Final Project of Banking and Financial Markets

Group Members

Rabiya Masood
Qadir Bukhsh
Naveed Khokhar
Bisma Rehman
Mashood Amjad

Instructor:

Sir Kashif Arif

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Topic:

Banking

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 Table of Contents
1. Executive summary...............................................................4
2. Introduction:.........................................................................5
3. Overview of the banking sectors:........................................8
4. Main Banks:........................................................................10
5. Financial products and services:.......................................14
6. Processes:.............................................................................22
7. Conclusion:..........................................................................30
8. References............................................................................32

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 1. Executive summary
Our group is pleased to be given the opportunity to present the report about
banking in Pakistan. We will introduce banking that what actually banking is and
will tell why it is important. Then we will tell you about the overviews of banking
sectors. We will tell you about the top banks of Pakistan and we will explain the
products and services and the process of their banking system and payments
process of the banks. In last we will conclude our final report.

2. Introduction:
Banking is defined as the business activity of accepting and safeguarding money
owned by other individuals and entities, and then lending out this money in order to
conduct economic activities such as making profit or simply covering operating
expenses. 

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A bank is a financial institution licensed to receive deposits and make loans. Two
of the most common types of banks are commercial/retail and investment banks. 
Depending on type, a bank may also provide various financial services ranging
from providing safe deposit boxes and currency exchange to retirement and wealth
management.
In the United States of America banks are regulated by the U.S. Federal Reserve
Bank which is one of the world's major central banks.  Above all, central banks are
responsible for currency stability.  They control inflation, dictate monetary policies,
and oversee money demand and supply in the market.  Commercial or retail
banks offer various services including, but not limited to, managing money
deposits and withdrawals, providing basic checking and saving accounts,
certificates of deposit, issuing debit and credit cards to qualified customers,
supplying short-and long-term loans such as car loans, home mortgages or equity
line of credits.  Investment banks gear their services toward corporate clients.  They
provide services such as merger and acquisition activity and underwriting among
other investment services.
 

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In 2017, the Federal Deposit Insurance Corporation (FDIC) conducted a U.S
national survey (Links to an external site.) To estimate the number of unbanked
and under banked American households.  Survey executive summary revealed that
approximately 8.4 million U.S. household or 20.5 million individuals were
unbanked, which means no one in that household had a saving or a checking
account.
Survey also indicated that approximately 24.2 million U.S. households or 64.3
million individuals were under banked, which means the household had an account
at an insured institution but also obtained financial products or services outside of
the banking system. 
 
But why is this important?
Because those who are unbanked or under banked are hindering their financial
lives from enjoying services that lead to financial well-being. Many must resort to
services outside the banking system to cash checks or borrow loans and incur
higher transaction fees and interest unnecessarily.   Here are some of the reasons
why banking tops the list of pillars required in financial literacy.
Safeguard your cash.
Manage your finances – record keeping and budgeting.
Receive your paycheck quickly using direct deposit.
Facilitate financial transactions.

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Insure your liquid assets.
Use debit and credit card services.
Earn interest.
Borrow loans.
Invest your money.
Establish a credit history to generate a FICO credit score instrumental in borrowing
funds and building wealth.

3. Overview of the banking sectors:

Banks play a key role in the entire financial system by mobilizing deposits from
households spread across the nation and making these funds available for
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investment, either by lending or buying securities. Today the banking industry has
become an integral part of any nation’s economic progress and is critical for the
financial wellbeing of individuals, businesses, nations, and the entire globe. In this
article, we will provide an overview of key industry concepts, main sectors, and
key aspects of the banking industry’s business model and trends.
A bank is a financial institution that provides banking and other financial services
to their customers. Banks are a subset of the financial services industry and play an
important role in the global economies. They are a key player in stimulating
economic growth. Banking is an important undertaking. The movement of capital
handled by banks allows economies to grow and prosper. Businesses and
governments need money to operate, and banks act as intermediaries between the
suppliers of funds and users of funds.
The Law of Banking:
Banking law is based on a contractual agreement between the bank and customer.
The customer is any entity for which the bank agrees to conduct an account or
business. Given below are the generally accepted rights and obligations:
• The bank account balance is the financial position between the bank and the
customer: when the account is in credit, the bank owes the balance to the customer;
when the account is overdrawn, the customer owes the balance to the bank.
• The bank agrees to pay the customer's cheques up to the amount standing to the
credit of the customer's account, plus any agreed overdraft limit.
• The bank may not pay from the customer's account without a mandate from the
customer, example cheques drawn by the customer.
• The bank agrees to promptly collect the cheques deposited to the customer's
account as the customer's agent, and to credit the proceeds to the customer's
account.
• The bank has a right to combine the customer's accounts, since each account is
just an aspect of the same credit relationship.
• The bank has a lien on cheques deposited to the customer's account, to the extent
that the customer is indebted to the bank.
• The bank must not disclose details of transactions through the customer's account
—unless the customer consents, there is a public duty to disclose, the bank's
interests require it, or the law demands it.
• The bank must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.

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These implied contractual terms may be modified by express agreement between
the customer and the bank. The statutes and regulations in force within a particular
jurisdiction may also modify the above terms and/or create new rights, obligations
or limitations relevant to the bank-customer relationship.

