Banks and Scope of Banking: Allied Bank of Pakistan (LTD)

Allied Bank Of Pakistan (Ltd)
Chapter. 01
BANKS AND SCOPE OF BANKING
 WHAT IS BANK?
 BANKING IN DEVELOPING SOCIETIES
 NEW CHALLENGES OF CONTEMPORARY AGE
 HISTORY OF ALLIED BANK LIMITED
 DENATIONALIZATION OF ALLIED BANK LIMITED
 ALLIED BANK LIMITED TODAY
 PRIVATIZATION OF THE BANK
 BRANCH NETWORK & ASSOCIATED BUSINESSES
 INTERNATIONAL OPERATIONS
 ASSOCIATED BUSINESSES
Department of Commerce 1
Faculty of Administrative Sciences Rawalakot (A.K)
1.1: WHAT IS BANK?

A bank is an institution for the custody, loan or exchange of money for sanctioning
credit, for transferring funds by domestic and foreign bills of exchange. It is a pipeline
through which currency moves in to and out of circulation.
As it is clear from the definition of banking, the main activity or function of banking is
borrowing and lending of money with a margin of gain. However, as far as the present
day banking is concerned, there are a number of different banks, set up under specific
different objectives, performing various functions.
1.2: BANKING IN DEVELOPING SOCIETIES

In the developed societies, the banks do not have to make many efforts in mobilizing
savings, as it has become a second habit with the people. The commercial banks are
financing the short and long-term capital needs of the business. The loans and discounts
of commercial banks include real state mortgages and long term loans, which extend to as
long a period as ten years. These banks also administer estates, acts as insurance agents
and underwriters, provide brokerage services and implement domestic as well as foreign
economic policies of the government.
Commercial banks in developing countries have to make vigorous efforts of resource

mobilization at all levels. However, with the passage of time the commercial banking
operations are under going remarkable qualitative change. In Pakistan for instance,
banking facilities are being extended to the un-banked places. Planned efforts are being
made to enhance the supply of bank advances to the new priority sectors in consonance
with the present day socio-economic needs.
A special scheme to induct commercial banks in the field of agricultural credit was
introduced in December 1972. The scheme provides for short and medium term loans to
farmers under a much-simplified procedure. State Bank's measures aimed at increasing
the flow of credit to the small man in business and industry as well as to housing and
non-traditional exports have also yielded positive results. The large risk to the
commercial banks in the sphere of agricultural finance and small loans are being covered
to a reasonable extent by the "Credit Guarantee Scheme". Mandatory targets for small
loan credit to the agriculture sector and for housing have been prescribed and are being
enforced. Corporate banking is also being reorganized and reactivated on lines that are
more viable.
1.3: NEW CHALLENGES OF CONTEMPORARY AGE

Banks play a vital role in the economic development of a country. They accumulate the
idle savings of the people and make them available for investment. They also create new
demand deposits in the process of granting loans and purchasing investment securities.
They facilitate trade both inside and outside the country by accepting and discounting of
bills of exchange. Banks also increase the mobility of capital. They provide a variety of
facilities for remitting a large amount of money from one place to another by the transfer
of a small slip of a paper.
In a country like Pakistan, which is still in the initial stages of economic development, a
well-organized banking system is the need of the day. There is acute shortage of capital
in Pakistan. The banks have to play an important role in promoting capital formation, in
controlling speculation in maintaining a balance between requirements and availability
and in directing physical resources in to desired channels. In advanced countries of the
world like America, Japan, Germany, the rate of capital formation ranges from 12% to
25% of their Gross National product. Where as in Pakistan the rate of saving has varied
from 5% to 8% only. In order to accelerate the rate of economic development the
Government has been acquiring foreign capital. The banks by launching a vigorous
campaign in both the villages and cities can mobilize the idle savings and can increase
the rate of investment. The country thus becomes independent of foreign capital, which in
fact has let us down on almost all the crucial happenings in the country.
This deficiency of capital accumulation is due to so many reasons like, lower per capita
income, disparity of wealth, un-organized banking system, ineffective fiscal measures
etc. One reason of this capital deficiency is the non-adoption of modern marketing tools,
such as market research, sales organization, sales training, sales management, advertising
etc. for attracting deposits. Therefore, these are the new challenges for banks, which are
to be achieved for the betterment of the economy.
1.4: HISTORY OF ALLIED BANK LIMITED

Allied Bank of Pakistan was the first Muslim bank in pre-partition which was established
at Lahore. Initially It was known as Australasia Bank, with a paid up share capital of
PKR 0.12 million, consisting of 2.444 shares of PKR 50 each. After nationalization in
1973, it was recognized in 1974. At that time, Sarhad Bank Limited and Pak Bank
Limited were merged with it and were renamed as the Allied Bank of Pakistan. At that
time, the Bank, operating 136 branches, had a paid up capital of PKR 5.83 million,
deposits amounting to PKR 849 million and advances exceeding PKR 628 million.
Post nationalized, ABL opened 116 new branches during 1974 alone, increasing its
branch network to a total of 252, which gradually increased to 697 branches by 1979. in
1980, the Bank of England granted ABL recognition as a full-fledged bank, thereby
allowing the Bank to conduct banking operations in England, where it maintained 4
branches. These are recently reconstructed as Habib Bank Limited (“HBL”). Between
1974-91, the Bank’s total net asset rose to PKR 24.4 billion and deposits to over PKR
21.3 billion, with a branch network of 747 branches.
1.5: Denationalization of Allied Bank Limited

This bank has denationalized in 1992. its deposits as on June 1992 are Rs. 25 billion,
capital Rs. 5 billion, profit before tax Rs. 100 million. It has 748 branches. This bank has
been sold to its 7500 workers, under the recently introduced Employees Stock Ownership
Programme. (ESOP).
1.6: Allied Bank Limited Today

Allied Bank of Pakistan, represents a bank that has grown with time, experience in
Pakistan. A major financial institution in scope and size, it symbolizes a fully evergreen
fully-grown trees, strong and firmly rooted.
ABL is one of the largest pvt. Sector banks in Pakistan in terms of assets, deposits and
advances. As per the last available audited accounts, 31 December, 1999, the Bank had
total assets of PKR 106.9 billion, total deposits of PKR 93.2 billion, total advances were
PKR 55.3 billion and 925 branches were operational nation-wide with a total of 7,108
employees (as on 30th June 2001, ABL had reduced its branches network to 855
branches).
The bank is principally engaged in providing corporate banking facilities to Pakistan’s

most valued corporations and institutions. Additionally, it also provides general banking
services to commercial, agricultural, industrial and individual customers throughout
Pakistan.
89% of the Bank’s deposits base is composed of deposits from the urban area. The bank’s
fundamental strength’s lie in its strong lending capacity, as well as providing a variety of
financial services, which has allowed ABL to diversify and enhance its deposits base.
1.7: Privatization of the Bank

The bank was operated as a national bank fully controlled by the Government of Pakistan
(GOP) until September 11, 1991 when the GOP handled over the management of the
Bank disinvested 51% of its shareholding to the employees when they approved the
Employees Stock Ownership Plan (“ESOP”) for ABL. Under this plan, the employees of
the bank were allowed to buy and manage the bank. The Allied Management Group
(“AMG”) representing the employees of ABL was then formed. The AMG under the
representation of Mr. Khalid Latif, the President of ABL at that time, purchased 26% of
the total shares at a price of PKR 70 per share, leading to the transfer of management.
Under the sale management, AMG had an option to acquire a further 25% of the share
capital at the same bid price within one year of the 1st sale. This 2nd transaction was
concluded in August 1993, resulting in AMG’s 51% ownership.
 Share Capital:
The authorized capital of ABL, as at Dec, 31, 1999, was PKR 5,000 million, divided in to
500 million ordinary share of PKR 10 each. The decision to increase the authorized share
capital from 2,000 million to 5,000 million was taken by the Board of Directors of ABL
in the AGM held on 19 April 1999. The issue subscribed and paid up capital of the Bank
as on 31 December 1999, was PKR 1,063.2 million comprising 106,315,565 fully paid up
ordinary shares of PKR 10 each. The break down of the majority share holding based on
the current outstanding shares of 106.3 million is as on next page
Share Holding Pattern

Name Shares Held %
Financial Institutions
National Bank Of Pakistan Trustee Wing 393,717 0.37
State Bank Of Pakistan 45,185,333 42.50
Insurance Companies
Pakistan Insurance Corporation 75,812 0.03
State Life Insurance Corporation 27,945 0.07
Investment Companies
Investment Corporation Of Pakistan 13,456 0.01
Others
Federal Government Of Pakistan 6,273,961 5.90
Other Institutions 120,817 0.12
Individuals 54,224,524 51.00
Total 106,315,565 100.00
1.8: Branch Network & Associated Businesses

1.8.1: Local Branch Network:

As of June2001, ABL has 855 branches nationwide, of which approximately 67%, i.e,
573 are located in large metropolitan areas. The network of 855 branches enables the
Bank to generate a substantial and stable deposit base, provide a wide range of banking
products and other financial services and diversify lending risks geographically, as well
as on the basis of credit and customer type.
1.8.2: ABL Branch Network Region Wise
Number Of Branches
Regional Office Location Computerized Total
Faisalabad 32 69
Gujranwala 23 39
Hyderabad 37 62
Islamabad 67 100
Karachi 104 104
Lahore 67 67
Mirpur 16 52
Multan 37 63
Peshawar 49 61
Quetta 36 40
Sargodha 10 35
Sialkot 20 45
Sukkur 14 34
Total 558 775
1.9: International Operations
1.9.1: Habib Allied International Bank Plc (“HAIB”)

