Professional Documents
Culture Documents
Bank Al Habib LTD PDF
Bank Al Habib LTD PDF
Bank Al Habib LTD PDF
ON
First of all thank to whom who is most merciful and kind to all of his creations with out
any discrimination and who make us able to Prepare this report
We are proud on following personalities for being our friends and relatives that
guidance helps us in the preparation of this report
ii
DEDICATION
TO MY BELOVED
PARENTS
Aamin!
iii
PREFACE
The management student must have sound knowledge of some practical procedure
and functions of Accounts and Computer being performed by different types of
organizations.
In order to meet this requirement, I was assigned to prepare Internship report on The
Bank Al Habib. During the training, I tried my best to acquire maximum knowledge
about the functions of the banking and there by learned a lot, which in my view would
be much beneficial to me in my profession carrier.
I do not claim of this report to be comprehensive and detailed but I am confident that
the reader, after studying this report, will be aware of BAH and about its different
departments.
Suggestion to improve the working and prosperity of BAH are added at the end of this
report making it more comprehensive to some extent and strategic.
iv
ACKNOWLEDGEMENT
All praise to Almighty Allah, the most merciful and compassionate, who
give me skills and abilities to complete this report successfully
I am grateful to my parents who are always been a source of
encouragement for me throughout my life and from start to the end of this
report
I am thankful to all my staff members so Bank Al-Habib Ltd Old
Bahawalpur Road Main Branch Multan.
I found every one very co-operative and helpful for providing me the
Theoretical as well as practical knowledge about the function and
operation of the bank.
I express my greatest gratitude to my kindhearted, who was the Person
who made me able to write this report, His enthusiasm shows the way
forward to me to achieve this success and who kept me in high spirit
through his appreciation. He helped me a lot each time I went up to him.
My Special Thanks:
Mr. Mehmood Zahid
(Zonal Manager)
(Operation Manager)
(Remittance Officer)
Mr. Tahir
EXECUTIVE SUMMARY
The main theme behind this report is to help understand the major functions of the
different departments of BAH as I had the opportunity of interning at this bank. As
we know that Internship experience is very important and helpful before anyone goes
looking for a job.
students the opportunity to grow, academically and personally. When anyone initially
starts out he is going to be doing the menial repetitive task that every new person had
to do. However this is not necessarily negative as it teaches the person responsibility
at the smallest level. The major part of my report is a training program; you could
read all my tasks which I assigned during the internship. This report is typically has
been made on the BAH different activities, its promotion, segments, and target
marketing. Readers will be able to read BAH customers retain technique and how
BAH deal with the customers.
BAH main objective are to provide its customers with safe, secure, valuable and
reliable service through wide range of products. The report covers all the product
information provided by the bank.
vi
TABLE OF CONTENTS
01
DAWOOD HABIB
02
02
04
05
Our Services
06
08
Planning
09
Process of planning
11
Purpose of organizing;
12
Democratic leader:
13
Process of control:
14
ORGANIZATION STRUCTURE
16
BANKING OPERATIONS
17
DUTIES OF A BANKER
17
ACCOUNTS OF CUSTOMERS
18
CHEQUES
19
KINDS OF CHEQUES
20
21
2. PAYMENT BY CHEQUE: -
22
27
28
CLASSIFICATION OF ENDORSEMENT
28
Islamic Banking
29
32
Declaration of Profit
35
38
41
43
vii
CLEARING SECTION
46
52
INTERNET BANKING
53
CASH DEPARTMENT
57
58
PRICING
62
Apni Car
64
Swot Analysis
65
Pest Analysis
68
viii
DAWOOD HABIB
Habib and Sons was formed in the 1920s to trade in cotton, copper, oil seeds, gold
bullion and other commodities and to act as a merchant bank. This in turn led to the
formation in 1941 of Habib Bank Ltd. Bombay, as a public limited company.
that Mohammad Ali Habib gavea blank cheque on Llyod Bank to the Quaid-e-Azam
who wrote Rs 80 million in it. (Anarticle in Habib Bank Golden Jubilee Presentation
and a letter to the Editor in daily Dawn,September 11, 1991).
(Pakistan)
(UAE)
Bank of Indiafailed todeliver Pakistan share of Rs 750 million held by it. It is said
that Mohammad Ali Habib gavea blank cheque on Llyod Bank to the Quaid-e-Azam
who wrote Rs 80 million in it. (Anarticle in Habib Bank Golden Jubilee Presentation
and a letter to the Editor in daily Dawn,September 11, 1991)
and
consultancyservices.
AL
Habib
Capital
Markets
VISION STATEMENT
MISSION STATEMENT
TO BE A STRONG AND STABLE FINANCIAL INSTITUTION
OFFERING INNOVATIVE PRODUCTS AND
SERVICES WHILE CONTRIBUTING
TOWARDS THE NATIONAL ECONOMIC AND
SOCIAL DEVELOPME
Our Services
What can Home Remittance Division of Bank AL Habib do for you?
Home Remittance Division at Bank AL Habib facilitates instant transfer of money
sent by overseas Pakistanis through our dedicated agents free of cost to the
remitter and the beneficiary. We are also facilitating Money Gram beneficiaries at
our counters. Bank AL Habib account holders will have their remittance directly
transferred to their accounts whereas Cash Pick up facility is provided at all our
branches. Furthermore, account holders with other Banks are also facilitated.
Step 1
Ask the sender / remitter for the reference number / PIN code.
Step 2
Visit any Bank AL Habib branch throughout Pakistan with the given reference
number / PIN code and your original CNIC or Passport.
Step 3
Fill a simple form and collect your payment instantly from the designated Home
Remittance counter.
Upon availability of correct mobile number SMS alerts are generated to the
beneficiaries for their facilitation.
Product
As defined by State Bank of Pakistan (Small Enterprises)
A small enterprises (SE) will be a proprietor or a partnership concerns which
meets the following parameters, as per new SBP PR, are as follows:
Recognizing the economic and regulatory importance of the Small Enterprises &
Medium Enterprises, the facts and figures around the world reveal that being
engine of economic growth, SE & ME sectors are considered to be the hub of
employment creation and resource mobilization activities. The SME Division was
established with an aim to provide SE & ME Banking and undertakes to
strategically serve this important segment. BAHL believes in simplification of
procedure and reduction in turnaround time and quality services.
Procurement of Inventory,
Receivable Financing.
Procurement of Machinery.
7
BMR.
Import / Export.
Guarantees.
Auto Leasing
1. MAXIMUM PROFIT
As the name of the Bank indicates that it was established to finance the nation. As
a Business organization its objective is to earn more and more profit by the least
expenditures.
2. GOOD ADMINISTRATION.
A good administration is an objectives of the Bank. Without proper
administration no organization can run successfully. A good administration should
have the following qualities:a:
Quick decision.
b:
Correct decision.
