employees take deposit for the bank, they will be given

incentives in the percentage of amount taken as deposit. For

instance, if Saving Officers or any other employees bring

deposit, they are given incentives of 1% of the total amount

which is given to them with monthly income; these are the

motivational factors for the employees as well as incentive. If

loan officers perform well their duties means that screening of

clients in well and efficient manner, they are appreciated by

the Branch Manager and by completion of screening,

employees get 200 Rs. per screening which is added in their

monthly salary, so these are also the motivational factors for

the employees working in KMBL.


3.15. Provident Fund and Gratuity:

Provident Fund:

Employee contribution: 10% of monthly basic salary

Employer contribution: equal amount

Gratuity:

< Then 5 years service: no gratuity will be payable

>then 5 years service: Gratuity equals to last month’s basic

salary * number of years

3.16. Compensation & Benefits

Online Salary Transfer was introduced through MCB Cash Management system, in

order to reduce the transit time of salaries

Relocation benefit was introduced for those employees who have been transferred

outstation

Employee loan scheme for Assistant Managers and above tiers was introduced

Vehicle policy reviewed and buy back option was provided to employees

Laptop policy was reviewed and laptops were provided to additional tiers with a

focus on increasing the efficiency of the Kashf team.

Note: The above mention compensation and benefit are not

being implemented except online salary transfer. Other


compensation and benefits are just commitment of the

organization, as my observation and discussion with

employees about these benefits during the period of my

internship.

3.17. Responsibilities / duties performed

Current staff:

Name Designation Duties

Arsal Mehmood Branch manager Final screening of

customer for lending,

maintenance of overall

performance

Shehzada Operation


Muhammad Adil manager

Khalil Tahir

Sandhu

Customer

service officer

Opening and

maintenance of

accounts, dealing with

customers, issuance of

cheque book etc


service officer

Completion of files,

dealing with customers

and fulfillment of all

related documents

Adeel Ahmad Teller Payment and receipt of

cash and inward and

outward clearing of

cheques

Sana Saleem Teller Payment and receipt of

cash and inward and

outward clearing of

cheques

Muhammad

Shehbaz

Loan Officer Screening and visiting

of customers at their

home and business for

lending purpose

Muhammad Asif Loan Officer Screening and visiting



lending purpose

Umar Farooq Loan Officer Screening and visiting



lending purpose

Zeeshan Ahmad Loan Officer Screening and visiting




lending purpose

Salman Azam Saving Officer Taking deposit for the

bank to meet their

target and fulfillment of

account opening forms

Usman Umar Saving Officer Taking deposit for the

bank to meet their



Sidra Sayed Saving Officer Taking deposit for the

bank to meet their



3.18. Critical analysis of branch:

By critically analyzing the branch, there is biasness in

providing jobs to the employees because qualification is not

given priority but experience matters within the branch, just

take the example of Branch Manger and Operation Manger,

Mr. Adil is the operation manager of the branch, and taking

basic salary of 28,000 Rs, but at the same time the employees

who have done MBA from Bahria, Numul, khazara, Islamic

University, and specialized in finance, they are working at

lower posts that are CSO(Mr. Khalil Tahir Sindhu),SO(Mr.

Usman Umar),Teller ( Mr. Adeel Ahmad), Senior LO( Mr.

Shahid). So, there is a discrimination in hiring the employees

and there is also reference based employees working in the

branch, Miss. Sidra Sayed who is working as Saving Officer is


totally reference based, her organizational behavior is not

favorable even then she is working in the branch.

The Branch Manager (Mr. Arsal Mehmood) did B.Com and

could not do ACMA which was in process at the time of his

hiring, means that he has got the designation of Branch

Manger on B.Com degree, he is the most flirtiest person in the

whole branch and pass certain flirty comments on female staff

members. Such person should not be in the branch from the

presence of whom, female staff employees do not feel secure.

3.19. Communication system:

There is smooth upward and downward communication

between branch and head office, if there in any conflict

regarding to the performance of employees, they do

communicate through telephone and if there is any change in

policy or in case of sending any notification or using official

documents, communication is done by email, because

evidence is required from the branch in terms of email to

change the official documents which is required by the

internal and external audit to avoid from objections.

