INTERNSHIP REPORT ON BANK OF PUNJAB

SUBMITTED TO

Prof. Dr. Zulfqar Ahmad Bowra

SUBMITTED BY

Roll No:
Morning
REGISTRATION NUMBER

HAILEY COLLEGE OF COMMERCE

UNIVERSITY OF THE PUNJAB, LAHORE

1|THE BANK OF PUNJAB

Letter addressed to the concerned teacher about the submission of
the report
Supervisor,
Hailey College of Commerce,
University of Punjab, Lahore.
Respected Sir,
I am pleased to present you the internship report work place Bank of
Punjab, railway road branch Sheikhupura dated from 17 May 2021 to June 28,
2021.

This report has been prepared in accordance with the requirements and the guidelines
approved by the competent authority.

This report includes the, introduction of the Bank of Punjab, organizational structure,
ratio analysis with bar charts, interpretation of ratio analysis, SWOT analysis, general
recommendations to the organization, skills acquired by me, and some additional data
about the working of organization.

Finally, the internship report includes the audited financial statements as per the
requirements, and some additional documents.

Thank you for your time and consideration.

Yours obediently,

Roll no:

Section: A

2|THE BANK OF PUNJAB

 AREAS COVERED BY THE REPORT

Areas covered by the report are given as follow:

 Introduction of BOP / History

 Vision Statement

 Mission Statement

 Organizational structure

 Functions of Various Departments

 Plan of my internship program

 Training program

 Financial analysis

 Ratio analysis

 Ratios Calculated by Bank of Punjab

 SWOT analysis of bank

3|THE BANK OF PUNJAB

 ACKNOWLEDGEMENT

Praise be to Almighty Allah, the most merciful and magnificent and to his Holy
Prophet Muhammad (Peace be upon him) who is forever a torch of guidance and
knowledge for humanity as a whole.

I feel deep sense of gratitude for manager of The Bank of Punjab, railway
road of Sheikhupura who allowed me to carry out my internship and providing me
necessary assistant and guidance during the internship period. I am also grateful
to the departmental heads of the bank especially operations related department
for their cooperation.

I express my heartiest and sincerest sense of gratitude to respectable

Persons, (SBP) coordinators of IBP (Institute of Bankers Pakistan) under whose
proper guidance, skillful suggestions and constructive criticism, this work got its
present shape.

I owe depth of gratitude to my loving parents, and brother who supported me

morally and inspired me to the higher ideas of life. My appreciation also goes to
all those friends who provided me any assistance in what so ever manner in the
preparation of this study.

I am also thankful to my teacher and bank staff who encouraged and

cooperated with me to give knowledge and information which made me able to
prepare this report.

4|THE BANK OF PUNJAB

Preface

M.com curriculum is designed in such a way that student can take hold of
maximum knowledge and can get practical exposure to the corporate
world in minimum possible time. Business schools of today realize the
importance of practical knowledge over the theoretical base.
The internship report is necessary for the partial fulfillment of M.com
Curriculum and it provides an opportunity to the student in understanding
the industry with special emphasis on the development of skills in
analyzing and interpreting practical problems through the application of
theories and techniques.
It is a new platform of learning through practical experience, which gives
the learner an opportunity to relate the theory with the practice, to test the
validity and applicability of his classroom learning against real life business
situations.

5|THE BANK OF PUNJAB

Contents

AREAS COVERED BY THE REPORT.................................................................................

ACKNOWLEDGEMENT........................................................................................................

1. EXECUTIVE SUMMARY...................................................................................................

1.1 INTRODUCTION OF BOP / HISTORY....................................................................

1.2 Vision and Mission statement.................................................................................10
1.3 OBJECTIVES.........................................................................................................12
1.4 COMPETITORS.....................................................................................................12
1.5 MAJOR CUSTOMER OF THE BANK OF PUNJAB...............................................13
1.6 ORGANIZATIONAL STRUCTURE.....................................................................13
DIVISION AND DEPARTMENTS..................................................................................13
1.7 Branch Network of Bank of Punjab........................................................................14
1.8 Organizational Hierarchy........................................................................................15
1.9 FUNCTIONS OF DIVISION....................................................................................15

2. BRANCH STRUCTURE..................................................................................................22

STRUCTURE OF THE BRANCH............................................................................................22

2.1 SERVICES.............................................................................................................22
2.2 Deposit section.......................................................................................................23
2.3 Nature of deposits..................................................................................................24
2.4 Account Opening Section.......................................................................................26
2.5 Clearing Department..............................................................................................26
......................................................................................................................................28
2.6 Remittance Department.........................................................................................28
2.7 Advances/Credit Department.................................................................................31

3 PLAN OF MY INTERNSHIP PROGRAM.........................................................................38

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 3.1 First and second week...........................................................................................38
3.2 Third and fourth week.............................................................................................39
3.3 Fifth week...............................................................................................................39
3.4 Sixth week..............................................................................................................39

4 TRAINING PROGRAM.....................................................................................................40

4.1 ACCOUNT OPENING DEPARTMENT...............................................................40

4.2 ACCOUNTS DEPARTMENT.................................................................................42
4.3 REMITTANCE DEPARTMENT..............................................................................43
4.4 CLEARING DEPARTMENT...................................................................................44
4.5 HUMAN RESOURSE DEPARTMENT...................................................................45
4.6 ADVANCE AND CREDIT DEPARTMENT...............Error! Bookmark not defined.

5 FINANCIAL ANALYSIS...................................................................................................47

5.1 Critical Analysis:.....................................................................................................47

5.2 Financial Analysis...................................................................................................52

6 SWOT ANALYSIS............................................................................................................57

6.1 Strengths................................................................................................................57
6.2 Weaknesses...........................................................................................................57
6.3 Threats....................................................................................................................58
6.4 Opportunities..........................................................................................................58

7 CONCLUSION..................................................................................................................59

8 RECOMMENDATIONS....................................................................................................62

9 BIBLIOGRAPHY.............................................................................................................67

7|THE BANK OF PUNJAB

 1. EXECUTIVE SUMMARY
The bank of Punjab (BOP) was established in 1989 and got the status of
scheduled bank in 1994. It offers number of products in their customer line. It has
a network of total 293 branches which are currently operating in Pakistan. Its
operations are continued to be streamlined with focus on rationalization of
expenses, re-alignment of back-end processing to increase productivity,
enhancement of customer service standards, process efficiency and controls.

Functionally it is divided into different divisions with each division headed

by a General Manager. BOP is currently operating in Commercial banking, Retail
banking, corporate banking, Treasury, investment and trade finance. Its shares
are traded in all the three stock Exchange of Pakistan. Majority of shares of BOP
is held by the Government of Punjab.

As for as the financial ratios of the Bank are concerned, they all show a
healthy sign regarding future position of the Bank in both financial and
operational terms. All ratios are fully in accordance with the banking industry’s
standard and norms which are a yard stick to measure the performance in a
banking sector. At the end the conclusion and the recommendations are the part
of the report. Bibliography is the part, which contain all the references from I,
obtained data to prepare this report.

During the course of my internship, I learned about different functions

performed by different departments and bank as a whole. I also learned bank’s
correspondence with their customers and with their branches. I learned about
documentation requirements and record keeping for different activities and
processes, especially the documentation requirement for different kinds of
financing facilities.

8|THE BANK OF PUNJAB

1.1 INTRODUCTION OF BOP / HISTORY
The Bank of Punjab started functioning with the inauguration of its first
branch at 7-Egerton Road, Lahore on November 15, 1989. The inauguration of
the bank was performed by Mr. Nawaz Sharif, the Chief Minister of Pakistan at
that time.

In Pakistan, over long periods of time the gap in saving and investment
and balance of trade deficit has posed serious threat to the target levels of
growth, The ailments related to the budgetary deficit and public debt, both foreign
and domestic are in addition. Interestingly even such adverse circumstances,
growth of banking sector during the preceding year registered a favorable
change, which speaks of hidden potential and strength of economy.

Fortunately, the banking sector of the country has the well organized and
properly institutionalized system, which is the major vehicle not only for
mobilization of resources to finance trade, agriculture, and industry but also for
the effective conduct of monetary policy.

The emergence of new bank on the national scene in the early 1990s has
done two important services to the nation.