3. CUSTOMER SERVICE.
The main objective of the Bank is to serve his customers. It serves the customers
on both directly and indirectly. Bank collects money from an individual, firms, and
limited Companies etc. It also gives loan to the people.
4. DEVELOPMENTS.
Banks spending large amount of its profit for its own development. Therefore, the
large amount of its profit is spent on opening the new branches of the bank and
8
5. EXPENDITURE DISCIPLINE.
Bank is trying to minimize its expenditure. So, it keeps strict control over
expenditure and avoids wastage of money at every stage.
6. ZONAL INSPECTION.
Every branch should be inspected by Zonal inspector at least once a month as
directed by Principal Office under B.D. may verify from time to time.
Management function
Planning
Organizing
Leading
Controlling
Planning
Planning is Defining organization goals and objectives.Establishing overall strategies
for achieving those goals.Developing a comprehensive set of plans to integrate and
coordinate organization work.
Types of planning:
Bank Al Habib us e both formal and informal types of planning;
Informal;
In informal planning, their planning is not written down, short term focus and specific
toan organizational unit.
Formal;
In formal planning, their planning is written down, specific, long term focus and
involvesshared goals for the organization.
Goals and objective:
Profitability
Profitability
10
Process of planning
Mission:
To be a strong and stable financial institution offering innovative products
and services
whilecontributing
towards
the
National
economic
and
social
development.
Strategies
Strategies of bank Al Habib are giving loans and accepting deposits.Types of
strategies used by bank Al Habib; cost leadership strategy, differentiation strategy,
focusedstrategy and etc.
Plans
Plans of bank Al Habib are short-term and long-term advances & deposits.
Programs
Programs of bank Al Habib are up to one year or more then one year advances,
fixedaccounts, and etc.
Policies:
Policies of the bank Al Habib are profitability, by making profitable advances and
customerssatisfaction by providing best services at an affordable cost.
Rules:
The rules are define the upper level management according to situation.
Budget:
Bank Al Habib always met its budget
Organizing
Managers work in organization. But what is an organization?An organization is an
arrangement of the people to accomplish some specific purpose. Your
colleges,university, banks, governments departments are all organizations because
they have three commoncharacteristics.First; each organization has a distinct purpose.
This purpose is typically expressed in terms of a goalor set of goals that the
organization hope to accomplish.Second; each organization is composed of
people. One person is working alone is not an organizationand it takes people to
perform the work thats necessary for the organization to achieve its goals
11
Purpose of organizing;
Divide work to be done into specific jobs and departments in bank Al Habib.
Assign tasks and responsibilities associated with individual jobs in bank AlHabib.
Coordinates diverse organizational tasks in Bank Al Habib.
Establish relationship among individuals, groups and departments in Bank Al Habib.
Types of organization
I. Tall vs. Flat:
Bank Al Habib is a tall organization.
II. Multinational vs. National:
Bank AL Habib is a multinational organization.
III. Single vs. Branch:
Bank Al Habib is a branched organization.
IV. Mechanistic vs. Organic:
Bank Al Habib is an organic organization.
V. Big vs. small:
Bank AL Habib is a big organization.
Leadership:
The process of influencing a group of people towards the achievement of pre
selected goalsis called leadership. & The person who makes this process or who can
influence others / group of people and who has managerial authority is called a
leader.
Traits & skills of Leader:
The leaders of bank Al Habib have the following Traits & Skills in themselves.
Decision making
Communication power
Motivation power
Honesty
Strong vision
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Interpersonal skills
Consistency
Step forward
Discipline
Competitive skills
Types of leader:
There are three basic types of leaders;
Dictator
Democratic
Laissez-fair
NOTE:
But the Bank Al Habib has the democratic leaders.
Democratic leader:
The leaders, Bank Al Habib have, are the types of Democratic. Because the major
portion of the bank is decentralized, thats why the each leader has the complete
power of decision making, but they are working collaboratively in whole
organization with each other. All leaders of bank are involved in decision making,
delegating their authorities to their higher qualified employees, encouraged the
participation of their employees in work and gives them opportunities of coaching in
well manners.
Motivation:
Motivation is the very important skill of the leader, without the motivation skill the
leader does not work effectively in the organization. Motivation of the employees to
done the certain task and achieve the organization goals is too much important in the
organization for its operations. Motivation is the duty of the leader toward his
subordinate to do for the certain task to accomplish the organization goals.
13
Control:
Control is the process of monitoring activities to ensure that they are being
accomplished as planned and of correcting any significant deviation.
Importance of control;
Control is very much important because it is the final link in the management
functions. It is the only way mangers know whether organizational goals are being
met and, it not, the reasons why. The value of control function lies in its relation to
planning, empowering employees, and protecting work place. In Bank Al Habib the
importance of control can not be neglected because its a service base organization
and deals with finance. Every employee in this organization has direct of indirect
interaction with financial activities and finance play the key role in the progress of the
bank. Thats why there is significance importance of a good control over all the
activities in the bank for progressing on the right path.
Process of control:
A three-step process including measuring actual performance, comparing actual
performance against astandard and taking managerial action to correct deviation or
inadequate standards.
14
Specific standards;
Internal control system and all transaction and significant events must be
clearly documented, and the documentation readily available for examination.
Transaction and other significant events are to be without delay recorded and
properly classified.
correct
or
otherwise
resolve
the
matters
brought
to
managements attention.
15
ORGANIZATION STRUCTURE
BOARD OF DIRECTORS
EXECUTIVE BOARD
CHIEF EXECUTIVE
DIVISIONAL CHIEFS
PROVINCIAL CHIEFS
CIRCLE CHIEFS
ZONAL HEADS
BRANCH MANAGERS
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BANKING OPERATIONS
The Bank provides a wide range of facilities for transacting money in and outside
the country. Being' custodian of the money, it manages the assets in such a way that
the Bank remain solve and liquid to a high degree so that it is able to meet the demand
of the customers for cash payments. In the operation of a Bank, there i~ a close
relation between the Banker and the customer.
Banker is a person, whether corporate or not who carries on the business of the
banking. The customer is a person who has some sort of account either current or
fixed o~ some similar relation with a banker.
The relationship between Banker and customer is primarily that of debtor and
creditor with the rules reserved where the customers are relying on a loan from the
banker.
DUTIES OF A BANKER
1. To honor a customers cheques.
The Banker's duty is to honor the cheques of the customers.
i.
ii.
iii.
iv.
2. Standing orders:The Bank abides by the standing orders of the customers in making periodical
payments on his behalf such as club, library and insurance perineum etc.
17
3. Secrecy of the customers. Account: The Bank owes a contractual duty not to disclose the customers financial
position with out his consent.
4. Valuables for safe custody:The Bank takes care of the property deposited with it by the customers with or
without charge. When a Bank does not charge, the Banker is called gratuitous bailey
and when a specific charge is made, the Banker is then a paid bailey.
