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INTERNSHIPREPORT
FIRST WOMEN BANK LIMITED (The worlds only bank for women)
A unique financial institutionA commercial bank $ DFICatering to the socio-economic needs of women, run and
managed by women
PRESENTED BY
UNSA PARVEEN
MC070403584
MBA (Final year)
Completed on( 29-06-2009 )
VIRTUAL UNIVERSITY OF
PAKISTAN
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2. DEDICATION
With unique encouragement and involvement of my parents and bank staff, I completed my
report I concede the politeness and guidance of my respectable parents. Therefore, this report is
devoted to my parents.
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3. ACKNOWLEGEMENT
I am thank full to the management of First Women Bank Limited , all of its office staff , all of its
sales department , who give me a chance to complete my internship program in a better way. All
the staff of FWBL gives me full support and give me every piece of information which I asked
them. I am specially thanking full to Manager Miss Shakira Mirza who give me permission for
doing internship in this organization. Many thanks also go to my friends and classmates at my
campus, with whom I had shared ideas on different topics and had really nice time with them.
4. Executive summary
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As part of the academic requirement for completing MBA (Banking and Finance) Master .BusinessAdministration of the students are required to under go six weeks of internship with an organization.The internship is to serve the purpose of acquainting the students with the practice of knowledge ofthe discipline of banking administration.
This report is about First Women Bank Limited. FWBL was established in 1989 and since then, ithas expended its network, becoming the largest women Bank of the country.
In this Report I have discussed the followings topics of the bank
1The brief history of the organization is described in the start, the bank was introduces in1989 and it has 535 number of employees and 38 branches in all over the Pakistan
2The nature and product lines of the organization are explained in the banging. The bank hasmany products such as first car, first house, first choice ,Micro Financing ,SMEFinancing, Business Loans for Women ,Women, Personal etc
3Afterwards its some major competitors are discussed
4The bank has many departments in its branches. Each is discussed in very detail. Cashdepartment, remittances, clearing, advances and deposits departments are importantdepartments of the FWBL
5The brief introduction of FWBL Gujarat branch where I have got my internship isexplained. Its cooperative staff and its working are described.
6As an internee in First Women Bank Limited the main focus of my study research was onGeneral banking procedures in one of the branches of First Women Bank Limited. Theseoperations include Remittances, deposits, advances and foreign exchange.Similarly differentaspects of overall of FWBL are also covered in this report.
7Financial department of the FWBL is discussed its electronic working is explained. The bankuses the AUTOBANKER for the record of its daily transactions and customers statements.
2Future prospects are Phone banking Call centerInternet banking
Utility bills paymentsPoint of sale terminals
Debit cards, etc
2Financial ratios are discussed. Three years financial comparison is conducted in this report.How and at which ratio profit of the organization is increasing day by day
3SWOT analysis is also described in this report, the strengths, weaknesses; opportunities andthreat to the banking sector are described in detail.
1. Exploiting an organizations opportunities and strength.
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2. Neutralizing it threats.3. Avoiding or correcting its weakness.
4Competitors analysis of this organization is also conducted and certain conclusions aremade.
5At the end some suggestions are suggested for enhancing the working capacity of the
banking sector.6References and sources which are used in my report are also illustrated at the end of thereport. I have collected material from different books, from internet web sites and fromnewspapers. The banking site www.fwbl.com.pk is very helpful in my repost preparation.
7At the end of the report I have attached some financial statements, ratios analysis graphsand banking advances and deposits reprehensive graphs, from where I have collectedmaterial for the preparation of my internship report.
5. Scanned copy of the internship certificate
Table of Contents
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CONTENTS PAGE NO
1. Title page 01
2. Dedication 02
3. Acknowledgement 03
4. Executive summary 04
5. Scanned copy of the internship certificate 06
6. Table of contents 07
7. Brief introduction of the organizations business sector. 08
8. Overview of the organization 10
9. Organizational structure 19
10. Plan of your internship program 35
11. Training program 38
12. Structure of the Finance Department 43
13. Functions of the Finance Department 48
14. Critical analysis 53
15. SWOT analysis of organization in the business sector 66
16. Conclusion & recommendations for improvement 70
17. Reference & Sources used 75
18. Annexes 76
7.Brief introduction of the organizations business sector
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The FWBL Business Center spells a new era of economics empowerment and development center of opportunitiesaimed at improving business run by women. There are three Business centers one is at Karachi, Lahore andIslamabad. Business Center Lahore and Islamabad started their operation in Feb 1999, while Karachi in May 1999.
Ours Aims
Developing new women Entrepreneurs
Linking the center with branch network countrywide.
Providing Women Entrepreneurs information and business advice relating to business panning andmanagement
Finance
Sales & Marketing
Export Quality standards.
Exhibitions of products at Chamber of Commerce and Export Promotion Bureau and other places atconcessionary rates.
Lecture / Seminars on business, Management and Export.
TARGET GROUP OF WOMEN
House WivesWorking WomenFemale Student
STRATEGY
EducationsEconomic of enlistmentWelfare of women and their families
ACTIVITIES
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To achieve the above mentioned aims and objectives the following activities are carried out on regular basis.
1. Shorts terms courses (One Month).
2. Workshops (Two or Three days).
3. Advanced Courses (More then one month )
4. Exhibition & Display of products
5. Advisory Services & Counseling
SUMMER CAMP
Business Center offered special courses for female students during their summer vacations at discounted rate.
ADMISSION PROCEDURE
An admission is granted on first come first served basis.
Nominal fee is charged for each course.
Registration fee of cost.
BUSINESS CENTEROFFICES
Karachi
Lahore
Islamabad
8. Overview of the organization
a. HISTORY of FWBL:
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First Women Bank Ltd. is a unique financial institution, a scheduled Commercial Bank and aDevelopment Financial Institution for socio-economic empowerment of women. First Women
Bank Limited (FWBL) is located in Karachi, Sindh, Pakistan.
First Women Bank Limited was incorporated as a Scheduled Commercial Bank in Public Sector
as Public Company Ltd by shares on 21st November 1989 Under Companies Ordinance 1984 &Commenced its business on 2nd December 1989 with a paid up capital of Rs. 100 million (Nowenhanced to Rs. 200 Million) 90% of which was contributed by five leading public sector Banksof the country viz: National Bank of Pakistan, Habib Bank Limited, Muslim Bank CommercialLimited, United Bank Limited and Allied Bank of Pakistan Limited in varying proportions and
10% had come from Federal Government.
ORGANIZATION:
The Bank is headed by Ms. Zarine Aziz, who took over as President in year 2001. FWBLsuffered heavy FOREX loss in 1996. The situation further deteriorated due to negative equity,
pending tax appeal, low capital base, and infected balance sheet. In 2001, the Governmentcreated an enabling environment for the Bank. The period from June 2001 to December 2006was an era of Turnaround for the First Women Bank Ltd. with significant growth recorded in
all financial activities. The Bank accomplished the highest ever results in all key areas during theyears 2001 2006 over the previous 12 years and continued to progress in all spheres of
financial and operational activities.The Bank crossed achieving consolidated net profit of Rs. 1.2billion during last 6 years 2001 to 2006 (as on January 23, 2007)
Paid-up Capital was further enhanced to Rs.283 million with the injection of Rs. 40 million from
the Ministry of Women Development, Government of Pakistan during 2004.
The Pakistan Credit Rating Agency has upgraded the long and short-term credit ratings to AAand A1+, respectively. The rating demonstrates the Banks sustainability and financialstrength. FWBL was the first Bank to launch Micro Credit in Pakistan. The Bank has disbursedRs.10.8 billion to women, thereby proved the best outreach.
In collaboration with ILO, FWBL directly financed women micro-borrowers in rural areas. Theproject identified 42 micro-businesses and provided skill training to 375 rural women. The Bankdisbursed micro-credit to 972 women living below poverty line in 64 villages, with 100%recovery rate.
Ms. Shafqat Sultana, the newly appointed President of First Women Bank Ltd. has assumed heroffice today in Karachi. She is the 3rd president of First Women Bank Ltd.Ms. Shafqat has beenserving the FWBL as its Executive Vice President and General Manager Sindh and Balochistan
for the past nine years. She was also member of Executive Committee of the Bank.
b. Nature of the organization:
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1Receiving Deposits2Advances of Money3Safe Custody4Transfer of Money5General Utility Services
c. Business volume
FWBL crosses Rs. 1 Billion in Profit
Best out reach to
women (loan disbursed)
Rs. 8.5 Billion
Balance sheet size/
Total Assets
Rs. 10.503 Billion
PACRA credit Rating
Long Term
Short Term
BBB+
A2
Recovery Rate 98%
Future Contracts planned for a particular period etc:
Human resource management and development:
Several HRM and DI are planned for the future. The introduction of an automated HRIS willenable the effective tracking of all staff qualifications and experience, providing information for
effective talent management, succession, planning and work life balance as another area offocus for the female workforce of the bank.