3.20. Hiring system:

The hiring system of employees is two ways process; firstly,

the employee is interviewed by the branch manager and then

his/ her CV is transferred to the head office and he is again

interviewed and give test to the Human Resource Manager of

KMBL named as Abdul Rafay and after fulfilling the whole

requirements of policies given by the Head Office, the

employee is hired and he is given three days training in which


he is learnt how to perform his duties and overall view of the

organization’s norms and values.

3.21. Morale of staff:

There is a good morale in staff of the whole branch, the staff

deal with one another in a good manner and there is no

concept of leg pulling among all the staff of the branch. They

all behave with me in a good manner during the period of my

internship and there is just like a family environment in the

branch.

3.22. Physical facilities (this will be included facilities

like room sizes, ventilation, furniture, separate rooms

for offices:

The branch of KMBL is not well established, no air conditioning

facility is available in the whole branch and there are no

separate rooms for offices even for the branch manager. Loan

officers do not have Computer system on their tables, there is

also shortage of office equipment on their tables, and even

they are not provided calculators for the purpose of

calculations for the fulfillment of Loan Application Forms (LAF),

they are using calculators of CSO’s.

3.23. Performances:

3.23.1. In terms of quality (through customer

satisfaction)


3.23.2. In terms of quality (through number of accounts

and budgets):


3.24. Latest budget review:

The working capital of Kashf micro-finance bank limited is

711,752,967 as per balance sheet as on 31 December,2009,

its numbers of borrowers are 48,770 and the amount of loan

that has been disbursed to the customers is 299,215,549, the

number of depositors is 48,770 and the amount deposited to

3.25. Summary:


Chapter 4: Work done by me

4.1. Account Opening:

Firstly, from the date of joining I have learnt how to open

current account. Before starting opening an account, the

client is shortly interviewed that which type of account he or

she is wanted to open, then a sample of their signature is

taken in order to decide whether he or she is eligible for

opening photo or non- photo account. If the customer’s

signature is shaky, photo account is opened and if the

customer has original sign which means some symbol which is

not easily copied by others, non- photo account is opened.

The things required to open an account in case of photo

account are three passport size photos, CNIC and the CNIC of

Next Of Kin which means that if the customer dies, he or she

will maintain the account on behalf of the client. In case of

non-photo account, other things remain same just passport

size photos are not required. After providing the required

documents, a person is eligible to open an account.

Account opening form consists of following documents:

Check Book Requisition

Two Specimen Signature Cards

Account opening form


KYC (Know Your Customer)

Indemnity for Urdu or shaky Sign (if required)

Indemnity for sign changing Sign (if required)

NADRA Verysis (if required)

Student Identity Card (if required)

4.1.1. Check Book Requisition:

The purpose of cheque book requisition is to fulfill official

requirements on the time of issuance of cheque book to the

customer. It consists of two options whether the cheque book

is issued to the customer itself or to any other person or blood

relations, but they mainly focus on issuance of cheque book to

the customer itself because it involve less risk.

4.1.2. Specimen Signature Cards:

It is used to admit the customer’s signature for the purpose of

opening account, if the signature of customer is in Urdu or

shaky, two passport size photos are paste on Specimen

Signature cards, but if the signature of the customer is original

which means it is not easily copied by others, non- photo

account is opened and customer signature is taken two times

on SS cards, and put the stamp of Signature Admitted on the

centre of SS cards.

4.1.3. Account opening form:


Account opening form consist of the necessary information

about the customers like residential address, permanent

address, contact numbers, account number, name and NIC

number of the customer and name of customer parents and

the name and address of Next Of Kin which means if the

customer dies or becomes insolvent, he or she will pay the

amount of loan taken by the customer, or in case of any fraud,

he will be responsible to pay that amount.

4.1.4. KYC (Know Your Customer):

Basically this document is filled by the CSO through a short

interview about personal and financial information, name of

spouse, and then asked the purpose and nature of opening

the account and source of income. If he is running his own

business, it comes in the category of self-employed in which

customer tells about its monthly income approximately and

average saving and expenses and then yearly income is

calculated. If the customers source of income is service

sector, it comes in the category of salaried person, and its

monthly salary, the name of employer, job title, job duration is

mentioned and then customer is required to give an evidence

that he or she is working in that particular organization for

which they have to submit the photo copy of their employee

card or employer gives in black and white the name of

employee, salary, job duration and do signature after writing

all above requirements on business pad.