ACCOUNTS OF CUSTOMERS
A Bank should not open an account for a customer unless his integrity and
responsibility is duly authenticated by a responsible person known to the Bank.
By
opening of an account, the Banker usually gets the specimen signatures on cards.
b. Mental patients: If the Bank comes to know of a customers lunacy, the Bank will immediately
suspend the OPERATIONS on the account until the court gives order or the Bank has
full proof that his customer has fully recovered. When the customers is mentally
unsound, the court appoints a receiver who operates the accounts under the direction
of Master in Lunacy.
c.
account by the Bank. At the death of the husband, the widow is fully authorized to
withdraw the balance.
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d. Infants:An infant can open an account with a Bank, but he is not allowed to overdraw the
account. If the infant customer wishes to have an over draft, an adult should draw and
sign on indemnity contract.
e.
Partners:When an account is opened by the partner they are to sign a mandate authorizing
any or all of their member to make with drawls. The partners are jointly responsible
for all the loans and other obligation incurred by the firm.
f.
Societies, Clubs etc:If an incorporate body opens an account in a Bank, the committee of management
deputes certain of lice bearers to operate on the account. The bank obtains a copy of
the resolution of the society or clubs appointing certain members to administrative
funds.
Bank immediately. The. members of the society who are operating the account or
not liable for any draft.
g. Death of a customers:If a Bank receives the notice of a customers death , all operations on the account
are suspended until the executors or administrators produce the probate. All credits
received after the notice of the death of customer are placed in a new account for
disposal by the executor or administrator later.
CHEQUES
A cheque is a bill of exchange drawn on a Banker and payable on demand.
According to Dr. Hard,
"A cheque is an unconditional order in writing drawn on a Banker signed by the
drawer, requiring the Banker to pay on demand a certain sum in money to or to the
order of a specified person or to learner."
Cheque is merely an order on a Bank by its clients to pay a sum of money to
himself or to a third party on demand.
19
The drawer.
(ii)
(iii)
The payee.
The drawer is the person who signs the cheque. The party which is authorized to
pay back the money is called drawer. The person to whom or to whose or order the
money is to be paid is called payee. A cheque in order to be valid must bear the
signature of the drawer. It should be in writing preferable by means of a pen.
KINDS OF CHEQUES
There are three kinds of cheques : 1.
Bearer Cheque:
ii.
iii.
Cross Cheque:
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the payee. The crossed cheque can not be cashed when it is presented at the counter of
the Banker.
If a Bank makes payment of post dated cheque before it falls due, the Bank would
be liable to the drawer for the amount.
(iii)
to be stale or over due. Normally, if the cheque is presented six on seven months after
the date, it is marked as "Stale" or "out of date". The out of date cheque requires the
confirmation of the drawer.
(iv)
Alterations on a cheque:
If the drawer is to make changes in the date or amount or in the name of the
person then full signature must be obtained on all the material alterations made on the
cheque.
21
There is sufficient credit in the account of the customers to cover the amount
written on the face of the cheque :-
b.
c.
d.
22
b.
c.
d.
If the holder of a cheque presents it through the post to the paying Banker the
usual practice for drawer Bank is to send back the cheque instructing the
holder to either present the cheque in person or the collection should be made
through another Bank.
3. Payment in Due Course :If a cheque is drawn in proper form and is paid by the paying Banker in good
faith the Bank does not incur any liability.
b.
Similarly, in case of crossed cheque, the drawer Bank is protected of the forged
document only if
a.
b.
C.
d.
5. Fraudulent Alteration of amount:If a drawer draws the cheque in such a manner that it makes room for alternation
of the amount, or hi signs a Blank cheque, and the Bank pays in good faith the amount
which is fraudulently increased, the Bank will not be held responsible for the
customers loss.
23
In all such cases, where the payment is stopped well in time, the operative
signatures are cancelled and the cheque is returned with a marked "Cancelled in error,
payment countermand."
2. Customer's Balance:The Banker can refuse to make the payment of a customer's cheque1 if his
balance is not sufficient to cover the cheque. However, if the Bank has allowed the
facility of overdraft, the Banker is bound to make the payment provided the amount is
within the limit of the overdraft.
3. Cheque is not an assignment of funds:A holder of a cheque can not ask the Banker to earmarl. credit balance of the
drawer in his favor. If the customer's balance is sufficient to cover the cheque, the
payment will be made. The cheque will be dishonored if the Balance available for
drawing the cheque is not sufficient. The holder of the cheque can not either have an
equitable claim against the drawer Banker.
4. Payment in due Course:The Banker will refuse to make the payment. of a cheque if :
i.
ii.
24
Business.
5. Advising Fate By Telegram:If cheques are presented direct to the -Banker or through the collecting Banker
with a request to wire fate and the paying Banker's answer is in the affirmative then
the Banker has to make the payment even if he receives the countermand of payment
written or oral from the Customer.
6. Marking Cheques:A drawer may get a particular cheque 'Marked' from his Banker. The Banker will
retain the amount in order to honor the "marked" cheques. If' the other cheques issued
by him are not covering his credit Balance, Bank will dishonor them for want of
funds.
7. Forgery of the Drawer's signatures:If the Banker is doubtful of the drawer's signature of in the alternation of amount
the Bank can refuse to make the payment.
8. Notice of Customers Death:The Banker will terminate the payment of a cheque if he receives the notice of the
customer death.
9. Bankruptcy Petition:If the customer is unable to pay his debt i.e. he is insolvent, then he or his creditors
present as petition to the court to take over the debtors, property for distribution
among creditors. If the Bank receives a notice of t he refuse to honor the cheque
forthwith.
10. Making of a Receiving order:If the customer is satisfied that the cu-stomer appears to be insolvent, it will
immediately issue a receiving order. The Bank will refuse to make payment on the
advertisement of receiving order of its customer in the news paper or on direct
intimation from the court.
25
11. Trust Funds:If the Banker is satisfied that his customer by breach of trust is crediting the trust
fund to his account, the Banker may refuse to pay the cheques.
12. Garnishee Order:If the creditor of Banks customer gets a garnishee order from the court, the
customer is not allowed to operate the account by the Bank.
13. Account Closed:If the drawer has closed his account, the Bank will dishonor the cheque presented
to the Bank.
14. Mutilated Cheques:If a cheque is mutilated, torn or cancelled, the Bank will refuse to debit the account
of the customer. The payment on. the torn cheque can, however, he made, if it is
confirmed from the drawer or from the payees Banker.
15. Difference in words and Figures, :If the amount stated in words differ from the amount expressed in figures, the
Bank will refer the cheque to the drawer remarking: amount in words and figures
differs.
16. Irregular endorsement:Ii the endorsement on the chequ-e is irregular, the Bank will not make the
payment on the cheque presented to it.
17. Lost or Stolen Cheque:If a cheque is lost or stolen and the drawer informs the Bank well ii. time, the
Bank will refuse to honor the cheque if presented after the receipt of the notice.