Competency based learning initiatives will be introduced to develop skills of staff and will be
cascaded throughout the bank. These initiatives will provide a solid foundation for the long termsustainability of the human resource assets of the bank.
First women bank limited run and managed by the women, for the women of Pakistan, iscommitted to be the benchmark employer of women in the banking industry, with the best
practice and the best financial services, in line with its vision.
To be the lead bank for women: dynamic, adaptive and responsive to their special economic
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needs, offering the best financial services and the best banking practices.
Information technology:
The bank is committed to provide more resources for the implementation of new innovation in
the field of information technology for the benefit of our valuable clientele. After the successfullaunch of the online banking, the bank is improving its IT system, automation of Head officewould be completed soon.
Further, it is planned to consolidate and build on the improved infrastructure by upgrading ofcore banking applications, offering new products, such as
8Phone banking9Call center10Internet banking11Utility bills payments
12Point of sale terminals13Debit cards, etc.
d. Product lines
(A complete range of products/ services of the organization)
Products play a vital role in the success of any organization. They stimulate the organizationalincome to increase and populate the organization as well. The followings products are offered by
the FWBL to its customers.
1.Micro Financing2.SME Financing3.Business Loans for Women4.Education Loans for Women5.Personal Loans for Women6.First Choice7.First Car8.First Home9.Financial Services Desk
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MICRO FINANCING
FWBL is amongst the pioneers in micro-finance. In 2001 Women World Banking acknowledgedFWBL as leader in micro-finance for its innovative products and services.
The three-pronged strategy of FWBL micro-finance model is:
1Extending micro-credit to the Urban and Rural Women;
2Offering wide-ranging support services;
3Research, documentation and compilation of women centric data;
The Micro-Finance product we offer;
1Ranges from Rs. 5000 to highest credit amount in the industry; of Rs. 100,000
2Mark-up rates are amongst the lowest
Thus retaining and elevating micro borrowers to higher micro-credit ceilings.
SME FINANCING
The model of First Women Bank Ltd. is the way forward, which believes that a "micro-borrower" of today is a potential "SME" and a "Corporate Client" of the future.
The Bank offers SME Loans to Women Entrepreneurs:
1Funds for start-ups
2Working capital/Export Finance
Medium term loans to established SMEs can purchase new equipment
BUSINESS LOANS FOR WOMEN
FWBL extends loan to business women for establishment of new business/development ofexisting business, and for working capital.
Women can get loans ranging from Rs. 0.1 Million to Rs. 2 Million. The Financial Services Deskof the bank assists the applicants of the loan in financial, legal, taxation, marketing and
management issues.
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EDUCATION LOANS FOR WOMEN
Often women are deprived of their right to pursue higher education mainly because of thefinancial constraints many family face. Society does not realize that well-educated enlightened
women health by rearing an equally enlightened future generation.
First Women Bank Ltd Offer education loan at an attractive rate, with special bonus for thebright students.
PERSONAL LOAN FOR WOMEN
Providing you just that extra spending power around the house no matter what your needs mightbe! Get greater spending power with personal loans for women.
FIRST CHOICE
First Women Bank Ltd. proudly present loans for buying consumer durables through "FIRSTCHOICE" Scheme. Through this scheme, women can buy electrical appliances for their home
and kitchen with the convenience of paying on a monthly basis.
First Choice scheme facilitates women in buying items of necessities to luxuries instantly, whichthey otherwise could not afford due to budgetary constraints.
FIRST CAR
The scheme "First Car" is designed to assist women from all walks of life to conveniently availcar loan facility from the bank on low markup rates. The scheme is specially designed for
working women who often face problems in commuting to their workplace.
FWBL's 'First Car' offers competitive financing rates, low down payment, flexible repaymentoption, quick processing and insurance coverage from reputable companies.
FIRST HOME
First Women Bank Ltd. offer home loans under the brand "First Home". Women can get a loanup to Rs. 7.5 million from the bank.
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These loans are offered to all classes of working women i.e. salaried, self-employed (proprietor),professionals in business.
Another great advantage that only FWBL offers is that these Home Loans can be availed singlyor jointly i.e. with spouse or a male earning member of the family.
FINANCIAL SERVICES DESKWomen in developing countries are often unable to access financial and non financial resourcesthat might help them in attaining a level of economic self-sufficiency. There are both practicalobstacles as well as social constraints faced by women who are interested in improving their
economic prospects.
Credit can only be effective when it is understood as one aspect of an integrated set of supportservice to
strengthen women's-economic activities.
Financial Services Desk (FSD) serves as a powerful tool for economic empowerment andsupport to women, by providing support and advise on Credit Management, Legal issues,
Taxation and Marketing.
Our objectives are to:
1Assist women in interacting with government organizations, trade bodies, taxationauthorities, as well as non- government institutions.
2Provide technical support to export oriented entrepreneurs.
3Help women attain higher economic standards, through specific consumer loan
products.
e. Competitors
The followings are the main competitors of the first women bank limited.
1National Bank of Pakistan2Habib Bank Limited3Muslim Bank Commercial Limited
4United Bank Limited and5Allied Bank of Pakistan Limited6& ALL COMMERCIAL BANKS
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9. Organizational structure
1ZARINE AZIZ (PRESIDENT)2Charmaine Hidayatullah Head of Legal & Security, EVP
3Shahid Siddique Amjad Mughal Head of Finance & Planning4Shafqat Sultana Head of SME, EVP5Tauqir A. Siddiqui CIO & Head of Information Technology6Naushaba Shehzad Dy. Head Credit7Mustansir Rao Treasurer8Ferozeali Hussaini Dy. Head Risk Management Division9Mr. Abdul Ghafoor Head of HRD
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a.Organizational Hierarchy chart
b. Number of employees
The numbers of employees have been changed during the period of time. Numbers of employeesare increasing day by day as the tasks are increasing.
Permanent 323Temporary on contractual basis 192Daily wages 20Banks own staff strength 535
Outsourced -Total 535
c.Main offices
a. Sindh & Baluchistan Region Imperial Courtb. Branch Karachic. Punjab Region Main Boulevard Branch d. Lahoree. Islamabad Region Blue Area Branch f. Islamabad
g. NWFP Region the Mall Branch Peshawar
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d. Introduction of all the departments
MANAGEMENT
Management is a distinct process consisting of activities of planning, organizing, actuating and
controlling performed to determine and accomplish stated objectives with the use of human beingand other resources.8The management has two types.
1 Centralized.2 Decentralized.
Centralized Management tends to concentrate decision making at the top of the Organization.Decentralized disperses decision making and authority throughout and further down the
Organizational hierarchy. FWBL have a centralized type of management because all the decisionsare taken by the top management.
Departments
1. CASH DEPARTMENT
Cash department performs the following functions
Receipt
The money, which either comes or goes out from the bank, its record should be kept.Cash department performs this function. The deposits of all customers of the bank are controlled bymeans of ledger accounts. Every customer has its own ledger account and has separate ledger cards.
Payments
It is a bankers primary contract to repay money received for this customers accountUsually by honoring his cheques.
The Requisites of Cheque
There is no prescribed form of words or design of a Cheque, but in order to fulfill theRequirements mentioned in Section 6 above the Cheque must have the following.
a) It should be in writingb) The unconditional orderc) Drawn on specific banker onlyd) Payment on Demand
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e) Sum certain in moneyf) Payable to a specific persong) Signed by the drawer
Parties to Cheque
The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no payee butbearer.a) The Drawerb) The Draweec) The Payee
Types of Cheques
Bankers in Pakistan deal with three types of cheques
a) Bearer Cheques
Bearer cheques are cashable at the counter of the bank. These can also be collected throughclearing.
b) Order cheque
These types of cheques are also cashable on the counter but its holder must satisfy the bankerthat he is the proper man to collect the payment of the cheque and he has to show hisidentification. It can also be collected through clearing.
c) Crossed Cheque
These cheques are not payable in cash at the counters of a banker. It can only be credited to thepayees account. If there are two persons having accounts at the same bank, one of the accountholder issues a cross-cheque in favour of the other account holder. Then the cheque will becredited to the account of the person to whom the cheque was issued and debited from theaccount of the person who has actually issued the cheque.