 The saving base of the economy has effectively enlarged and hence the
investment opportunities have increased.
 The services of the banks in the fact of severe competition have improved
considerably so that now consumers are left with extensive choice to do or
undo their business relations with these banks keeping in view quality of
their services.

9|THE BANK OF PUNJAB

 The Bank of Punjab is working as a scheduled commercial bank with its
network of 306 branches at all major business centers in the country. The Bank
provides all types of banking services such as Deposit in Local Currency, Client
Deposit in Foreign Currency, Remittances, and Advances to Business, Trade,
Industry and Agriculture. The Bank of Punjab has indeed entered a new era of
science to the nation under experience and professional hands of its
management. The Bank of Punjab plays a vital role in the national economy
through mobilization of hitherto untapped local resources, promoting savings
and providing funds for investments. Attractive rates of profit on all types of
deposits, opening of Foreign Currency Accounts and handling of Foreign
Exchange business such as Imports, Exports and Remittances, Financing,
Trade and Industry for working capital requirements and money market
operations are some facilities being provided by the Bank. The lending policy of
Bank is not only cautious and constructive but also based on principles of
prudent lending with maximum emphasis on security. As agriculture is
considered as backbone of our economy the Bank of Punjab has introduced
"Kissan Dost Agriculture Finance Scheme" to small farmers.

The Bank of Punjab has the license to discharge its responsibilities

towards national progress and prosperity. Within the couple of years of its
scheduling, the bank has not only stamped out for itself prominent niche in the
conventional banking of the country but in certain areas it has the distinction of
taking the lead. In the short span of time the Bank has been able to evolve a
distinct corporate culture of its owned-based policies, which are realistic and are
on highly professional footings

1.2 Vision and Mission statement

1.2.1 Vision Statement
“To be customer focused bank with service excellence.”

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1.2.2 Mission Statement
“To exceed the expectation of our stakeholders by leveraging our
relationship with the Government of Punjab and delivering a complete range of
professional solutions with a focus on programs driven products and services in
the agriculture and middle thier markets through a motivated team.”

1.2.3 CORE VALUES

These are the values we celebrate:

Our Customers:

As our first priority

Profitability:

For the prosperity of our stakeholders that allows us to constantly invest, improve and succeed

Corporate Social Responsibility:

To enrich the Lives of community where we operate

Recognition and Reward:

For the talented and high performing employees

Excellence:

In everything we do

Integrity:

In all our dealings

Respect:

For our customers and each other

11 | T H E B A N K O F P U N J A B
1.3 OBJECTIVES

The Bank of Punjab being a commercial bank performs all those function as were
attributed to such banking institutions both in the areas of resources mobilization and
investment. It is providing funds for commerce, trade, industry, and agriculture but its
main emphasis is on accelerated development of agro -based industry. So, the main
objective of the bank is to channelize the resources into sectors, which have suffered
from neglect. Other objectives included.

1. To provide speedier services to the common man.

2. To provide the highest rate of return to the shareholders by achieving good
profitable growth.
3. Ensure that its performance in all facets of its operations more than matches that
of its competitors.
4. To enter into financing contracts and to mobilize resources in local and now in
foreign currencies consistent with the objects of the bank.
5. Maintains a comprehensive range of domestic and international activities.
Act as a reputable efficient and responsible organization.

1.4 COMPETITORS
The competitors of the Bank of Punjab are the other commercial banks in Pakistan such
as:
 Soneri Bank Limited,
 United Bank Limited,
 Allied Bank Limited,
 Askari Bank Limited
 Faisal Bank Limited,
 Standard Chartered Bank Limited,
 Habib Bank Limited,
 Meezan Bank Ltd

12 | T H E B A N K O F P U N J A B
1.5 MAJOR CUSTOMER OF THE BANK OF PUNJAB
Some major clients of the bank of Punjab are given bellow,

 Educational institution
 WAPDA
 Pakistan telecommunication private limited
 Agriculturists
 WASA
 MDA
 TOWN MUNCIPLE COMMITTEE AND LOCAL GOVENING BODIES
 PHARMACEUTICLE COMPANIES

1.6 ORGANIZATIONAL STRUCTURE

DIVISION AND DEPARTMENTS

DIVISIONS DEPARTMENTS

 ADMINISTRATION  ORGANIZATION & METHODS

 OPERATIONS  INFORMATIONAL &
 BUSINESS DEVELOPMENT TECHNOLOGY
 CREDIT  OFFICERS TRAINING
 INTERNATIONAL INSTITUTE

 FINANCE  SHARES

 RECOVERY  LAW

 AUDIT & INSPECTION  STATIONERY

 TREASURY  PLANNING RESEARCH &

PUBLICATION

13 | T H E B A N K O F P U N J A B
 HEADED BY: - HEADED BY: -

GENERAL MANAGER CHIEF MANAGER

(Figure 1.6)

1.7 Branch Network of Bank of Punjab

BRANCH NETWORK
(450)

FAISALABAD LAHORE

Total Branches – 38 Total Branches - 65

GUJRANWALA MULTAN

Total Branches - 54 Total Branches - 62

KARCHI
KARCHI //QUETTA
QUETTA RAWALPINDI
SHEIKHUPURA

Total Branches - 15 Total Branches – 2

(Figure 1.7)
Head Office and the main branch of BOP is in Gulberg 3, Lahore & Egerton,
Lahore Respectively.

The Bank has been divided into seven regions.

Each consisting number of branches.
 Lahore Region

14 | T H E B A N K O F P U N J A B
  Faisalabad Region

 Gujranwala Region

 Sheikhupura Region

 Karachi/Quetta Region

 Multan Region

 Peshawar Region

1.8 Organizational Hierarchy

Chairman

Managing
Director

General
Manager

Regional
Officer
Area
Manager
Branch
Manager

Operation
Manager

1.9 FUNCTIONS OF DIVISION

1.9.1 Administration/Human Resource Division

G.M

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 Admin & Officer’s Training
Establishment Institute

This division deals with the problems relates to the staff administration. The main
function of this department is to arrange a comprehensive training program for recruited
staff. Others function includes:
 Recruitment
 Staff remuneration
 Placing the staff
 Providing and defining the opportunities for career development and
growth
 Devising and implementing services rules.
 Promotion and demotion
 Suspension and termination
 Transportation
 Security, health and benefits

Operations Division
1.9.2
G.M

Computer Dept.

Stationary Dept.

Engg. & Maintenance

16 | T H E B A N K O F P U N J A B
 O & M Department

This Division is concerned with the operational working in general

banking, which is concerned with the routine working of the bank. Any problem or
ambiguity arise in any branch working are rectified and suggested for correction
by this division. This Division usually takes technical procedures involved the
decisions like commissions. And also,

 The maintenance of the existing building owned by the bank.

 Opening new branches and their maintenance.
 It also deals with the stationery problems of the bank.

1.9.3 BUSINESS DEVELOPMENT DECISION

G.M

Marketing PRP
Cell Department

It is the other name of the marketing division. It promotes the bank cause i.e.
deposits and work for the over all development of the bank. Deposits are the
lifeblood of any bank. Without deposits bank cannot perform any function of
banking. This division fixes the deposits target of every branch by keeping and
eye over the potential customers in the area. It gives motivation to branches to

17 | T H E B A N K O F P U N J A B
 achieve their targets through different campaigns and schemes like cash prizes
and special increments. It publishes a bulletin in which those branches are
encouraged who achieves their monthly targets. The main function is to develop
and attract the customers and depositors. It also manages:
 Advertising policy
 Sales promotion.
 Schemes offered by the bank

1.9.4 CREDIT DEVISION

G.M

Agriculture Credit Wing

This division control over all credit operations like approval of loans, Inland
Bill Purchased (IBP) and also keeps check over securities mortgage,
hypothecating or pledge. It also fixed the rate of mark-up and other decisions
concerning with the credit.
There is a credit committee, which consists of senior officers; Branches
send the credit proposal to head office credit division. Credit committee approves
it after making a through analysis. It also

 Prepare the policies regarding the sanctioning loan

 Monitor loans and credit
 Look after the portfolio of the bank
 Define credit limits against specified securities

18 | T H E B A N K O F P U N J A B
1.9.5 INTERNATIONAL DIVISION

G.M

International wing

Forex Money
Market
Investment

Engg. &
Maintenance

This division is providing important services to the bank regarding the matters
of International Trade, Import, Export Letters of Credit, Travelers cheque etc.
 It develops “Correspondent Relationship” with others on commission basis
and this helps to deal with the clients having import export business.
 It handles treasury operations.
 The Marketing and Spot Inspection cell, which were introduced by the
bank, are showing positive results in terms of achieving foreign currency
deposit targets and other foreign related business.
1.9.6 FINANCIAL DIVISION

G.M

Balance Sheet
Results Monitoring
SBP Affairs, and
Compliance.

