Bank of Khyber

Assignment of System Development and Design

Topic

Flow of Information between Organizational Departments

Bank of Khyber

Submitted to

Sir Saeed Shehzad

Submitted by

Ayesha Hashmi

Roll no 4

BBA (hons)

VII – (M)

Institute of Management Studies

University of Peshawar
 Bank of Khyber

Introduction of Bank of Khyber

The Bank of Khyber was established through the Bank of Khyber Act
passed by the Provincial Assembly in June 1991. It is the only Bank in
Pakistan having its head office at Peshawar. Up to 1994 the Bank was
operating at provincial level as unscheduled bank under the auspices
of the provincial government. But in 1994 it got the status of the
scheduled bank and came under the regulatory framework of SBP,
currently operating at the national level. Due to this status the BoK is
also engaged in foreign trade business directly.

ORGANIZATIONAL STRUCTURE OF BoK

Organizational structure is defined as “the set of elements that can be
used to configure an organization1.” As technology, environment, size,
lifecycle and strategy can all influence an organizational design, it should
come as no surprise that organizations adopt many different kinds of design2.
Most design, however, fall into one of the four basic categories. Others are
hybrids based on two or more of the basic forms3.

The organization structure of BoK is based on functional (U-Form)

design. The Functional Design is an arrangement based on functional
approach to departmentalization4. Functional approach to
departmentalization means grouping together those jobs, which involves
similar activities5. This design has been termed the U-Form (for unitary) by
the noted economist Oliver E. Williamson6. Under the U-Form arrangement,
the members and units in the organization are grouped into functional
departments such as production and marketing etc7.

1
Ricky W. Griffin, Management, Ed 5th, USA: Houghton Mifflin Company, 1997, p. 292.
2
Stephen P. Robbins and Mary Coulter, Management, Ed. 5th, USA: Prentice Hall Inc, 1998, p. 329.
3
Ricky W. Griffin, Management, Ed 5th, USA: Houghton Mifflin Company, 1997, p. 333.
4
Ricky W. Griffin, Management, Ed 5th, USA: Houghton Mifflin Company, 1997, p333.
5
Ibid, p. 298.
6
Oliver E. Williamson, Markets and Hierarchies, New York: Free Press, 1975, p. 31.
7
Ricky W. Griffin, Management, Ed 5th, USA: Houghton Mifflin Company, 1997, p. 333.
 Bank of Khyber
ORGANIZATION HIERARCHY
At each position the duties, goals, functions, responsibility and authority are
clearly explained.

The channels that delegate these activities are called organization

hierarchy. This must be set in such a manner to best accomplish the
organizational goals.

The Bank of Khyber ultimate governing body is the board of directors

while the day-to-day affairs of the bank are managed by a Managing Director
appointed by the board of directors for a term of three years on contract with
the consent of the Government of N.W.F.P. Under the supervision of MD there
are executive vice presidents (EVPs) the senior most officials in the bank’s
hierarchy each heading a bank unit. Next to EVP there are senior vice
presidents ( SVPs) and vice presidents (VPs) heading their respective
divisions and departments.

At the branch network of BoK there are branch managers and assistant
branch managers.

The nomenclature of various posts in the bank is as under:

1. Executive Vice President

2. Senior Vice President
3. Vice President
4. Assistant Vice President
5. Officer Grade-I
6. Officer Grade-II
7. Officer grade-III
8. Junior officer
9. Driver
 Bank of Khyber

DEPARTMENTALIZATION OF BoK
Departmentalization is the process of grouping jobs according to some
logical arrangement.8 The manner in which activities should be divided and
formed into specialized group usually referred to as departmentalization.9
BoK has used the most common base for departmentalization i.e. the
functional approach to departmentalization.10 Functional departmentalization
means where grouping of jobs takes place according the same, or similar
activities.11 The word function is used here to mean organizational functions
such as finance and production, rather than the basic managerial functions
such as planning or controlling.12

The head office of BoK is divided into the following departments”

1. Credit Division
2. Finance Division
3. Islamic Banking Division
4. Internal Audit Division
5. Information Technology Division
6. Human Resource Division
7. Treasury and Investment Division
8. Banking operations Division
9. Marketing Division
10. RRMC & RD Division