Payment of Cheques
It is a bankers primary contract to repay money received for his customers account usually byhonoring his cheques. Payment of money deposited by the customer is one of the root functions ofbanking. The acid test of banking is the receipt of money etc. from the depositors, and repayment to
them. This paying function is one, which is the distinguishing mark of a banker and differentiateshim from other institutions, which receive money from the public. However the bankers legalprotection is only when payment is in Due Course.
The payment in due course means payment in accordance with the apparent tenor of the instrument,in good faith and without negligence to any person in possession thereof under circumstances, whichdo not afford a reasonable ground of believing that he is not entitled to receive payment of theamount therein mentioned. It is a contractual obligation of a banker to honor his customers chequesif the following essentials are fulfilled.
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a) Cheques should be in a proper form:b) Cheque should not be crossed:c) Cheque should be drawn on the particular bank:d) Cheque should not mutilate:e) Funds must be sufficient and available:f) The Cheque should not be post dated or stale:
2. CLEARANCE DEPARTMENT
A clearinghouse is an association of commercial banks set up in given locality for the purpose ofinterchange and settlement of credit claims. The function of clearinghouse is performed by thecentral bank of a country by tradition or by law. In Pakistan, the clearing system is operated by theSBP.
If SBP has no office at a place, the fwbl, as a Representative of SBP act as a clearinghouse. After the
World War II, a rapid growth in banking institutions has taken place. The use of cheques in makingpayments has also widely increased. The collection as settlement of mutual obligations in the form ofcheques is now a big task for all the commercial bank.
When Cheque is drawn on one bank and the holder (payee) deposits the same in his account at thebank of the drawer, the mutual obligation are settled by the internal bank administration and therearises no inter bank debits from the use of cheques.
The total assets and total liabilities of the bank remain unchanged.In practice, the person receiving a Cheque as rarely a depositor of the cheque At the same bank as thedrawer. He deposits the cheque with his bank other than of payer for the collection of the amount.
Now the bank in which the cheque has been deposited becomes a creditor of the drawers bank.
The depositor bank will pay his amount of the cheque by transferring it from cash reserves if thereare no offsetting transactions. The banks on which the cheques are drawn become in debt to the bankin which the cheques are deposited. At the same time, the creditors banks receive large amounts ofcheques drawn on other banks giving claims of payment by them. The easy, safe and most efficientway is to offset the reciprocal claims against the other and receive only the net amount owned bythem. This facility of net inter bank payment is provided by the clearinghouse.The representatives of the local commercial banks meet at a fixed time on all the business days of theweek. The meeting is held in the office of the bank that officially performs the duties ofclearinghouse.
The representatives of the commercial banks deliver the cheques payable at other local banks andreceive the cheques drawn on their bank. The cheques are then sorted according to the bank on whichthey are drawn. A summary sheet is prepared which shows the names of the banks, the total numberof cheques delivered and received by them. Totals are also made of all the cheques presented by or toeach bank.The difference between the total represents the amount to be paid by a particular bank and theamount to be received by it. Each bank then receives the net amount due to it or pays the net amountowed by it.
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In-Word Clearing Books
The bank uses this book for the purpose of recording all the cheques that are being received by thebank in the first clearing. All details of the cheques are recorded in this book.
Out-Word Clearing Book:
The bank uses outward clearing register for the purpose of recording all the details of the chequesthat the bank has delivered to other banks.
3. ADVANCES DEPARTMENT
Advances department is one of the most sensitive and important departments of the bank. The majorportion of the profit is earned through this department. The job of this department is to makeproposals about the loans. The Credit Management Division of Head Office directly controls all theadvances.
As we known bank is a profit seeking institution. It attracts surplus balances from the customers atlow rate of interest and makes advances at a higher rate of interest to the individuals and businessfirms. Credit extensions are the most important activity of all financial institutions, because it is themain source of earning. However, at the same time, it is a very risky task and the risk cannot becompletely eliminated but could be minimized largely with certain techniques.
Any individual or company, who wants loan from FWBL, first of all has to undergo the filling of a
prescribed form, which provides the following information to the banker.
Name and address of the borrower
a) Existing financial position of a borrower at a particular branch.b) Accounts details of other banks (if any).c) Security against loan.d) Exiting financial position of the company (Balance Sheet & Income Statement).e) Signing a promissory note is also a requirement of lending, through this note borrower promisethat he will be responsible to pay the certain amount of money with interest.
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Principles of Advances
There are five principles, which must be duly observed while advancing money to the borrowers.
1Safety
2Liquidity3Dispersal4Remuneration5Suitability
Bankers funds comprise mainly of money borrowed from numerous customers on various accountssuch as Current Account, Savings Bank Account, Call Deposit Account, Special Notice Account andFixed Deposit Account. It indicates that whatever money the banker holds is that of his customerswho have entrusted the banker with it only because they have full confidence in the expert handlingof money by their banker.
Therefore, the banker must be very careful and ensure that his depositors money is advanced to safe
hands where the risk of loss does not exist. The elements of character, capacity and capital can help abanker in arriving at a conclusion regarding the safety of advances allowed by him.
1Character: It is the most important factor in determining the safety of advance, for there is nosubstitute for character. A borrowers character can indicate his intention to repay theadvance since his honesty and integrity is of primary importance. If the past record of theborrower shows that his integrity has been questionable, the banker should avoid him,especially when the securities offered by him are inadequate in covering the full amount ofadvance. It is obligation on the banker to ensure that his borrower is a person of character andhas capacity enough to repay the money borrowed including the interest thereon.
2Capacity: This is the management ability factor, which tells how successful a business has beenin the past and what the future possibilities are. A businessman may not have vast financialresources, but with sound management abilities, including the insight into a specific business,he may make his business very profitable. On the other hand if a person has no insight intothe particular business for which he wants to borrow funds from the banker, there are morechances of loss to the banker.
3Capital: This is the monetary base because the money invested by the proprietors representstheir faith in the business and its future. The role of commercial banks is to provide short-term capital for commerce and industry, yet some borrowers would insist that their bankersprovide most of the capital required. This makes the banker a partner. As such the banker
must consider whether the amount requested for is reasonable to the borrowers own resourcesor investment.
4Liquidity: Liquidity means the possibilities of recovering the advances in emergency, becauseall he money borrowed by the customer is repayable in lump sum on demand. Generally theborrowers repay their loans steadily, and the funds thus released can be used to allow freshloans to other borrowers. Nevertheless, the banker must ensure that the money he is lending
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is not blocked for an undue long time, and that the borrowers are in such a financial positionas to pay back the entire amount outstanding against them on a short notice.
5In such a situation, it is very important for a banker to study his borrowers assets o liquidity,because he would prefer to lend only for a short period in order to meet the shortfalls in thewording capital. If the borrower asks for an advance for the purchase of fixed assets thebanker should refuse because it shall not be possible for him to repay when the banker wantshis customer to repay the amount. Hence, the baker must adhere to the consideration of theprinciples of liquidity very careful.
6Dispersal: The dispersal of the amount of advance should be broadly based so that largenumber of borrowing customer may benefit from the bankers funds. The banker must ensurethat his funds are not invested in specific sectors like textile industry, heavy engineering oragriculture. He must see that from his available funds he advances them to a wide range ofsector like commerce, industry, farming, agriculture, small business, housing projects andvarious other financial concerns in order of priorities. Dispersal of advances is very necessary
from the point of security as well, because it reduces the risk of recovery when somethinggoes wrong in one particular sector or in one field.
7Remuneration: A major portion of the bankers earnings come form the interest charged on themoney borrowed by the customers. The banker needs sufficient earnings to meet thefollowing:
a) Interest payable to the money deposited with him.b) Salaries and fringe benefits payable to the staff members.c) Overhead expense and depreciation and maintenance of the fixed assets of the bank.d) An adequate sum to meet possible losses.e) Provisions for a reserve fund to meet unforeseen contingencies.f) Payment of dividends to the shareholders.h. Suitability
The word suitability is not to be taken in its usual literary sense but in the broader sense of purport.It means that advance should be allowed not only to the carefully selected and suitable borrowers butalso in keeping with the overall national development plans chalked out by the authorities concerned.Before accommodating a borrower the banker should ensure that the lending is for a purpose inconformity with the current national credit policy laid down by the central bank of the country.
Forms of Loans
In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the form ofcash finance, overdrafts and loans. FWBL provides advances to different people in different ways as
the case demand.