Shares Dept.
19 | T H E B A N K O F P U N J A B

Company Affairs
 It controls the routine financial matters. The permission of special
expenditure incurred in the branches, and other such cases. The daily position
and HO Extracts are daily sent to this division by all the branches. This division
not only estimates the profit and loss of every branch but also prepare overall
income statement and balance sheet of the complete bank. It also keeps record
of total deposits of the bank and then their classification in the form of loans into
different sectors of economy. The basic functions are:
 Monitoring the fiscal and financial policies of the bank.
 Deals in exploring means for investing surplus bank funds.
 Maintenance and investment of Gratuity and Pension Funds of the
employees.
1.9.7 RECOVERY DIVISION

G.M

Law Department

The recovery division, which was established in 1994 to assist in

regularizing the difficult loan accounts, has rendered valuable services in this
respect. To effect recoveries in an efficient manner, a policy has been framed in
accordance with the guidelines issued by the State Bank of Pakistan Moreover,
recovery cells at regional levels have been set up to assist the head office. This

20 | T H E B A N K O F P U N J A B
 division looks after the matters of recovery of loans with the assistance of legal
advisors

1.9.8

Audit and Inspection Division

G.M

Audit of Rectification
Branches and Persuasion

This department ensures appropriate system of checks and balances. It checks

all the irregularities, errors and forgeries if any, under the rules and regulations
formed by the Government of Punjab. For this purpose it doesn’t only keep and
eye on the branches in their surrounding area but also conduct surprise and
comprehensive audits of the branches.

21 | T H E B A N K O F P U N J A B
 2. Branch structure
Structure of the Branch
Unfortunately, the branch has not got sufficient staff to meet the needs. The staff is less
and present officers got burdened when some times more than usual customers come
especially in the beginning of every month. The request for more staff has been sent to
the regional office since 2006 but no appropriate actions have been taken still now. If
we compare it with other banks, we come to know this staff is far less than them. There
is no system administrator, only one cash officer and one billing officer is there which is
not appropriate for such a busy branch. The burden is accumulated on few peoples and
there is no chance of relief in near future.
Table 1:
Designation No. of Employees
Branch Manager 1
Operation Manager (OG- 1
l)
Officer Grade ll 1
Officer Grade lll 2
Cash Officer 2
Messenger 1
Gun Man 2
Peon 2

2.1 SERVICES

SERVICES PROVIDED TO CUSTOMERS

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 The following are the services being provided to the claims.

Acceptance of deposits
Granting of loans
Transaction Foreign Exchange Services
Remittance – Collection
SPEDFAX- instant Fund Transfer Service
Locker’s facility
Utility Services

The Bank of Punjab attaches specials importance to the fee earning

business and business base remuneration. As part of diversification of the bank’s
utility services, the collection of bills of INSTAPHONE (mobile phone network)
was added to existing collection arrangements for WAPDA, SUI GAS, WASA,
PTCL, and PAKTEL. By using bank’s extensive branch network, effort have been
to made to maximize the exploitation of this source in view of its rich potential of
yielding business and deposit direct earning of commission.

2.2 Deposit section

In modern times very few business enterprises are carried out solely with the capital of
the owners. Borrowing funds from different sources has becomes an essential feature
of today business enterprise. But in the case of an entire banking system is based on it.
The borrowed capital of the bank is much greater than their own capital. Banks’s
borrowing is mostly in the form of deposits.

These deposits are lent out to different parties. The larger the difference
between the rate at which the deposits are borrowed and the rate at which they
are lent out the greater of the profit margin of the bank. Furthermore, the larger
the deposit the larger will be the funds available for employment; larger the funds
lent out the greater will be the profit of the bank.

23 | T H E B A N K O F P U N J A B
 To receive the deposit is the basic function of all commercial banks. The
bank does not receive these deposits for save keeping purpose only, but they
accept deposits as debts. When banks receive deposit from a customer, the
relationship of a debtor and creditor is established where by the customer
become the creditor and the bank a debtor. When the bank receives amount of
deposit as a debtor, it becomes the owner of it. It may, therefore use it as deems
appropriate. But there is an implicit agreement that the amount owned would be
paid back by the bank to the depositor after a specified period.

2.3 Nature of deposits

Current deposits
Profit & loss sharing account
Basic bank account
Short notice term deposits
Call deposit
Term deposit receipts (TDR).

2.3.1 CURRENT DEPOSITS

In this type of account, the client to allowed to deposit or withdraw money
as and when he likes. Because of their nature, these deposits are treated as the
current liabilities of the bank. There is not profit on such deposits. Usually, this
type of account is opened by the business.

2.3.2 PROFIT & LOSS SHARING ACCOUNT

This type of accounts is one step towards the Islamization of banking
system in Pakistan. There are two types of PLS Accounts.
 PLS Saving Account
 PLS-TDR (Profit & Loss Sharing Term Deposit Receipts).
PLS saving accounts can be opened with the minimum sum of Rs. 100
and PLS-TDR account can be opened for a sum of Rs. 1000 or above. Profit is
paid on both types of the PLS account on half yearly basis.

24 | T H E B A N K O F P U N J A B
 Under PLS saving account the depositor undertakes to share profit or loss
on the deposits earned or sustained by the bank. Secondly the bank is at the
liberty to invest the funds of the deposits in any avenue, it deems fit. The PLS
deposits are invested in non-interested channel

2.3.3 BASIC BANKING ACCOUNT

The minimum initial deposit will be Rs.1000. No profit will be Payable. No fee
(service charges) for maintaining such accounts will be charged. There will be
no limit for maintain minimum balance. In the cases, there balance in BBA's
remain "NIL" for a continuous 6-month period, such accounts will be closed.
Account holder will be allowed a maximum of 2 deposit transactions and 2
checking withdrawals, free of charge either through cash/through clearing per
month otherwise service charges of a regular banking account shall be
applicable for that month as per Bank's Schedule of Charges. Unlimited free of
charge ATM withdrawals from Ban's own ATM's will be allowed. In case of
withdrawals from BBA though the ATM Machine of other Banks, the Charges of
these Banks shall be applicable for such transaction.

2.3.4 SHORT NOTICE TERM DEPOSITS (SNTD)

This kind of deposit is for a short period. The depositor may withdraw his
deposit at any time by giving seven days notice to the bank. This type of deposit
facilitates the depositor to withdraw his amount with interest of the deposited
period.
2.3.5 CALL DEPOSIT
Call deposits are the sorts of deposits, which are deposited with the banker
against any tender. This is without interest deposit. This may be with interest provided
the depositor has agreed to keep this amount with the bank for some fixed period.

2.3.6 TERM DEPOSIT RECEIPTS (TDR)

25 | T H E B A N K O F P U N J A B
 This type of deposit is same as the SNTD. The difference is that SNTD is
for short period (7- 30 days) while TDR is for long period (1 month up to 5 years).

2.4 Account Opening Section

Account opening is the first step towards establishing a relationship

between the customer and the bank. The Bank of Punjab is offering basically two types
of account:

 Current deposit account

 Profit & loss sharing account

The necessary condition for a customer, who wants to open an account

with the bank, is introduction, which is preferably by the bank officers or any
account holder of the bank. The different categories of accounts that are
available are as under.

 Individual Account
 Joint Account
 Partnership Account
 Limited Company Account
 Clubs, Society, Association, or Trust Account
 SNTD

2.5 Clearing Department

Clearing is the most important department of the bank performing various
functions.
Clearing House:
A clearinghouse is an organization of the member banks, working under
SBP and which is for the purposes of setting inter banks claim resulting from

26 | T H E B A N K O F P U N J A B
 transmission of funds from one bank to another. The branch cheque/instruments
are credited into the account of the customer. The clearing can be:

 Outward
 Inward

2.5.1 Outward Clearing

The instrument collected or stored bank wise and a schedule is prepared

separately for each bank mentioning the total number of instruments and the
amount of the instruments. Then these are recorded in a register called
“OUTWARD CLEARING REGISTER” then a main schedule is prepared showing
the total number of cheque and their aggregate amount being presented in the
clearing
The cheque/instruments are handed over the clearing branch. Central
clearing branch issue CREDIT ADVICE to the branch for passing credit to its
customer immediately. The branch on receiving credit advice debits the clearing
account and credits the respective customer accounts.