Types of Banks: Commercial & Investment Banking:

The banking industry can be divided into two categories ‘commercial-banking’ and
‘investment-banking’. Commercial banks play a key role in the entire financial
system by mobilizing deposits from households spread across the nation and
making these funds available for investment, either by lending or buying securities.
Investment Banks, on the other hand, raise
capital (cash/money) for companies, which
companies need in order to grow and
expand their businesses. Investment banks
sell securities to public investors in the form
of stocks or bonds.
Distinctive types of banks are evolving to
cater to various business demands, social
needs, and global complexities. These
different banking institutions conduct their
operations in a different manner. However,
on the basis of their functions, clientele
served and products or services offered, we can classify banks as follows:
  Retail Banks.
 Commercial banks.
 Investment Banks.
 Cooperative banks.
 Central banks.
 Specialized banks.

4. Main Banks:
Overview:

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Pakistan Banking Sector comprises of Commercial Banks, Foreign Banks, Islamic
Banks, Development Financial Institutions and Microfinance Banks. The Industry
constitutes around 31 banks of which five are public sector banks, 22 are private
banks and 4 are foreign banks.
As of 2017 total assets in the Banking Sector stood at $ 159.50 billion. State Bank
of Pakistan (SBP) is the Central Bank of Pakistan and it is responsible for
regulating the monetary and credit system of the country and is instrumental in
securing monetary stability and judicious utilization of the country’s productive
resources. It functions through its three fully owned subsidiaries namely:

Structure of Banks in Pakistan:

Banks in Pakistan are categorized as below:

SBP-Banking Services Corporation – It supports the regulator in performing
functions related to currency management, credit management, interbank
settlement system, public debt management, foreign exchange, and export
refinancing, etc.
National Institute of Banking and Finance – It is the training arm of the regulator
(SBP) which is responsible for imparting training and capability building of
employees of SBP and conducting various courses for Financial Institutions to keep
abreast with the latest in the Banking Domain.

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Deposit Protection Corporation – It is responsible for ensuring protection to the
depositors of member’s financial Institutions which are regulated by SBP. It
defines the quantum of deposits to be paid in the unlikely event of failure of any
member financial Institute which is regulated by SBP.
List of Top 6 Banks in Pakistan:
Habib Bank Limited (HBL)
National Bank of Pakistan
Meezan Bank
Bank Alfalah
MCB Bank
United Bank Limited
Let’s see each one of them in detail:

#1. Habib Bank Limited (HBL):

Founded in 1941, Habib Bank Limited is the largest bank by asset in Pakistan. It
operates through its wide network of 1751 branches and 2007 ATMs and provides
services in the areas of Branch Banking, Corporate Banking, Retail Financing,
SME and Investment Banking services. It is headquartered in the capital of
Pakistan i.e. Karachi. The bank has branches in various countries including Europe,
Australia, Middle East, America, Asia, and Africa. The shares of the bank are listed
on the Karachi Stock Exchange.

#2. National Bank of Pakistan:

Founded in 1949 and is the largest state-owned bank operating in
Pakistan. It has an extensive branch network of over 1313 branches in
Pakistan and a global presence in 11 countries and representative offices
in China and Canada. The Bank acts as a trustee of public funds and
agents to the SBP. It is headquartered in Karachi. It provides both
commercial banking and public sector banking services and is a leading
player in the debt-equity market, investment banking, agriculture
financing, retail financing, and treasury services. The bank is majorly

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owned by the State Bank of Pakistan which is holding 75.20 percent
voting rights as per the shareholding pattern as at Dec 2017 and
#3. Meezan Bank:
Meezan Bank is Pakistan’s first and largest Islamic Bank which commenced its
operations in 2002 after being issued the first-ever Islamic Commercial Banking
license by the State Bank of Pakistan. It operates under the principle of Islamic
Shariah and is recognized for its product development capability, Islamic Banking
research, and advisory services. It provides a wide range of Islamic banking
products and services through its wide network of the retail branch network of
more than 600 branches across Pakistan. The Bank has been conferred with major
recognition from various local and international institutions as the Best Islamic
Banks in Pakistan. As of Dec 2017, the Bank has a healthy Capital Adequacy
ratio of 12.89 percent. It is headquartered in Meezan House, Karachi, Pakistan.
#4. Bank Alfalah:
Bank Alfalah is the fifth largest private Bank of Pakistan and commenced banking
operation from 1st November 1997. It operates with more than 600 branches across
Pakistan and has an international presence in Afghanistan, Bangladesh, Bahrain,
and a representative office in UAE. The Bank is owned and operated by the Abu
Dhabi Group and it provides financial solutions to retail consumers, corporations,
institutions, and government through its wide array of products and services.
Strengthened with the banking of the Abu Dhabi group and driven by the strategic
goals set out by its board of management, the bank has invested in revolutionary
technology to offer an extensive range of products and services. The Bank is
headquartered in Karachi, Pakistan.
#5. MCB Bank:
MCB Bank Limited is one of the oldest and top banks in Pakistan. Founded in
1947 and was nationalized in 1974 as part of the Government of Pakistan’s
economic reform movement and was later privatized in 1991. The Bank has been
conferred with the prestigious Euro money Award for Best Investment Banks in
Pakistan for two years in a row (2016 and 2017). It provides commercial banking
and related products and services in Pakistan, South Asia, Middle East, and
Eurasia. The Bank is headquartered in Lahore, Pakistan.  The Bank has a customer
base of approximately 4 million and total assets of around Rs.300 billion and
operated through a wide branch network of more than 1100 branches.