A) Cash Finance
This is a very common form of borrowing by commercial and industrial concerns and is made
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available either against pledge or hypothecation of goods, produce or merchandise.In cash finance a borrower is allowed to borrow money from the banker up to a certain limit, either atonce or as and when required. The borrower prefers this form of lending due to the facility of payingmarkup/services charges only on the amount he actually utilizes.If the borrower does not utilize the full limit, the banker has to lose return on the unutilized amount.In order to offset this loss, the banker may provide for a suitable clause in the cash financeagreement, according to which the borrower has to pay markup/service charges on at least on self orone quarter of the amount of cash finance limit allowed to him even when he does not utilize thatamount.
b) Overdraft/Running Finance
This is the most common form of bank lending. When a borrower requires temporaryaccommodation his banker allows withdrawals on his account in excess of the balance, which theborrowing customer has in credit, and an overdraft thus occurs. This accommodation is generallyallowed against collateral securities. When it is against collateral securities it is called SecuredOverdraft and when the borrowing customer cannot offer any collateral security except his personal
security, the accommodation is called a Clean Overdraft. The borrowing customer is in anadvantageous position in an overdraft, because he has to pay service charges only on the balanceoutstanding against him. The main difference between a cash finance and overdraft lies in the factthat cash finance is a bank finance used for long term by commercial and industrial concern onregular basis, while an overdraft is a temporary accommodation occasionally resorted to.
c) Demand Financing/Loans
When a customer borrows from a banker a fixed amount repayable either in periodic installments orin lump sum at a fixed future time, it is called a loan. When bankers allow loans to their customersagainst collateral securities they are called secured loans and when no collateral security is taken
they are called clean loans.The amount of loan is placed at the borrowers disposal in lump sum for the period agreed upon, andthe borrowing customer has to pay interest on the entire amount. Thus the borrower gets a fixedamount of money for his use, while the banker feels satisfied in lending money in fixed amounts fordefinite short periods against a satisfactory security
4. REMITTANCE DEPARTMENT
Remittance means a sum of money sent in payment for something. This department deals with eitherthe transfer of money from one bank to other bank or from one branch to another branch for theircustomers. FWBL offers the following forms of remittances.
a) Demand Draftb) Telegraphic Transferc) Pay Orderd) Mail Transfer
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Demand Draft
Demand draft is a popular mode of transfer. The customer fills the application form.
Application form includes the beneficiary name, account number and a senders name.The customer deposits the amount of DD in the branch. After the payment the DD is prepared andgiven to the customer. FWBL officials note the transaction in issuance register on the page of thatbranch of FWBL on which DD is drawn and will prepare the advice to send to that branch. Theaccount of the customer is credited when the DD advice from originating branch comes to theresponding branch and the account is debited when DD comes for clearance. DD are of two types.
a) Open DD: Where direct payment is made.b) Cross DD: Where payment is made though account.
FCHARBLGES FOR DD5I. Up to Rs. 50,000/- is Rs 50/- only
II. Over Rs. 50,000/- is 0.1%
Pay Order
Pay order is made for local transfer of money. Pay order is the most convenient, simple and secureway of transfer of money. FWBL takes fixed commission of Rs. 25 per pay order from the accountholder and Rs. 100 from a non-account holder.
Telegraphic Transfer
Telegraphic transfer or cable transfer is the quickest method of making remittances.Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to thespecified person. The customer for requesting TT fills an application form. Vouchers are preparedand sent by ordinary mail to keep the record. TT charges are taken from the customer. No excise dutyis charged on TT. The TT charges are:Telegram/ Fax Charges on TT = Actual-minimum Rs.125.Cable telegram transfer costs more as compared to other title of money. In cable transfer the bankuses a secret system of private code, which is known to the person concerned with this departmentand branch manager.
Mail Transfer
When the money is not required immediately, the remittances can also be made by mail transfer(MT). Here the selling office of the bank sends instructions in writing by mail to the paying bank forthe payment of a specified amount of money. Debiting to the buyers account at the selling office andcrediting to the recipients account at the paying bank make the payment under this transfer. NBPtaxes mail charges from the applicant where no excise duty is charged. Postage charges on mail
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transfer are actual minimum Rs. 40/- if sent by registered post locally Rs.40/- if sent by registeredpost inland on partys request.
5.HUMAN RESOURCE MANAGEMENT
Human Resource plays a vital role in the success of every service organization. They interactbetween man and machine. Their attitude can win or loose the customer. The positive attitude couldonly be created in a conducive environment, which can make the staff dedicated towards theorganization and its objectives. In reality the man is more important than machine as it is the humanwhich could get maximum out of machine to keep a happy customer. However, most organizationsgive little importance to this very important asset.Various aspects related to human resource of National Bank of Pakistan are critically examined in thefollowing text:
Selection & Recruitment
Although the Bank believes in merit but in practice the selection of employees is not done on merit.Most of the employees are low educated. This shows that candidates with some strong familybackground or political pressure are given preference in recruitment and qualified candidates aresometimes left behind.
Job for LifeLike the employee of public sector organizations in Pakistan, the employees OF FWBL also enjoytheir job for life. Since there is no risk of early retirement or redundancy in rank, they do not performwith their full potentials. This is one redundancy in rank, they do not perform with their fullpotentials, and this is one of the reasons responsible for the low productivity of the employees of theBank.
Performance Appraisal
The performance of employees of the Bank are appraised though their annual confidential reports atthe end of each year. This has become an outdated method of performance appraisal and no longerused due to the following reasons:
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1. The performance of employees is evaluated after quite a long time.2. Element of subjectivity is involved in this method.3. Employees participation is not ensured in the process of evaluation.4. Objectives of employees are not quantified.
Inter Personal Relationship
Modern management acknowledges human resources as one of the most important assets of anorganization. But by their very nature, human beings are also the most unpredictable. Where anumber of persons work together, interactions among them, of necessity, will lead to conflicts andFWBL is no exception. Most interpersonal conflicts in FWBL can be traced back to the followingmajor heads. Lack of Communication reasons for conflict. Not only it is due to the failure to send amassage but to an interpretation given to the massage by the receiver is different from that intended.
Diversity in Values
Diversity in values, perceptions, cultural background and life-style is another reason responsible forinter personal conflicts in NBP. Different values and perceptions about the same issue, event orpersonality hinder understanding. When things come to such a pavement, therefore, interpersonalconflicts are generated.The dominant trend in all modern industrial societies of the world is merit and expertise, which helpspromote cohesion and reduce conflicts. But the feudalistic mindset is still very strong in our set upand there is no tradition of tolerance for differing viewpoints.Hence, interpersonal conflicts are generated.
Corruption
Our social acceptance of corruption gives rise to corruption at every level of social andorganizational set up. Corruption involves financial embezzlement, favoritism, nepotism, cronyismand other number of such practices. All these cause resentment that keep building up and lead toconflict sooner or later.In the past few years, some cases of frauds have happened in different branches. The reasons can belinked with the employee dissatisfaction of FWBL.
Discipline & Authority
Maintaining discipline and implementation of authority (tables) in letter and spirit is the key tosuccess of any organization. In FWBL, The authority tables are not strictly maintained. Line
managers are not fully equipped with the authority with no vertical or horizontal interference.
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6. DEPOSIT DEPARTMENT: -
It controls the following activities:
a) A/C opening.
b) Issuance of cheque book.c) Current a/cd) Saving a/ce) Cheque cancellationf) Cash
Account opening
The opening of an account is the establishment of banker customer relationship. Before a bankeropens a new account, the banker should determine the prospective customers integrity,
respectability, occupation and the nature of business by the introductory references given at the timeof account opening.
Preliminary investigation is necessary because of the following reasons.
i. Avoiding fraudsii. Safe guard against unintended over draft.iii. Negligence.iv. Inquiries about clients.
There are certain formalities, which are to be observed for opening an account with a bank.
Formal Application
Introduction Specimen Signature Minimum Initial Deposit Operating the Account
a)Qualification of Customer
The relation of the banker and the customer is purely a contractual one; however, he must have thefollowing basic qualifications.
He must be of the age of majority.
He must be of sound mind. Law must not disqualify him. The agreement should be made for lawful object, which create legal relationship Not expressly declared void.
b)Types of Accounts
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Following are the main types of accounts
1) Individual Account2) Joint Account
3) Accounts of Special Types
1 Partnership account2 Joint stock company account3 Accounts of clubs, societies and associations4 Agents account5 Trust account6 Executors and administrators accounts7 Pak rupee non-resident accounts
8 Foreign currency accounts19
Current account
These are payable to the customer whenever they are demanded. When a banker accepts a demanddeposit, he incurs the obligation of paying all cheques etc. drawn against him to the extent of thebalance in the account. Because of their nature, these deposits are treated as current liabilities by thebanks. Bankers in Pakistan do not allow any profit on these deposits, and customers are required tomaintain a minimum balance, failing which incidental charges are deducted from such accounts. This
is because the depositors may withdraw Current Account at any time, and as such the bank is notentirely free to employ such deposits.
