This report is the practical part of the most vital practice of our MBA-Banking finance program. The sole objective of my activity is to familiarize with the practical manipulation of business organization. This report has been written to know how big organizations like Askari Bank manage their teams to achieve their common goals.
In the first phase of the report there is the general introduction about the company and then different terms have been explained, then the mission, values, different services and different strategies of the organization have been explained. In the next part, SWOT analysis of the firm have been done by the help of which it is identified that what are the strong areas of the company and where it lacks so
that it can improve, and then in the end most important my experience while visiting in the Askari Bank
Introduction of Topic
Functions of Commercials banks:
1. Receiving Deposits:
This is the main function of commercial banks to collect savings of individuals and firms. They offer different types of deposits for the facility of the customers.
i. Current Account or Demand Deposits:
Any amount can be withdrawn from this account any time without any notice. No interest is allowed on this type of account.
ii. Saving Account:
This type of deposit account which is usually held by the middle class group. The
saving account carries lower rate of interest.
iii. Fixed Deposit:
Amount cannot be withdrawn before the fixed future date in this type of deposit. High interest is allowed in fixed deposit which is different according to period.
2. Advancing Loans:
This is the important function of the commercial bank. Credit is given to the people in different ways.
(a.): Making Loans:
There are three types of loans given to borrowers.
i. Short Term Loans:
These loans are advanced for the period of six months to one year. High Interest rate
Is charged on this type of accounts.
ii. Medium Term Loans:
Loans from one to five years are called medium term loans.
iii: Long Term Loans:
Loans which are advanced for the period, more than ten years are long term loans.
(b.): Bank Overdraft:
Banks allows their trustful customers to draw more than the deposit they have in the
Bank. Bank charges interest on overdraft.
(c.): Cash Credit:
Bank also gives credit against immovable property and interest is charged by the
bank.
(d.): Discounting of Bills:
This is income source of bank to discount bills of exchange. They charge nominal
Interest and discount only reputed and clear bills of exchange
Practical study
Practical study of Organization
Askari Commercial Bank Limited is a division of Army Welfare Trust of Pakistan. Askari Commercial Bank Limited was incorporated on
October 9, 1991. The Bank obtained business commencement certificate on February 23, 1992 and started its operations from April 1, 1992. It is a public limited company and its shares are listed in all three stock exchanges of Pakistan i.e. Karachi Stock Exchange, Islamabad Stock Exchange and Lahore Stock Exchange.
Askari Bank has expanded into a nation wide presence of 115 branches and an offshore Banking Unit in Bahrain. A shared network of over 1300 online ATMs covering all major cities in Pakistan supports the delivery channels for customer service. As on December 31, 2005 the Bank had equity of Rs.8.6 billion and total assets of Rs.145.1 billion, with over 600,000 banking customers, serviced by 2754 employees.
Askari Commercial Bank Limited works under the prudential regulations of the State Bank of Pakistan and is engaged in business of banking as defined by the Banking Companies Ordinance 1962. State Bank of Pakistan awarded license for Islamic Banking branch operations of November 21, 2005. The authorized capital of Askari Bank is Rs.50 Million.
History:
Askari bank Ltd (formerly Askari Commercial Bank) was incorporated in Pakistan on October 9, 1991, as a Public Limited Company. It started its operations during April 1, 1992. The bank principally deals with banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on the Karachi, Lahore & Islamabad Stock Exchanges and its shares are currently the highest quoted from among the new private sector banks in Pakistan.
Askari bank has expanded into a nationwide presence of 150 branches, and an offshore banking Unit in Bahrain. In the success story of ASKARI BANK, one of the most important factors, apart from its dynamic management and prudent approach, is the Quality of its Services, which gives it a great edge over its competitors. ASKARI BANK has always strived to facilitate its customers by introducing various high quality hi-tech services for the first time in Pakistan which ultimately reduce the counter time of customers.
Askari bank has also achieved another milestone with the launch of Askari bank Zari Credit Card. This is the ever first credit card offered to the farmers in Pakistan with complete product features and service benefits. It aims to meet farmer's production and development needs and to supplement cash flows, whenever required. It is also a matter of satisfaction that ASKARI BANK has been the first bank to introduce PTCL and WAPDA utility bills payment electronically through ATM and Internet on an Online-Real-Time Basis. For the first time in Pakistan, they have introduced Mobile ATMs to provide banking facilities at the doorsteps of their customers. Phone Banking and Internet Banking Facility allows the customers, to access their accounts from anywhere in the world, and effect transactions. Bank has established its Data Warehouse and Customer Care Centre, a dedicated customer call center to provide one window service to their valued customers in terms of their telephonic enquires.
VISION
To be the Bank of First Choice in the region
Mission
To be the
Leading private sector bank in Pakistan
With an international presence,
Delivering quality services
Through innovative technology
And effective human resource management
In a modern and progressive organization
Culture of meritocracy, maintaining
High ethical and professional standards,
While providing enhanced value to all our stake-holders,
and contributing to society.