4.1.5. Indemnity for Urdu or shaky Sign:

If customer’s signature is in Urdu or shaky sign, which can be

easily copied, he or she has to sign the indemnity of Urdu

signature, in which he or she indemnifies that all the

transactions will be done in front of bank officers even if he or


she wants to withdraw or deposit cash in his or her account,

the basic purpose of this indemnity is to minimize the risk of

cash with-drawl on behalf of that customer without his

consent, it is to secure the customer from fraud or any fake

transaction on behalf of him or her.

4.1.6. Indemnity for sign changing Sign:

If the customer’s signature differs from National Identity Card

on account opening, this indemnity is required to dispatch

with account opening form, in which the customer certifies

that he or she want to change his or her signature and the

changed signature will be acceptable for all transactions

related to his account. This indemnity is basically an evidence

for changing the signature from his original signature.

4.1.7. NADRA Verysis:

It is an online verification of customers National Identity Card,

but it is done only for those customers who take loans from

Kashf Micro-finance Bank Ltd, basically the purpose of NADRA

Verysis is to clarify the ambiguity of fake National Identity

Cards of the customers, because some customers take loans

on fake National Identity Card so that they can refuse to pay-

back loans and proof that they have not taken any loan.

4.1.7.1. Note: After opening an account, Letter of Thanks

(LOT) is sent to the customers through mail in order to verify

the residential address of the customer.

4.2. Dealing with customers:


During the period of my internship, I have also learnt how to

deal with customers regarding different perspectives. The first

perspective is to make customers aware about the products

and their benefits in order to meet customer’s needs. Most of

the customers belong to backward and under-developed areas

and they are mostly illiterate so they are not eligible to

understand brushers, or if we deal them in Urdu, so we use

the same communication mode to aware customers about the

products and services of the branch. Following are the

instructions that are given to the customers by me (internee)

but basically Customer Service Officer provides this

information to the customers for the purpose of applying loan.

The te3rms and conditions are clearly communicated with the

customer at the time of loan application that if he or she will

not be able to repay the loan, the bank will file a case against

him and if he delays the amount of installment, he has to pay

50 Rupees fine per day after due date, and when customer

does not pay two consecutive installments, the bank takes

legal action against that customer and recover its bad debts in

court.

4.2.1. Process of taking loan from KMBL:

When a customer wants to take loan from KMBL first he visits

the branch and takes the whole information from CSO also by

me, in which the requirements for loan application is


communicated with him. Following are the requirements by

the customer in order to apply for the loan:

Two recently paid Utility Bills of customer’s home

Two recently paid Utility Bills of customer’s business

(shop)

Two recently paid Utility Bills of guarantor’s home

Two recently paid Utility Bills of guarantor’s business

(shop)

One passport size photo of customer

One passport size photo of guarantor

CNIC of customer

CNIC of guarantor

4.3. Completion of Files:

I have also learnt how to fill the official documents of the

branch that are concerned with relevant documents that are

required to apply for loan till from application of loan to

disbursement. Following are the documents that are

dispatched in fill to fulfill all the formalities.

Check-list (Branch Manger)

Check-list (operation Manger)

Repayment Schedule

Branch Manager Screening Sheet

Indemnity of PDC’S

Disbursement sheet

Utility Bills

LAF(Loan Application Forms)

Legal Papers

12 Post Dated Cheques (PDC’s)

Three promissory Notes


Note: On each and every document of file, the guarantor and

the customer signs, except BM screening sheet

4.3.1. Check-list (Branch Manger):

This check list is signed by BM (Mr. Arsal Mehmood), he takes

an overview that all the relevant documents are filled

according to pro-forma that is given by the HO, the file

completion is the responsibility of CSO (Shamaila Khan) but

during my internship period I have done this task and learn

practical knowledge.

4.3.2. Check-list (operation Manger):

This check list is signed by OM (Mr. Adil), he also takes an

overview and rectify the errors in because he is responsible to

follow the entire prescribed format and accountable for

objections at the time of external and internal audit.

Repayment Schedule:

This schedule contains all the details of the total and

installment amount, date of each installment and the number

of installments. One copy of this Repayment Schedule is given

to the guarantor because he is responsible to pay for the

installments if actual customer disables to pay.