ABL was maintaining 4 branches in the U.K. in London, Birmingham, Manchester and
Glasgow. However, earlier this year, ABL and HBL, agreed
To merge their UK operations into one bank, HAIB, with effect from 03 December 2001.
HAIB has an initial paid up capital of GBP23 million, with ABL and HBL controlling
9.50% and 90.50% equity stake respectively. HAIB will be fully operational effective 01
January 2002.
1.9.2: Global Transactions:

The international banking division of ABL predominantly focuses on
 The international banking needs of domestic customers
 International correspondent baking.
International division caters to the needs of the Bank s domestic corporate and other
customers in financing import and export transactions. ABL s products include foreign
letters of credit, guarantees, remittances, acceptances and collections.
In order to effectively handle the trade related business of ABL on global basis,
correspondent- banking arrangements with 327 of the world s major bank franchises.
Close long- term business relationships have been developed with 27 renowned exchange
companies, operating in the Middle East to handle the remittances of Pakistan expatriate
community.
1.10: Associated Businesses
1.10.1: First Allied Bank Modaraba:

First Allied Modaraba (“FABM”), managed by Allied Management Services (Pvt.) Ltd.
(“AMS”), (a wholly owned subsidiary of ABL), was floated in January 1993. FABM’s
paid up capital, as of 30 June 2000, was PKR 350million with net profit (before
management fee) of PKR 6.01 million. The primary function of AMS is to manage
FABM.
1.10.2: Functions
As a fully functional commercial bank, the activities of Bank are organized around the
following areas:
 Commercial Lending: provides both fund as well as non-fund based

financial facilities, focusing on short- term trade related self-liquidation
credits.
 Consumer Banking: the Bank operates a growing credit card

business, under the “Master Card” franchise, with global acceptance
capability and a wide-ranging merchant base. The Rupee-based traveler’s
cheques product is one of the ABL’s most attractive consumer products.
The bank also intends to substantially increase its automated teller
machines on a shared basis.
 Treasury Operations: the Bank’s treasury employs some of the

industry’s most respected professional. The treasury systems operate
under up-graded technology for efficient and profitable funds
management.
 Credit Department: with its 59 year banking history, ABL is highly

experienced in handling various types of credits, including syndicated
lending, project financing, agriculture credit, financing to small & medium
enterprises and micro-credit.
 Technology: Currently, there are 558 computerized

branches out of 855 branches of the Bank, the highest amongst its peers.
All branches are expected to be computerized by 2003. The ABL
information Technology Division is working on improving the MIS of the
Bank and developing the entire network on real time on-line basis.
CHAPTER. 02
PRODUCTS AND SERVICES OF THE BANK
 DEPOSITS
 ADVANCES
 FOREIGN SERVICES
 UTILITY SERVICES
 ABL MAHANA AMADANI SCHEME
2.0 PRODUCTS AND SERVICES OF THE BANK

The bank provides its customers various products and services to cater their needs of
investments and other social or business requirements. These products and services
offered by the bank are as follows.
2.1 DEPOSITS
To receive deposits is a basic function of all commercial banks. Commercial banks do
not receive these deposits for save - keeping purpose only, but they accept deposits as
debts. When a bank receives, a deposit from a customer becomes the creditor and the
bank a debtor. When he bank receives the amount of deposit as a debtor, it becomes the
owner of it. It may, therefore, use it, as it deems appropriate. However, there is an
implicit agreement that the amount owned would be paid back by the bank to the
depositor on demand or after a specified time.
Deposits are the lifeblood of a bank and their classification is based on the duration and
purpose for which the deposits are to be kept at the bank before the depositors can
withdraw them. At present ABL accepts deposits in both local & foreign currencies and
provides a variety of accounts where these sums are put in at the desire of the customers.
Now a brief description is given about various types of accounts, in both local and
foreign currencies:
Local Currency Deposits In local currency (PKR) the following type of accounts is
available at the Bank:
 Current Account
 Saving A/c
 Short term deposits
 Fixed deposit receipts
A brief explanation of the above stated accounts is given below:
2.1.1 CURRENT ACCOUNT

These are payable to the customer whenever they are demanded. The Bank treats these
deposits as current liabilities. No profit is given on these accounts and there is no
restriction of minimum balance to be kept in these accounts.
2.1.2 Saving Account

In such types of account, the depositors are normally allowed to withdraw a limited
amount of money only twice a week.
2.1.3 Fixed Deposit Receipts

In these accounts, the amounts are deposited for a fixed period, which may be 1 month, 3
months, 6 months, and 1 year.
2.1.4 Short Term Deposits

In these accounts, the amounts are deposited for fixed period but shorter than that of
Fixed Deposit Receipts, which may be 7 days, and 30 days.
2.1.5 Foreign Currency Deposits

At present ABL Main Branch, accepts US$, GBR, YEN and DM in shape of foreign
currency deposits. For these foreign currency deposits bank has offered the following
accounts.
 Foreign Currency Accounts

 Foreign Currency Saving Account
A brief description of above stated accounts is given under:
2.1.5.1. Foreign Currency Current Accounts

In these accounts, depositors can deposit a sum of money in any of the above-mentioned
currencies. The depositor can also withdraw any amount subject to the availability of the
amount. No profit is given on these accounts and no restriction as per the minimum
balance required.
2.1.5.2 Foreign Currency Saving Accounts
ABL pays the interest that is earned on the sums available in the accounts by making
investments.
2.2 Advances
Advances department of a bank provides many facilities to various individuals and
businessmen against charging the interest from them.
It is usual practice of the bank that it examines the personal character of the borrower and
reputation and scope of business; he is doing or going to commence.
However, there are three ways normally used to seem the account
1. Pledge
2. Mortgage
3. Hypothecation
 Pledge
It is contract between the borrower and the bank whereby the goods are transferred in to
the banker’s possession while the ownership remains in the possession of the borrower.
This possession remains with the bank until the payment of loan is dully made. In case of
default, the bank can sale the goods after giving the notice.
 Mortgage
Mortgage is a contract whereby the interest in any specified immovable property is
transferred to the banker in order to give the security for the payment of debts.
 Hypothecation:
It is term where goods are charged for the purpose of security. But the possession and
ownership remains with the owner of the goods.
2.2.1 Categories Of Advances

The bank can make the advances in the following three ways
1Overdraft
2. Loan
3. Cast Credit
 Overdraft
Under such arrangement the customer is allowed to withdraw the amount excessive from
his balance. But the limit of amount is sanctioned by the manager and given for a fixed
period.
 Loan
When the bank makes the advances in a lump sum, to be repaid in lump sum or in forms
of installments with interest at any future date, it is known as loan. These loans may be
short, medium or long term.
 Cash Credit
These advances are made against the security of the goods which may make like in the
form pledge or hypothecation. The bank credits the borrower account with the account
making as loans. The amount cannot be withdrawn lump sum. While interest is paid on
the amount withdrawn from the bank. ABL deals and sanctions all about kinds and
categories of advances.
2.3 FOREIGN SERVICES

Following is the list of major foreign services provided by the ABL to its customers: e.g;
 Documentary Letter of Credit

 Bills for Collection
A brief description on of above stated services is given under:
2.3.1 Documentary Letter Of Credit

A documentary Letter of Credit may be defined as an authority issued by the opening
bank on behalf of the importer in favor of the exporter with the stipulation that the drafts
drawn there under will be duly honored, if the terms and conditions as mentioned there in
are duly complied with.
With respect to the documentary credit, the following types of documentary letter of
credit are offered by ABL:
 Revocable LC
 Irrevocable LC
 Confirmed LC
 Transferable LC
 Back to back letter of credit
 Stand by LC
 Sight LC
 Usance LC
In some cases, the exporter is not willing to wait for the proceeds of collection to be
remitted. In such cases exporter requests the Bank to negotiate the bills i.e. he sends the
documents to Bank. In this case, Bank examines the documents and arranges them with
the requirements mentioned in the Letter of Credit. When bank satisfied, it pays to the
exporter. Now Bank has the right to collect the proceeds on his own behalf from the
importer's Bank.
ABL performs the functions of both the exporter's and the importer's Bank as per its
customer's status.
2.3.2 Bills for Collection

The exporter's bank receives the documents from the exporter, examines and dispatches
them to the importer's bank. The importer's bank confirms these, as per the requirements
stated in the letter of credit, if founds correct, gets the amount from the customer, advice
the exporter's bank about the receipt of payment and in the end makes the payment to the
exporters bank..
2.4 Utility services

The bank provides its customers the non-banking services, such as collection of utility
bills, etc. Utility bills can be paid through cash or cheques drawn on any branch of the
branches at their convenience “cheque drop in” system. The bank mails the bills after
payment to the customer.
2.5 ABL Mahana Amadani Scheme

The main purpose of this scheme is to attract saving and win over new clients.Rtd.Civil
and armed forces employees can make the investment. Widows and the children being
brought up by guardians. Expatriates looking for payment monthly Nome. Investments
can be individually as well as collectively.
CHAPTER. 03
DEPARTMENTS
 ACCOUNT OPENING AND CLOSING DEPARTMENT
 TYPES OF ACCOUNTS
 CASH DEALING DEPARTMENT
 STOP PAYMENT INSTRUCTIONS
 COMPUTER TERMINAL PROCESS
 CLEARING DEPARTMENT
 POSSIBLE INSTRUMENT AT CLEARING DEPARTMENT
 COLLECTION OF CHEQUES
DEPARTMENTS
ACCOUNT OPENING AND CLOSING DEPARTMENT