18. Stop Cheque note:If a customer informs the Bank orally or verbally for stopping the payment of the
particular cheque, the Bank will obey the instructions and will put "Stop Cheque
Notice" in red ink in the account of the drawer.
26
19. Receipt of Notice of Indemnity:If the Bank comes to know that a particular customer has become insane or is of
unsound mind and the Bank is satisfied that hi customer is unable to act rationally, the
authority of the Bank to act as agent will then cease. If the Bank receives the lunacy
order from the court, the cheques will be returned with the remark "refer to drawer.
20. Joint Account:If there is a joint account the Banker will get definite instructions as to how the
account is to be operated upon whether all of them shall operate the account or
delegate the authority to one. On the death of any party to a joint account, the balance
rests in the surveyor or surveyors subject to an expressed authority on the contrary.
In case of a partnership firm, every partner can open an account in his name. But the
Banker would not allow until and unless it is signed by all partners, giving the manner
of operation. The death or retirement of a partner dissolves the partnership then the
Bank should not allow any operation on such an account.
22. Company Account:If the Company or a corporation wants to open an account with the Bank it would
provide a copy of resolution passed by the Board of Directors appointing it as a
Banker to the Company, naming the person or persons authorized to operate the
account. If any authorized person draws a cheque on behalf of the company, then it
would be dishonored.
ENDORSEMENT:
A cheque or a bill is endorsed when the transfer puts his signature on the back or
an along of a cheque and a bill as a part of its negotiation. If the cheque is bearer, it
needs no endorsement. However, in our country, the Banker insists on getting the
endorsement (signature) on the back of the cheque. If the holder of the cheque does
not agree to put his signature, then he shall have to give a properly stamped receipt for
27
the amount paid to him. If the cheque or bill is drawn payable to order, it requires the
endorsement of the transferor, so that the payment is made in due course
2.
Endorsement may be made in ink, print, pencil or with a rubber stamp. The
Bank prefers the endorsement to be wholly in ink as it is not liable to
obliteration as well as alteration.
3.
The endorsement must be of the entire value of the Cheque and bill. Partial
endorsement which may be in the name of one endorsee or more than one
endorsees separately is not legally valid.
4.
If the number of endorsees or payees is more than one on the bill then all the
payees are the endorse unless one endorsee has the authority to
endorse on
CLASSIFICATION OF ENDORSEMENT
The Main classification of endorsement are as follows:
1. Conditional endorsement :
-If the endorsement makes the payment of a bill subject to the fulfillment of a
condition or conditions, the endorsement is called conditional endorsement. The Bank
or the payer can disregard the conditions and make the payment to the endorsee and
the payment will be considered valid.
28
2. Blank Endorsement :It the endorser signs his name on the bill but does not give the name of any other
person to whom he wishes to transfer the cheque, the endorsement is called blank.
When there is no endorsee specified on the bill, it becomes payable to bearer even
though it may be originally drawn to order.
3. Special Endorsement :
-An endorsement which
5. Partial Endorsement:If the bill purports to be endorsed for a part of the amount payable, the
endorsement is called partial endorsement is legally in effective.
This department consists 'if the following sections:1. Account opening section.
2. Deposit section.
3. Clearing section.
4. Remittance section.
5. Accounts section.
Islamic Banking
Bank AL Habib Limited is a well established commercial bank in Pakistan, which
has also been licensed by the State Bank of Pakistan to undertake Islamic Banking
through its Islamic Banking branches.
Bank AL Habibs Islamic Banking Branch offers Deposit Schemes and Islamic
Financing for Individuals / Traders / Industries which are completely based on
Islamic Shariah principles.
All arrangements / documents relating to above are Shariah compliant and have
29
been approved by our Shariah Advisor. He will regularly monitor all Deposits and
Financing to ensure that these are Shariah compatible.
Introduction to Shariah Advisor Mufti Dr. Ismatullah
Mufti Ismatullah is the Shariah Advisor of Bank AL Habib Islamic Banking. He is
a PhD in Islamic Economics. His thesis Zar (Money) in light of Shariah is
considered as one of the useful researches of Islamic Economics.
Mufti Islamtullah holds the degrees of Aalim-e-Deen and Takhassus Fil Fiqh
from Jamia Dar-ul-Uloom, Karachi. He has been teaching Quran, Hadith, Fiqh,
Philosophy and Arabic Grammar in Dar-ul-Uloom since 1993. Mufti Sahab has a
vast experience in issuing Shariah rulings (fatwa) and is currently serving
Dar-ul-Ifta of Dar-ul-Uloom. So far he has issued about 20000 Fatwas regarding
different topics and Shariah issues.
Mufti Sahab is also a member of Shariah Advisory Board of Pak Qatar Takaful
Group.
All products are approved by our Shariah Advisor and all transactions are
personally supervised by him.
Islamic Financing
We also offer Islamic Finance for Individual / Traders / Industries, etc. These
finances are offered in the following forms:
Murabaha Finance
Istisna Finance
30
All arrangements / documents relating to above are Shariah compliant and have
been approved by our Shariah Advisor.
a) Murabaha Finance
A contract between the Bank and a Customer under which the Customer first
purchases certain goods/commodities/assets as an Agent of the Bank, and the
Bank after taking possession of the goods/commodities/assets sells it to the same
Customer by adding certain profit margin to its cost.
Shariah Compatibility:
Customers Guidance:
Goods shall not be used by the Customer before the Murabaha offer and
acceptance are signed.
In case of late payment, Customer will have to pay certain amount to charity
fund as per Murabaha Agreement.
31
32
of the bank until the title to such tangible asset is completely transferred to the
client.
Renting out by the bank undivided share in the asset owned to the client.
All other terms and conditions as are essential to co-ownership, Ijarah and sale
shall be fulfilled in respect of different stages in the process of DM
arrangement.
Proportionate share of the client and the bank must be known and defined in
terms of investment.
Loss, if any, shall be borne by the bank and the client in the proportion of their
respective investments.
In case a client fails to honor the undertaking, as aforesaid with regard to the
periodic payment and purchase of sale of units as the case may be, the asset
may be sold in the open market and the bank aggrieved by such failure shall
be entitled to recover:
Actual loss, defined as the difference between the market price and price
mentioned in the undertaking, if any, not being the opportunity cost.
ny gain on sale of property, shall be shared by the bank and the client in
proportion of their respective investment at the time of such sale.
33
d) Istisna Finance
Istisna is a contract of sale of specified item(s) to be manufactured or constructed.
It is an order to a manufacturer to manufacture a specific commodity for the
purchaser. It is necessary for the validity of Istisna that the price is fixed with the
consent of the parties and that the necessary specifications of the required items
are fully settled between them. The Istisna price can either be paid in advance, or
in installments or at the time of delivery of goods.