2.5.2 Inward Clearing

On receiving cheque/instruments from central clearing branch, the in
charge checks the number and amount of cheque received in clearing must tally
with the main schedule received from central clearing branch.

This cheque/instrument are entered in “INWARD CLEARING REGISTER”

for the cheque/instrument passed in clearing is a credit advice for the aggregate
amount of cheque passed in clearing is prepared, drawn on central clearing
branch.

27 | T H E B A N K O F P U N J A B
 2.5.3 Reserves at State Bank of Pakistan
Deposit held by bank at SBP serves as check clearing and collection
balances. Rather than physically transferring funds between banks, check
clearing and collection can be done by simply debiting or crediting a bank’s
account at SBP

.
2.6 Remittance Department

Remittance is a major function of the bank. It is the transfer of money from one place to
another place. The need for remittance is commonly felt in commercial life particularly
and in everyday life generally.
By proving this service to the customers, the Bank of Punjab earns a lot of
income in the form of service charges.
The Bank of Punjab deals with the following type of remittances: -

 Demand Draft (DD)

 Mail Transfer (MT)
 Telegraphic Transfer (TT)
 Pay Order

Now we discuss all these in detail: -

2.6.1 DEMAND DRAFT (DD):

Demand draft is a written order given by the one branch of a bank on behalf of customer
to another branch of the same bank to a certain amount to the certain person.
Procedure for Preparing Demand Draft.

1. A draft voucher is filled which contains the following information:

 Name of the parties involved
 Date

28 | T H E B A N K O F P U N J A B
  Amount to be sent
 Account number (if DD is crossed)

2. A credit voucher is filled in order to get the excise duty and exchange
commission.
3. The sender deposits the total amount of the two vouchers i.e. the debit and
credit vouchers.
4. Then the cashier sends the cash receipt voucher to the accounts department
and the account records the amount paid in his cash scroll.
5. Accountant gives the DD leaf along with the DD voucher to his assistant who
records the sender’s name, amount and receiver’s name. After writing all
the information in the DD register, he gives it to the officer along with the
DD for authentication.
6. After authentication the DD is handed over to the sender and bank sends the
advice to the concerned branch. so, when the party presents the DD in the
concerned branch its payment could be made.

Parties involved in the Demand Draft

The following parties are involved in demand draft;

1. Purchaser or Sender
The purchaser is the person who sends the money to a particular person
payable at a certain branch.
2. Issuing or Drawing Branch
The branch from where the demand draft is issued to another branch of
the same bank.
3. Drawer Branch
Branch in which the draft has drawn and called upon to pay the amount.
4. Payee

29 | T H E B A N K O F P U N J A B
 The person who is entitled to receive the amount after presenting the
demand draft in the drawer branch.

2.6.2 MAIL TRANSFER (MT):

It is the transfer of money from one branch to another branch of the same
bank through mail service. In mail transfer there is no need of advice as the
amount is directly credited to the receiver’s account.
Procedure
1. First a voucher is filled in which the sender writes the amount to be sent,
name, account number of the receiving person with the branch name and
date.
2. A credit voucher is filled in order to deduct exchange, postage charges
according to the amount of the mail transfer.
3. The sender deposits the total amount in the cash department.
4. The cash officer gives the vouchers to the officer after affixing received
cash stamp and writing the amount in red ink.
5. Then the officer writes the amount paid in the cash scroll and gives the MT
to his assistant.
6. MT leaf is filled according to the information provided in credit voucher.
He also writes the same information in the MT register. Then he gives the
MT leaf and MT register to the officer for authentication.

2.6.3 TELEGRAPHIC TRANSFER (TT):

This is the most urgent method of remitting the money from one place to
another place. This method is used when the sender desires to send urgently, in
this case the sender request the manager of the branch to issue TT.
Procedure
For sending the TT the manager and officer apply a test. In the test the
manager and officer use a coding technique. They write their own code numbers,
which is allotted, to them as the bank branch code. After making all the

30 | T H E B A N K O F P U N J A B
 conformation the concerned branch makes the payment to the receiver. If the
sender wants to convey the same message through telephone then he has to
pay the charges of telephone along with the TT charges. First the person
deposited the TT amount along with the charges through the credit voucher then
his TT sent to the relevant branch.

2.6.4 PAY ORDER (PO)

A pay order is a written order issued by the bank on its own branch, drawn
upon and payable by itself to pay a specified sum of money to the person. The
purpose of a pay order is to transfer the fund from one place to another. It is
usually not issued in favor of the parties of other cities. Usually the pay order is
issued for the local transfer of money from one person to another or from the
person to any other department. It is used for different purposes. The purpose
may be the repairs of the branch or renovation of the branch.
Procedure
The procedure of a pay order varies with the nature of the purpose. If the
work is of huge some of amount then first the manager writes a letter to the Zonal
Chief in order to get sanction of the work. Then the advertisement of the work is
given in the newspaper in order to invite the contractors. But if the work is small
then the branch manager has discretionary power to select the party whose rate
is lowest. After finishing the work, the contractor submits the bill of work on his
stamp pad. Then the bank issues a pay order, against the pay order the
contactor gets the amount from the issuing branch

2.7 Advances/Credit Department

“Major source of bank’s Income”

It is the loan function, which produces the major person of bank’s income,
and as such it is the major areas of professional banker’s concern and attention.

31 | T H E B A N K O F P U N J A B
2.7.1 Principles while advancing
Basically, there are five principles that must be duly observed while
advancing money to borrowers.
 Safety
 Liquidity
 Disposal
 Remuneration
 Suitability

2.7.2 FORMS OF LENDING

Many there are two types of advances:

 Short-term (maturity within one year)
 Long term (maturity with the period of more than one year)

However, they are further classified as:

 Running Finance
 Demand Finance
 Cash Finance
 Letter of Guarantee

2.7.3 Running Finance

This form of finance was previously known as “overdraft”. When a

customer requires the temporary accommodation, his bank allows withdrawal his
account in excess of credit balance, which the customer has in its account, a
running finance occurs. The accommodation is thus allowed collateral security.
When it is against collateral securities, it is called a “Secured Running Finance”
and when the customer cannot offer any collateral security except his personal
security, accommodation is called a “Clean Running Finance.” The customer is in

32 | T H E B A N K O F P U N J A B
 advantageous position in running finance because he has to pay the mark-up
only the balance outstanding against him on daily product basis.

2.7.4 Demand Finance

This is common form of financing to commercial and industrial concerns
and is mad available either against pledge or hypothecation of goods produce or
merchandise. In Demand Finance the party is financed up to a certain limit either
at once or as and when required. The party due to facility of paying mark-up only
on the amount it actually utilizes prefers this form of financing.

 Ordinary Shares
 Preferred Shares
It can be
 Quoted or Unquoted
 Registered
 Bearer
 Inscribed

2.7.5 Advances against Immovable Property (Mortgage)

A mortgage is the transfer of and interest in specific immovable property for

the purpose of securing the payment of the money, advanced or to be advanced.
By way of loan, and existing debts or the performances of the engagement this
may raise the financial liability.

The transfer is called the ‘mortgager’ and the transferee the ‘mortgagee’ the
principal money and interest of which payment is secured for the time being and
instrument by which the transfer is affected, is called the letter of the mortgage
deed.
Availability of adequate flows of credit for industry and agriculture are for the
growth and development of an economy. This acquires added importance when

33 | T H E B A N K O F P U N J A B
agriculture is the core of the economy as also the sector where the bulk of the
poor are concentrated. Growth and productivity in Pakistan's agriculture has
slowed down in recent years and is, therefore, of serious concern given its
importance for the economic prosperity of the country. Apart from various other
weaknesses in the infrastructural support of the agricultural sector, inadequacy
and lack of efficacy of credit, flows to support agriculture related activities has
been a major constraining factor.