Function of A/c opening & closing in ABL is performed under Accounts department but I
am discussing it with separate heading for better understanding. Firstly, all types of
Accounts, which can be opened in ABL, have been described:
3.1 TYPES OF ACCOUNTS

 Current account
 Saving account
Brief explanation of these accounts is as follows:
3.1.1 CURRENT ACCOUNTS

Current A/c is used to meet the daily transactions. Current account provides safety to the
customer's money, gives the advantage of paying debts by the convenient and safe means
of sending cheques through the post thus avoiding the trouble and loss that units in PKR,
US$, GBP and DM.
3.1.2 SAVING ACCOUNT

In case of saving accounts, account holder gets profit. There is a time limit for drawing
cash; customer cannot draw money before a certain time.
In ABL, saving a/c is used as current a/c, & there is no main difference between current
& saving account except profit. Limited company, Partnership Company, club societies
& associations joint & sole proprietorship can open this account.
3.2 CASH DEALING DEPARTMENT
Cash department of ABL is given the complete responsibility of handling all receipts &
disbursement of cash, because of transaction in both local & foreign currencies & near
cash items such as traveler cheque etc (when they are issued against cash). Consequently,
it is also responsible for the bookkeeping of these transactions & the safe custody of cash
& near cash securities. Following are the major functions of the cash dealing department
of ABL:
 Cash receipts (or receive deposits)

 Encashment of cheque
Cash department of ABL is a separate close part covered with glasses. No one other than
cash department's employee is allowed to enter into that area.
Cash receipt
The depositor uses cheque deposit slip (or cash deposit slip) for depositing the amount.
There are two types of cash deposit slip:
 One for current account-holders

 Other for saving account holders.
Both are in different colors for clear identification. There are two parts of cash deposit
slips:
 Counter foil
 Adjacent credit voucher.
PROCEDURE
The cashier first verifies all the requirements of the cash deposit slip that whether these
are fulfilled or not & verifies the amount written in words & figures. After that, he enters
the detail of the receipt in the "Inward Cash Register".
The deposit slip is stamped, cash is received & counter foil is given to the depositor. The
adjacent credit voucher is used for recording & posting purposes.
3.3 Encashment of cheque

Cheque enactment involves following four main steps. These steps are:
 Accepting of cheques
 Affirmation of signatures
 Computer terminal process
 Payment of cash
 Requirements to Encash a Cheque
Following requirements are essential to encash a cheque.
 No Stop Payment Instruction
No stop payment instruction is presented for the account.
 Instrument in Writing
It must be in writing. However, there is no bar on writing material but the cheque written
with lead pencil is not honored by the bank in practice because unauthorized alternations
can also easily be made are difficult to detect so a cheque should be either typed or pen
written or printed.
 Cheque must not be crossed
The cheque which could be presented to the drawee bank for encashment over the
counter should not be crossed whereas crossed cheques are deposited into account.
 The sum of money must be certain

A cheque must contain an order to pay a certain sum of money only amount in figures
and words must be same.
 Drawer's Signature
The document in order to be validly called a cheque must bear the drawer's (account
holder) signature or that of his authorized person. At the time of opening an account a
customer provides a banker with a specimen of his signatures, so the signature on the
cheque must tally with that.
 Sufficient Balance
Sufficient balance should be present in the customer's (drawer's) account to encash

cheque.
STOP PAYMENT INSTRUCTIONS

If a customer lost his chequebook, he would make stop payment instruction to cash
department of ABL. Stop payment instructions can be made in two ways.
 Verbal
 Written
The customer could inform the cash department on telephone or face-to-face meeting to
stop payment, but later a written instruction must be made on a prescribed form.
If customer make stop payment instruction to the bank and bank make payment to some
one else after lodgment of stop payment instruction in the computer, Bank would become
liable for this fault.
3.3.1 ACCEPTANCE OF CHEQUE

The cash is paid against the cheque of the client. The following points are kept in mind
while receiving the cheque from the client.
 Cheque should be drawn on ABL.

 It should not be post dated.
 It should be a bearer cheque so the word bearer should not be
crossed.
 Payment is not stopped by the drawer.
 Amount in words & figure should be same.
 Alternation in date/figure/word require drawer's full signature,
with signature on the cheque.
If signatures are not the same then it is returned back otherwise forwarded to computer
terminal.
3.3.2 AFFIRMATION OF SIGNATURES

After receiving the cheque the officer verifies the signature of the account-holder with the
signature on the cheque. If signatures are not the same then it is returned back otherwise
forwarded to computer terminal.
3.4 COMPUTER TERMINAL PROCESS

The cheque is received in computer terminal, where the computer operator checks the
balance of the account holder. The operator also sees whether the stop payment
instructions are received from account holder or not. After considering these two points
computer operator posts the cheque in account holder ledger & returns the cheque back to
the officer.
3.4.1 PAYMENT OF CASH

The cheque is cancelled after posting & is returned to cashier. The cashier enters the
cheque in "cash paid register" & pays against the second signature of the receiver on the
back of the cheque.
Nearly everyday in the morning time, cash comes from State Bank of Pakistan through
Brinks (which provide safe cash delivery services). This cash is required by the bank to
meet the current needs of cash.
This cash is received from the Brinks in the presence of an authorized officer & cashier
of bank, with full satisfaction.
3.5 CLEARING DEPARTMENT

Nearly all the banks provide a variety of services to their depositors. One valuable service
provided is that of clearing. Clearing department also plays an important role in
performing the activities of the bank.
The basic function of clearing department is to provide services to customers in

collection of their cheques of other banks, whether they are in city or outside the city. The
customer can get the money in his account at ABL from the cheques drawn on another
bank. The bank accepts the cheque in the clearing department & later on collects these
cheque from the bank on which it is drawn through the clearing house i.e., State Bank of
Pakistan.
For example, sometimes the account holder of ABL presents a cheque, which is not
drawn on ABL but the person, is not drawn on ABL but the person has an account in
ABL, in this case bank accepts this Cheque in clearing department & after collecting the
amount from that bank on which cheque is drawn, ABL credits the account of customer
(account-holder). This function is called clearing function.
3.5.1 CLEARING
We can define clearing as, "the transfer of funds from one branch of bank to the other
branch of the same bank or the other bank on which the instrument is drawn, without
involving cash through "State Bank's clearing house" or we can say in other way that
cheques which can not be cashed at the cash counter of the bank.
3.5.2 CLEARING HOUSE

It is one of the services provided by central bank i.e, State Bank of Pakistan to the other
commercial banks. SBP acts as a clearinghouse. Different banks are the members of the
clearinghouse. A representative of each bank represents his bank in the clearinghouse.
“A clearing house is an association of commercial banks set up in a given locality for the
purpose of interchange & settlement of credit claims".
A representative of each bank represents his bank in the clearinghouse. Each banks
representative has cheques on behalf of his banks customer (these cheques are not drawn
on their own bank) in the clearinghouse. They hand over these cheques to the respective
banks on which these cheques are drawn & receive cheques from other banks, if any.
The SBP maintains the accounts of the ABL like other scheduled banks, debits the
account of the drawee bank, and credits the presented bank, which is ABL in that case.
3.5.3 TYPES OF CHEQUE

Some specific types of cheque are being entertained in the clearing department of ABL
Main Branch, Lahore.
These types of cheque are:

 Local cheque
 Out station cheque
 In house cheque
 Local Cheque
By local cheque we mean collection of cheques from the banks which are the members of
the clearinghouse and which are located within the city.
 Out Station Cheque

By out station cheque we mean collection of cheque from the banks, which are situated
outside the city. It means that presenting bank and the bank on which the cheque is drawn
are not situated in the same city.
 In House Cheque
In house cheque are drawn on one branch of NBP and presented to another branch of
NBP such cheques are marked with transfer stamp.
3.5.4 TYPES OF CLEARING

Clearing department deals with the two type of the clearance. These are stated below:
 Inward clearance
 Outward clearance
3.5.4.1 Inward Clearance

Cheque drawn on NBP and presented to other Banks or handed over to NBP agent in
clearing house. That is inward clearance for NBP. So inward clearing results in outflow
of funds to collecting banks reducing the balance in the clearing account.
3.5.4.2 Outward Clearance

Similarly cheque, which is drawn on other, bank and presented to NBP are known as
outward clearance for NBP. So outward clearing results in inflow of funds from paying
bank into the clearing account maintained with the clearing house, increasing the balance
in the clearing account.
Outward clearing thus may be:

 Local clearing
 Outstation clearing
Excess of outward clearing over inward clearing produces a net increase in the clearing
account balance. Excess of inward clearing over outward. Clearing produces a net
decrease in the clearing account balance. The first case is referred to as favorable clearing
& the second case as unfavorable clearing. The balance of incoming & outgoing
clearing should be nil (zero).
3.6 POSSIBLE INSTRUMENT AT CLEARING DEPARTMENT

Following instruments can be presented at the clearing department:
 Cheques
 Demand drafts
 Pay orders
3.7 COLLECTION OF CHEQUES

The Pay-in-slip is checked & entered in the "Inward collection" or outward collection".
After making the entry, the counter foil is returned to the client.
 Inward Bills for Collection (IBC)

Inward collection means the cheque received & drawn on NBP for payment. Inward bills
for collection means cheques received from another branch for clearing. These cheques
first cleared & then transferred to the account of branch account e.g. cheque deposited in
Karachi branch for UBL, Lahore branch, will receive in Lahore branch at first then issued
for clearing in UBL.
 Outward Bills for Collection: (OBC)

Outward collection means the cheque of other banks. Outward bills for collection are the
reciprocal of IBC that is drawn on bank & deposited in other bank.
For example, he will make person A, who is in Islamabad & payment. Now seller will
deposit, the cheque deposit slip in his bank, UBL Islamabad. UBL will prepare a draft &
letter & send it to NBP Main branch, Lahore.
NBP Main Branch, Lahore will debit his customer A's a/c & credit clearing. This draft
will be then transferred back to Islamabad through clearing where credit will be given to
customer & debit to clearing house.
Within 3 days payment should be received otherwise reminder will be send to the payer
to pay amount. This reminder will be through either courier service or TCS etc. If
payment is not received within 15 days then reminder should be send after 8 days of 15
days limit.
 STAMPING
Three stamps will be used in case of IBC & OBC.
 Stamp of OBC (or IBC) whichever is the case.