Branch Manager Screening Sheet:

When a customer applies for loan, first he is screened by Loan

officer, in the screening of LO, the repayment behavior of the

customer is observed from discussion about that customer to

its surrounding people of its business and residences. If the


people witness that he is good in repayment, his application is

accepted for lending purpose, otherwise his case is declined

which means he is rejected to take loan from KMBL.

Indemnity of PDC’S:

If customer’s signature is in Urdu or shaky, he will sign for this

indemnity. The basic purpose of this indemnity is that he is

going to open current account and he is liable to signature in

bank officer’s presence in case of any transaction regarding to

his account.

Disbursement sheet:

The disbursement sheet contains all the details of the amount

of loan taken by the customer, in this sheet, the date of

amount taken, interest percentage of loan, interest amount,

principal amount, total amount including interest amount and

the installment amount including interest amount is

mentioned.

Utility Bills:

Eight utility bills are dispatched with the file; the basic

purpose of taking these utility bills is just to evaluate the

repayment behavior of the customer and the guarantor as

well that if they are paying utility bills on time, they will pay

installment amount on due date.

LAF (Loan Application Forms):

LAF are the most important documents which contains all the

necessary information of the customer about his


Chapter 5:

Half page introduction:


This chapter mainly emphasize on the policies and strategies

of the bank,

Policies:

The policies of KMBL mainly focused on the prudential

regulation of Micro-finance which was passed in the period of

Pervaiz Musharaf government according to micro-finance

ordinance 2001.

Note: They have not communicated with me the policies of

branch and keep it as confidential because of certain

restrictions and rules and regulations imposed by the Head

Office even they have not tell me how to use the packaging

software of bank named as H-Plus and they have not allow

me to do any work on computer.

Strategies /functions (in that branch):

There are mainly two types of functions working which are as

follows:

Short-term Strategies/functions:

In short-term strategies, they are mainly focused upon

increase in disbursements and deposits because the

operations of banks are mainly focused on these two factors

and they are generating a lot of revenue because of lending

funds to the customers as and by taking surplus funds from

the customers as deposits. They invest these funds in

different companies to purchase shares and generate high

revenue by the fluctuation of prices.


Long-term Strategies/functions:

Five Years Plan:

Year

0

Year

1

Year

2

Year 3 Year

4

Year

5

No of

branches

22 28 38 60 87 101

No. of

credit

clients

15,334 48,090 110,486 171,858 276,284 375,740

Total loan

portfolio

337 M 1,690 M 4,162 M 6,870 M 11,349

M

15,537

M

No of

saving

Clients

0 98,472 373,410 640,090 868,759 1,085,2

08

Total saving

Deposits

0 345M 2,545 M 4,897 M 6,951 M 9,507 M

The long-term functions involved that operations of the

organization should be improved in which revenue is not


generated up to the set standards, or if there is any deficiency

in the performance of branches, or the management decides

in which area, new branch is to be established, or setting of

strategies in order to get organizational long- term goals.

Note: They have not clearly communicated their strategies,

but these are by my personal observation and informal

discussion with the employees of the branch. The above

Successes (it will be based on the impact of the

strategies):

Kashf’s success and best practices were

recognized by the Government of Pakistan and the

President and Founder of Kashf Roshaneh Zafar

was awarded the Tamgha-i-imtiaz by President

General Pervez Musharraf.


Kashf Foundation was awarded the AGFUND

International Prize for Microcredit 2005 by HRH

Prince Turki of Saudi Arabia in a ceremony held in

Cape Town.

The programme’s outreach now extends to 76,170

clients and the outstanding portfolio is Rs.778

million with a portfolio at risk of 0.32%.

The total work force has increased from 275 to

331 over the one year with the greatest relative

increase in the field staff. Gender ratio is 56%

males to 44% females.

The President of Kashf participated in the World

Economic Forum 2005 along with heads of state

and leaders of major international organizations

and also represented the organization at the India

World Economic Forum.

In the aftermath of the devastating earthquake

that hit the northern areas of Pakistan, Kashf

actively coordinated and implemented relief

efforts for the victims by disbursing over Rs 5.5

million in funds.

A cash management system was implemented in

order to integrate Kashf with the formal financial

system and to bring more transparency in the flow

of information on a daily basis, while an

accelerated pilot was continued for automating all

Kashf branches.