CORE VALUES
The intrinsic values, which are corner stone's of Askari corporate behavior, are:
• Commitment
• Integrity
• Fairness
• Team-work
• Service
Objectives
To achieve sustained growth and profitability in all areas of business.
To build and sustain a high performance culture, with a continuous improvement focus.
To develop a customer-service oriented culture with special emphasis on customer care and convenience.
To build an enabling environment, where employees are motivated to contribute to their full potential.
Askari is committed to its identity of "security & trust" and will endure to uphold this image at all the times.
To maximize use of technology to ensure cost-effective operations, efficient management information system, enhanced delivery capability and high service standards.
To manage the Bank's portfolio of businesses to achieve strong and sustainable shareholder returns and to continuously build shareholder value.
To deliver timely solutions that best meets the customers' financial needs.
To explore new avenues for growth and profitability.
Products & Services
Current Account
Askari Investment Certificate
Askari Deposit Accounts
Askari Quality Deposit
Askari Halal Certificates of Aasaan Monthly Mudarabah
Askari Wakalah- tul- Istismar.
Clearing Cheques.
Demand Drafts, Pay Orders.
Lockers facility.
Utility Bills Collection.
Askari Ijarah Bi Sayyarah.
Askari Home Musharakah.
Practical study of the organization with respect to issue
Functions
Corporate & Investment Banking
Personal Banking
Mortgage Finance
Auto Finance
Business Finance
Travellers Cheques
Profit / Markup Rates on Retail Products
Askari Commercial Bank provides two types of loan that are:
1. Fund Based Loan
2. Non Fund Based Loan
1. Fund Based Loan
In this type of finance, bank actually deploys its funds and mark up is charged
on it. ACBL provide the following types of fund-based loan
Running Finance
It is also called "over draft" because ba nk provides an extra credit limit to customer existing current account. Running finance is a secured loan because bank provides extra credit limit against some collateral security or hypothecation security. Hypothecation is prime security. The customer can avail this credit limit at any time of the maturity time period; which is normally one year. But if the conduct of customer is satisfactory and customer can avail this facility to the extended period, then this limit is roll over to next year.
The cheque book is issued and customer is flexible to draw with in the drawing power. The customer is allowed to withdraw the defined extra credit limit or a portion of it. The customer has free will to debit or credit his account again and again up to specified time period of maturity, so it is called running finance. Rate of mark up varies in every case. Mark up is calculated at daily basis. The mark up is not charged on the full amount of credit limit and not for whole period. But it is charged on the drawing amount and only for that day the customer holds this drawing amount. So running finance is not a regular source of income for the bank.
i. Cash Finance
Cash finance is like a running finance but it is extended against the pledged security like inventory or stock and 25% cash margin is also charged. The pledged stock is also insured from any insurance company and the customer also pays all the insurance and any other security expenses. The chequebook is not issued so the customer has no fee will to debit or credit the amount. But if customer wants to draw stock then he will deposit amount equal to the stock and bank will issue delivery order in favor of customer. Mark up is charged over the full loan amount and for whole time period of maturity.
(ii) Term Finance
In the finance, replacement schedule of loan is mentioned along with loan amount, time period and mark up rate. Term finance has maximum time limit of 5 year. Mark up rate varies according to nature of offered security and time period but now a day it exists between 7 to 10 %. Replacement schedule contains monthly installment in which amount of markup and principle (deducting adjusted amount of principle from the actual principle amount) term finance is profitable for the bank because it generates regular income for bank.
ACBL issue two types of Term Finance
a. Clean term finance
b. Secured term finance
Clean Term Finance
These loans are extended without holding any security by the bank. ACBL extend clean finance only to Army personnel against their salary account and after the approval of their commanding officer. Every commissioned officer of Army can take loan. Rate of mark up is 12%. If customer applies for Rs.25, 000 then branch credit can extend this loan but if the amount is greater then it is approved by the high level.
Secured Term Finance
Secured term finance is for business entities. These finances are extended against security like stock or inventory. Cash security margin is received the major portion of security is pledge and remaining is hypothecation or mortgaged so pledged security is the prime security. The business entities can avail this facility for the following three purposes.
Askari Mortgage Finance offers you to get Home Loan Financing with five variations:
Build a Home (Tranche Loans)
Buy a Home
Buy a plot and Construct
Renovation
Balance Transfer Facility
Build a Home: This type of loan is extended to customers who already own a piece of land and need funds to meet cost of constructing property on that land. The disbursement of this loan is made in four or less tranches during the construction phase depending upon the bills of quantity (BOQ) submitted by the customer and the quantity and quality of construction done.
Buy a Home: As the name suggests, this type of loan is meant for the purchase of an already constructed property.