 Crossing stamp.
 Payee's a/c will be credited.
First two will be in front side of cheque while the 3rd stamp will be on the backside of
the cheque. Entry is made in the register of OBC (or IBC) & from the register the no. of
OBC (or IBC) is given on the cheque.
PROCEDURE OF CLEARING THE CHEQUES:
 Pay in Slip
The customer fills pay in slip; this slip is just like deposit slip. The cheque number, date,
amount, & account number must be written on this slip.
 Stamping and Scrutinizing

The officer on receipt of cheque and pay in slip will stamp the pay in slip with "Cheque
Received" and give a portion of slip to customer and the remaining portion is attached
with the original cheque. The original cheque will marked with two stamps:
 ABL
 Clearing Stamp
Before 12:30 P.M, all cheques are counted and then scrutinized in bank wise and sent to
clearing house.
 Stamping Of The Instruments

The instrument of payment accompanied by pay-in-slip (cheque receipt) is received at the
counter of the bank by the concerned officer who conducts scrutinizing of the
instruments. If no discrepancies are noted then the officer should sign the pay-in-slip &
its counter foil.
The counter-foil & the pay-in-slip should then be stamped in the following manner.
 The clearing stamp bearing the date of the next working day
should be affixed on the face of the cheques.
 Special crossing stamp containing "the name & branch name of
bank" should also be affixed on the face of the cheques.
 The third necessary stamp indicates the paying bank to "credit
payee's account". It is the conformation of outward clearing.
 If "payee's account only" is mentioned on the cheque, the payee
should sign on the back of cheque for endorsement of cheque to
another person.
3.7.1 FORMS OF CLEARING

Clearing is of two forms:
 Local clearing
 Collection
 Local Clearing
By local clearing, we mean collection of cheques from the banks, which are member of
clearinghouse within the city. Banks take responsibility by endorsing these cheques. Sort
out these cheques bank wise; prepare the settlement sheet bearing the name of the bank
and number of cheques with total amounts.
There is a time for presenting the cheques in clearing house. If before that time, cheques
are not sent to clearing house. Then they will be delayed for next day. On the specific
time gate of clearing house has been closed and nobody can enter into it. So next day
bank presents cheques in clearing house. Cheques sent to clearing department must be
debited to SBP and credited to customer account, and when bank receive back these
cheques then debits customer and credits SBP. A simple example for understanding the
entries made is that, when cheque comes to clearing house from Citibank (e.g., any
customer of NBP has made payment to a person who is customer of Citibank) then SBP
will credit the City bank and debit the NBP account because cheque is of NBP.
In case if any bank or branch of bank is not the member of the clearing house then bank
present or receives cheques through collection.
3.7.2 ITEMS TO BE CHECKED ON CLEARING CHEQUES

When cheques are received from the clearing following items should be checked
immediately:
 Cross stamp
 Clearing stamp
 Date (which should be current)
 Endorsement stamp on backside
 Amount in figures and words should be matched
CHAPTER: 04
MANAGEMENT
 RESPONSIBILITIES
 STRATEGIES
 HUMAN RESOURCE DEVELOPMENT IN ABL
 JOB ADVERTISEMENT
 CLASSIFICATION OF STAFF
 APPOINTMENT
 RECRUITMENT
 CONDITIONS OF APPOINTMENT
MANAGEMENT
The Board of Directors of the Bank consists of 8 members, named below, with Mr.
Khalid A. Sherwani as Chairman.
1. Khalid A. Sherwani
2. Asif Bajwa
3. Shaukat Hayat Durrani
4. Muhammad Sami Saeed
5. Mozaffar Iqbal
6. Saeed Anwar
7. Justice (Retd.) Aamer Raza
8. Muhammad Azam Khan
4.1: Responsibilities
Boards of Directors are held responsible by the stock holders for the management of the
bank. Because of the scope of responsibility and detail of management involved, they
usually delegated some of the responsibility. Generally, following the stockholders
meeting and their election, the Directors:
1. Elect one of their members as Chairman of the Board and delegate to him the
responsibility of presiding at all meetings.
2. Elect one of their members as President and Chief Executive Officer of the bank
3. Elect corporate records of the bank.
4. Approve the compensation to be paid to the various officers and employees of the
bank.
4.2: Strategies
The management, anticipation the prior year’s provisioning in line with the ongoing
banking sector reforms, has already initiated major re-engineering and re-organization of
the Bank. The Bank had embarked upon a two-prolonged strategy of adopting a
nationalized program to bring down cost, introduce innovative products and offers
specialized financial solutions and services to customers. Measures, which have already
been implemented, are set out below:
• With the objective of achieving decentralization and cutting down expenses, the
decision-making has been reduced from four to two tires, 68 controlling offices,
comprising of 4 provincial, 18 circles and 46 zonal offices have been consolidated
into 16 regional offices.
• With a view to improving efficiency and right sizing the ABL network, 66
branches have been closed or merged.
• The corporate units have been re-structured by reducing the number of divisions
and redefine their functional responsibilities, so as to provide valuable support to
field operations.
• Treasury operation has been re-organized on a modern technology platform.
• A centralized Special Asset Management Division has been established for

expeditious recover and settlement of non- performing loans.
• Expensive deposits have been reduced, improving the interest margin.
• Deposit mobilization through innovative products like “Tahfuz” (launched in

February 2001)are being developed & implemented.
The implementation of the aforementioned steps has been successful in Cutting down
costs and improving efficiencies, resulting in enhanced Operational profits. The Bank
now plans to focus on further strategic Objectives, as set out below:
4.3: Human Resource Development in ABL

• Recruitment and Selection
• Training and Development
• Employees services, Safety, Health & Welfare
• Salary Administration
• Industrial Relation
• System of Communication
• Negotiating with Union; and
• Terms & Conditions of Employment, etc. in ABL
• For this purpose, I met Human Resource officials of ABL in Human Resource
Division. I made the following questionnaire and asked from him about above
vital heads. The questionnaire was
• What is your source of employee supply?
• What method and procedure you adopt to select somebody?
• What are the criteria for selection and induction of new ones?
• Are you satisfied with your bank’s selection procedure?
• How and when you feel to conduct training programme for newly selected as well
as old ones?
• What is the method training?
• What is the normal and usual training tenure?
• When and how salary is determined and given to employees?
• Do incentive, bonus system exist?
• In which way and direction the communication process take place in

organization?
• Do upper management is in direct contract with medium and lower level

management?
• What equipments are used for communication within and outside the
organization?
• How much sound industrial relationship do you have?
• What is the role of union and its influence?
• Are you in favor of union activities or against it?
• What privileges bank offer for the welfare, Health and safety of its employees?
• Are you satisfied with the policies of bank regarding terms and conditions of
employment?
The officers not only listened to my questions with kind attention but also gave me a lot
of information regarding above heads without hurry and in a very sophisticated manners.
The abstract of our talk is as
• Allied Bank of Pakistan Limited is governed by the service rules made by the
Board of Directors under Article 133 (VI) of memorandum and Article of
Associations, read with Section-11(4) of the Bank’s (Nationalization) Act, 1974)
• According to the rules, following aspects are accomplished as
4.4: Job Advertisement

The job is advertised through both electronic and print media. But usually, print media
that are newspapers are preferred. In newspapers, the job is advertised without
mentioning the name of the bank rather P.O Box is used to cancel bank’s identity. This is
done for avoiding any political or any other pressure, influence or approach for selecting
any particular individual or group of people.
4.5: Classification of Staff

The permanent staff of the Bank shall be classified under the following categories:-
4.5.1: Category
a). Senior Executive Vice President/Executive Vice President:(Executive grade)
b). Senior Vice President: (senior grade-I)
c). Vice President: (senior grade-II)
d). Assistant Vice President (senior grade-III)
e). Officer Grade-I
f). Officer Grade-II
g). Officer Grade-III
4.5.2: Category
a). Head Casher/Stenographer
b). Draftsman/Estimator/Overseer
c). Senior Casher/Stenographer/Teleprinter/Key punch operator
d).Assistant, Typist, Casher, Godown Keeper, Machine and telephone operator,