The Holding Company structure will enable the group to

further its vision for financial inclusion for low-income

communities by tapping into 'patient capital' investors who are

motivated to create long-lasting models serving low-income

markets, particular women, to access a range of financial

services.

Chapter 5: Organization Analysis

5.1. SWOT analysis:

5.1.1. Strengths

Diversified products (KKKK, KS)

Unique branch location

Very attractive salary packages to employees

Heavy internal financing i.e. from heavily growing

deposits

Qualified staff

Unique deposit products & saving products rates

Capacity Building for Women Entrepreneurs


5.1.2. Weaknesses

High lending rate as compared to its competitors

Less banking experience

High rate of staff turnover

5.1.3. Opportunities

Open new branches in NWFP

Mobile Banking

Setting up an insurance branch and a fund for

educational projects

It can offer a wider range of services, such as savings

and insurance products

5.1.4. Threats

Lost of its customer because of its high lending rates

Profitability can decrease due to high rate of staff

turnover

5.2. Pest Analysis:

5.2.1. Societal Environment:

Following are the forces which are currently affecting

Kashf Micro-finance Bank and the Banking Industry:

5.2.2. Economic:


The main things affecting Kashf Micro-finance Bank and

the banking industry are increase interest rates, and the

rising inflation rate in the economy, for example,

currently KIBOR which is benchmark for industry lending is

at highest ever point.

5.2.3. Technological Developments:

Like introduction of oracle financial systems, symbols, and

different application are increasing productivity of the Kashf

Micro-finance Bank as well as the banking industry, but on

the other its initial implementation costs are causing

increased administrative cost to KMBL.

5.2.4. Socio cultural:

Socio cultural forces like values, demographic characteristics,

etc are also affecting KMBL as well as the banking sector.

Because of these values some professionals do not want to

join banking sector, and some people do not keep their money

in the banks, because of religious believes. But on the other

hand such believes are also helping banks to introduce

Islamic products. KMBL has lost various customers because of

shifting from Islamic Banking to conventional banking.

5.2.5. Political-legal

These include the forces like political conditions in

country, SBP regulations, etc are also affecting KMBL as

well as banking sector. For example, SBP is increasing

discount rates, Minimum Capital Requirement (MCR), cash

reserve ratio, etc which is causing liquidity problems for

KMBL as well as banking sector. Due to MCR, various mergers

took placed in the banking sector.

5.2.6. Task Environment (Industry)


Many forces in the industry are causing competition,

these include, technology i.e. communication system like

Symbols, Sun, Oracle, etc, larger branch network, ATM

locations, unique products, etc.

5.3. Porter Model:

Task environment of KMBL can be discussed through

following Porter Model:

5.3.1. Threat of new entrants:

Opening of branches by Barclays (which in

international reputable bank), threat of entering of

Bank of China (BOC) by acquiring SME Bank, and

Industrial Development Bank of Pakistan (IDBP), while

BOC is also planning to acquire 26% stakes in

National Bank of Pakistan.

5.3.2. Bargaining power:

Bargaining power of buyers due to increase in interest

rates, small firms are not in a position to take loan

from banks, while number of corporations in Pakistan, is

limited. Therefore, key customers/buyers (corporate

customers) of banks have gained substantial power

and now they can bargain the spread with the

relationship managers due of availability of the large

number of the banks.

5.3.3. Threat of Substitute products or Service:


As such there is no significant threat of substitute

products or service, but few services like investment

related services are offered by various Mutual Funds,

and Security Dealers, but these services are limited to

big cities. While, on deposits side, National Saving

Organization, and is providing substitute products to the

depositors of the banks through attractive packages, at

very attractive rates.

5.3.4. Bargaining power of suppliers:

Currently this is big problem for KMBL as well as

industry, because of liquidity crisis and Pakistan’s poor

international financial rating, all fund suppliers are

avoiding to supply credit to Pakistani industry,

moreover depositors bargaining power has also been

increase due to high mark up rate offered by various

banks, and due to dearth of deposits with bank) Rivalry

among competing firms Banking sector is facing severe

competition, due to availability of many national and

international banks in the industry. Currently HBL

bank, is leading with 40% market share, while MCB with

highest profits and National Bank of Pakistan with

largest deposits.