Shariah Compatibility:
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Declaration of Profit
Declaration of Profit on various Deposits for the Quarter ended June 30, 2014
Bank AL Habib Limited Islamic Banking has declared the following Profit
Rates:
Products
Profit Rates
5.31%
5.46%
5.68%
6.06%
6.44%
0.02%
6.52%
6.82%
7.58%
8.19%
8.49%
8.94%
9.10%
0.66%
The above profit rates have been approved by our Shariah Advisor.
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Profit Sharing Mechanism for Distribution of Profit for next three months
i.e. from July 1, 2014 September 30, 2014.
The Bank is currently offering Term Deposits and Saving Deposits under the
principle of Mudarabah.
The Bank will calculate the profit of the deposit pool after every quarter. Profit
will be distributed at the Net Income level i.e. Gross Income less direct
expenses, write-offs/charge-offs and loss on sale of investments. In case of
comingling of Banks equity with depositors fund in pool, the Net
Income/Loss of Pool shall be allocated between the Banks equity and the
depositors fund in proportion to their respective share in pool.
Net Income of the deposit pool will be shared between the Bank (Mudarib) and
depositors (Rab ul Maal) on the basis of a pre-determined profit sharing ratio.
The Banks profit sharing ratio will be 50% of the Net Income and Depositor(s)
profit sharing ratio will be 50% of the Net Income after the allocation of profit
to Banks equity in proportion to the respective share in the pool.
The profit is distributed among the account holders on the banks
predetermined weightages, announced at the beginning of the quarter based on
their respective category/tiers.
At the end of the period, the Bank may unilaterally reduce its profit sharing
ratio for the benefit of all the deposit categories in a pool.
In case of a loss, as per the rules of Mudarabah, the deposit pool will share the
loss in the ratios of investment of depositors.
36
Weightages declared for the 3rd quarter i.e. (1st July, 2014 September 30,
2014) are:
S. #
Products
Weightages assigned
0.70
0.72
0.75
0.80
0.85
0.002
0.86
0.90
1.00
10
1.08
11
1.12
12
13
14
15
1.20
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i.
FORMAL APPLICATION:
The customer is to filling "Account Opening Form 11 It is a formal request by a
customer to the bank to allow him to have and operate the current or saving account.
ii. OBTAINING INTRODUCTION:The bank before opening , and account obtains introduction of the customer from
old customer, responsible person etc.
IV. MINIMUM INITIAL DEPOSIT:In Pakistan the current account can be opened with a minimum of Rs. 500/- and
PLS Saving Account with a minimum of Rs 100/- These amounts are also the
minimum balances to be maintained by the account holders with the Bank.
ii.
IV. PRECAUTIONS IN PREPARING THE PASS BOOK:The Banker should be careful in preparing the pass book However, the customer
himself should.
38
i.
Send the pass book for making entries and also periodically check up them.
ii.
He should also see that the entries are initialed by the accountant.
iii.
The customer should verify the entries with own books of account.
iv.
In order to safe guard the secrecy of the account, the customer should receive
the pass book in closed cover.
B. WITH-DRAWL.
Withdrawal is made on cheques supplied by the Bank. A new cheque book is
issued only on receipts of the requisition slip attached to the cheque book issued
previously and this presented along with the depositor pass book for entire against
cheque book challan. Cheque book is issued on discretion of the branch manager.
C. INTEREST.
The current rate of interest allowed on deposit in saving Bank account is
ascertained at the Bank. This rate is subject to change. The amount of interest is
calculated for each calendar month on the lowest balance at credit of an account
between the close of the sixth day of a month and the end of the month and only on
every complete sum of ten rupees.
Every account is made up half yearly to 30th June 31st December, and the interest
calculated as above is added to the balance of each account as on these dates.
D. TRANSFER OF AN ACCOUNT.
Account can be transferred to any other branches of N.B.P. free of charge. If a
depositor wants to transfer his account, he presents his pass book personally or sends
it to Bank and writes an application for the transfer of an account.
E. CLOSING OF AN ACCOUNT:
A depositor willing to do ,e his account must present his pass book in order that
with drawls and the amount of interest due on the account is entered therein and final
balance stuck. This balance is then paid to the depositor and his receipt is taken, the
pass book is canceled, unused cheque forms on hand are also surrendered at the same
time.
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F. SECRECY:
The secrecy of depositors account is the. responsibility of every official engaged
in the Bank service.
Saving account
Saving Account is that account in which customer puts his surplus money which
issued by the account holder for withdrawal or for payment. No interest is allowed on
this account.
40
The holder of account can withdraw upto Rs. 15,000/- per month is eight
withdrawals, in case of higher withdrawal, seven day prior notice is necessary. This
account is operated under interest free system.
v.
fixed period may be three months, six months, one year, two years, five years and
more. The Bank allows a higher rate of interest for larger period.
At the time of operating on account the Bank issues deposit certificates for the
period and amount. The account holder can not withdraw his amount before the
specified period, but the same Bank will allow loan against that certificate. Bank is
liable to give interest on this account on maturity date.
2. DEPOSITS SECTION:
There are two types of deposits i.e. current and saving There are different forms
present in the section of or deposits.
1.
ii
iii
iv
In he above mentioned forms, the bank makes an agreement with his customers.
41
One year tenure is an optimal time period for fixing ones savings in a term
deposit. Lower tenures pay lower markups and higher tenures increase the risk
of breaking the term deposit and further foregoing accrued profits.
Each individual has the option to avail a line of credit equivalent to 90% of
their deposit amount. This facilitates the fixture of an individuals savings for
the one year tenure.
Deposit Schemes
Bank AL Habib Limited, Islamic Banking Branch, invites participation in the
following deposit schemes:
The above deposit schemes are based on the Islamic Shariah principles and have
been approved by our qualified and experienced Shariah Advisor.
Funds will be used for investments and providing finances to trade and
industries on fully Shariah compliant basis.
Funds will be used for investments and providing finances to trade and
industries on fully Shariah compliant basis.
42
Funds will be used for investments and providing finances to trade and
industries on fully Shariah compliant basis.
AL Habib Salana Account is a deposit account and can be opened with Rs,
25,000/-
All other rules applicable to PLS Savings account will also apply to AL Habib
Salana Account inculding Zakat, Withholding Tax and other Government
Levies unless exempted.
If the deposit is encashed before maturity, profit will be calculated and paid for
the period held at the rate applicable to Savings Account.
43
The indicative return payable on "AL Habib Salana Account" deposit effective
July 01, 2014 is 9.10% per annum. (The rate of profit on deposit schemes are
current and subject to change)
up
to
Rs.500,000 is 10%
P.A
and for
Young Savers Account will have Internet Banking facility and ATM Debit
Card available to your parent/guardian
Young Savers
Until you the Young Savers are a minor, i.e., below 18 years, the account will
be operated by your parent/guardian. When you attain majority, the balance in
the account will be transferred to a new account which you will open and
operate after completing required formalities, including the concurrence
of your parent/guardian.