2.13.1 Credit Department13

Credit division of BoK continuously tailored its policy frameworks in

accordance with the tough competition faced in the wake of reducing
mark up rates scenario and increase liquidity in the market.
8
Ricky W. Griffin, Management, Ed 5th, and USA: Houghton Mifflin Company, 1997, p298.
9
John Douglas and Joseph L. Massie, Managing, Ed. 2nd, New Jersey: Prentice Hall, 1973, p143
10
Personal Communication, interviewee, Zahid Sahibzada (OG-I) at Head office.
11
Ricky W. Griffin, Management, Ed 5th, USA: Houghton Mifflin Company, 1997, p298.
12
ibid.
13
Annual Report 2004 of BoK p 15
 Bank of Khyber
Introduction of new schemes like house, consumer, car and micro
financing will definitely improve and enhance the credit portfolio. BoK
is strengthening its grip on the target market for these schemes. The
credit monitoring cell, credit department, consumer finance
department and micro finance department comes under the umbrella
of credit division.

2.13.2 Finance Division14

The finance division is responsible for fiscal managing, financial

control, financial reporting and accounting function of the bank. This
division ensures that the accounting record and systems are
maintained in accordance with the internal policies, regulatory
requirements and international accounting standards. It establishes
policies and procedures relating to the finance functions, monitors
returns on earning assets and report on various performance indicators
including assets/liabilities mismatch. The division directs control of the
budgeting process in accordance with the annual plans, policies,
management’s directives and strategies. Internal auditors, tax
authorities and SBP inspectors are the advisories of this department.
2.13.3 Islamic Banking Division (IBD)

The division is working according to the guideline of Shariah

supervisory board.

The objective of the IBD is to implement the decision of the board of

directors to gradually convert the whole bank into an Islamic bank with
in three years under the supervision of the Shariah supervisory board
as per rules and regulations of the SBP. IBD plans to convert twelve
more bank branches in 2005 and the remaining in 2006.
2.13.4 Internal Audit Division (IAD)

The internal audit division works independent of the management and

reports to audit committee of the board of directors (BOD). The audit
committee comprises of three non-executive directors and the head of
IAD has freely access to the chairman of the committee. The IAD
consist of two departments namely audit & inspection and compliance
& implementation.

IAD provide regular training to its personnel in various field of banking

to enhance their skills and proficiency. It provides guidance and creates
14
Ibid. p 16
 Bank of Khyber
awareness among the employees of the Bank regarding bank’s
policies, procedures and regulations and compliance thereof.
2.13.5 Information Technology Division (ITD)15

Information technology department progressed in the last eight years

and trying its best to stay abreast in the field of fast developing
technology. In order to achieve its goals, the management has decided
to start on-line banking in the very near future, this will facilitate the
customers of the BoK and they will be able to transfer money between
any two BoK branches and throughout the country.
2.13.6 Human Resource Division (HRD)16

HRD plays a vital role in carving the present and future image of an
organization by managing the employees in most beneficial and
effective manner. The functional arena of HRD consists of recruitment,
training, performance appraisals, planning and career development
and above all grooming of staff to adhere to office ethics and social
norms. HRD provides on the job as well as off the job training to the
staff in diverse areas of banking and management. The training relies
on both internally arranged courses as well as external courses at
institute of repute in the country.
2.13.7 Treasury and Investment Division17

BoK is now gearing towards revamping its treasury, would soon

assume a more pro-active role in serving BoK customers, especially
the corporate clients. Upgrading the human resource skills is
enhancing its capacity and the I.T system .In future BoK will be able
to manage corporate customer funds and quote money market
related rates for short-term corporate size loans.
2.13.8 Banking Operations Division18

The Banking operations Division is mainly responsible to manage the

operations i.e. work processing functions in the bank. The banking
operations division controls branch operations and international

15
Ibid. p. 19
16
Ibid. p. 21
17
Ibid. p. 22
18
ibid p22.
 Bank of Khyber
banking department. This division propose operational polices,
procedures and ensure strict compliance of the same through liaison
with internal audit division.
2.13.9 Marketing19

The marketing division of the bank is responsible for the formulation

and implementation of Marketing Strategy of the Banks products both
on assets and liabilities keeping in mind the business environment of
the province. Accordingly the division works to popularize the Banks
deposit schemes and loan products among the people with a view to
improve business and over all image of the Bank.
2.13.10 RRMC & RD20

The main responsibilities of the division include the recovery of all

irregular as well as bad debts of the bank. As a part of re-engineering
of the division, a full-fledged collection unit was established whose
major assignment is to follow-up the delayed accounts from the very
1st day of default in order to mitigate the risk of further infection.

In order to bring effectiveness and cost control RRMC&RD coordinators

closely with credit, IT and MIS division.

19
Ibid p17

20
ibid p18.
Bank of Khyber