7.4 SWOT Analysis

Strengths


Based on financial strength and superior performance•

•.•Attracted big corporations like SNGPL, Attock Group

of Companies, Zaver Petroleum, etc.Weaknesses•Weak

branch network across the country.•High employee

turnover.•Low number of ATMs.•Attracting only upper

and middle class customers.•Market share is declining

from new competition.•Employees’ frustration due to

excessive work burden.Opportunities•It can capture

agriculture market by offering innovative agri

finance products. •Impressive print and electronic

media campaign highlighting FBL’s role in the

development of rural economy of Pakistan can give it

competitive edge over its competitors.•Through re-

branching, FBL can capture lot of new

customers.•Merger with Barclays or Bank of China

to become part of larger international banking

network and to increase the profit.Threats•Declining

trend in banking sector, which can affect it to large

extent because of its big corporate customers which are

few in number.•Arrival of Barclays and Bank of China in

Pakistan, which can increase the competition in banking

sector.•Decreasing trend in Earning per share and stock

prices.•Moving of key employees, e.g. Corporate

Relationship Managers, which means moving of

corporate clients to other banks.

Performance

5.4.Ratio Analysis:


As Kashf micro-finance bank limited is a newly established

bank, its first branch was inaugurated in December 2008 at

Lahore, so that is why just one year annual report is prepared

by the bank yet, for the purpose of ratios interpretation and

calculation, at least two years data is required, which is not

available, so I cannot calculate its ratios and interpret it by

comparing at least two years data.

5.5.Summary:

5.6.Recommendations with their feasibility (economic,

political, financial etc)

Interest rate of lending funds should be reduced, so that it can be easily

affordable for all customers.

They should not be any biasness in customers dealing, because they

treat reference base

customers, regular customers and especially with those customers who

bring lump-sum deposit for the branch in a very well manner, but the

customers of Kashf Foundation are not treated in a good manner.

There should be flexible environment, so that employee’s turnover can

be reduced.

Development of strategic, business and operational plans

Market research techniques should be improved

Risk-assessment tools should be identified


Client selection strategy

Monitoring systems that measure and forecast risks should develop

Communication strategy with relevant stakeholders should inroduce

References:

www.kmfbank.com

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

#hl=en&q=annual+ratio+anaylysis+of+kashf+micro+financ

e+bank+ltd+for+the+year+ended+2009&meta=&aq=f&aqi

=&aql=&oq=&gs_rfai=&fp=982714dd5b6c0abf


http://www.google.com.pk/#hl=en&q=annual+ratio+anaylysis+of+kashf+micro+finance+bank+ltd+for+the+year+ended+2009&meta=&aq=f&aqi=&aql=&oq=&gs_rfai=&fp=982714dd5b6c0abf



http://www.kmfbank.com/

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

#hl=en&source=hp&q=what+is+the+overall+respective+se

ctor+of+kashf+micro-

finance+bank+ltd+in+pakistan&btnG=Google+Search&meta

=&aq=f&aqi=&aql=&oq=&gs_rfai=&fp=982714dd5b6c0abf

Appendices:

Account opening form

Letter from the organization


Brushers

List of tables:



List of abbreviations:

KMBL: Kashf Micro-finance Bank Limited

MCR: Minimum Capital Requirement

SBP: State Bank of Pakistan

LO: Loan Officer

CO: Customer Officer

BM: Branch Manger

The Challenge:

A 2005 study of 99 countries by the World Bank concluded that

greater levels of financial outreach are tied to higher levels in standard

economic development indicators.

According to a 2007 report by the Asian Development Bank, no more

than 10% of the low income market in Pakistan has access to financial

services.

Traditionally, commercial banks are not interested in serving lower

income populations because transaction costs for smaller loan sizes are

too high and conventional collateral requirements cannot be met.

The Innovation

Kashf Holdings Private Ltd. will establish a group of companies

providing a suite of specialized financial services - micro-savings,

micro-insurance, housing finance - to different segments of low

income households.

Kashf Foundation has scaled from 10,000 clients in 2002 to over

300,000 clients at the end of 2008. It is well positioned to reach over 1

million clients with a national branch network offering a range of

financial services.


Kashf is diversifying into new product areas and is well positioned to

develop and distribute new financial products to the base of the

pyramid on a scalable basis.

As a result, over 5-7 years, more than 1 million families will have

access to a suite of financial services tailored to meet their needs.


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Intrnshp Report on Kashf Micro-Finance Bank Ltd

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