Buy a Plot and Construct: This loan type is extended for the customers who want to buy a plot and construct a property on that plot. The disbursement of this loan is made in lump sum for the purchase of plot and then in four or less tranches during the construction phase depending upon the bills of quantity (BOQ) submitted by the customer and the quantity and quality of construction done. The bifurcation of limit for purchase of plot and construction will be applicable as per prevailing SBP prudential regulations.
Renovation: This loan is offered to customers who already posses a house and require funds for renovation/ improvement. Disbursal will be made only after customer has provided BOQ and an undertaking for utilization of this facility for the purpose of renovation/ improvement.
Balance transfer facility: This kind of loan is offered to existing borrowers of other institutions, who may want to switch over to Askari Bank Limited because of service, pricing or relationship reasons. The loan with the other financial institute should have been paid in accordance with bank's credit history and debt burden requirements. Balance transfer facility is strictly not allowed for the properties that are still under construction.
SWOT Analysis
Strengths
The Pakistan army is supporting to Askari Commercial Bank. It builds trust of client on Bank. Being a bank of Pakistan Army, Askari bank has competitive edge on its competitors.
Holds a sound repute in the financial circle
ASKARI BANK has huge amount of deposits due to their attractive returns.
ASKARI BANK generates positive operating cash flow which provides return to the debt and equity holders.
ASKARI BANK maintains Dividend Equalization Reserve to payoff dividend even when a bank face decline in profit.
M/S PACRA has awarded the Bank with the credit rating AA Strengths for Long term and A1+ for Short term.
ACBL has launched its Mobile ATM Bus Service, which is the Pakistan's First Mobile ATM Bus Service. No other bank has taken initiative of mobile ATM Bus yet.
The Askari bank has a large network of branches. There are 155 branches all over the Pakistan.
Personalized services of the staff to the employees
All the transactions and information regarded the customer's deposits has been computerized. Currently, Unibank System is being practiced for this purpose. Now Askari Bank is decided to change the Unibank System
Askari's management is quite prepared to adopt the latest advancements in technology resulting in revolution in the banking operations such as check clearing process, computer based teller equipment, automatic teller machines, and electronic funds transfers among the others.
Maintaining the healthy correspondent relationships with foreign banks
Weaknesses
ASKARI BANK is not so good to cover its net markup expenses.
More than 90% of its total assets are financed through debt which increases risk of the bank.
ASKARI BANK has no optimal capital structure to attract their potential investor.
Inefficiency of credit department to check debtor's credibility.
ASKARI BANK financial statements does not show stable relationship between operating cash flow and net income so consequently it fails to indicate "Quality earnings".
It is becoming clear that the true lasting competitive advantage comes through human resources and how they are managed. ASKARI BANK seems to not focusing on this highly critical issue as the job satisfaction level of the employees working at ASKARI BANK, was quite low.
Since, ASKARI Banks' major competitors are Union Bank Limited and Bank Alfalah has started large media campaign, so keeping in view these threats, Askari bank should emphasize more on its advertisement.
Division of work and description of job is not properly defined to each and every staff member.
Opportunities
As economy is growing, there is more investment demand in Pakistan. Banks have opportunity to enhance their business. So, there is a strong potential for growth.
All the opportunities of the 21st century are to be availed in the information technology. Information technology is the future. Therefore ASKARI BANK should emphasize much on IT,
Sharp increase in Imports and exports of the country.
With the threat of WTO, SMEs require more funds to enhance their infrastructure to improve the quality. Banks are the source of these funding.
ASKARI BANK should emphasize on E - Banking. In which Bank can design a universal account like other foreign banks, to enhance online facilities.
Emerging interest towards Islamic Banking.
Threats
The Askari bank has major GOVT. deposits. With change of government policies it may affect the bank.
Entrance of foreign bank in competition with local bank is great threat for The Askari bank.
ASKARI BANK should enhance its Branch Network, in order to capture the market of different areas.
ASKARI BANK should enhance the Pay Packages given to the employees, because it has been noticed that the competitors of the ASKARI BANK are giving more suitable pay package to their employees.
Askari bank is facing a strong competition by its major competitors; Union Bank and Bank Alfalah. Business of these banks is also growing with very high pace. So in order to achieve the sustainable growth in a market, ASKARI BANK has to remain vigilant about the ever changing environment and the competitors.
The State Bank of Pakistan often imposes various restrictions on banks. Therefore, none of banks is independent in policy making and can launch any product without the permission of the State Bank of Pakistan.
Government legislations about banking sector.
Conclusion
After doing work in ACBL, I am in a position to conclude that the services provided by the bank to the customers are properly screened and checked and there are almost 0% chances of error or ambiguity. The working environment of the bank is also very much friendly and cooperative. The bank has a unique status among other banks because of its low profit rates, security deposits and quick processing methods for processing of applications. There is a good training system for the internees as well. The staff currently working in the bank is highly cooperative and experienced.
I would also like to avail the opportunity to thank all employees of the bank who helped and guided me in such a nice way, and also to my institute who provided me this opportunity as a course requirement to get a practical life exposure.