Agriculture is the largest sector of the economy. It contributes 25 percent

to GDP, provides raw materials to 80 percent of industry and employment to over
50 percent of the population. This is a sector that has the shortest gestation
period for investments and, therefore, a remarkable capacity to bring about a
turnaround in the economy. This important sector in Pakistan is suffering from a
number of maladies and is consequently witnessing stagnation in productivity.

Due to policy and administrative requirements, the savings in the

agriculture sector remain low and, therefore, the sector has perpetually remained
capital starved. The pricing of input and output in agriculture over the years has
forced the majority of farmers in Pakistan to plough back their incomes into
agriculture and non-institutional credit, And has more often than not served to
weaken their potential earnings. Needless to say, that shortage of savings and
lack of availability of capital is one of the major reasons for poverty in the country.
The agricultural and rural sectors in Pakistan in general and in Punjab in
particular are, therefore, suffering from severe under-development. Under a
desirable development model, Punjab can:
* Increase agricultural production to meet the country's requirement of
essential foods items and industrial raw materials.
* Develop agro-based industry in the rural sector for economic value addition
* Generate additional employment opportunities in rural as well as adjacent
small towns/cities

34 | T H E B A N K O F P U N J A B
 * Control massive migration to the urban centers that in turn is causing a
number of social, administrative (i.e. law and order) and economic problems for
the urban areas.
* Promote poverty and improve the income generating capacity of the
agriculture-based population.
 
Never before in the history of Pakistan, has the development of the
agricultural and food sectors been as critical as at this occasion and appropriate
short- and long-term measures are necessary for its revival, sustenance and
stability. Supply of credit by Financial Institutions for meeting the specific needs
of agriculture and rural sectors are essential components for improvement in both
short and long-term development of the country. This has assumed even greater
importance in the present situation of declining water availability. Per acre,
production is plummeting. The per acre yield of most of the crops is stagnant
rather diminishing. The most important factors responsible for this downward
trend in productivity are: -

2.7.6 FACTORS RESPONSIBLE FOR LOW YIELD PER ACRE

 
                          Imbalanced fertilizer use
                          Lack, availability of certified and good quality seeds
                          Improper control of pests and weeds

SCARCITY AND INEFFICIENT USE OF WATER

            Natural and mechanical water resources.

NON-USE OF MECHANIZED FARMING PRACTICES

Lack of education and resources, motivation to use advanced tools for
agriculture:
High cost, low output, unskilled labor intensive
Non-availability of credit and financial assistance to the agriculture sector

35 | T H E B A N K O F P U N J A B
 .
The importance of availability of credit to the agriculture sector has always
been recognized by Government and given Top Priority. Specialized institutions
have been in place for a number of years. However, these institutions have failed
to realize the full potential from the sector and at times contributed to its further
deterioration. It is therefore of paramount importance that The Bank of Punjab
through well thought out policies ensures that it does not repeat the follies of the
past. 

A number of institutions are in the field yearning to obtain results. We in

The Bank of Punjab will support the role of the Government in providing much
needed support to the agriculture sector but with a difference. The difference
being that instead of subsidizing the needs we will be active participants in
economically feasible projects thereby safeguarding the investments of the Bank.

A precondition to lending by the Bank will be an undertaking from the

customers/borrowers not to borrow from any other source whatsoever. This is
important to ensure against any multiple borrowing and more importantly to
restrain the borrower from falling into a debt trap.
The Bank of Punjab has been at the front position in contributing to the
Agriculture Sector at a limited scale and has initiated schemes in agreement with
the State Bank of Pakistan approved/eligible programmes for the assistance/help
of the agriculture farmers.

             Presently, the Bank is financing farmers in some specific areas only. The
State Bank of Pakistan has expanded the scope of its scheme and included a
number of items eligible for credit under Agri-finance Schemes.

            In terms of the importance, priority and current needs. We have short
listed the items from the State Bank of Pakistan's list provided under cover of its
Circular letter No. ACD/1044/1050/PD/P-08/2001 dated 26.04.2001.

36 | T H E B A N K O F P U N J A B
The list of eligible items for Agri-Credit is mainly divided in two sectors; i.e.
Farm Credit. And
Non-Farm Credit 
Farm Credit is further bifurcated into:
Short-Term
Medium-Term
Long-Term Credit.

37 | T H E B A N K O F P U N J A B
 3 PLANS OF MY INTERNSHIP PROGRAM
Operations of the branch are controlled by Branch Manager and
Operations Manager. Staff of the branch includes Branch System Administrator,
Operations Staff including:
 Grade I officer
 Grade II officer
 Grade III officer
 A cash officers
 Billing officer

Starting and ending dates of Internship:

I started internship on May 17, 2021 which ended on June 28, 2021

Name of training departments and duration:

The duration of the internship program was 1.5 months. The staff of the
branch was much cooperative. They imparted me training in all departments of
the branch i.e.
 Accounts Opening
 Accounts Department,
 Remittance Department,
 Clearing Department,

3.1 First and second week

In the first two weeks of the internship, I worked in Accounts Opening

Department in which I learnt how to open an account, how to close an account
and how to operate an account.

38 | T H E B A N K O F P U N J A B
3.2 Third and fourth week

In the third and fourth week, I worked in Accounts Department in which I

learnt various functions of Accounts Department.

3.3 Fifth week

In the fifth week, I worked in Remittance department where I learnt and
worked in Entry of remittance instruments in the system and preparation of
physical instruments

3.4 Sixth week

In sixth week of internship, I worked in Clearing Department where I learnt
about Inward Clearing and Outward clearing.
The Bank of Punjab had changed its online banking system to Flex cube
Universal Banking System. My supervisor had asked me to sort out the cheques
and vouchers and attach the vouchers with the bank statements of the
customers.

39 | T H E B A N K O F P U N J A B
 4 TRAINING PROGRAM
First Day in Bank of Punjab

On first day of my program, I was briefed by the branch manager about

different branches of the bank. I was also told about the major rules and
regulations which were being observed by the management of the bank. I was
also briefed by the Manager Operations which proved as a mile’s stone during
my internship program. I also met different members of the staff of the bank
which helped me to obtain basic knowledge about those branches. Then I started
my working in account opening department.

4.1 ACCOUNT OPENING DEPARTMENT

Procedure of account opening:

Account Opening Form

When a client approach to the bank to open an account, the detail of that
person is obtained on an account opening form which requires information about
that person such as Name, Address, CNIC number etc

Completion of the Form

Account form is then completed in all respect and checked by the bank
officer and is duly signed by the customer which is also verified by the
Operational Manager.

Specimen Signature Card (SSC)

Signature specimen card is compulsory for opening an account in the
bank. Without getting signature of the customer account cannot ne opened.

40 | T H E B A N K O F P U N J A B
Signature Difference Form
If client’s signature differs from the CNIC, the signature of the client is
taken on a signature difference form

Computerized Checking

The bank officer is connected via internet to the NADRA website and
checks the record of his customer’s social life. If the record of the person is ok,
then the officer of

The bank authenticates the record under his signature and stamp and
send it to the Branch Manager

Account Number
Account number is written on the cheque book requisition. After
completion of all procedures, the bank prepares a letter and sends it to the client
at his postal address to pay gratitude to the customer.

Cheque Book Issuance

The first cheque book consists of 25 leaves and no charges are deducted
from the account the account of client. There after bank sends a
recommendation for 25, 50 and 100 leaves with different prices and charges are
deducted from the account of clients.

Procedure for Closing of an account

If customer wants to close the account, he fills up an account closing form
and signs there in, account balance should be zero, approval is taken from the
Branch Manager Specimen card is taken back and is attached with the form and
account is closed.

41 | T H E B A N K O F P U N J A B
 Procedure of issuance of Bank Statement

A requisition slip is taken from the customer duly signed and the period
from which the customer wants to take the statement. After verification of
signature Bank Statement is issue to the customer and Rs. 55 are deducted from
account of customer

Procedure for ATM/PIN Issuance

Bank of Punjab provides the ATM facility to its Customers and they can
withdraw their amount at any time through ATM. For issuance of ATM, customer
has to sign an ATM form and Bank office make an entry in the system and within
15 days bank receives ATM card from Head Office which is given to the
customer

4.2 ACCOUNTS DEPARTMENT

When I completed my training in Account Opening Department, the

Branch Manager sent me to Account Department.