Construction supervisor, Tracer and other techniques.
4.5.3: Category
a). Electrician/Ferro Printers
b). Driver/Chief Jamadar
c). BankGuard, Chokidar, Messenger, Electrician, Plumber, Carpenter, Mali and

such other staff.
d). Sanity Worker
The board of directors shall have the power to determine the classification of any new
posts that may be created, if they do not fall under any of the classifications in category I.
In the case of other Categories the classification of such posts will be determined by the
president.
4.6: Appointment
1. Appointing shall be made both by direct recruitment and by promotion.
2. Employees serving in lower grades in categories II and III who possess the
requisite qualifications shall be eligible to compete when direct recruitment is
made in higher grades of categories II and III.
4.7: Recruitment
1. All appointments of employees shall be made the competent authority in
accordance with the policy laid down by the Board of Directors.
2. A person selected, as trainee officer in the Bank shall be governed by the terms
and conditions of his letter of appointment.
4.8: Conditions of Appointment
4.8.1: Domicile
Candidates must be domiciled in Pakistan or Azad Jammu and Kashmir. Provide that
the competent authority in special cases may waive this condition.
Every employee shall, on his appointment, declare his domicile in writhing and shall
submit domicile certificates. “Lace of domicile” means the permanent home place of
employee. No employee, who has once declared his place of domicile, shall be
allowed to changer or alter the same.
4.8.2: Educational Qualifications

The minimum educational qualification for recruitment to posts in Category I shall be
Bachelor’s Degree from a University recognized by the Federal Government. This
qualification shall not be waived except in special cases by the competent authority.
Other qualifications necessary for recruitment to posts in Category I shall be as

follows, namely:-
a). Officer Grade-III A pass in part-I of the Institute of Bankers or an equivalent

examination and at least 5 years experience in supervisory capacity in a scheduled bank.
b).Officer Grade-II A pass in Part-I of the institute of Bankers or an equivalent

examination and at least 7 years experience in supervisory capacity in a 1 st class
scheduled bank.
c).Officer Grade-III A pass in Part-I of the institute of Bankers or an equivalent

examination and at least 15 years experience in supervisory capacity in a 1st class
scheduled bank.
d). Senior Grade-III A pass in Part-I of the Institute of Bankers at least 20 years as an
officer
including 10 years in a senior position in a 1st class scheduled bank.
Provided that the condition prescribed in clauses (a), (b), (c) and (d) may be relaxed by
the competent authority in special cases.
The minimum educational qualifications and experience for the posts in Categories II and
III shall be as follows:-
a). Cashier Intermediate
b). Assistant Intermediate with 30 w.p.m. typing speed.
c). Typist Intermediate with 45 w.p.m. typing speed.
d).Steno typist Intermediate with shorthand and typing
Speed of 80/45 w.p.m.
e). Stenographer Intermediate with shorthand and typing speed of
120/45 w.p.m.
f). Key Punch Operator Intermediate with experience of operation the key
Punch machine.
g). Telephone Operator Intermediate with experience of operation PABX.
h).Construction Work Metric with diploma in Electrical, Mechanical or
Civil Engineering with 5 years of experience.
i). Overseas Metric with diploma in Electrical, Mechanical or
Civil Engineering.
j). Tracer Metric with certificate in drawing.
k). Electrician Wireman’s Competency License with 2 year’s

Experience.
l). Plumber/Fitter/ Certificate in the respective trade where available.
Polisher/Mechanical/ Carpenter
m). Drafty/Messenger 8th class pass.
n). Chowkidaar/ Preferences to ex-serviceman
Watchman
Provided that the conditions prescribed in the sub-rules (a)-(n) may be relaxed by the
competent authority in special cases if in conformity with statutory provisions.
4.8.3: Age Limit

A candidate shall not be less than 18 years or more than 25 years of age at the time of
recruitment in the Bank’s service.
Provided that the competent authority in suitable cases may relaxed the upper age
4.8.4: Medical Examination

The Bank’s Medical Officer or any Medical authority specified by the Bank in this behalf
must declare every candidate physically fit.
4.8.5: Probation
1). A candidate for appointment in category-I shall be on probation for one year. The
period of probation may be relaxed or dispensed with by the competent authority in
suitable cases.
2). Employees other than Category-I shall be placed on probation initially for a period not
exceeding six months at the discretion of the competent authority.
3). On the satisfactory completion of the period of probation, an employee shall be

confirmed.
4.8.6: Extension of Probation
In the event of an employee falling to show satisfactory progress during his probationary
service, the competent authority may at its discretion extend his period of probation or
offer him an appointment in a lower grade or dispense with his service.
4.8.7: Record of Service

A record of service shall be maintained by the Bank with following particulars:-
a). Name
b). Father’s Name
c). Personal/Employee Number
d). National Identity Card No.
e). Date of Birth
f). Domicile
g). Nationality
h). Qualifications
a. Educational
b. Professional
i). Previous experience
a. Non banking
b. Banking
j). Permanent address
k). Date of appointment (with reference to letter of appointment l). Date of joining
service
m). Promotions-Dates & Grades
n). Appointment held
o). Pay
p). Allowances:
a) House rent/rent ceiling
b) Other
q) Leaver record
An employee shall not have access to his confidential reports:
Provided that shall be informed of adverse remarks relating to remediable defects, if any,
in order to give him any opportunity to explain his position or to correct himself.
4.8.8: Seniority
An employee will ordinarily rank for seniority in the grade on the basis of the date of his
confirmation in the grade and, in this case of an employee not appointed on probation, on
the date of his appointment in the grade.
4.8.9: Promotions
All promotions shall be made on the merits of each case and no employee shall have a
claim to be promoted to any particular posts or grade by virtue of seniority alone,
promoted to all categories and grad shall be made by the competent authority in
accordance with the promotion policy laid down from time to time by the competent
authority.
4.8.10: Training and Development of Employees

For the training and development of newly recruited as well as existing employees, the
Human Resource Division has a training wing which has 3 Training Academies.
These Training Academies are situated at

1) Karachi: It covers the areas of Singh and Balouchistan
2) Lahore: It covers the Punjab and Northern Areas.
3) Peshawar: It ranges to NWFP and Azad Jammu and Kashmir.
At these training academies, lectures, seminars etc, are conducted throughout the year on
different sectors and field operations, like general banking, foreign exchange, letter of
credits, advances etc.
New techniques and methods are used to keep the employees well-informed and abreast
of the repaid and new changes due to sheer competition and globalization. There is a
monthly course on computer orientation to equip employees for cyber competition and
war. Both in house as well as mobile courses are held and conducted for the training and
development of the employees. In addition to above, trainers’ training is arranged and
held at Institute of banker’s. For these outsiders, experts from every field and renowned
professors, doctors etc. are invited to deliver and share their practical experience to
polish, groom latent stills of the officials of the Bank.
4.8.11: Employees Safety, Health and Welfare

As ABL is not an industrial concern, so there is as such no extra-ordinary need for safety
and precautionary measures which are taken by almost all industrial concern and factories
which working on machines and big plants etc. As regards Health and Welfare of
workers, job security is there. Medical allowances and compensation for accidental loses
are granted.
At Officer’s level: 2 basic salaries or medicine;
Basic salary is or consultancy, hospitalization and laboratory charges etc Lower Level:
Medicine as a part of salary and consultancy expenditure are given. All these facilities are
given on re-imbursement basis that is to get the money after presenting the bills.
Besides this, following allowances are given for welfare of employees

• Recognized Provident Fund
• Post Job Allowances like Pension, Gratuity, Life time Medial Facility even at
Abroad
• Benevolence Grant
• Superannuation Fund
• Group Insurance Scheme etc.
In addition to above, the following types of leaves may be granted to an employee to

facilitate him when they are submitted to competent authority and through proper
channel.
• Privilege Leave
• On Full Pay
• On Half Pay
• Extraordinary Leave
• Leave not due
• Special Leave
• Maternity Leave
• Disability Leave
• Leave ex-Pakistan
• Leave Preparatory To Retirement
• Causal Leave
For the social welfare of employees loans on very easy installments and mark-ups are
given for house, conveyance etc. too. For example, for house constructions 80 B.S. is
given out of which 40 are free and remaining are on 7% interest, which is very low as
compared to others.
4.8.12: Man Power Planning

The competent authority and Board of Director’s review and finalize every year how
employees should be promoted, indulged or departed according to the changing
circumstances and economic and financial position of the Bank. In addition to that, there
is also a political pressure from Govt. to do so. For instance, now a day, this Bank is
being privatized so there so there is a policy of downsizing as there is slump in the global
as well as in domestic market and recession in business activities. So Bank is offering
golden shake hands to its employees to curtail extra expenditure being incurred on them.
On the other hand, the bank is inducting new, young and talented persons from backward
areas to promote banking functions in remote areas. The bank recently recruited a group
of employees from Azad Jammu & Kashmir on probation to capture market and
customers of these areas.
4.8.13: Salary Administration

The Bank distributes salary on monthly basis to its employees. The amount of salary
varies according to the scale or grade of an employee.
In addition to Basic salary, Increments, fringe benefits, cash prices are given and facility
to visit abroad in special cases is awarded. Besides this, following allowances (other than
traveling allowances) are given to employees basing upon their grades and job nature.
• Special Duty Allowance
• House Rent Allowance
• Extra payment Allowance/Ceiling
• Extra payment for Extra Work
• Entertainment Expenses
• Conveyance Allowance/Transportation Facility
• Winter Allowance
• Teaching Allowance
• Evening Banking Allowance
• Unattractive Area Allowance
• Education Allowance
• Washing Allowance
• Discomfort Allowance
• Acting Allowance
Following is the list of various forms of Traveling Allowances