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#6. United Bank Limited:
Founded in 1959, United Bank is one of the oldest and largest commercial banks in
the private sector in Pakistan. It operates through a wide network of more than
1390 branches across Pakistan and has an overseas presence in more than 19
countries. The Bank is engaged in commercial banking and related services and is
headquartered in Karachi, Pakistan. The Bank boasts of a strong financial profile
and consistent profitability record and specializes in Retail Banking, Corporate
Banking, Investment Banking, Treasury Services, etc. The Bank’s shares are listed
on all three stock exchanges of Pakistan and its Global depository receipts
(GDR) are listed on London Stock Exchange. The Bank employs more than 10000
people and is committed to providing the best banking experience to its clients.

5. Financial products and services:

#1. Habib Bank Limited (HBL):

By leveraging on our strong local and international franchise, HBL offers a range
of products & services to facilitate the demands of our FI/NBFI partners.
TRADE FINANCE
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  Opening, advising, confirmation and negotiation of letters of credit.
 Discounting of LCs including providing bankers acceptances.
 Trade loan syndications.
 Risk participations.
 Pre/post export financing.
 Issuance of financial guarantees/SBLCs.
 Documentary collections.
CASH MANAGEMENT
 Specialized Deposit Slips – conventional collection model.
 Internet Banking – electronic collection (non-individual/business customers).
 Cash In Transit – CIT
 Direct Debit Collection – SIDA (Standing Instructions for Debit Authority).
 Utility Bills Payments – UBP
 HBL At Work (HAW) – payroll solution.
 Vostro account services.
 Commercial Payments - SSI
NON-BANKING FINANCIAL INSTITUTIONS
 One-window solution to NBFIs covering the bank’s entire suite of banking
solutions mainly:
 Long-term and Short-term lending facilities
 Customized deposit products for placement of liquidity under conventional
& Islamic modes
 Tailored digital solutions for transaction & employee banking
 Consumer Banking products under conventional & Islamic modes
 Structured derivatives for hedging of market risk
GLOBAL REMITTANCE BUSINESS
 Remittance is a quick and easy way of transferring money to Pakistan by
Pakistani’s living abroad. HBL Remittance provides remitters multiple ways
to send money to their loved ones through HBL’s secure and diverse
channels.
TRADE AND CASH PRODUCTS OFFERED BY HBL GLOBALLY

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  Habib Bank Limited (HBL) is pleased to be given the opportunity to present
its trade and cash clearing capabilities in Pakistan and overseas network.
 With an extensive network in more than 15 countries, it is well positioned in
the emerging trade and investment corridors across Asia, Africa and the
Middle-East, HBL combines global capabilities with deep local knowledge
to develop innovative products and services to meet the diverse and ever-
changing needs of our customers.
 Over the years, HBL has successfully built its business through a strong
emphasis on client and market needs, a thorough understanding of the
regulatory issues, and an expertise in developing operational and
technological solutions. These factors have established HBL’s reputation as
a market leader in Pakistan.
#2. National Bank of Pakistan:
Company overview National Bank of Pakistan (NBP) is the second-largest
commercial bank in Pakistan, with market shares of 13% in terms of total deposits
and 12% in terms of total loans as of 30 September 2017. As of 31 December 2017,
it reported total consolidated assets of PKR2.4 trillion ($21.4 billion).
NBP provides commercial banking services, including modaraba management,
broking, leasing, foreign currency remittances, exchange transactions, asset
management and investment advisory facilities. Furthermore, the bank acts as an
agent for SBP, for the administration of administering treasury transactions on
behalf of the Government of Pakistan. It also offers Islamic banking facilities and
trustee services.
Corporate Finance: This segment provides underwriting, privatization, merger
and acquisition, securitization, research, debt (government and high-yield), equity,
syndication and secondary private placement services, as well as initial public
offering (IPO) facilities. In 2017, it accounted for 1.3% of the bank’s total income.
Trading and Sales: This segment offers fixed-income, equity, foreign exchange,
credit, commodity, funding, lending and repo, and broking services. As of 31
December 2017, it reported total consolidated assets of PKR685.7 billion ($6.2
billion), and accounted for 12.6% of the bank’s total income in 2017.
Retail Banking: This segment provides retail and private loans, deposit facilities,
banking, trust and estate investment advisory, merchant/commercial and private
label, and retail services. As of 31 December 2017, it reported total consolidated