Account department is responsible for budgeting keeping record of the

revenue and expenses all transaction that are take place in the bank and their
physical prove (voucher) are come to the account department next day these
voucher are also posted to computer and the computer generated report of daily
transaction is created in IT department and then they send to the account
department to match or tell to computer generated report and their voucher of
daily transaction and save it as a physical record that these transaction are take
place in the bank at following date. The report generated by the accounts
department on a daily, weekly, monthly, bi-yearly and yearly is written in a proper

42 | T H E B A N K O F P U N J A B
 format. It is neither necessary nor possible to get up to date all of these reports in
a short period of time.

Some of the common reports are: Monthly Assets & Liabilities, Monthly
Budget Review Report, Monthly Monitory statement, Monthly Performance
Review Report and Monthly fixed investment. For these statements, five reports
carry extreme importance. The five reports are: Daily position of advances and
deposit, Statement of affairs, Daily exchange position report, fixed assets
statement and Monthly review of performance.

The account department of BOP has to record even the minor expenses
of the branch like tea for staff, stationery for the branch.

4.3 REMITTANCE DEPARTMENT

Remittance department transfers the fund form one bank to another bank and
one place to another place. In this department collection take place. The bank of
Punjab makes payment of only open cheque on the counter and prohibits the
payment of crossed cheques. Bank of Punjab transfer money from one place to
another place by way of payment order, demand draft, inward collection, outward
collection.

Demand Draft
An order to pay money to the payee who is residing outside the city,
Demand draft can be for a customer who may or may not have and account in
the bank but the other person’s account must be maintained with the bank for
which the payer has demanded the demand draft.

Payment Order
Pay order is order money but this payment is to be made within city. In other
words it can be said that the payee and the payer should be in one city. In pay
order payment can be made in cash, clearing and transfer.

43 | T H E B A N K O F P U N J A B
4.4 CLEARING DEPARTMENT

I learnt their about clearing of different cheques and remittance handling. I

was told there the main objects of clearing.

I received all the clearing cheques and made a schedule of these cheques
after making entries in outward and inward clearing registers and sent the same
to main branch where at all the cheques were sent to NIFT(National Institutional
Facilitation Technology)

NIFT
NIFT stand for National Institutional Facilitation Technologies. Clearing
house of SBP has shifted a part of its work to private institution names NIFT.
NIFT collets cheques, demand draft, pay order, traveler’s cheques etc. from all
branches of different banks within city through its carriers and send them to the
branches on which these are drawn for clearing. NIFT prepare a sheet for each
branch and send it to each branch as well as to State Bank of Pakistan where
accounts of Banks are settled.

TYPES OF CLEARING
Inward clearing:

When cheques of other Banks are deposited in our bank, after clearing
these cheques through NIFT by the other Banks on which these are down.
Accounts of customers are credited.

Outward clearing:

44 | T H E B A N K O F P U N J A B
 When cheques of our bank are deposited in other Banks and these
cheques are sent to us for verification, we debit the of our client after verification
their account.

Human resource (HR) includes all the issues related to employees and the
resources that the every branch of the bank has accessed
HR department contains the inward mail maintaining a inward mail
registered and outward mails i.e. mails from other branches or bank, stationary of
the branch and the important instrument prepared by the specific company

ISSUING OF CHEQUE BOOKS

Then another task for me was “issuing of cheque books”. It is one of the most
interesting works that I have learnt in the bank. Cheque books should be issued only
after all the formalities of the account opening forms, which have been checked by the
branch manager.

 Maintaining Dispatch register and Inward Mailing register was also

included in duties assigned to me. I also used to help different employees
in their work.

 My work timings were from 9am to 5pm, six days in a week.

Voucher checking
Afterwards I have learnt about vouchers, checking of vouchers is essential to
confirm that correct calculation has been done. Vouchers are properly bind sealed,
and checking by the manager. I have checked the following things:
 The check should not be post-dated/anti-dated.

 Amount in words and figures tallies.

 Cash paid stamps (with dates) are duly affixed in case of cash cheques and

45 | T H E B A N K O F P U N J A B
 in case of clearing stamps is affixed.

 Cutting/over writings are duly authenticated by the account holder, etc

46 | T H E B A N K O F P U N J A B
 5 FINANCIAL ANALYSIS
5.1 Critical Analysis:

5.1.1 Vertical analysis of BOP (last 3 years)

2020 2019 2018

Rs (mln) Rs (mln) Rs (mln)

% % %
Statement of financial position:
Assets
Cash & balance with 61209 46754 59946
treasury banks 06% 05% 07%
Balance (other banks) 3682 3016 1537
00% 00% 00%
Lending to FI 5132 1418 1225
01% 00% 00%
Investments 568803 511137 449006
56% 55% 55%
Advances 314125 303559 248243
31% 30% 30%
Operation fixed assets 32433 31193 28595
03% 3% 04%
Other assets 31246 37555 26956
03% 4% 3%
Total 1,016,630 934,631 815,805
100% 100% 100%
Liabilities
Bill payables 11975 16628 10139
01% 02% 1%
Borrowings 118459 59543 38543
12% 06% 5%
Deposits 708091 688330 632330
70% 74% 78%
Deferred tax liabilities 11377 10397 4201

47 | T H E B A N K O F P U N J A B
 01% 01% 01%
0ther liabilities 28927 29630 20064
03% 03% 02%
Total 878,829 804,527 705,277
86% 86% 86%

Net Assets 137,800 130,104 110,231

14% 14% 14%
Represented by
Share capital 11130 11130 10118
01% 01% 01%
Reserve 51309 48830 46601
05% 05% 06%
Inappropriate profit 50446 46948 40552
05% 05% 05%
Surplus (net of tax) 24897 23169 12959
02% 02% 02%
Total 137,800 130,104 110,231
14% 14% 14%

Profit & Loss Account

Markup earned 80532 77269 65064
82% 86% 85%
Markup expensed (31210) - (33757) - (27196) -
32% 37% 36%
Net markup income 49322 43512 37868
51% 48% 50%
Provision and write off (698) - 1864 2888
01% 02% 04%
Net MUI after 48623 45376 40776
provisions 50% 50% 53%
Non-mark-up income 17115 12944 11171
18% 14% 15%
Non-mark-up (23406) - (21591) - (19639) -
expenses 24% 24% 26%
Profit before taxation 42333 36729 32288

48 | T H E B A N K O F P U N J A B
 43% 41% 42%
Taxation (16782) - (12405) - (10793) -
17% 14% 14%
Profit after taxation 25551 24325 21494
26% 27% 28%

5.1.2 Horizontal analysis of BOP (last 3 year)

2020 2019 2018

15vs14 14vs13 13vs12

Rs (mln) Rs (mln) Rs (mln)

% % %
Statement of financial position:
Assets
Cash & balance with 61209 46754 - 59946
treasury banks 31% 22% 04%
Balance (other banks) 3682 3016 1537
22% 96% 29%
Lending to FI 5132 1418 1225 -
262% 16% 21%
Investments 568803 511137 449006
11% 14% 12%
Advances 314125 303559 248243
03% 22% 04%
Operation fixed assets 32433 31193 28595
04% 09% 20%
Other assets 31246 - 37555 26956 -
17% 39% 35%
Total 1,016,630 934,631 815,508
09% 15% 06%
Liabilities
Bill payables 11975 - 16628 10139
28% 64% 02%
Borrowings 118459 59543 38543 -
99% 54% 51%

49 | T H E B A N K O F P U N J A B
Deposits 708091 688330 632330
03% 09% 16%
Deferred tax liabilities 11377 10397 4201 -
09% 147% 56%
0ther liabilities 28927 29630 20064 -
02% 48% 05%
Total 878,829 804,527 705,277
09% 14% 06%

Net Assets 137,800 130,104 110,231

06% 18% 08%
Represented by
Share capital 11130 11130 10118
00% 10% 10%
Reserve 51309 48830 46601
05% 05% 05%
Unappropriated profit 50446 46948 40552
07% 16% 14%
Surplus (net of tax) 24897 23169 12959 -
07% 79% 05%
Total 137,800 130,104 110,231
06% 18% 08%

Profit & Loss Account

Markup earned 80532 77269 65064
04% 19% 05%
Markup expensed (31210) - (33757) (27196) -
08% 24% 01%
Net markup income 49322 43512 37868 -
13% 15% 07%
Provision and write off (698) - 1864 - 2888
137% 35% 1093%
Net MUI after 48623 45376 40776
provisions 07% 11% 00%
Non-mark-up income 17115 12944 11171
32% 16% 22%
Non-mark-up (23406) (21591) (19639)

50 | T H E B A N K O F P U N J A B
 expenses 08% 10% 09%
Profit before taxation 42333 36729 32288
15% 14% 02%
Taxation (16782) (12405) (10793) -
35% 15% 02%
Profit after taxation 25551 24325 21494
05% 13% 04%

Commentary on Critical analysis:

In comments of regarding critical analysis I will discuss two things, first one is financial
position and the second one is financial performance.