Bank officers will also visit your school to help you open Young Savers
Account and collect your deposit
44
The indicative Return Payable on "PLS Savings Account" deposits with effect
from July 01, 2008 is 5.00 % per annum.
This plan adds to the earning ability of your PLS Savings Account with Bank
ALHabib.
Your profit is paid out / credited every month to your Account instead of
six-monthly as in case of PLS Savings Account.
The indicative Return Payable on "Monthly Profit Plan" deposits with effect
from July 01, 2008 is 5.00 % per annum.
Treasurers call;
Corporate societies, trusts and even individuals have large funds which are
generallyidle. Such funds can be put to This plan is open to Current Deposited
Account. Access to such funds requires only a 24 hour notice. Profit is calculated on a
daily product basis and credited to your Account monthly. The applicable rates for the
Treasurer's Call Deposited Account,effective January 1, 2005 are: work to earn
handsome profits via the AL Habib Treasurer's Account
Growth certificates
Bank AL Habib has now introduced 5 Years Growth Certificates for its
customerswhich are for a longer tenor at very attractive rates. Receipts may be issued
on PLS TermDeposit Receipts clearly marked 5 Years Growth Certificates.
45
In case of a joint account the Senior Citizen will be the primary account holder
and other joint account holders must be between 18 and 60 years of age.
Profit will be paid on the first working day of the next month
Profit may be drawn through Cheque or ATM from any branch of Bank AL
Habib.
CLEARING SECTION
Every Bank performs the paying and receiving functions. Cheques are collected
which are drawn upto Banks for customers. Similarly the cheques drawn on different
Banks and deposited by Banks own customers for collection within the city is know
as clearing The functions of receiving and paying is mostly done through the clearing
house. A clearing house can be defined as "AA place where that representatives of all
Bank get together to settle the receipts and payment of cheques drawn on each other"
Clearing House provides the facility which can hardly be dispensed with especially,
in case of crossed cheques.
There are two main types of clearing.
i Outward clearing
ii
Inward clearing.
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i.
OUTWARD CLEARING:
It includes those cheques and other instruments which are sent by the Bank to the
Banks for payment on behalf of its own clients. Cheques are sent to clearing house
thorough local main branch.
A delivery message from the local main branch comes to every branch at a fixed
time to pick its outward clearing or outward returns as the case maybe.
b.
c.
d.
e.
Jotting of all the schedules are taken in the clearing House statement. Amount
of the cheques in written in the "Delivered" and to pay column.
f.
After balancing the outward clearing, the pay in slips are released to C.D.
department.
g.
h.
The instrument, schedule. etc. are delivered to the messenger from the main
branch.
b.
The amount's of all the instruments are jotted down and totaled. If should be
equal to the amount mentioned in schedule from the local main branch.
c.
d.
e.
If there is any return, that is deducted from the total and IBCO prepared for the
remaining amount.
3. CLEARING CHEQUES.
When the payee/endorse and the drawer of cheque maintains account with
different Banks, the collection Bank in any one of the following methods:a.
it can collect cash by sending its representative with the cheques to each of the
paying Banks. It is not so much appropriate.
b.
c.
To accept transfer, transfer delivery and clearing cheques from the customer of
the branch a~ d to arrange for their collection.
b.
To arrange payment of
to any other branch of BAH or any other member or such member of local
clearing house.
c.
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sent for collection by BAH branches not represented at the local clearing
house.
REMITTANCE SECTION
Remittance means transfer of money from one place to another place. It is of two
kind.
I.
Inland remittance.
II.
Home remittance.
1. INLAND REMITTANCE.
An inland remittance means a transfer of money payable at a certain place within
the country. Inland remittances can be classified as under:a.
Within locality.
b.
a. WITHIN LOCALITY
When a branch situated in DIkhan is required to send drafts to any other branch
situated in the same city The process is know as within locality. For example BAH
Main Branch, DI Khan sends any draft to BAH Rakh Mandar branch ,DI Khan.
b. OUTSIDE LOCALITY.
Outside locality is an important type of inland remittances, which means the
transfer of money payable outside the city. For example, BAH Main Branch DIkhan
sends any draft to a Branch situated at D.I.Khan.
It is commonly done through the following three means:i.
ii
iii
49
i.
TELEGRAPHIC TRANSFER
In telegraphic transfer, the Bank takes commission and telegram charges from the
sender.
The Bank itself transfer the funds to the drawee branch though a coded message
in telegram, confirmatory of which is also sent through routine dak mentioning all
details. All bank Branches have been provided with their code books name Bank Keys
Code Book where from the coded message is agreed by the drawee branch. T.T. can
be sent open, which may be paid in cash in drawee branch, or may be direct y
creditable to relevant account.
ii
amount at the drawee branch can only be transferred to an account, amount can not be
paid in cash. Other procedure is same as T. deposit of money at sending branch.
Difference is only of postage and. telegram charges. The M.T. which in its self is an
advice also is sent by registered post, while T.T. is sent through telegram.
ACCOUNT SECTION.
Every Business organization deals in money matters. Bank also deals in money
and more over since the money belong to the depositors therefore, it is of utmost
importance to keep systematic and correct record.
50
Further-more, the Banks are commercial institutions and its main objective is to
earn profit, therefore, then record of all incomes and expenditures are kept correct an(t
systematically.
In BAH the responsibility for maintaining necessary accounting data and to
keep upto date records In a systematic manner has been assigned to the Accounts
Department.
The Branches of Bank Pt perform their daily routine work and deal in money that
belongs depositors. Here account department hold great importance in banking,
because it keeps all the accounting records properly.
ACCOUNTS TERMS
The account department maintain all the accounting records properly There are
certain accounting terms which are defined into the following-
1. ACCOUNT
A summary of all debit and credit transaction pertaining to a similar nature or to
an individual or body of persons is called an account.
2. VOUCHERS
A written evidence recorded on a price of paper in respect of a money transaction
is called voucher.
3. GENERAL LEDGER.
Main ledger is a book, where various accounts of different type are kept.
Generally this book is in binded form containing several sheets for several accounts.
4. SUBSIDIARY LEDGER.
Where a main head has got different sub-head of it: subsidiary leader are
maintained. These subsidiary ledgers are maintained from the main ledger.
51
b.
Abstract book.
c.
d.
Register of vouchers
e.
Transfer book.
f.
g.
h.
Supplementary sheets.
i.
Different vouchers.
11.
Preparation of statement.
During the course of daily business of the branch, a number of cheques are
presented by customer for cash payment, though transfer, delivery and clearing
cheques at the counter. Also a number of new accounts are opened and cash is
deposited by the customers. A number of new vouchers are passed by the branch by
debiting, one account and crediting another account.
So in order to ensure that during the day all the transactions have properly been
recorded and they are complete in all respects and are recorded in proper books by the
branch this recording is done on daily basis and maintained by account section.