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assets of PKR184.9 billion ($1.7 billion), and accounted for 3.8% of the bank’s
total income in 2017.
Commercial Banking: This segment offers project, export and trade finance, as
well as real estate, factoring, lending, guarantee, bill of exchange and deposit
services. As of 31 December 2017, it reported total consolidated assets of PKR1.5
trillion ($13.5 billion), and accounted for 68.7% of the bank’s total income in 2017.
Payment and Settlement: This segment provides payment and collection, clearing
and settlement, and fund-transfer services. It accounted for 0.9% of the bank’s total
income in 2017.
Agency Services: This segment offers escrow, securities-lending, depository
receipt, corporate action, issuer and paying agent services. It accounted for 10.6%
of the bank’s total income in 2017.
Assets Management: This segment provides asset management, modaraba
management and investment advisory services. As of 31 December 2017, it
reported total consolidated assets of PKR2.2 billion ($19.4 million), and accounted
for 1.9% of the bank’s total income in 2017.
Retail Brokerage: This segment includes stock-broking, investment-advisory and
fund-placement services. As of 31 December 2017, it reported total consolidated
assets of PKR1.2 billion ($11.0 million), and accounted for 0.2% of the bank’s total
income in 2017.
#3. Meezan Bank:
Islamic Banking Product Development
Islamic Finance, though working in the space provided by the Islamic principles, is
very open to creativity and innovation. Financial Engineering to develop Shariah-
compliant alternatives to conventional financial products is an important task
undertaken by the Shariah Advisory function. Research and development of new
Islamic financial instruments is also a vital and ongoing activity of the function.
Product Development requirements and requests received from our client
organizations are also provided with assistance and technical support.
2. Islamic Capital Market Services
Shariah Advisory Services (SAS) provides following services within Islamic
Capital markets details for which are mentioned below:
3. Shariah Compliant Corporate Restructuring
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Interest is a common pain in the economy domestically and internationally. Interest
based financial system necessitates the use of riskier instruments which being
highly speculative can disrupt an economy in downturns. Islamic financial
principles propose Shariah-compliant yet highly robust alternatives for the financial
needs of the economy. Meezan Bank has had the unique experience of converting
conventional banks into an Islamic Bank. The Bank also provides Shariah
Technical and Support Services to corporate clients to convert all operations of the
clients into making them Shariah-compliant.
4. Preparation of Shariah Governance and Regulatory Frameworks
Meezan Bank offers a great support to any institution interested in the formation of
a reputable Shariah Supervisory Board. This support includes the development of
Shariah Governance Framework including the reference of world renowned
Shariah Scholars, assistance in finalizing the Terms of Reference (TOR) of the
Shariah Advisor / Shariah Supervisory Board and assistance in holding the Shariah
Supervisory Board Meetings.
5. Business Plan
MBL, being the premier Islamic Bank of Pakistan, provides state-of-the-art
business plans to Islamic financial institutions including competitive landscape
analysis, feasibility studies, financial projections, research, product line extensions,
channel and marketing strategy.
6. Islamic Insurance (Takaful)
Meezan Bank provides Shariah-compliant services to insurance companies for
introducing Takaful windows. MBL provides assistance in the areas of Shariah
supervisory framework, product development and refinement, capacity building,
investment guidelines, Shariah audit, Shariah compliance and internal controls.
#4. Bank Alfalah:
Bank Alfalah Home Finance:
Whether you want to buy your own home, build your own home, carry out
improvements on a current property or purchase a plot and build your home, a
home loan from Alfalah has the perfect loan for you and will help you to get on the
property ladder. The loan can be paid back over a period of 3 - 20 years and there is
an annual balloon payment facility that allows borrowers to pay the loan off
quicker.

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Bank Alfalah also offering a unique product called Home BTF which is a balance
transfer facility that allows you to pay off your home finance secured through other
banks on a better rate of interest hence offers saving and hassle-free experience.
For detail guidance on Alfalah Home Financing, visit Mawazna Home Finance
Comparison service.
Bank Alfalah Credit Cards:
Bank Alfalah has a number of credit cards available that are designed to offer a
number of privileges and freedom.
The Alfalah Visa Platinum Credit Card is a card that offers travel rewards that
enabling Card Holders to earn points that can be redeemed for airline tickets,
airline ticket upgrades as well as hotel bookings. There are also discounts available
for shopping spends and dining. The Card Holders will also benefit from the
Airport lounge access.
Alfalah Visa Gold Credit Card is a card that can be used around the world and
offers users enormous discounts at restaurants, shops and for airline travel. The
credit card can be used to earn rewards known as orbits and the points can then be
redeemed for airline tickets, upgrades, and hotel bookings. The card offers a
balance transfer facility as well as a cash advance feature.
Alfalah Visa Classic Credit Card offers a wide range of benefits including
discounts at shops and restaurants. Again, the card can be used to earn points
towards air travel while it has a balance transfer and cash advance facility.
The Alfalah Ultra Cashback card is a card that comes with no fee for the first year,
with users being able to earn cashback on over 100 shops and restaurants. It is
accepted globally, there is a cash withdrawal facility as well as a balance transfer
facility.
The Alfalah Titanium Credit Card offers a number of benefits and advantages that
provide exclusive discounts and the chance to earn points towards air travel. It
comes with a cash advance and balance transfer facilities.
The Alfalah Visa Corporate Card is designed for businesses, offering easy
management and complimentary airport lounge access. Users can earn reward
points for all spends and bonus reward points for the company, while each account
is given a dedicated relationship manager.
Bank Alfalah Personal Loan:
Bank Alfalah offers personal loans that are ideal for those times in your life when
you need to make a large purchase and you are running out of finances. The