• Daily Allowance, day, fare, mileage etc.
• Traveling Allowance Rates for employees in Category-I
• Traveling Allowance Rates for employees in Category-II
• Other Journeys
• Traveling Allowance on first Appointment
• Travel by shortest route

• Journey/on con official duty
• Traveling expenses higher than entitlement
• Certificate to accompany traveling bill
• Transfer on request
4.8.14: Industrial Relation

As ABL is a commercial bank, so it has strong industrial relationship with its fellow
beings. The Bank’s fundamental strengths lie in its strong lending capability, as well as
providing a variety of financial services, which has allowed ABL to diversify and
enhance its deposit base and hence good industrial relationship.
The bank has one of the most extensive branch networks with deep penetration in both
urban as well as rural Pakistan. This acts as a major competitive advantage over its more
urban private sector competitors and foreign banks. The extensive branch network has
allowed these banks to tap into a lucrative base of low cost and stable deposits.
There are number of key and famous firms to whom Allied Bank Limited of Pakistan has
financed and lend loans. ABL is one of the largest private sector banks in Pakistan in
terms of assets, deposits and advances. Because of this, the Bank is in a position not to
develop strong and healthy relationship but also to maintain sustaining them.
4.8.15: System of Communication

In ABL, upward and downward or ascending and descending or vertical communication
occurs for internal communication. Top level management give instruction to medium
and lower level management by face-to-face meetings. Besides this, faxes, phones,
emails etc that is electronic media for circulars regarding instruction are also used. The
management or organizational structure is split into different heads/divisions. These
divisions are in a continuous contact with each other to inform each other regarding any
issue, as they are dependant heavily on each other. Apart from electronic media, ordinary
mails through TCS and other swift courier’s services are sent regarding different issues
and matters. For communication externally, a part from direct face meeting, both print as
well as electronic media is used. ATM’s and credit cards are gaining Popularity in now a
day fast and dynamic market and business situation.
4.8.16: Influence and Role of Union

No one can deny the positive role of union. Union of any organization really works for
the social, economic welfare of the workers of any firm or organization. It can really
fights of the employees and convince the management to adopt such system, witch is
necessary for the safety of guarding and protective shield against all malpractices of
owners or management.
The union in ABL is established and is guided by Labor Act. Its role and influence varies
from time to time. But Allied Bank’s union is strong enough to ply its role as it comprises
of the employees of the Bank and the Bank is owned by the employees too. At the time,
when Government was ready to sell the shares of ABL to general public, the Allied
employees union was quite active at that time and they purchased 51% shares of the
Bank. The union was quite unanimous at the juncture. It was the real representative of
employees of the Bank. The bank’s president Mr. Khalid Latif, at that time, promoted and
encouraged union activities to convince government to sell the Bank’s share to its
employees. Unfortunately, with the passage of time, the union splited into segments due
to different policies and interests and is no more active and efficient as it was in the past.
Government and the new top management snub it and its activities as they have their own
axe to grind. Now the union is weak and under pressure currently.
4.8.17: Terms & conditions of Employment

As mentioned earlier that ABL is governed by Service (Staff) Rules, 1981, so it has
certain and specified terms and conditions for its employees which must to be fulfilled by
them, so
• Every employee shall confirm to and abide by these rules and shall observe,
comply with and obey all orders and directions which may from time to time be
given by any person or persons under whose jurisdiction, superintendence or
control he may, for the time being, be placed.
• Every employee shall sever the bank honestly and faithfully
• And shall maintain strict secrecy regarding the Bank’s affairs and the affairs of
its constituents.
• He shall use his utmost endeavors to promote the interest of the Bank and shall
show courtesy and attention in all transactions which officers of Government, the
Bank’s constituents and the Public.
• No employee shall be member of any political party, take part in, subscribe in aid
of, or assist in any way, any political movement in Pakistan or relating to the
affairs of Pakistan.
• No one shall express views detrimental to the ideology of Pakistan
• No employee shall leave his station overnight, shall not absent from Bank without
prior permission from competent authority.
• No one shall make any personal representation direct to the Board of

Director’s/Government/Government Agency.
• No employees shall bring or attempt to bring political or other outside

pressure/influence directly or indirectly to beet on the authority.
• No employee shall accept any gift from a constituent or a subordinate employee
of the Bank.
• Except with the permission from competent, no employee incurs an unsecured

debt to an extent exceeding his emoluments of three months.
• No speculation in stocks, shares, giving of guarantee without permission from

competent authority.
• No employee shall marry a foreigner without permission of president except
Muslim citizen of India.
• No one shall open and maintain an account with ay other bank is banker without
previous permission from competent authority.
• An employee guilty of infringing any of the provision of rules mentioned will

render himself liable to disciplinary action including dismissal from service.
4.8.18: Punishment
Without Prejudice to the other provisions contained these rules where an employee who
commits breach of the regulations/other orders issued to him in connection with his
official work or who displays negligence, inefficiency, or indolence or who knowing does
anything detrimental to the interest of the Bank or is guilty of any other act of misconduct
or in subordination the competent authority may impose on him one or more of the
following penalties:-
a) reprimand;
b) postponement or stoppage of increment or promotion;
c) forfeiture of pay for any period of unauthorized absence from duty;
d) recovery from pay of the whole or part of any pecuniary loss caused to the
Bank by the employee;
e) degradation to a lower stage of pay in his grade to a lower grade;
f) compulsory retirement from service;
g) removal from service which dose not disqualify for future employment or
calls upon an employee to resign from service; and
h) Dismissal which will involve permanent disqualification for future

employment in the Bank.
CHAPTER. 05
FINANCIAL STATEMENTS
ALLIED BANK OF PAKISTAN LIMITED
 BALANCE SHEET
 PROFIT AND LOSS ACCOUNT
 CASH FLOW STATEMENT
 RATIO ANAYSIS
5.1 Financial Statements

Allied bank of Pakistan limited
BALANCE SHEET
AS AT DECEMBER 31, 2004
2004 2003 (Rupees
‘000)
ASSETS
Cash and balances with treasury banks 10,842,435 9,443,478
Balances with other banks 1,477,282 1,761,896
Landings to financial institutions 16,175,000 15,361,237
Investments 57,262,834 40,734,616
Advances 58,799,702 40,659,158
Other assets 5,946,710 5,758,689
Operating fixed assets 2,548,375 2,596,133
Deferred tax assets-net 1,155,817 1,200,741
154,208,155 117,515,948
LIABILITIES
Bills payable 2,534,363 1,772,730
Borrowings from financial institutions 11,894,682 2,664,643
Deposits and other accounts 126,391,752 114,218,082
Sub-coordinated loans - -
Liabilities against assets subject to finance lease - -

Other liabilities 3,066,594 2,834,969
Deferred tax liabilities - -
143,887,391 121,490,424
NET ASSETS/ (LIABILITES) 10,320,764 (3,974,476)
REPRESENTED BY:
Share capital 4,313,156 1,063,156
Share premium 10,950,000 -
Statutory reserves 574,703 557,876
Accumulated losses (6,323,707)
(6,490,139)
9,514,152 4,869,107
Surplus on revaluation of assets-net of tax

806,612 894,631
10,320,764 (3,974,476)
5.2 PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER31, 2004
2004 2003
(Rupees ‘000)
Mark-up / return / interest earned 5,177,989 4,984,607
Mark-up / return / interest expensed 771,088
1,154,913
Net mark-up / interest income 4,406,901
3,829,694
Provision against non-performing loans
And advances – net 1,519,682
615,996
Reversal of provision for diminution in the (26,832)
(16,931)
Value of investments – net
Bad debts written off directly 44,229 4,129
1,537,144 603,194
2,869,757 3,226,500
NON-MARK-UP / INTEREST INCOME

Fee, commission and brokerage income 1,255,153
454,784
Dividend income 14,705 15,352
Income from dealing in foreign currencies 265,345 162,151
Income from sale and purchase of securities 14,008
124,273
Income form trading in government securities 35,688
1,074,186
Unrealized / gain on revolution of investments
Classified as held for trading 68 -
Other income 154,682 312, 534

Total non-mark-up / interest income 1,739,649
2,143,280
4,609,406 5,369,780
NON-MARK-UP / INTEREST EXPENSES

Administrative expenses 4,088,685
4,247,103
Provision against other assets 150,179
1,736
(Reversal of provision) / provision against
Off balance sheet obligations (93,427) 265,513
Other charges 7,009 8,558
Total non-mark-up / interest expenses 4,152,446
4,522,910
456,960 846,870
Reversal arising on account of depreciation

Charged on land in prior years -
107,189
PROFIT BEFORE TAXATION 456,960 954,059
Taxation – current (for the year) 158,000
97,012
(For the year) 28,000
209,089
9. Deferred 102,690 262,378
288,690 568,479
168,270 385,580
PROFIT AFTER TAXATION

Accumulated losses brought forward (6,490,139)

(6,811,367)
Transfer from surplus on revaluation
of fixed assets – net of tax 14,989
12,764
(6,475,150)
(6,798,603)
APPROPRIATIONS
Transfer to:
10. Statutory reserve 16,827
77,116
11. Capital reserve -
-
12. Revenue reserve -
-
13. Proposed cash dividend -
-
14. Others -
-
16,827
77,116
Accumulated losses carried forward (6,323,707)
(6,490,139)
Earning per share – basic and diluted (in Rupees) 0.74