Vertical analysis:

As we see in analysis assets are increasing over last three year from 815,508 million to
1,016,630 million or even the liabilities are also growing in the same % that shows the
financial position of the BOP to stand or exist in the market. Assets increasing are the
past of successful organization, BOP also done this, but one thing missing is the
number of assets increased by the other organization is a little better as compare to the
BOP, that’s why BOP lost its ranking of number 1 commercial bank of Pakistan.

In regarding financial performance, it was good but the organization should increase its
profits %. You can see profit is increasing in numbers such as from 21,495 million to
25,551 million. But if you look at the profit % is getting down by 2% from 2018 to 2020,
that a point to be focus.

Horizontal analysis:

As comparing the financial position of the BOP shows a good jump to 15% increment in
asset in 2018 that was just 6% in 2019, but in 2020 it was 9% that was good one to
stand in major banks of Pakistan. In comparing with liabilities, the net assets also show
a great boom in 2018 but not enough in 2019.

51 | T H E B A N K O F P U N J A B
The financial performance also shows the great jump in 2019 that was 13% as
comparing 2018 that was only 4%. And in 2020 it was again going down to 5%.

In short organizations not maintain its performance of 2010 in 2020.

5.2 Financial Analysis

5.2.1 Liquidity Ratios

2020 2019 2018
Current Ratio 1.1348 1.1376 1.155
Quick Ratio 1.1348 1.1376 1.155
Cash Ratio 0.0706 0.0509 0.086

Interpretation:

Current ratio:

The current ratio is an excellent diagnostic tool as its measure whether or not your
business has enough resources to pay its bills over the next 12 months. The formula is:

Current ratio=current assets/current liabilities.

The best current ratio is 2:1 and the least is 1:1, and the showing result of 1.155 to
1.1348 is acceptable but the organization should maintain or update it.

Quick ratio:

The quick ratio, sometime called the acid-test, is a more stringent test of liquidity than
the current ratio. This is because it removes inventory from the equation. Inventory is
the least liquid of all the current assets. A business has to find the buyers if it wants to
liquidate the inventory, or turn it into cash.

Quick ratio= (current asset-inventory)/current liabilities.

52 | T H E B A N K O F P U N J A B
Just because the banking sector not dealing with inventory and inventory is zero, then
the quick ratio will be same as current ratio.

Cash ratio:
The cash ratio is an indication of the firm’s ability to pay off its current liabilities if some
immediate payments is demanded, that is very low for the company, they should
maintain some source to pay immediate case.

Cash ratio=cash/current liabilities.

5.2.2 Leverage Ratios

2020 2019 2018
Debt to Asset 0.86 0.86 0.86
Debt to Equity 6.83 7.18 6.39
Equity multiplier 7.38 7.18 7.4

Interpretation:

Debt to total assets ratio:

It is the percentage of total funds provided by creditors.

Debt to total assets ratio=total debts/total assets.

It should be 0.5 to 0.6, if lower then insufficient or if higher then risky, and BOP shows
risky ratios because of its high profitability.

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Debt to equity ratio:

It is percentage of total funds provided by creditors versus by owners of BOP calculated

by:

Debt to equity ratio=total debt/total stock holder’s equity.

Equity multiplier:

It is the ratio of the total assets to the total equity. It tells us about how much the
company has assets for the equity, that was going well as assets of BOP is increasing,
It can be calculated as:

Equity multiplier=total assets/total equity.

5.2.3 Coverage Ratio

2020 2019 2018

interest coverage 2.12 2.015 1.928

Interest coverage: it indicates the firm ability to cover interest charges.

And BOP results shows greater than 1 so it’s good for BOP.

Interest coverage=EBIT/interest expenses

5.2.4 Efficiency Ratios

2020 2019 2018

Inventory turnover 0 0 0
Total Assets turnover 0.079 0.082 0.079

Interpretation:

Inventory turnover:

54 | T H E B A N K O F P U N J A B
It tells about whether a firm holds excessive stocks of inventories and whether a firm
slowly selling its inventories compared the industry average.in case of BOP it should be
zero because of zero inventory.

Inventory turnover=CGS/Inventory
Total assets turnover:

It tells about the sales productive, plan and productive equipment utilization.

Total fixed asset = sales / total asset

It is almost same as the previous year but the company need to go better with time.

5.2.5 Profitability Ratio’s

2020 2019 2018

Gross profit margin 0.612 0.563 0.5820
Net profit margin 0.317 0.314 0.330
Return on assets 2.62% 2.78% 2.72%
Return on equity 23.25% 23.83% 23.09%

Interpretation:

Gross profit margin:

It tells about the total margin available to cover operation expenses and yield a profit. It
is more than the previous year then it is best and healthy for the company.

Gross profit margin = gross profit / sales

Net profit margin:

55 | T H E B A N K O F P U N J A B
It shows the after-tax profit per rupee of sales of BOP.

Net profit margin = net profit / sales

Return on assets:

It tells after tax per rupee of asset of BOP.

Return on assets = net income / total assets

Return on equity:

It tells after tax per rupee of stockholder’s investment in the BOP.

Return on equity = net income / total equity

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 6 SWOT ANALYSIS
SWOT ANALYSIS OF THE BANK OF PUNJAB

6.1 Strengths

 Fundamentally sound bank

 3.7 crore strong customer base
 Well-entrenched Brand Image
 Dominant position in Indo-Genetic Plain –No
 competition
 A leader amongst Public Sector Banks
 High proportion of customer base in deposits
 Strong Risk Management Practices
 Redefined processes through technology initiatives like
 CBS, ATM, Internet Banking
 100% CBS branches
 High tech platform incorporating EDW, CRM etc.
 Large network of branches with 66% in Rural & Semi urban areas

6.2 Weaknesses

 presence in less developed areas leading to high operating cost

 self-satisfaction (Structural & Environmental)
 Weak & Inconsistent MIS rendering decision making difficult
 Limited International presence. Low NRI business
 More dependence on conventional low margin business
 No Income from Financial Products such as Insurance, Mutual Fund,
Credit Card etc.

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  “State” Ownership has affected level playing field and competitive ability
 Less flexibility in dealing with strategic HR & operational issues
 Imbalance in distribution/ deployment of staff
 Inadequate skills for modern banking
 Changing environment, adoption of technological advancement, marketing
of products requires change in the mind-set of employees
 Low per employee productivity

6.3 Threats

 Aggressive marketing by competitor banks

 Expansion of peer Banks/Private Sector Banks.
 Loss of savings business to Mutual Fund/ Insurance Products which are
aggressively marketed as being more remunerative
 Technological uniformity of competitor banks
 Aggressive strategy and innovative products, larger risk appetite of other
banks.

6.4 Opportunities

 Financial addition is a clear-cut opportunity with overall exposure to formal

services of finance being about 20%.
 Great opportunity for expanding business with over 60% populations
outside the banking service network.
 IT Initiative creating a back bone for increasing reaches. It provides an
opportunity to go beyond the Brick & Mortar.
 Bank has a visionary leadership which can transform the bank.
 Large workforce of 55398 numbers of employees. Each and every
employee has to believe we can do it, usher in change in our

58 | T H E B A N K O F P U N J A B
 attitudes/conventional wisdom, be a learner willing to adapt to the
changing.