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process time is quick and there are a number of payment options available. The
loan can be paid over as long as five years and Alfalah account holders will earn
points for taking out a personal loan. Since Alfalah Personal Loan is an unsecured
loan, therefore, there is no collateral requirement. You can avail Alfalah Personal
loan for up to PKR 2m.
Bank Alfalah Auto Loan:
The Alfalah Auto Loan is designed to make it possible for borrowers to purchase a
used, new or imported vehicle. The rates are competitive and the cost can be spread
over as much as seven years. Borrowers can choose from fixed and variable rates
giving them control over how much they spend per month. Bank Alfalah also
offers various facilities to its Auto Loan customers through offering balloon
payment facility and vehicle replacement options in cases when want to buy a new
car and would like to make adjustments through an old car without any penalty.
Deposit Accounts:
Alfalah offers a wide range of deposit accounts aimed at a wide range of target
customers.
Alfalah PKR Current Account – Users are given an account that offers them
instant access to their account and funds that is non-interest bearing.
Alfalah Basic Banking Account – This account requires a small initial deposit and
no monthly balance. Users can make 2 deposits and withdrawals per month.
Alfalah Asaan Account – Current - This simple bank account requires a small
deposit of PKR 100.00 to open it and it comes with no service charges. There is a
limit on deposits and withdrawals and no minimum balance required.
FCY Current Account – This account is ideal for those who carry out transactions
in Pakistan and internationally through other currencies such as USD, GBP etc.
The account can be opened in a range of currencies and there is no restriction on
the number of monthly withdrawals or deposits.
Alfalah Savings Account – A simple savings account that pays interest on savings
and allows user access to their savings while being able to make as many deposits
as they wish. There is no requirement for a monthly balance.
Alfalah Kifayat Monthly Savings Account – This is for individuals and couples
and offers increased profits on higher balances. Access to savings is simple and
users can make online transactions.
Alfalah Care – An account for seniors that offers a good rate on savings. All
profits are paid monthly and it requires just a small deposit to open the account.

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There is also no limit on withdrawals and deposits.
Alfalah SnaPack Account – This is the perfect account for children aged between
6 and 17. They can earn a profit on their savings when they open a joint account
with parents.
Alfalah Royal Profit – This is aimed at those businesses that have high transaction
numbers while it does require a minimum balance with higher profits paid on
higher savings. There is no limit on monthly deposits or withdrawals.
Alfalah Asaan Account- Savings – A savings account that aims to offer a simple
way to save and access your money. Profits are paid every six months and there is
no minimum balance required. There is a limit on deposits and withdrawals.
Alfalah Term Deposit – For those who want to make their savings work hard, this
is the perfect account. Savers can put their money away for up to five years where
profits can be paid via a number of options.
Alfalah Kamyab Karobar – This business account offers free transactions,
cheque-books, and banker’s cheques. Cash withdrawals are free and an internet
banking facility offers a greater level of control.
Alfalah Mahana Amdan – Savers can earn significant profits on fixed term
savings. A minimum deposit is required with profit being paid every month.
Alfalah Foreign Currency Fixed Account – This is an attractive account for those
who use foreign currency. It can be opened in several currencies with amounts
being fixed in place for a number of periods.
#5. MCB Bank:
Project & Structured Finance:
Involves financing complex projects, usually in an SPV structure, where the loan is
tightly structured around the cash flows, risks are allocated amongst various
stakeholders, and there is limited or no recourse to the sponsors.

Syndicated Loans and Debt Capital Markets:

Involves structuring/advisory arrangement, underwriting and placement services
for significant financing requirements by large and medium sized corporate and
institutional clients. Our wide array of activities also includes financial
restructuring of corporate, issuance of commercial paper, placement of syndicated
loans and bonds.
Quasi Equity / Hybrid Instruments:

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Structuring and placement of a category of debt that has some characteristics of
equity such as being unsecured or subordinated or with a potential equity upside.
Equity Capital Raising:
Services include due diligence and valuation, private placements, underwriting and
management of public offers.
Advisory Services:
Varied services such as financial advisory, commercial structuring support and
M&A advisory.
Facility Administration:
Management of creditor interests in syndicated transactions in capacities such as
facility agent, security trustee, project monitoring bank, book-runner etc.
Commercial Banking:
Complementary products and services such as revolving lines of credit, trade
services and cash management that may be bundled with our Investment Banking
Products.

6. Processes:
Account Opening Process:
Following are the guidelines for women for opening an account:
*While required documentation may vary from account to account, the basic
documents required at the time of account opening may include but are not limited
to the following:
1. Proof of Identity- :

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Valid ID
 CNIC/SNIC/NADRA Receipt (Pakistan national only)
 Form B/CRC/Birth Certificate (For minors)
 ARC/POC/Passport (Foreign nationals)
2. Nadra verification:
 Biometric Verification
 Nadra Verisys Report where biometrics where biometric cannot be captured
(Exception POC)
 Not Applicable (Passport/B Form/ARC/CRC)
3. Proof of Address
 Biometric Verification
 Utility Bill
 Office Address
4. Source of Funds-Proof of income Account Opening Process :
 Salaried individuals:
 Employer certificate/Service Card/Staff Card/Salary Certificate/3-month Pay
slip/ Pensioner book or card
 Non-Salaried individuals
 Declaration form
 Housewife/ Minor/Student:
 Details of the funds provider/Guardian/ Financial Supporter and their source of
income
5. Additional Documents-Special Accounts:
 Photo/ Illiterate / Shaky Signature
 4 personal Photographs
 Indemnity Form
 Vernacular Form

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 Minor Customer
:  Student ID card
 Court order regarding appointment of guardian (in case guardian blood relation
is not determined).
 Housewife
 Housewife declaration
 Visually impaired
 Undertaking for visually impaired / Blind Person
Payment Process:

 Glossary:

Access Code Includes pin, password or code, which provides a means of

access to a Consumer’s Account for the purpose of initiating
an Electronic Fund Transfer.
Acquirer /Acquiring Bank Is the entity that holds deposit accounts for card acceptors/
merchants and to which the card acceptors/ merchants
transmit the data relating to the transaction. The acquirer is
responsible for the collection of transaction information and
settlement with the acceptor/ issuer.
ATM Only Card Proprietary Card that can only be used at ATM for cash
withdrawal and other transaction.
Card-Not-Present (CNP) Transaction made when a consumer is not face-to face with
the retailer or service provider – for example shopping
online, by mail, or by phone.
Cash Card Card that is used for cash withdrawal only at ATM or Cash
Dispenser.
Cheque A Negotiable instrument written, dated and signed
instrument that contains an unconditional order from the
drawer that directs a Bank/ MFB to pay a definite sum of
money to a payee. A check is a bill of exchange where the
drawee is a Bank/ MFB.
Clearing Clearing is the process of transmitting, reconciling and, in
some cases, confirming transfer orders prior to settlement,
potentially including the netting of orders and the
establishment of final positions for settlement.

Clearing House Means corporation, company, association, partnership,

agency or other entity that provides clearing or settlement
services for a Payment System.
Closed loop Prepaid Card Means a prepaid card that: I. Are not issued by the Bank. II.
Are issued by a merchant (such as fuel cards), card program

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 sponsor or a service provider and are generally distributed
by the merchant’s retail outlets. III. Are acceptable at the
issuing merchant/service provider’s sites only. IV. Do not
necessarily collect the identity (CNIC) of the purchaser or
recipient.

Consumer Means any person who or which avails the facility of

Electronic Fund Transfer.

Convenience Amount The amount in figures field on a cheque that shows the
amount payable. (i.e. the convenience amount rectangle.

Counterfeit / Skimming Illegally altering a valid card where the information is copied
or skimmed directly from card’s magnetic stripe.

Credit Cards Card indicating that the holder has been granted a line of
credit. It enables the holder to make purchases and/or
withdraw cash up to a prearranged ceiling; the credit
granted can be settled in full by the end of a specified period
or can be settled in part, with the balance taken as extended
credit. Interest is charged on the amount of any extended
credit and the holder is sometimes charged an annual fee.

Debit Cards Card enabling the holder to have his purchase directly
charged to funds on his account at a deposit-taking
institution (may sometimes be combined with another
function e.g. that of a cash card or cheque guarantee card).

Debit Instrument Means a Card, Access Code, or other device other than a
cheque, draft or similar paper instrument, by the use of
which a person may initiate an Electronic Fund Transfer.

Demand Draft A remotely created instrument used to make payment

transfer from one Bank/ MFB account to another account or
from one Bank/ MFB to another Bank/ MFB. These are the
instruments issued by Bank/ MFB after receipt of payment
either in cash or from account of customer.

Designated Areas of An imaginary rectangular clear area 0.64 cm (0.25") around

Interest (AOI) each of the Data Elements specified on the face of the
Cheque, required to optimize image character recognition.
Designated Payment Means a Payment Instrument designated by the State Bank
Instrument as Payment Instrument under section 12 of Payment
Systems & Electronic Fund Transfer Act 2007.

Designated Payment Means a Payment System designated by the State Bank

System under section 4 of Payment Systems & Electronic Fund
Transfer Act 2007.

Dividend warrant Payment of company dividend either using dividend voucher.

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 Bank/ MFB report transfer through Account.

E-commerce Buying and selling of goods and services over internet.

Electronic Fund Transfer Means any transfer of funds, other than a transaction
originated by cheque, draft or similar paper instrument,
which is initiated through an Electronic Terminal, telephonic
instrument, point-of -sale Terminal, stored value card
Terminal, debit card, ATM, computer magnetic tape or any
other electronic device so as to order, instruct, or authorize a
Financial Institution to debit or credit an Account.

Electronic Money Means an undertaking that issues means of payment in the

Institution form of Electronic Money and is duly authorized to do so.

Electronic Terminal Means an electronic device, operated by a consumer,

through which a consumer may initiate an Electronic Fund
Transfer.

Encryption Is a process of encoding information or data into a form

called cipher text, so that only authorized parties can read it.

Financial Market Is a multilateral system among participating institutions,

Infrastructure including the operator of the system, used for the purposes
of clearing, settling, or recording payments, securities,
derivatives, or other financial transactions.

Interbank Fund Transfer Transfer of funds from one Bank/ MFB to another Bank/ MFB.
(IBFT) The transactions can be executed through
ATMs/Internet/Call center/Mobile Phone Banking. 

International Bank Is an international standard for identifying bank accounts

Account Number (IBAN) across national borders with a minimal of risk of propagating
transcription errors.

Intra Bank Fund Transfer from one account to another account within the
Transfers (Within Bank/ same Bank/ MFB; branches may be different.
MFB Fund Transfer)
Intrusion Detection Means network security applications\appliances which
System (IDS) monitor events occurring in a computer system or network in
order to identify violations, malicious activity and suspicious
patterns that may indicate a network or system attack from
someone attempting to break into or compromise a system.

Intrusion Prevention Is an extension of IDS, which in addition to performing

System (IPS) intrusion detection also attempts to stop possible incidents.

Issuer Is the bank which issues payment cards (debit/ credit/

prepaid cards etc) to accountholders/ customers.

Least Privilege Principle The principle that security architecture should be designed in

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 a way that each entity is granted the minimum system
resources and authorizations needed by the entity to
perform its functions.