Until a few decades back, the proportion of Current Deposits in relation to Fixed Deposits was verysmall. In recent years, however, the position has changed remarkably. Now, the Current Depositshave become more important; but still the proportion of Current Deposits and Fixed Deposits varyfrom bank to bank, branch to branch, and from time to time.
Saving account
Savings Deposits account can be opened with very small amount of money, and the depositor is
issued a cheque book for withdrawals. Profit is paid at a flexible rate calculated on six-month basisunder the Interest-Free Banking System. There is no restriction on the withdrawals from the depositaccounts but the amount of money withdrawn is deleted from the amount to be taken for calculationof products for assessment of profit to be paid to the account holder. It discourages unnecessarywithdrawals from the deposits.
In order to popularize this scheme the State Bank of Pakistan has allowed the Savings Scheme forschool and college students and industrial labor also. The purpose of these accounts is to inculcate
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the habit of savings in the constituents. As such, the initial deposit required for opening theseaccounts is very nominal.
Issuing of cheque book:
This department issue cheque books to account holders.Requirements for issuing cheque booka) The account holder must sign the requisition slipb) Entry should be made in the cheque book issuing bookc) Three rupees per cheque should be recovered from a/c holder if not then debit his/her account.
Cheque cancellation:
This department can cancel a cheque on the basis of;
a) Post dated chequeb) Stale chequec) Warn out chequed) Wrong sign etc
FOREIGN EXCHANGE/DEPARTMENT
This department mainly deals with the foreign business. The main functions of this department are:
a) L/C dealing.b) Foreign currency accounts dealing.c) Foreign Remittance dealing.
L/C dealing
FWBL IS committed to offering its business customers the widest range of options in the area of
money transfer. If you are a commercial enterprise then our Letter of Credit service is just what youare looking for. With competitive rates, security, and ease of transaction, FWBL Letters of Credit arethe best way to do your business transactions.
Foreign currency account dealing
This department deals with the foreign currency accounts which mainly include dollar account, euro
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account etc.
Foreign Remittance dealing
This is very important function of this department.
Cash
This department also deals with cash. Payment of cheques, deposits of cheques etc.
.
10. Plan of your internship program
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a. A brief introduction of the branch where you did your internship
As part of the academic requirement for completing MBA (Banking and Finance) Master .Business
Administration of the students are required to under go six weeks of internship with an organization.The internship is to serve the purpose of acquainting the students with the practice of knowledge ofthe discipline of banking administration.This report is about First Women Bank Limited. FWBL was established in 1989 and since then, ithas expended its network, becoming the largest women Bank of the country.
Purpose of the Studies
The main of the study in hand is together relevant information to compile internship report onFWBL.To observe, analyze and interpret the relevant data competently and in a useful manner.
To work practically in an organization. To develop interpersonal communication.
Scope of Studies
As an internee in First Women Bank Limited the main focus of my study research was on Generalbanking procedures in one of the branches of First Women Bank Limited. These operations includeRemittances, deposits, advances and foreign exchange.Similarly different aspects of overall of FWBL are also covered in this report.
Research MethodologyThe report is based on my two months internship program in FIRST WOMEN Bank of Pakistan.
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 staffand having discussion with them. Formally arranged interviews and discussions alsohelped me in this regards.
Primary data:
Personal observationInterviews of staff
Secondary data:
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ManualsJournalsMagazineAnnual reportsInternet
b. Starting and ending dates of your internship
The duration of my internship was from 16-06-2009 to 30-05-2009. During this period I learntmuch, the previous views about banking was changed and I was able to work in the bank withhard work. Before going there I was not much interested in banking work but after this I havedeveloped the respect for bankers. They are really playing a big/ vital role in our economy.
c. Names of the departments in which you got training and the duration ofyour training
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Details of departments during the internship program
Name of departments From(dates) To (dates)
Tokens and chequesinterpretation
16-04-2009 24-04-2009
Clearings 25-04-2009 04-05-2009
I.T 05-05-2009 18-05-2009
Remittances 19-05-2009 30-05-2009
During my period of internship, the following assignments were assigned to me:
1.From 16-04-2009 to 24-04-2009
To receive the cheques from clients, check the date and tally the amount in figures and wordsthen take the signature of the bearer at the back of the cheque. After that assign a token numberon the cheque and hand over the relative token to the client for payment and forward the chequeto the CD/SB in charge Mrs. Naheed firdous for further process.
2.From 25-04-2009 to 4-05-2009
After that I was assigned the work of accounts as an assistance of Mrs. Naheed firdous. Inthis department I have learn about the clearing process. How to receive cheques for clearing,and how to make clearing for NIFT. Also I have learned some matters of account opening.
3.From 05-05-2009 to 18-05-2009
I have also assigned the work of I.T as assistance of Miss Humaira nazli. I have learned howto start and end the day, how to post the utility bills, how to make collection vouchers andhow to post them.
4.From 19-05-2009 to 30-05-2009
Spending sufficient time there, the next task which was assign to me was remittances matters.Fill the DD, MT, TT application form, make them, enter in the relevant books etc
10.Training program
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a.Detailed description of the operations/activities performed in thedepartment(s)
I worked in
I have attended internship from 16-04-2009 to 30-05-2009. During this period I have givenorientation in cash, accounts, clearings, and remittances. The brief description of eachdepartment is given below.
DEPARTMENTATION OF FWBL Gujrat branch in which I work
Dividing an organization into different parts according to the functions is calleddepartmentation. So FWBL gujrat branch is divided into two main parts.
1. Cash Department2. General Banking Department.
Cash Department:
Cash department mainly deals in cash. The Head of department is miss humaira nazli and two cashiernasreen mushtaq and saiqa munawerThe objective of cash department are:To facilitate people in the payments of their bills and taxes and repayments of cashThere are two main functions of cash department.
i. Paymentii. Receiptsi. Payments are the function that they pay their cheques and pay cash.ii. Receipts mean collection of utilities bills, taxes etc.
Receipt
The money, which either comes or goes out from the bank, its record should be kept.Cash department performs this function. The deposits of all customers of the bank are controlled bymeans of ledger accounts. Every customer has its own ledger account and has separate ledger cards.
Payments
It is a bankers primary contract to repay money received for this customers accountUsually by honoring his cheques.
The Requisites of Cheque
There is no prescribed form of words or design of a Cheque, but in order to fulfill the
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Requirements mentioned in Section 6 above the Cheque must have the following.
a) It should be in writingb) The unconditional orderc) Drawn on specific banker onlyd) Payment on Demande) Sum certain in moneyf) Payable to a specific persong) Signed by the drawer
Parties to Cheque
The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no payee butbearer.
a) The Drawerb) The Drawee
c) The Payee
Types of Cheques
Bankers in Pakistan deal with three types of cheques
a) Bearer ChequesBearer cheques are cashable at the counter of the bank. These can also be collected through clearing.
b) Order chequeThese types of cheques are also cashable on the counter but its holder must satisfy the banker that heis the proper man to collect the payment of the cheque and he has to show his identification. It can
also be collected through clearing.
c) Crossed ChequeThese cheques are not payable in cash at the counters of a banker. It can only be credited to thepayees account. If there are two persons having accounts at the same bank, one of the account holderissues a cross-cheque in favour of the other account holder. Then the cheque will be credited to theaccount of the person to whom the cheque was issued and debited from the account of the personwho has actually issued the cheque.
Cheques payment
It is a bankers primary contract to repay money received for his customers account usually byhonoring his cheques. Payment of money deposited by the customer is one of the root functions ofbanking. The acid test of banking is the receipt of money etc. from the depositors, and repayment tothem. This paying function is one, which is the distinguishing mark of a banker and differentiateshim from other institutions, which receive money from the public. However the bankers legalprotection is only when payment is in Due Course. The payment in due course means payment in
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accordance with the apparent tenor of the instrument, in good faith and without negligence to anyperson in possession thereof under circumstances, which do not afford a reasonable ground ofbelieving that he is not entitled to receive payment of the amount therein mentioned. It is acontractual obligation of a banker to honor his customers cheques if the following essentials arefulfilled.a) Cheques should be in a proper form:b) Cheque should not be crossed:c) Cheque should be drawn on the particular bank:d) Cheque should not mutilate:e) Funds must be sufficient and available:f) The Cheque should not be post dated or stale:g) Cheque should be presented during banking hours:
General Banking
In this section of the bank the general banking function is performed. It is divided into fivedepartments.
1Remittances Department.2Computer Department.3Advances Department.4Clearing Department.5Establishment Department.