7 CONCLUSIONS

As we know nothing is perfect, there is always a room for improvement;

following are my suggestions for the betterment of BOP:

 BOP is in the process of providing the services of Automated Teller

Machine. In order to compete with other banks ATM services must be
provided throughout the country as this service is becoming very popular
in customer focus banks.
 The bank is also in process of computerizing its records which is good
sign but it is going on with small progress Computerization must be done
on early basis. This will help in increasing efficiency of work done,
customer’s satisfaction, decrease the stationary cost and resultantly it will
increase profits.
 In past BOP has always being suffered bad Government policies.
Government intervention should be avoided completely.
 Employees Training programmed must be introduced on continuous basis
so that employees get updated with latest developments and innovations
especially related to customers.
 Bank should introduce incentive plans for employees on regular basis so
that employees may work whole heartedly for the welfare of their
organization. While giving incentives qualification, work, experience, hard
work and such other factors must be consider.
 Mismanagement of resources must be avoided as much as possible as it
decreases profit but also discourage hard workers and honest employees.

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 Fresh graduates must be recruited. As the combination of Experienced
and fresh people can produce better results and it will improve the
efficiency of management.
 BOP is going towards mobile banking but the problem is that a common
client has no idea of its usage due to lack of marketing. I think that a
proper marketing program must be launched for client’s awareness.
 Bank should help the society by providing interest free loans to talented
students.
 There is a great need of proper training of employee.
 The behavior with the customers should be improved.
 The employee’s way of dealing should be improved.
 The bank should take step to monitor the implementation of HR activities.
 The HRM department of BOP is not so good as compared to other well-
known organization. They have made separate sections within HRM
department each section is assigned with different task. The
implementation of HR activities is very low.
 The Hr staff is friendly and cooperative.
 Some employees in the department just do the same job, they become
master of practicing job but they know almost nothing and are losing their
knowledge about their jobs.
 They keep their data confidential I face great difficulty in collecting data
related to HR department of BOP.
 The Bank of Punjab is using its own software which is not so good. The
features of the system are not so advance it needs some modification.
 Another important factor which can be considered as a short fall is, that
most of the employees are not aware with the advance studies related to
their fields this can also affect their job performance.
 The procedure for evaluating the performance of employees is not fair and
rational.

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 At the end I conclude that due to the assistance of all branch employees I
have been able to learn many new things associated to the banking sector, I was
able to run the day successfully at the end of each day, arranging all the
vouchers, maintaining record of branch manfully, filling account opening forms of
customers, filling cheques of the customers and handle other tasks as well.

Bank of Punjab is a competitive organization and in the market share to

overall banking sector BOP is at third position as relative to other banks in the
Pakistan.
On the other hand I am able to complete this report under the supervision of my
Advisor Mr. Muhammad Ali and make all concepts clear in proper way.
THE BANK OF PUNJAB is a good Organization in the way that anybody
can join it for his/ her long-term career. Overall working environment is
comfortable. Management is very strong and above that it’s a government bank.
Employees of Bank of Punjab, Ali View Garden Branch work more than their
working hours and the working environment is friendly. It also shows their
devotion, obligation to the organization. Customers are satisfied as best possible.

61 | T H E B A N K O F P U N J A B
 8 RECOMMENDATIONS
BOP is one of the leading commercial bank in the Pakistan but according
to my point there are some recommendations in order to improve the worth of its
system and to improve its products and services

After doing a deep study following are my recommendation,

 ATM machine must be installed so that increases the income of branch.
 Improvement in the salary package to motivate the employees.
 On the bases of performance, rewards should be assigned to increase the
productivity
 There is shortage of staff in the branch. In order to improve the services of
the BOP proper staff should be hired in the relative branch.
 To retain or attract customer, bank should adopt competitive rates for its
services.
 Branch should focus on the consumer banking as well because it is a
good source of income to branch.
 Proper facilitated branches should be maintained to gain value customer.
 The bank pays high profit to its customers and provides excellent services
but there is a lack of publicity of its services on part of its clients.
 The pay of BOP employees is less than other banks, which is an
indication of discouragement among employees.
 The employees have no direct access to higher authority and a large
hierarchy of persons is involved. This creates frustration in employees in
solving their problems.
 In most branches there is no facility of fax machines, which results in late
delivery of messages and dealings.
 The size of almost all branches of the bank of Punjab is very small. It
creates difficulty for the customers as well staff members for proper
dealings, which always gives congested atmosphere.

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 The grading system of the bank is not fair and the criteria for grading
system are not mentioned. Due to unfair grading the employees of the
bank are not happy.
 The HRM setup needs careful attention for betterment and improvement.

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 The Bank of Punjab
Profit and Loss Account
As on 31st December

Particulars 2018 2019 2020

Rs. (000) Rs. (000) Rs. (000)

Markup/ return/interest earned 80532 77269 65064

Markup/return/ interest expensed (31210) (33757) (27196)
Net markup/interest income 49322 43512 37868

Provision against non-performing loans (698) 1864 2888

and advances-net
Provision for diminution in the value of 5643 4567 4056
investments
Bad debts written off directly 100 2465 ----

Net markup/interest income after 48623 45376 40776

provisions
NON-MARK-UP/INTEREST INCOME
Fee, commission and brokerage income 473,212 659,488 579,520
Dividend income 1,385,875 1,812,870 2,025,160
Income from dealing in foreign 239,804 377,233 324,327
currencies
Gain on Sale of Securities 389,063 2,039,535 733,787
Unrealized Gain / Loss on Revaluation --- ---- --------
of Investments classified as held for
trading
Other income 466,435 547,635 526,186
Total non-mark-up/interest income 2,954,389 5,436,761 4,188,980

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 6,650,904 7,149,153 (13,924,705)
NON-MARK-UP/ INTEREST
EXPENSES
Administrative expenses 1,751,970 2,255,342 2,808,835
Provision against lending to financial 130,000 -------- 10,101
Institution
Provision against off Balance Sheet 175 292 ----
Items
Provision against receivable from NIT --- ---- ---
Other charges 38 37,950 114,700
Total non- markup/ interest expense (1,882,183) (2,293,584) (2,933,636)

Total non- markup/ interest expenses (1,882,183) (2,293,584) (2,933,636)

4,768,721 4,855,569 (16,858,341)

Extraordinary /unusual items -------- --------- ---------
PROFIT BEFORE TAXATION 4,768,721 4,855,569 (16,858,341)

Taxation
For the year –Current 880,997 170,700 207,600
-Deferred
For prior year –Current -- (19,921) 1,052,000
-Deferred 83,469 250,772 8,033,001
964,466 401,551 6,773,401
PROFIT AFTER TAXATION 3,804,255 4,454,018 (10,084,940)

Un-appropriate profit b/f 169,817 3,226,961 3,468,956

Reversal of Excess management fee ---- ----- 6,250
accrued last year
Transfer from surplus on revaluation of 6,174 5,866 5,572

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 Fixed assets – net of tax
175,991 3,232,827 3,468,278
Profit available for appropriation 3,980,246 7,686,845 (6,616,662)

The Bank of Punjab

Balance Sheet
As on 31st December
Particulars 2018 2019 2020
Rs. (000) Rs. (000) Rs. (000)
ASSETS:
Cash and Balances with treasury Banks 61209 46754 59946
Balances with other Banks 3682 3016 1537
Lending's to financial institutions 5132 1418 1225
Investments 568803 511137 449006
Advances 314125 303559 248243
Other assets 31246 37555 26956
Operating fixed assets 31500 34567 21984
Deferred Tax assets ---------- --------- 28754

Total Assets 1,016,630 934,631 815,805

LIABILITIES

Bills payable 11975 16628 10139

Borrowings from financial institutions 118459 59543 38543
Deposits and Other accounts 708091 688330 632330
Subordinated Loans ------ -------- -----
Liabilities against assets subject to finance 11377 10397 4201
lease

66 | T H E B A N K O F P U N J A B
Other liabilities 28927 29630 20064
Deferred Tax liabilities 29850 22043 -------
Total Liabilities 878,829 804,527 705,277

Net Assets 137,800 130,104 110,231

Represented By:
Share Capital 11130 11130 10118
Reserves 51309 48830 46601
Un-appropriate Profit 50446 46948 40552
Total Equity 24897 23169 129559

Surplus on Revaluation of Assets 137,800 130,104 110,231

67 | T H E B A N K O F P U N J A B
9 BIBLIOGRAPHY

 Annual Reports of bank of Punjab

 New letters of BOP
 Employees
 http://www.bop.com.pk/
 Personal observation

SOURCES

 http://www.bop.com.pk
 www.google.com
 Annual report
 Personal observation
 www.investopedia .com
 http://www.sbp.com.pk/
 http://www.wikipedia.org/
 http://www.ibp.org.pk
 Financial management by Van Horne

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