MICR Magnetic Ink Character Recognition (MICR) Line also called

as MICR line must consist of Payment Order/Demand Draft
number, bank and currency code. The MICR line should be
according to E-13 B font format across left bottom side.

Netting Means the conversion into one net claim or one net
obligation of claims and obligations resulting from transfer
orders which a participant either issues to, or receives from,
one or more other participants with the result that only a net
claim can be demanded or a net obligation be owed.

Off Site ATM ATM installed on places other than Branches i.e. Installed at
Business/Public places.

Off Us Transaction between Payer and Payee of different Bank/ MFB

via different payment channels.

On Us Transaction between Payer and Payee of same Bank/ MFB

via different payment channels.

Open Loop Prepaid Card Means a prepaid card that: I. Is issued by a Bank on a
prepaid basis in electronic or physical form to a customer in
a specified amount, may be reloadable in exchange for
payment; and II. Can be redeemed at multiple, unaffiliated
merchants, or usable at different Alternate Delivery Channels
like ATMs, Internet etc.

PA DSS Is the global security standard created by the Payment Card

Industry Security Standards Council (PCI SSC).

Participant Means a party to an arrangement that establishes a Payment

System.

Pay order A negotiable instrument which instructs a payer bank to pay

a certain sum to a third party.

Payee Person to whom money is being paid or is due, especially the

person to whom a cheque or money order is payable.

Payer Person named as responsible for the payment of a check,

money order, or other financial paper when it is redeemed.

Payment Card Any card including an ATM card, debit card, credit card,
prepaid card or stored value card, used by a Consumer to
affect an electronic transaction.

Payment Instrument means any instrument, whether tangible or intangible, that

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 enables a person to obtain money, goods or services or to
otherwise make payment; but excludes Payment
Instruments prescribed in Negotiable Instrument Act,
1881(XXVI of 1881).

Payment Scheme Are a set of interbank rules, practices and standards

necessary for the functioning of payment services and may
include card schemes comprising technical and commercial
arrangements, setups to serve one or more brands of card
which provides the organizational, legal and operational
framework necessary for the functioning of the services
marketed by those brands or internet based E-Commerce
schemes.

Payment System Inter-alia means a system relating to payment instruments,

or transfer, clearing, payment settlement, supervision,
regulation or infrastructure thereof and includes clearing,
settlement or transfer of Book Entry Government Securities.

Payment System Means such Authorized Party that is a company registered

Operator and Payment under Companies Ordinance 1984 and is engaged in
Service Provider (PSO operating and/or providing Payment Systems related
and PSP) services like electronic payment gateway, payment scheme,
clearing house, ATM Switch, POS Gateway, E-Commerce
Gateway etc. acting as an intermediary for multilateral
routing, switching and processing of payment transactions.

Payroll Card Is a prepaid card issued by a Bank on behalf of an employer

for electronic transfer of an employee’s salary, wage or other
compensations on a recurring basis.

PCI DSS Is a global data security standard adopted by Payment Card

brands that process, store or transmit cardholder data
and/or sensitive authentication data. Payment Systems
Department Regulations for Payment Card Security State
Bank of Pakistan.

Point of Sales(POS) POS Machines -where retails transactions are carried by

swiping the Plastic Cards such as at a service desk of sales
points at restaurants, lodging, entertainment, and museums
etc.

POS Terminal Is a device which enables payments at a POS location.

Preauthorized Electronic Means an Electronic Fund Transfer Authorized in advance.

Fund Transfer
Prepaid Card A card on which value is stored, and for which the holder has
paid the issuer in advance.

Real Time Gross Means a Payment System which can effect final settlement
Settlement System of funds, payment obligations and Book Entry Government
Securities and instruments on a continuous basis during such

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 operating hours of a processing day as the State Bank may
determine on a transaction-by-transaction basis.

Security Breach Is any incident that results in unauthorized access of

systems, applications, data, services, networks and/or
devices by bypassing their underlying security mechanisms,

Security Controls Are formal arrangements made to avoid, counteract and

minimize security risks identified by the bank in its Security
Risk Assessment exercise. These include preventive,
detective and corrective arrangements to mitigate security
risks to protect bank’s assets.

Security Framework: Means documentation of management’s decision that

describes the detailed arrangements made for the protection
of bank’s customers, IT and communication resources.
Security framework contains operational, administrative,
technical and physical safeguards to meet the security
objectives outlined by the bank.

Security Objectives Series of statements that describe bank’s intent to safeguard

itself from internal or external threats.

Security Risk Assessment  Is the process of identifying, estimating and prioritizing
internet security risks to which bank’s assets (customers, IT
and communication resources) are exposed.

Social Transfer Card Is a prepaid card issued by a Bank under a formal

agreement with an authorized government entity for a
specific purpose of disbursing funds to assist the
underserved segment of the country.

Standing Instructions It is an instruction an account holder given to the Bank/ MFB

to pay a fixed amount at regular intervals to another
account, utility bill company or any other such purpose.

Supplementary Cards Cards issued with the consent of Basic Cardholder to close
family members.

Systemic Risk means the risk that relates to the inability of a participant to
meet its obligations in the Payment System as they become
due or a disruption to the Payment System that could, for
whatever reason, cause other participants in the Payment
System to be unable to meet their obligations as they
become due.

Teller An employee in a bank or savings institution who receives

and pays out money.

Third  Party -ATM ATM installed by a 3rd Party Service Provider that provides

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 service to the Bank/ MFB.