Remittances Department:
This department is header by Mrs. Naheed firdous a very competent person. The objective of thisdepartment is: -To transfer the money of people from one place to another place in safe and comparable wayThe main functions of this department are:
i. Issuing of demand draft.ii. Issuing of Mail transfer.iii. Issuing of Telegraphic transfer.iv. Issuing of payment order.v. Issuing of call deposit.vi. Pension payments etc.vii. Closing and scrolling of government collections.
Issuing of cheque book:
This deptt issue cheque books to account holders.Requirements for issuing cheque booka) The account holder must sign the requisition slipb) Entry should be made in the cheque book issuing bookc) Three rupees per cheque should be recovered from a/c holder if not then debit his/her account.
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Advances department:
Every bank has a department, which advances money to borrowers. In FWBL gujrat branch theadvances department is head by the miss azmmat bibi the sub manager of the branch and OperationManager Both are very competent persons. The objective of Advances Department is
To facilitate people by giving short term and long term loans on easy terms and conditions.
The main function of this Department is to take surplus money from the people at low rates and lendthis money to borrowers at high rates to earn profit.
Clearing Department:
A clearinghouse is an association of commercial banks set in State Bank of Pakistan for the purpose
of interchange and settlement of credit claims. Clearing proceeds through NIFTIn FWBL gujrat Branch this department is headed by Mrs. naheed firdous havingOf about thirty years. The objective of this department is toTo facilitate customers for payment their Cheques of other banks.Two type of clearing books are maintained.
I. In word clearing books:The bank uses this book for the purpose of recording all the cheques that are being received by thebank in the first clearing. All detail of the cheques are recorded in this book.
ii. Out word clearing book:The bank uses outward clearing register for the purpose of recording all the details of the chequesthat the banks have delivered to other banks.
Computer Department:
This department headed by the accountant and two other persons are performing the real function.The objective of this Department is to facilitate customers in payment of their cheques.The main functions performed by this department are:
a) Checking balance.b) Deduction from balance on clearing cheques.c) Issuing bank statements.
d) Dealing Western Union.
Establishment Department:
FWBL gujrat Branch having an Establishment Department. This Department is controlled byManager Shakira Mirza very competent and experienced person. This department mainly deals withthe branch employees. The main objective of this department is to
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To regulate bank business
Main functions of this department are:a) Keeps the record of attendance of employees.b) Employees salaries distribution.c) Employees bonuses etc.
b. Detailed description of the tasks assigned to you.
During my period of internship, the following tasks were assigning to me
5.To receive the cheques from clients, check the date and tally the amount in figures and wordsthen take the signature of the bearer at the back of the cheque. After that assign a tokennumber on the cheque and hand over the relative token to the client for payment and forwardthe cheque to the CD/SB in charge Mrs. Naheed firdous for further process.
6.After that I was assigned the work of accounts as an assistance of Mrs. Naheed firdous. Inthis department I have learn about the clearing process. How to receive the cheques forclearing, and how to make clearing for NIFT. Also I have learned some matters ofaccount opening.
7.I have also assigned the work of I.T as assistance of Miss Humaira nazli. I have learnedhow to start and end the day, how to post the utility bills, how to make collectionvouchers and how to post them.
8.Spending sufficient time there, the next task that was assigning to me was remittances matters.Fill the DD, MT, TT application form, make them, enter in the relevant books etc
12. Structure of the Finance Department
a. Departmental hierarchy
Charmaine Hidayatullah
Head of Legal & Security, EVP
Ms. Charmaine Hidyatullah joined the First Women Bank Ltd in 1989 as Legal Advisor andChief of Legal Department. She also remained Federal Nominee Director of FWBL from 1991 to
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1994. In 1994 she was promoted to the cadre of SVP, since then she held several importantportfolios such as Member of Executive Committee, Head of Business Centre, Head of SecurityDepartment, Head of Publicity and Public Relations and Head of Human Resources Department.She plays the key role in recovery of stuck-up finances of the Bank through Court andnegotiations with defaulting Borrowers/ Judgment Debtors, Syndicate Financing, and matters
pertaining to legal operations of the bank.She has done her Masters in Law from S. M. Law College, Karachi and specializes in CompanyLaw. She started her career as a practicing Lawyer in Civil and High Courts of Sindh where sheconducted several independent cases related to Banking, Corporate and Civil Law in the Courtsand Banking Tribunals. She served as Legal Advisor for various domestic and foreigncompanies. Since 1981, she is also Vice President Status of Women of United Nations Section ofall Pakistan Women Association. She has also served as Honorary General Secretary of PakistanRed Crescent Society appointed by Government of Pakistan.
Shahid Siddique Amjad Mughal
Head of Finance & Planning
Mr. Shahid Mughal joined First Women Bank Ltd., in February 2002. He is the Head ofFinance & Planning/ CFO & Company Secretary. He is also member of the ExecutiveCommittee, IT Steering Committee and ALCO. He plays a pivotal role in strengthening thefinancial discipline, internal controls systems and in formulating policies and procedures forvarious activities. He was awarded as Best Executive for two consecutive years.
Mr. Shahid Mughal is a Chartered Accountant, an Associate Member of the Institute ofChartered Accountants of Pakistan and Fellow Member of the Institute of CorporateSecretaries of Pakistan. He started his banking career in 1992 from Emirates BankInternational in Internal Audit Pakistan, where he went up to the position of Manager InternalAudit Pakistan. In between, he was also the Manager Operations for EBI Sialkot Branch. In
1997 he was awarded by EBI as the Best Employee of the Year.
Tauqir A. Siddiqui
CIO & Head of Information Technology
Mr. Tauqir A. Siddiqui has joined First Women Bank Ltd in the 2007 as a CIO and Head ofinformation Technology and is a member of Banks Executive Committee. He is an MBAand has done various certifications from local and international Universities andorganizations.Mr. Tauqir is responsible to provide the leadership and management for all informationtechnology services and operations and participates in the formation of IT policies and
procedures by making appropriate recommendations for improvements and additions thatenhance the efficiency and effectiveness of the information technology services andoperations to support the mission of the bank. He is responsible for infrastructure set up, andcentralized control of core banking application, handling of SWIFT, RTGS, ASA Firewall,support of ATMs, Phoenix and ATM Switch, set up of Email Domain server, eCIB,development of DRP and building of I.S Security Policy and its implementation structure,etc.
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For bringing the bank as technology leader, Mr. Siddiqui has planned for restructuring of theFWBL set up for high availability, secure network admission, day zero protection, IP VideoConferencing, Security Monitoring and response system and effective management ofinfrastructure along with anti-spam solution.The visionary IT Head; Mr. Tauqir A. Siddiqui and his dynamic team have done a
commendable and excellence job, especially in view of non-existence of MIS in 2001. Thelaunch of all above services has been extended in the last three years, which brought the bankin the fore front of technology. This enables our customers for Anywhere Banking to usetheir accounts all our branches and 3000 ATMs across the country.
Naushaba Shehzad
o Dy. Head Credit
Ms. Naushaba Shehzad has dual responsibilities with the Bank. She is the Head ofFinancial Services Division and is also handling the Credit Portfolio of all CorporateBranches. She is also member of the Banks Executive Committee and Executive CreditCommittee, and plays an active role in the policy-making arena.
She has diversified Banking experience of 15 years with First Women Bank limited. Shewas awarded the Best Employee of the Year award in 2001, and Best Executiveaward for the next two consecutive Years. She is a Graduate of Lahore College forWomen, and has an outstanding academic career, attaining Gold Medal in Masters ofSciences (MSc)-Statistics in 1988 and awarded with National Youth TalentAppreciation Award in 1991.
Mustansir Rao
Treasurer
Mr. Mustansir Rao joined FWBL in July 2002 as a Senior Vice President & Treasurer, and isa member of ALCO. He has 20 years of experience in Treasury business in Pakistan & theGulf Region.Mr. Rao started his banking career in 1978 with HBL. In 1982 he joined Bank of Credit andCommerce Intl, Abu Dhabi-UAE in the Treasury Portfolio Management Division. He movedto National Investment & Securities Corp (NISCORP), Abu Dhabi-U.A.E in 1989 asSettlement Manager. In 1992 he joined Bank Al Habib Ltd., Karachi as Manager Treasury,
where he was responsible for Forex & Money Market dealings. Before FWBL, he was ChiefDealer Treasury at Prime Commercial Bank Ltd, which he joined in 1995 and served for 7years. He has done his Masters in Commerce.
Mr. Abdul Ghafoor
Head of HRD
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b. Number of employees working in the Finance department
The numbers of employee are not constant; they vary according to tasks and networkincreases. The all staff of the FIRST WOMEN BANK LIMITED is engaged in the financialworking. All staff is considered as financial staff .the changes in staff during periods areshown below.