52
2. PREPARATION OF STATEMENTS.
To Judge the performance of branches, the Head Office requires periodic
statements from them. Through these statements the top management watches the
progress of the branches and they provide them necessary guidance, The top
management decisions depend upon these statements also. The following are the
important statements prepared by the account section: a.
b.
c.
INTERNET BANKING
What is Internet Banking?
Internet banking is a real-time solution that allows you to access your accounts 24
hours a day, 7 days a week. You may do your banking from the convenience of
your own home or office without visiting the branch or ATM. You may check
your balances; view your account statements and transaction history for your
various accounts. You can also transfer money between your accounts, change
your password etc over the Internet all in a secure manner.
What do I need to make use of this service and how does it work?
Our Internet Banking is easy to use. All you need is a personal computer or laptop
that is connected to the Internet.
You must be a customer who has registered for our Internet Banking service.
53
will send to you, after 5 working days, from the date of submitting the application
form.
You can also print the Internet Banking Application Form from online,
www.bankalhabib.com
Please read the terms & conditions carefully and print a copy and/or retain the
information electronically for future reference.
Balance Inquiry
Account Statement
Cheques in Clearing
Change Password
Funds Transfer
Bill Payment
Remittance Request
Account Usage
Balance Inquiry
Transaction details
Change Password
Account Usage
54
How does the Bank AL Habib make sure that only I can access my accounts?
You must enter Internet Banking Password every time you access the system. The
password is known ONLY to you.
Don't use your date of birth, telephone number, address, your name or the
name of a friend or relative in your password.
Lock your password when you logout from Bank AL Habib Internet Banking
service.
55
56
CASH DEPARTMENT
PROCEDURE OF CASH RECEIPTS AND PAYMENTS
The cash department is the largest department in Banking. The basic goals or
objective of the Bank are to earn profit. Therefore, receive money from their clients
and invest in business. The adopted in the Bank is as under
TOKEN
The payments are made only against the tokens. The tokens are issued by the
clerk deputed for this job. The branches have code numbers of There own branch
engraved on the existing stock of tokens. When the cashier makes payment against
tokens, he ensures that beside, the token number, the Code number is also correct.
The token are checked daily by the officer responsible for checking of cash and
he tallies the number with the number shown in the stock on hand in the furniture and
fixture register.
57
SAVING-IN-CASH-CHECKING THEREOF
The Manager or the officer checking the cash, checks the cash physically in the
afternoon before the cash is safed in.
Loose and unstitched notes of all denomination as well as stitched notes of Rs.
100/- denomination are physically counted.
bundles and sealed bags containing coins are properly checked and tallied with the
cash position before the cash is safe-in. It is the personal responsibility of the Manger
and Sub-Manager to see that till such time the cash is safe-in, One Officer always
remain in the branch. The branch hours of the officers art so fixed that at least one
officer remains in the branch till the cash is safe-in.
When the cashier goes to lunch, be safes-in the cash properly and does not leave
it in his drawers or in box. All the branches are given a limit permission for keeping
cash. No branch is allowed and are strictly prohibited to keep excess cash to its
prescribed limit.
58
rights and is
fully protected if he opens fire with a view to injure or even to kill the Dakotas at the
time of commission of robbery or when they are escaping with the loot. The Guard
care instructed by the Zonal Chief on the Manager of the Branch.
CASH-IN-TRANSIT
At the time of feeding cash to the branches or lift surplus cash from the branches
the cash is accompanied with a gun-man an Officer and a cashier. The boxes
containing with cash are locked. Whenever The cash is transferred from the van to the
branch or vice versa, the gun-man accompanying the cash and of the Guard Branch
are standing on Guard at some distance with loaded gun so that any attempt of
robbery may be failed.
Cash is not taken out from the cash trunks in the van but the locked cash trunks
are taken inside the branch, the necessary amount of cash is delivered. The branch
Manager thoroughly checks up the antecedents of the occupants of the adjacent shape;
boarding the walls of the branches in order to ensure that a burglary by breaking the
wall or digging a tunnel underneath is avoided.
PETTY CASH.
An advance for petty cash is given to the cashier on the first of each month by
debit to suspense Account. Advance for "Petty Cash" payments. form petty cash are
made on the authority of the Manager givens on the relative petty cash Memo.The
cashier maintains a petty cash statement/register. The supervisory Officer checks the
register regularly and initialed on it. The advance is kept separate from other money in
cashiers hand, At the end of the month
59
The petty cash Memos are attached with the relative expenditure account voucher. At
least once in a week the balance of the advance given for petty cash is verified by a
supervisory officer on different day.
Similar verification is carried out by the Manager or second officer at least once a
month on different days.
EXCESS/SHORT CASH
At the time of Balancing the cash by the Cashier if the Manager finds that the
cash is in excess. In such cases, the excess account is kept in Sundry Deposit sundry
Creditors Account by passing a credit voucher.
If any claim there after is received by branch it is paid to the claimant after
thorough scrutiny by reversing the entry of Sundry Deposit-Sundry creditor Account.
Similarly in case of short cash, a voucher debiting Suspense Account Sundry
Debtor is passed by the branch. The short cash is immediately report to Zonal and as
per instruction of Zonal Office/Head Office the entry of Suspense Account Sundry
Debtors is reversed.
CASH FINANCE
The smartest way of fulfilling your personal & family needs, while keeping your
savings intact. Now take advantage of a hassle-free personal loan at the most
competitive rate against your National Savings Certificates, Pak Rupee/Foreign
Currency Deposits & First Habib Cash Fund units. The AL Habib Cash Finance is
a secured personal loan which offers both Running Finance Facility (RF), which is
60
a Revolving line of Credit with quarterly mark-up servicing, and a Term Finance
Facility (TF), for a period of 1 Year to 5 years, to make your repayments easier
with equal monthly installments.
SALIENT FEATURES
No Processing Fee
No Pre-payment Penalty
ELIGIBILITY CRITERIA
Required Documentation
ALHABIB CASH FINANCE Application Form
Copy of CNIC
BBFS
Latest salary slip / Salary Certificate (For salaried person)
Bank Account Statement for last six Months (For Business Person)
Any other document of income proof, if available
Currently Liability declaration *As per the prescribed SBP format)
FINANCE AMOUNT
61
PRICING
Financing upto Rs. 5.0 Million Against Bank AL Habib PKR Deposits
Financing upto Rs. 5.0 Million (Against FCY Deposits and Permissible
Government Securities)
FAQs
Q. What kind of financing facility does the Bank provide under AL Habib
Cash Finance?
A. We offer both Term Finance (TF) & Running Finance (RF) Facility for
individuals for meeting their personal, family or household needs.
For
over 5 Million :
Finance: 1.25%
62
Q. What is the security that I will have to offer to avail AL Habib Cash
Finance?
A. Defence Saving Certificates, Special Savings Certificates & Regular Income
Certificate issued by the Government of Pakistan under the National Saving
Schemes and purchased through Banks, State Bank of Pakistan Offices and
National Saving Centers shall be acceptable as security.