Threats Are circumstances/events with the potential to adversely

impact the operations of the bank and its assets.

Traceability Means the ability to discover information related to an event

happened in a system by chronologically recording all related
events in an unbroken manner to uniquely identify parties
involved in a verifiable way.

Two dimensional  (2D) Is a graphical image that stores information both horizontally
Bar Code and vertically. 2D Bar code can store information up to 7,089
characters.

Two Factor Authentication  A combination of two different factors of authentication

among three known factors; something the user knows,
something the user has and something the user is.

Vulnerabilities Are the weaknesses in a system, or control gaps, if

exploited, could result in the unauthorized disclosure,
misuse, alteration, or destruction of information or
information systems.

7.Conclusion:
In recent years, the financial sector has not only been more resilient to negative
external macroeconomic shocks, but also better equipped to meet the growing
credit needs of the economy. The overall macroeconomic scenario also continued
to support the stability of the financial sector. Most indicators such as high real
GDP growth, low inflation, reduced budget deficits, improved debt and debt
repayments, current account surpluses, and stable exchange rates are vulnerable to
the financial sector as a result of significant economic improvements. Suggests a
significant decrease. However, tremendous credit growth in the private sector,
sharp rises in stock and real estate prices, and existing cash overhangs could add a

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variety of risks that could impact financial sector performance. There are several
areas. Recognizing the risks mentioned above, top regulators SBP and SECP have
taken several steps to protect the financial system from negative shocks.
Regulations and guidelines are continually developed through feedback forms that
are actively requested by stakeholders. The Institutional Risk Assessment
Framework (IRAF) system recently introduced by SBP is of great help in quickly
fixing the creeping weaknesses of banks and DFIs. This, along with NBFC
Prudential Regulation and other SECP guidelines, has enabled the financial system
to better manage various financial risks. In recent years, the reach of the financial
sector has expanded significantly due to the significant increase in banking
operations with the SME sector and consumers. Reach in these areas may increase
over the next few years. (1) Many banks have developed human resources expertise
to tailor products to specific target markets and manage associated risks. (2) This
area has little development, except for early progress, and therefore has great
potential. (3) Regulators have developed a legal infrastructure that allows financial
institutions to mobilize joint funds to bring risk-reducing products to market. In
addition to consumer finance, the increased activity of microfinance institutions
(MFIs) not only contributes to poverty reduction, but also promotes banking with
the poor. These microfinance activities are expected to increase in the future with
the emergence of new institutions in this market segment. SBP has already issued
separate supervisory rules for these agencies. In addition, various funds have been
created as part of the Microfinance Sector Development Program (MSDP) with the
support of the Asian Development Bank to mitigate risk and provide microfinance
facilities on a sustainable basis. In addition, the existing MFI currently meets the
needs of only a small proportion of the large population, so this sector has great
growth potential. Another important development in the financial sector is the
emergence of Islamic banks. Although efforts to Islamization of the banking
system date back to early 1980s, it is the recent past when the full-fledged Islamic
Banks started their operations parallel to the conventional interest based banks. The
SBP has constituted a Shariah Board and established a separate department to deal
with the rules and regulations of Islamic Banking. Although present activities of
the financial institutions focusing on Islamic modes of financing form only a
miniscule portion of overall finance sector, these are likely to grow at greater pace
in future as the extent of prospective users is quite large. Financial markets, which
performed impressively to cater to the needs of the market players, are likely to
deepen further in coming years. While money market is likely to benefit from the

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establishment of money market funds and the opening up of the avenue to issue
commercial papers, foreign exchange market will experience the establishment of
foreign exchange companies. The capital Pakistan: Financial Sector Valuation
2003 market, which has been very strong with various measures over the past few
years, is expected to maintain its momentum. Replacing Badra's financing with
margin financing, many of the steps SECP has taken will help further strengthen
the capital markets. The rapid expansion of credit into non-traditional areas has
raised concerns about the quality of assets in the financial sector, but non-
performing loans have continued to decline. While reducing the burden of non-
performing loans is a positive development for the financial sector as a whole,
financial institutions need to strengthen their internal controls and controls to keep
an eye on the expansion of their lending portfolio. This is most important,
especially as aggressive credit expansion to the value of significantly inflated
stocks and real estate can degrade the quality of assets in the financial sector.
However, this is unlikely because of the strengthened SBP monitoring mechanism
and the ongoing capacity building of the financial sector. In addition, SBP recently
raised the minimum capital requirements of banks and DFIs, essentially in line with
Basel II (Basel II), to further strengthen the shock absorption capacity of these
institutions. Increasing minimum deposit capital (no loss) not only helps expand
financial activity in an increasingly competitive business environment, but can also
support the ongoing merger / acquisition process over the next few years.

8.References
 https://www.wallstreetmojo.com/banks-in-pakistan/
 https://www.technofunc.com/index.php/domain-knowledge/banking-
domain/item/overview-of-banking-industry#:~:text=The%20banking
%20industry%20can%20be,by%20lending%20or%20buying%20securities
 https://www.sbp.org.pk/
 https://www.mawazna.com/bank-alfalah
 https://www.hbl.com/business/fi-grb/products-services
 https://www.nbp.com.pk/services/
 https://www.sbp.org.pk/PS/Gloss.htm
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 https://www.ubldirect.com/Corporate/BankingServices.aspx
 https://www.mcb.com.pk/corporate/products-services

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