2000 2001 2002 2003 2004 2005 2006 2007 Variance
since
2000
No of
employees
484 484 496 524 507 513 531 535 11%
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c. Finance & accounting operations
First Women Bank Ltd. has been recognized by CIDA as a unique institution catering to thespecial needs of women in Pakistan. FWBL and CIDA have entered into a 3 years collaborationto provide financial assistance for the two important directions of the Bank i.e. setting up ofFinancial Services Desks and Training and Capacity Building of FWBL employees.
Financial Services Desks, based in Karachi, Islamabad and Lahore, are facilitating women'saccess to financial services by providing support in the areas of credit management, legalcounselling, tax consultancy and marketing.
Through CIDA's assistance in Capacity Building of FWBL, a total number of 94 FWBL bankershave been trained at the Institute of Bankers, Pakistan and are serving the women of Pakistan in
the most effective manner.
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How FWBL banks operate: how they obtain their funds from agents who want to lend andchannel those funds to agents who want to borrow. In the process of doing this, the chapterintroduces us to a valuable analytic deviceCalled a T-account. T-accounts will prove useful, not only in this part of the course on banking,but also in the next part of the course that looks at the money supply process. Finally, helps us
identify and understand four basic principles of bank management: liquidity management, assetmanagement, liability management, and capital adequacy management.
1. The Bank Balance SheetLiabilities (Sources of Funds)Assets (Uses of Funds)2. Basic Operation of a Bank: T-accounts3. General Principles of Bank ManagementLiquidity ManagementAsset ManagementLiability Management
Capital Adequacy Management
In our overview of the financial system, we briefly considered the role that banks play inchannelling funds from agents who have saved funds and want to lend to agents who need fundsand want to borrow. We also identified the main sources and uses of funds that banks have.
13. Functions of the Finance Department
FINANCIAL ANALYSIS
Financial analysis, though varying according to the particular interests of the analyst,always involves the use of various financial statement primarily the balance sheet and incomestatement. The balance sheet summarizes the assets, liabilities, and owners equity of a business at a
point in time, and thee income statement summarizes revenues and expenses of the over a particularperiod f time. A conceptual framework for financial analysis provides the analyst with aninterlocking means for structuring the financing.
b. Finance system of the organization
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The financial system of the FWBL is very strong. It takes the deposits from the clients and givesadvances to the clients.The deposits rates are lower than advances rates; the difference between these rates is the profitof the organization. The organization is maximizing their profits in days.Women s is succeeding in every field of banking.
c. Use of electronic data in decision making
Accounting system
The bank use electronic data in decision-making.For daily records special software says AUTOBANKER is used. Every daily transaction isrecorded in the auto banker, and after all transactions, the process of day end is preceded. TheAUTOBANKER helps in balancing the daily transactions. The process of day end cannot bepreceded, without balancing the daily transactions.
Auto banker also keeps records of every transaction and statements, which wee can be used formany purposes. We can print out the clients statements and bank balance sheet, daily affairs,profit and loss, and many others
d. Mobilization of funds
The funds are mobilized electronically through DD, TT, PO, MT documents.
a) Demand Draftb) Telegraphic Transferc) Pay Orderd) Mail Transfer
Demand Draft
Demand draft is a popular mode of transfer. The customer fills the application form.Application form includes the beneficiary name, account number and a senders name.
The customer deposits the amount of DD in the branch. After the payment the DD is prepared andgiven to the customer. FWBL officials note the transaction in issuance register on the page of thatbranch of FWBL on which DD is drawn and will prepare the advice to send to that branch. Theaccount of the customer is credited when the DD advice from originating branch comes to theresponding branch and the account is debited when DD comes for clearance. DD are of two types.
a) Open DD: Where direct payment is made.b) Cross DD: Where payment is made though account.
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FCHARBLGES FOR DD5I. Up to Rs. 50,000/- is Rs 50/- onlyII. Over Rs. 50,000/- is 0.1%
Pay Order
Pay order is made for local transfer of money. Pay order is the most convenient, simple and secureway of transfer of money. FWBL takes fixed commission of Rs. 25 per pay order from the accountholder and Rs. 100 from a non-account holder.
Telegraphic Transfer
Telegraphic transfer or cable transfer is the quickest method of making remittances.Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to thespecified person. The customer for requesting TT fills an application form. Vouchers are preparedand sent by ordinary mail to keep the record. TT charges are taken from the customer. No excise duty
is charged on TT. The TT charges are:Telegram/ Fax Charges on TT = Actual-minimum Rs.125.Cable telegram transfer costs more as compared to other title of money. In cable transfer the bankuses a secret system of private code, which is known to the person concerned with this departmentand branch manager.
Mail Transfer
When the money is not required immediately, the remittances can also be made by mail transfer(MT). Here the selling office of the bank sends instructions in writing by mail to the paying bank forthe payment of a specified amount of money. Debiting to the buyers account at the selling office andcrediting to the recipients account at the paying bank make the payment under this transfer. NBPtaxes mail charges from the applicant where no excise duty is charged. Postage charges on mailtransfer are actual minimum Rs. 40/- if sent by registered post locally Rs.40/- if sent by registeredpost inland on partys request.
e. Generation of funds
FUNDS ARE GENERATED THROUGH DIFFERENT TYPES OF ACCOUNTS.
Following are the main types of accounts1) Individual Account2) Joint Account3) Accounts of Special Types
1 Partnership account2 Joint stock company account3 Accounts of clubs, societies and associations4 Agents account5 Trust account6 Executors and administrators accounts7 Pak rupee non-resident accounts
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8Foreign currency accounts
f. Sources AND ALLOCATION of funds
Liabilities (Sources of Funds)
Checkable Deposits:Checkable deposits are deposits in bank accounts that allow their owners to write Checks.Checkable deposits include:
Demand deposits = checking accounts that pay no interest.
Negotiable Order of Withdrawal (NOW) accounts = checking accounts that payInterest.
Money Market Deposit Accounts (MMDAs) = high-yielding deposit accountsthat allow limited check-writing privileges.
Unlike demand deposits and NOW accounts, MMDAs are not included in M1 and are not subjectto reserve requirements. Checkable deposits are payable on demand: if the depositor requests awithdrawal or writes a check, the bank must pay immediately.Checkable deposits are a banks lowest-cost source of funds, since depositors are willing toaccept a lower interest rate in exchange for the convenience of being able to write checks.But checkable deposits are also costly to maintain: the bank must process the checks,prepare monthly statements, maintain bank branches, etc.
Nontransaction Deposits:
Owners cannot write checks on no transaction deposits.But they pay higher interest rates than checkable deposits.
No transaction deposits include:
Savings deposits = funds can be withdrawn, without penalty, at any time.Small (under $100,000) time deposits (certificates of deposit or CDs) = have a fixed maturity,with penalty for early withdrawal.Large (over $100,000) time deposits (CDs) = also have a fixed maturity date, but they arenegotiable, meaning that they can be resold in a secondary market.
Borrowings:
Borrowings include:Borrowings from the Federal Reserve = discount loans.
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Borrowings from other banks = federal funds.Borrowings from non-bank corporations = repurchase agreements.
Bank Capital:
As noted above:Capital = Assets - Liabilities = Net Worth.And as well see below, bank capital is a cushion against a drop in the value of the banks assets,since the bank becomes insolvent (bankrupt) if the value of its assets falls below the value of itsliabilities (i.e., it owes more than it can repay).
Assets (Uses of Funds)
Reserves:
Reserves include:The banks deposits at the Federal Reserve.Vault cash = currency that is physically held by the bank.
Reserves do not pay interest.
Required reserves:
By law, the bank must hold a certain fraction (10%) of every dollar of checkableDeposits (more precisely, demand deposits and NOW accounts) it receives as reserves.10% = required reserve ratio.Excess reserves = additional reserves held by the bank to meet its customers requests forwithdrawals.
Cash Items in the Process of Collection:
A check that had been deposited at the bank, but not yet collected from the checkWriters bank is a cash item in the process of collection.
Deposits at Other Banks:
Many small banks hold deposits at larger banks.In return, the large banks provide services such as check collection and help with securities
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purchases. This relationship between large and small banks is called correspondent banking, andis less important today than in was years ago, when check collection and securities transactionswere considerably more difficult.
Securities:
Securities include:US government and US government agency securities, State and local government (municipal)securities. By law, banks can only hold debt instruments; they cannot own equities. Because theyare default-free and highly liquid, a banks holdings of short-term US government securities(Treasury bills) are sometimes call its secondary reserves.