63
Apni Car
Minimum Down Payment for Brand New Cars is 20% & 40% for Imported
Cars
Maximum Loan: Rs. 3,000,000/- for Brand New Cars and: Rs. 1,500,000/- for
Imported Cars
No Pre-payment penalty.
Our highly trained executives will take care of your financing requirements.
The only thing you need to worry about is choosing the car and its colour
64
SWOT Analysis:
a)-Strength:
Attributes of the organization that are helpful to achieving the objective.
Strengths of bank Al Habib are as follows:
ATMs at bank Al Habib are secured friendly and easy to access.
Youngers account of the bank Al Habib is good source of promotion for
bank Al Habib.
65
b)-Weaknesses:
Attributes of the organization those are harmful to achieving the objective.
Weaknesses of bank Al habib are as follows:
Bank Al Habib is not quick to give loans and cards.
Not Easy application is for applying for a credit card
No marketing for the promotion of their marketing.
They are not high risk taker In business activities but in business the term is
used high risk high profit, low risk low profit
Too much poor Self Marketing Department.
Low incentives like bonuses overtime pay etc.
66
c) Opportunities:
External conditions those are helpful to achieving the objective.
Opportunities that Bank Al Habib can avail are as follows:
There is a lot of cushion available for Bank Al Habib in terms of expanding
its network of branches up to 230 but all this depends on stability of the
Pakistan economic and political situation
The opportunities available for Bank Al Habib are financing to SMEs (Small
and Medium Enterprises) in Pakistan.
Bank Al Habib can also look for small account holders
Bank Al Habib has an opportunity to merge with some other bank to increase
the number of its branches in Pakistan.
Attractive salary packages should be awarded.
Marketing department should be started in order to promote the name of Bank
Al HAbib.
On the job training & coaching sessions can be conducted.
d)- Threats:
External conditions which could do damage to the business's performance
Threats that could affect Bank AL Habib in negative way are as follows:
Day by day competition is increasing not only of the expansion of the banks
but also due to the launching of the new bank in the market e.g. Barclays.
Circumstances of Pakistan are a great threat for the existence of the Bank Al
Habib.
More and more banks are launching there operations in Pakistan which is
increasing competition for the Bank AL Habib.
The conventional banks those having high growth rate and high market share
are always being a threat.
Large business parties have fewer attractions in being a client of BAL-IBD,
mainly because of excessive amount of documentation.
67
PEST analysis:
Political forces;
The events in the last couple of years; the bomb blast of May 28th 1998 and the
subsequent freezing of the FCAs, the declaration that Riba is Un-Islamic, and a
volatile political scenario that saw the overthrow of the Nawaz Sharif regime, all
contributed in highlighting the important role of government in the local economy.
The freezing of the FCAs destroyed the confidence of foreign depositors.
Also, the
declaration that Riba is against the Sharia, is likely to cause tremendous uncertainty in
the banking sector. After this Pakistans army totally holds on the government and
push back the economy. Stability under the new regime is also very important for the
economy as a whole. Continuous political changes have disrupted the policies and
objectives as each regime brings with it its own agenda. Organizations need time to
68
adjust to one regime and then work with it towards economic enhancement. Due the
wrong policies of the government the talibanization also develop in Pakistan and
become the international issue in Pakistan and badly affected the Pakistan repute in
the world and promote the uncertain conditions for the business in the Pakistan. Due
to this the investors are not interested in the Pakistan.
Economic factors;
The Pakistan economy is more controlled economy, then one where market forces
reign supreme. Several key institutions are stated owned. Thus a discussion of the
economic forces that influence the private organization such as bank Al Habib cannot
ignore the substantial role played by the government in determining the state of the
economy. The biggest indicator of the heavy role enjoyed by the government was
evidence when foreign currency accounts (FCAs) were frozen on the orders of the
ministry of finance in the wake of explosion tests on may 31st 1998.
This and the recent efforts by the state bank to artificially lower the interest rates by
revising the repo rates downwards and encouraging lower bids for T-Bill, highlights
the overwhelming role of the government in the economy. Badla rates are a true
indication of market rates at which financial intuitions are willing to lend but the
government, under the dictates of the IMF wants to artificially lower the interest rates
so as to provide investment liquidity within the economy.
General Musharaf period of government putt back the economy of the Pakistan due
to the wrong policies of the government for the economic growth in the Pakistan.
Pakistan economy destroyed badly in that 10 to 11 years of the government, and
investors hesitated to invest in the Pakistan, and also the load shading is another factor
that effect the Pakistan economy badly.
This not the end of the story after this Pakistan economy face lot of problems like
bomb attacks in Pakistan no electricity and the unstable government, due to this the
investor are not invest in the Pakistan and the existing business men finish their
business unit due to the loss.
Social forces:
A low saving culture has offset the huge population advantage this is enjoyed by
Pakistan. Also culture is dedicated by the religion, and in Pakistan a significant
69
segment of the population is loath to accept interest for their deposits due to the
negative religious implications of such an act.
About 70% of Pakistans population is based on rural areas, thus making it harder for
banks to mobilize their deposits within these regions.
Habib group also started a school system in Karachi for the cherty purpose.
They give the funds to the poor person on the daily basis
Technological forces:
Banks in the developed world have been turning to heavy IT investments, which
differentiate their products, provide response times, enhance accessibility and improve
customer satisfaction. Though investing in state-of-the-art host banking solution
(Fiserv, Kapiti, etc) , ATM and POS ( point of sale) networks, visa, MasterCard, and
Amex switches, smart cards, telebanking and now internet banking are common IT
investment in the developed world, it is now that these products and services are
gaining faster acceptance in Pakistan.
Bank Al Habib change their technology in IT sector due to the requirements of the
current time, before this they have the poor technology of the IT and un less skilled
person in that field but at this time they replace it with the heavy installation of the IT
instruments. They hired new skill employed and trained them for the efficient and
effective work.
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Modarbas are almost in the same line of business and can be treated to the bank. Other
substitutes that compete include the national saving certificates, the stock market, its
supporting industry and brokerage houses.
IV. Bargaining power of suppliers;
The main suppliers in the banking sectors are depositors. Although the bank is given
higher return then any other bank (12% per annum) to attract the depositors but the low
innovation in the product and also low investment in the marketing sector of the bank
may provide difficulties in coming years.
The regulatory bodies could also be the suppliers as they provide guidelines to the bank
from time to time. These include the State Bank of Pakistan (SBP), The Corporate Law
Authority (CLA), The Ministry of Finance and the religious board.
V. Bargaining power of customers;
The main customers are small traders and exporters based in Karachi and Lahore,
majority of whom deal in textile related commodities. Since the bank is targeting the
short-term trade finance market, the bargaining power of customer is substantial as
other banks within the same sector like Habib bank, Bank Al Falah and Metropolitan
are fast catching up with the Bank Al Habib in providing services to the traders.
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