3.63
5.3 CASHFLOW STATEMENT

FOR THE YEAR ENDED DECEMBER31, 2004
2004
2003
(Rupees ‘000)
CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxation 456,960 854,059
Less: Dividend income 14,705 15,352
442,255 938,707
Adjustments fort non-cash charges
Depreciation / amortization 200,602 243,443
Reversal arising on account of depreciation
Charged on land in prior years -
(107,189)
Provision against non-performing loans
and advances(Including general provision) 1,519,682
615,996
Reversal of provision of diminution in
the value of investments (26,832)
(16,931)
Unrealized gain on revaluation of held
for trading securities (68) -
(Reversal of provision) / provision against
off balance sheet items (93,427) 265,513
Provision against other assets 150,179
1,736
Net profit on sale of property and equipment (12,685)
(11,450)
Bad debts written off directly 44,294
-
Finance charges on leased assets -

550
1,781,745
991,668
2,224,000
1,930,375
(Increase)/ decrease in operating assets

Lending to financial institutions (813,763)
(4,522,624)
Held for trading securities 12,147
(16,419)
Advances – net (19,536,967)
4,041,116
Other assets (excluding advance taxation) 200,820
2,247,360
(20,137,763)
1,749,353
Increase / (decrease) in operating liabilities
Bills payable 761,633
372,673
Borrowings from financial institutions 9,631,669
(4,822,684)
Deposits 12,173,670
10,334,737
Other liabilities 325,052
(623,366)
22,892,024
5,261,560
4,278,261
8,941,288
Income tax paid (715,979)
(688,467)
Payment against provision for off
balance sheet obligations (167,553)
-
Net cash flow from operating activities 4,094,729
8,252,821
CASH FLOW FROM INVESTING
ACTIVITIES
Net investments in available-
for-sale securities 35,050,801
(9,200,822)
Net investment in held-to-
maturity securities (51,694,132)
717,334
Dividends received 18,510
69,692
Investments in operating fixed assets (190,539)
(119,551)
Proceeds from sale of property
and equipment 36,604
21,480
Net cash flow on investing activities (16,778,756)
(8,511,867)
CASH FLOW FROM FINANCING ACTIVITIES

Payments of lease obligations -
(11,874)
Issue of share capital 14,200,000
-
Net cash flow on financing activities 14,200,000
(11,874)
Increase / (decrease) in cash

and cash equivalents 1,515,973
(270,920)
cash and cash equivalents
at beginning of the year 10,481,649
10,802,775
effect of exchange rate changes on
cash and cash equivalents 108,531
58,325
cash and cash equivalents at end of the year 12,106,153
10,590,180
5.4 Ratio Analysis
Current Ratio
Formula: Current assets/Current liabilities
Years 2003 2004

Ratio 0.21: 1 0.25:1
Net Working Capital
Formula: Current assets - Current liabilities
Years 2003 2004

Ratio -1, 72,455,806 -1, 89,650,733
• Return on Assets
Formula: Net Profit after tax/Total Assets100
Years 2003 2004
Ratio 1.12% 1.35%
• Earning per Share
Formula: Earning available for common stock/No. of

outstanding shares
Years 2003 2004

Ratio 3.63 .74
• Return on Equity Ratio
Formula: Net Profit after tax/equity
Years 2003 2004

Ratio 20.85% 22.53%
• Equity Ratio
Year 2003 2004

Ratio 0.047% .06%
CHAPTER NO.06
My Personal Experience
 PAYMENT OF CHEQUES
 ACCOUNT MAINTENANCE
 REMITTANCE DEPARTMENT
 OTHER WORK DONE
My Personal Experience
6.1 PAYMENT OF CHEQUES

The first work that was assigned to me was Scrutiny and payment of cheques. It is
considered, as the simplest work in consumer banking operations, but actually it is not
that simple. The cheques that are presented for either payment or for deposit are the main
points where most of the frauds occur. Due to this fact, the Token clerk must be vigilant
in his job. There are few points to be noted while scrutinizing a cheque for payment or
deposit,
i) Date of the cheque
ii) Signatures of drawer
iii) Signature of Presenter
iv) Amount in figures and words
v) Branch stamp
vi) Account number of the drawer
vii) Crossing in favor of any other person
Cheques for cash payment are taken from presenter, scrutinized and the presenter is
issued a token. But the cheques, which are presented for deposit in accounts of
customers, are not taken against tokens, rather a pay-in-slip is to be filled in and the
cheque is presented along with that slip. As the cheques are taken for deposit in
customer’s account, a Cheques Receipt Summary is prepared in which cheques are
entered according to their category, i.e., Transfer Delivery, Clearance or Collection.
6.2 ACCOUNT MAINTENANCE

The second major department in consumer banking is the Maintenance of different types
of Accounts. This department consists of the following main tasks:
i) Account opening procedures

ii) Issuance of cheque books
iii) Deposit and withdrawal of cash
iv) Monthly provision of profit
v) Posting of deposit and withdrawals in computer
vi) Issuance and payment of Term Deposit Receipts
vii) Issuance of Call Deposit Receipts
viii) Daily balancing of accounts in computer with other summary sheet
ix) Printing of daily transactions
x) Printing of Balances of all types of accounts (Jotting)
xi) Checking of print-outs
All these procedures, except few, are daily repeated. I have done many of these works
with my own hands and watched carefully the remaining procedures. I have also operated
computer for a few days, which mainly comprises of posting of cheques and vouchers,
posting of transfer delivery and clearance cheques, balance confirmation etc.
I have also issued Call Deposit Receipts. The reason for this activity is that the customer
wanted to take out there money from the accounts in order to skip the deduction of Zakat.
For this purpose, Cars were issued having both applicant and beneficiary the same
person.
I haven’t issued any Chequebook personally, but the procedure is very simple for
issuance. I have opened only one account (Current), and I think it to be sufficient to know
the procedure.
6.2.1 Procedure of opening of an account:

In order to open an account, first of all the customers have to fill a form prescribed by the
bank. The person is required to bring some reference or introduction for opening of the
account.
Some important information regarding introducer e.g. the name and a/c number of the
introducer is written on the space provided on the specimen signature card. Then in order
to find out whether he is a true introducer or not, a letter is sent to him thanking him for
this introduction so that any thing wrong may come into notice. There are different
requirements for different types of accounts and a/c holders.
6.3. Remittance Department

The fourth major department in consumer banking is the Remittance department. This
department is meant for transfer of money to same city or other cities. Money can be
remitted in the following ways:
i) The first and the most popular way of remittance is Demand Draft. During the
one-month training, I have worked on every aspect of Demand Draft from
issuance to payment. Procedure of issuance is the same as that in the manuals of
MCB except that two excise duty vouchers are prepared rather than one, Rs.2
voucher is prepared for sundry creditors and Rs.2 for excise duty. The Head
Office notifies this by a circular during training.
ii) Telegraphic Transfer is the second way to remit money. I have made and
processed only one TT during my training session due to lesser business of TT’s.
iii) Third method is the Mail Transfer. MT business in Rawalakot branch is also low.
I have made two MT’s during my training session.
iv) Pay order is the last instrument to remit money. I have made about six to seven
Pay orders. The procedure is almost the same as those of DD, TT & MT except
that the date on PO leaf is not entered at the time of issue. Moreover the pay order
register is required to be balanced daily for PO’s issued and paid during that
particular day.
Another type of remittance instrument is the Rupee Travelers Cheque. Rawalakot branch
also deals in the issuance and encashment procedures. Unfortunately I have not worked
personally on Rat’s.
6.4. OTHER WORK DONE

The Consumer Banking is not restricted up to the above-mentioned departments. There
are some more activities at the branch, which are as under.
i) Lockers The Rawalakot Branch also extends the facilities of lockers. Lockers are
safe custody boxes for keeping valuable things of customers. During the training I
also got the opportunity to work on Lockers.
ii) Cash Closing at Day End. I have also watched the process of cash closing at day
end. I have tallied the payment and receipt sheets with Token register & cash
books and also checked the vouchers and cheques paid.
iii) Preparation of Transfer & Summary Sheets I have made transfer sheets and
summary sheets at the branch. This process is rather a critical one because the
balances of these sheets must tally with the printed balances of computer each
day.
CHAPTER: 07
PROBLEMS AND RECOMMENDATIONS
 PROBLEMS
 RECOMMENDATION
Chapter: 07
Problems and Recommendations

In the current scenario of globalization, perfect competition in banking sector and slump
in the word’s economy, when we study the performance of ABL, it is considered that on
the whole the bank is contributing a lot towards the industrial development and capital
formation in the country. As it is exhibited from the data regarding the bank’s financial
performance as shown in this report that the bank is sharing major banking business of
the country. Further, the polices and schemes as are introduced and carried on by the
bank are of great source of half in industrial and trading growth. All these things reflect
the great and valuable efforts on the part of executive command of the bank. But as it is
said that nothing is perfect in this world, this might true in the case of ABL too.
So far as my own observations are concerned, I have concluded a major drawback in the
inner current banking system. In addition to that I have also learnt some disciplinary
wrong practices; I discuss these one by one.
7.1: Problems
7.1.1: No proper guidance

There are so many customers both literate and illiterate who even do not know to fill
cheques, pay in slips, application forms, etc. They fritter a lot of precious time of the
bank staff.
7.1.2: Lengthy Procedure