Loans:
Loans include:Commercial and industrial loansReal estate loans (mortgages).Consumer loans
Interbank loans.
14. Financial Statement Analysis
Financial analysis is the process of identifying the financial strengths and weakness of the firm byproperly establishing relation ship between the items of balance sheet and profit and loss account, inorder to make rational decision in keeping with the objective of the organization, for that purpose themanagement use analytical tools. To evaluate the financial condition and performance of the business
entity, the financial analyst needs to perform "checkups" on various aspects of the business financialhealth.A tools frequently used during these checkups is a financial ratio analysis, which relates two piece offinancial data by dividing one quantity by the other we calculate ratios because in this way we get acomparison that may prove more useful than the raw number by themselves. The business itself andoutside providers of capital (creditors and investors) all undertake financial statement analysis. Thetype of analysis varies according to the specific interest party involved. The nature of analysis isdepending at the purpose of analyst.
2004
Current Ratio = Current Assets = 9380868 = 1.05:1Current Liabilities 8974472
Current Assets = 567888+215845+3263159+3684825+1649124Current Liabilities = 71573+213150+8689749
2005 = 10147405 = 1.05:19629741
Current Assets = 726003+295110+1313119+5351075+2462098
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Current Liabilities = 67406+846150+8716185
2006 = 8642169 = 1.24:16965378
Current Assets = 705703+301056+1431628+3137533+3066249
Current Liabilities = 62057+931520+6965378
2007 = 8662596 = 1.11:17783923
Current Assets = 809657+384792+1245000+3159640+3063507Current Liabilities = 193321+21543+7569059
2004 Acid Test Ratio = Acid Test Assets = 9380868 = 1.05:1
Current Liabilities 8974472
2005
= 10147405 = 1.05:19629741
2006
Acid Test Ratio = Current Assets - closing Stock prepaid Expenses
= 8642169 = 1.24:16965378
2007
= 8662596 = 1.11:1 7783923
Working Capital = Current Assets - Current Liabilities 2004 = 9380868 8974472 = 406396
2005 = 10147405 9629741 = 517664
2006 = 8642169 6935378 = 1706791
2007 = 8662596 7783923 = 878673
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Sales to Working Capital SalesWorking Capital
2004 = 432986 = 1.07:1406396
2005 = 478527 = 0.92:1517664
2006 = 540796 = 0.32:11706791
2007 = 578072 = 0.66:1878673
Debt Equity Ratio DebtEquity/ Share holder fund
2004 = 213150 = 0.52:1407292
Shareholder Fund = Capital + Reserve + Surplus - Deferred Exps.= 283650+ 115857 + 21800 14015
2005 = 846150 = 1.95:1433795
2006 = 931520 = 1.08:1863943
2007 = 21543 = 0.02:11028110
Debt to tangible Net worth Ratio = Long term DebtTangible net worth
2004 = 213150 = 1.71:1124324
2005 = 846150 = 6.33:1133601
2006 = 931520 = 5.61:1165910
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2007 = 21543 = 0.14:1157887
Fixed Ratio = Fixed AssetsFixed Liabilities
2004 = 81621 = 0.38:1213150
2005 = 79955 = 0.09:1846150
2006 = 153060 = 0.085:11799999
2007 = 148686 = 0.14:11049659
Long Term Asset v/s Long term debt = Long term AssetsLong term Debt
2004 = 81621 = 0.38:1213150
2005 = 79955 = 0.094:1846150
2006 = 153060 = 0.16:1931520
2007 = 148686 = 6.90:121543
Debt Coverage Ratio = Earning before Interest and taxFixed interest charged
2004 = 432986 = 1.95:1222277
2005 = 478527 = 1.86:1257907
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2006 = 540796 = 8.74:161874
2007 = 578072 = 7.01:1
82485
Sales to Fixed Assets = Sales / Net IncomeFixed Assets
2004 = 124324 = 1.52:181621
2005 = 133601 = 1.67:179955
2006 = 165910 = 1.08:1153060
2007 = 157887 = 1.06:1148686
Return on Investment = Net Profit x 100Investment
2004 = 124324 x100 = 3.37%3684852
2005 = 133601 x100 = 2.50%5351075
2006 = 165910 x100 = 5.29%3137533
2007 = 157887 x100 = 5.00%3159640
Return on Total equity = Net Profit x 100Equity
2004 = 124324 x100 = 29.51%421307
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2005 = 133601 x100 = 29.65%450635
2006 = 165910 x100 = 19.10%
868479
2007 = 157887 x100 = 18.18%868479
Comments on 3 years RATIO ANALYSIS
1Cash Ratio:
This ration is obtained by dividing cash by current liabilities / liabilities.This ratio shows that the cash is enough for payment of current liabilities or not.
It is calculated as cash Ratio=Cash/current liabilitiesIt means that how much cash is available for payment its current liabilities. This ratio of FWBLshows a downward trend. Because of high advances cash is less to cover its current liabilities.
2Gross Profit Margin Ratio:
This ratio shows the profit margin in sales/ revenue.This is calculated as.Gross profit/ interest earnedG. profit margin relates profit of the organization to its sales (interest earned in case of Bank). Fromcalculation it is very much clear that the gross profit margin ration have upward trend which shows
that how much they using their deposits to earn interest. This show the profit of the firm relative toits revenue. It is a measure of the efficiency of the firms operations too. As it is clear that the ratiogong high this is the indication of good performance
3Net Profit Margin:
Explanation: from the calculation and graph it is very much clear that the performance of FWBL isvery good. And the trend is upward. It tells us a firms net income per rupee of revenue. As the trend
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is upward it shows the high profits in revenue per rupee in case of FWBL. It is because of highadvances the NBP has given to the people.
4Return on Equity:
Dividing profit after taxation by share holders equity. ROE compares net profit aftertaxes to the Share holders Equity. Explanation: from the calculation it is clear that the ROE Ratiohave an upward trend of FWBL. It is because of high net profit they have earned. It tells us theearning power on the shareholders investments. It is because of high investments by FWBL andeffective expense management.
5Return On Assets:
From calculation it is clear that this ration of FWBL is going high and high. It shows that FWBLusing its assets very efficiently. That is why they are earning very high profits. This shows that howefficiently they investing the assets thats why they are earning high profits
VERTICAL AND HORIZONAL ANALYSIS OF THE ORGANIZATION
FUNCTIONAL ANALYSIS
Formal Organization
Formal organization includes the activities of two or more person, which are cautiously determined
groups and coordinated towards a given objective. It provides base when people are able tocommunicate with other, when they have common purpose and they are willing to work. In FWBL,we find a formal organization. Bernard referred to an organization as a formal when the activities oftwo or more persons are coordinated towards a given objective.
Difference between theory and practice
A vast difference exists between theory and practice an FWBL has written procedure but practicalwork done by employees is a bit different from written procedures.
Bank duty to maintain secrecy
They dont care about maintaining secrecy, especially during the rush hours. They speak loudlyabout the account position and while getting clearance of cheque the person can easily get the wholeinformation from the ledge. The deposit clerk must be careful while passing any cheque. In thisregard another shortfall is in giving the information about the balance on telephone.
Excessive paper work
It is notified that due to the lengthy procedure of paper work the bank employee are over burdened.
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things on the job.
Low Profit Rates
Most of the customers shifted their account to the National Saving Center because of the low rates ofsaving deposit discourages the customers. Bank should increase their profit rates to attract customers.
Poor job rotation.
There is absence of job rotation in FWBL GUJRAT branch. A person placed in onedepartment remains their forever. It reduces career opportunities as well boredom and in the endresults in career platueing. Job rotation is very important for employee especially for those who arenewly recruited. The newly recruit should be rated in all department of the banking in order to getfamiliar with working of different departments so that when they get a responsible position they haveknow how of the whole system.
Delays in Loan Advancement
It has been observed that there are delays in sanctioning of cases form the head office, which resultsin customer dissatisfaction.
PERSONAL MANAGEMENT ANALYSIS
Need for better training program
Need of training is greatly emphasized all around the world. Training of the personnel is part ofhuman resource management. It has been noticed that the training program of FWBL is not adequate.
Once the candidate is selected and placed on the respective job. It becomes essential to train himadequately for the task. They should learn new methods for motivating customers.
Recruitment policy
Human resources are the lifeblood of the organization. If the personnel are recruitedCarefully they can become asset to the organization in the case of carelessness a liability on theorganization. Bank is not following its recruitment policy properly due to favoritism, nepotism andpolitical pressure. Both the top authority and staff union tries there best recruit their favorites,indulgence of political pressure add salt to the wounds. The persons selected through these channelsa
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