The book keeping system and filing system of the bank is so lengthy, ring and time
consuming that its output is adversely affected. There is an element of sluggishness
associated with it too.
7.1.3: No Equality in Attitude
The behavior of almost all the bankers with all of their customers is not the same; they
pay more attention and good services to some of the customers and neglect a major
portion of them. Some of the customers approach to the bank officials and get their work
done before others. It is definitely not good practice.
7.1.4: Favoritism
No doubt that bank enhances credit and finance facilities to persons and parties seeking
such financial assistance for the establishment of industries or trading units, or for
enhancement, of already existing projects. But the bank provides who may also ensure
the prepayment of amount advanced by providing securities arrangements to comer the
risk of non-repayment. Exactly, the bank should do so because later on the when
question of repayment of debt arises the condition of being financially sound providing
securities only can satisfy this question.
Sometimes, some person or group of person’s chalks out a very useful, sound and
successful plan, goes to the bank and request to advance them credit facility. But the pray
being not financially sound and having no arrangement of securities. So the bank rejects
application of such pray. In this way, such talented persons of country discouraged. This
happens usually due to favoritism, nepotism and red –tapism.
7.2: Recommendation
7.2.1: Effective Advertisement
The bank really lacks a sound advertisement, which could attract more and more people,
and should not rest upon existing customers. The bank should launch luring advertising
campaigns thought out the year to promote habit of saving in the people and to attract
new deposits and sustain.
7.2.2: Proper Planning
Bank should make a plan to accelerate its recover efforts on war footing and re-organize
the recovery function on global basis. In addition to this, bank should tighten up control
on expenditures, curtail extra lavishness and costs. Risky schemes should avoid in which
return is uncertain. Right people for right job must be appointed.
7.2.3: Division of Labor
If bank wants to get specialized in every walk of banking field then there must be
division of labor to eliminate extra and un-necessary burden on the employee of the bank.
Working conditions must be improved resulting in enhancement of efficiency of
employee.
7.2.4: Concentration on Current Deposits
More and more stress should be laid on acquiring current deposits and sustain existing
ones in order to reduce cost (interest) on deposits. Deposits must be taken at a lower cost
and given at higher interest rates to earn more profit.
7.2.5: Check On Expenditures
Un-necessary and non-productive expenditures must be controlled and cut-down.

Lavishness and extra-ordinary protocol for the entertainment of executives should be
curtailed and abolished.
7.2.6: Proper Guidance
Bank should adopt such an induction plan that when a customer opens his account with
the bank he should be supplied with a booklet written in simple language which enables
him to know the procedure of filling the cheques, pay in-slips, etc. It will save a lot of the
bank‘s staff precious time during the conduct of banking business and also ease the
customers.
7.2.7: Recruitment Procedure
There should be an open invitation to competitive and qualified professional degree

holders and young energetic blood purely on merit basis to get the efficient and
hardworking employee. Political pressures, influential approaches should be
accommodated.
7.2.8: Qualitative Advancing /Financing
The bank should avoid as much as possible to give loans to the politicians, ministers and
corrupt people or groups because recovery of loan is almost impossible form them. The
honest and deserving industrialist will always repay the loan before time to maintain his
reputation and credit standing in the eyes of bank.
CONCLUSION
Allied Bank of Pakistan, no doubt, doing well in the field of banking and it is aimed to
provide better services to its customers. It is specially performing its activities in the
customer advances.
It has a lot of potential to progress in future. The bank can do the good job of opening
branches in the rural areas that will, not only boost saving but also help the people to
raise their standard of living through these savings.
The staff in the bank is found to be very cooperative towards subordinates. I wish that the
bank may progress by leaps and bound, and keep on providing internship to students with
the same dedication.
Summing, I pay my deep gratitude to the bank for providing me with the opportunity of
having internship with it.
Bibliography
 Doyle E.P “Practice of Banking” 3rd. Ed., Richard Clay, Bungay, Suffgolk, 1981,
pp.26
 Meen S.A “Money and Banking in Pakistan”2nd.Ed.Royal Book Karachi,

Pakistan,1977.pp.38
 Allied Bank Limited, Annual Report 2003” printed at a Elite Fax 2579536. pp.4,
6, 14, 59.
 ABL“Monthly Economic Letter” Federal Budget 2000-2001, Researchwing,

Karachi pp-33
 www.abl.pk.com
Contents
Chapter. 01
WHAT IS BANK? 02
BANKING IN DEVELOPING SOCIETIES 02
NEW CHALLENGES OF CONTEMPORARY AGE: 03
HISTORY OF ALLIED BANK LIMITED 04
DENATIONALIZATION OF ALLIED BANK LIMITED 04
ALLIED BANK LIMITED TODAY 04
PRIVATIZATION OF THE BANK 05
BRANCH NETWORK & ASSOCIATED BUSINESSES 07
INTERNATIONAL OPERATIONS 08
ASSOCIATED BUSINESSES 08
CHAPTER. 02
PRODUCTS AND SERVICES OF THE BANK
DEPOSITS 11
ADVANCES 13
FOREIGN SERVICES 14
UTILITY SERVICES 15
ABL MAHANA AMADANI SCHEME 16
CHAPTER. 03
DEPARTMENTS
ACCOUNT OPENING AND CLOSING DEPARTMENT 18
TYPES OF ACCOUNTS 18
CASH DEALING DEPARTMENT 21
STOP PAYMENT INSTRUCTIONS 22
COMPUTER TERMINAL PROCESS 22
CLEARING DEPARTMENT 25
POSSIBLE INSTRUMENT AT CLEARING DEPARTMENT 25
COLLECTION OF CHEQUES 25
CHAPTER: 04
MANAGEMENT
RESPONSIBILITIES 30
STRATEGIES 30
HUMAN RESOURCE DEVELOPMENT IN ABL 31
JOB ADVERTISEMENT 33
CLASSIFICATION OF STAFF 33
APPOINTMENT 34
RECRUITMENT 35
CONDITIONS OF APPOINTMENT 35
CHAPTER. 05
FINANCIAL STATEMENTS
ALLIED BANK OF PAKISTAN LIMITED
BALANCE SHEET
48
PROFIT AND LOSS ACCOUNT 49
CASH FLOW STATEMENT 51
RATIO ANALYSIS 56
CHAPTER NO.06
MY PERSONAL EXPERIENCE 58
PAYMENT OF CHEQUES 59
ACCOUNT MAINTENANCE 59
REMITTANCE DEPARTMENT 61
OTHER WORK DONE 62
CHAPTER: 07
PROBLEMS AND RECOMMENDATIONS

PROBLEMS 64
RECOMMENDATION 65
CONCLUSION 68
BIBLIOGRAPHY 69

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Allied Bank Of Pakistan (Ltd)

 BANKING IN DEVELOPING SOCIETIES

 NEW CHALLENGES OF CONTEMPORARY AGE

 HISTORY OF ALLIED BANK LIMITED

 DENATIONALIZATION OF ALLIED BANK LIMITED

 ALLIED BANK LIMITED TODAY

 PRIVATIZATION OF THE BANK

 BRANCH NETWORK & ASSOCIATED BUSINESSES

BANKS AND SCOPE OF BANKING

1.1: WHAT IS BANK?

1.2: BANKING IN DEVELOPING SOCIETIES

Commercial banks in developing countries have to make vigorous efforts of resource

1.3: NEW CHALLENGES OF CONTEMPORARY AGE

1.4: HISTORY OF ALLIED BANK LIMITED

1.5: Denationalization of Allied Bank Limited

1.6: Allied Bank Limited Today

The bank is principally engaged in providing corporate banking facilities to Pakistan’s

1.7: Privatization of the Bank

Share Holding Pattern

Total 106,315,565 100.00

1.8: Branch Network & Associated Businesses

1.8.1: Local Branch Network:

1.8.2: ABL Branch Network Region Wise

Total 558 775

1.9: International Operations

1.9.1: Habib Allied International Bank Plc (“HAIB”)

1.9.2: Global Transactions:

1.10: Associated Businesses

1.10.1: First Allied Bank Modaraba:

 Commercial Lending: provides both fund as well as non-fund based

 Consumer Banking: the Bank operates a growing credit card

 Treasury Operations: the Bank’s treasury employs some of the

 Credit Department: with its 59 year banking history, ABL is highly

 Technology: Currently, there are 558 computerized

PRODUCTS AND SERVICES OF THE BANK

 ABL MAHANA AMADANI SCHEME

2.0 PRODUCTS AND SERVICES OF THE BANK

 Short term deposits

 Fixed deposit receipts

A brief explanation of the above stated accounts is given below:

2.1.1 CURRENT ACCOUNT

2.1.2 Saving Account

2.1.3 Fixed Deposit Receipts

2.1.4 Short Term Deposits

2.1.5 Foreign Currency Deposits

 Foreign Currency Accounts

2.1.5.1. Foreign Currency Current Accounts

2.1.5.2 Foreign Currency Saving Accounts

2.2.1 Categories Of Advances

2.3 FOREIGN SERVICES

 Documentary Letter of Credit

A brief description on of above stated services is given under:

2.3.1 Documentary Letter Of Credit

2.3.2 Bills for Collection

2.4 Utility services

2.5 ABL Mahana Amadani Scheme

 ACCOUNT OPENING AND CLOSING DEPARTMENT

 CASH DEALING DEPARTMENT