INTERNSHIP REPORT

Submitted to:

Professor
Dr. Muhammad Aamir

Submitted by:

Name: Asad Ahmed

Roll: BC18-624

7th Semester, Afternoon „B‟

Session: 2018-2022

(Hailey College of Commerce, University of the Punjab, Lahore)

The Bank of Punjab

Letter Issued by
Hailey College of Commerce, University of the Punjab, Lahore.

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The Bank of Punjab

Internship Completion Certificate

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The Bank of Punjab

Letter addressed to the concerned teacher about the submission of the report

Supervisor,
Prof. Dr. Muhammad Aamir,
Hailey College of Commerce,
University of the Punjab, Lahore.

Respected Sir,
I am pleased to present you the internship report, work place BOP Haji Pura Branch (0220),
Sialkot, dated from 1st July, 2021 to 6th August, 2021. I assure that I made this report
according to the format guided by the college administration. I cover all the major functions
performed during the internship period I learned by the supervisors of the bank. I learned
many professional skills during this period of time. I also make you sure that the data I submit
in this report is collected with my best intention and to the source available for the data
collection and submission.
Finally, the internship report includes the audited financial statements as per the
requirements, and some additional documents.

Thank you for your time and consideration.

Yours obediently,
Asad Ahmed,
Roll: BC 18-624,
Section: B “Afternoon”

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The Bank of Punjab

AREAS COVERED BY THE REPORT

Areas covered by the report are given as follow:

 Introduction of BOP / History

 Vision Statement

 Mission Statement

 Organizational structure

 Functions of Various Departments

 Plan of my internship program

 Training program

 Financial analysis

 Ratio analysis

 Ratios Calculated By Bank of Punjab

 SWOT analysis of bank

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The Bank of Punjab

ACKNOWLEDGEMENT

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

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

I express my heartiest and sincerest sense of gratitude to respectable persons,

(SBP) coordinators of IBP (Institute of Bankers Pakistan Karachi) under whose
proper guidance, skillful suggestions and constructive criticism, this work got its
present shape.
I owe depth of gratitude to my loving parents, and brother who supported me
morally and inspired me to the higher ideas of life. My appreciation also goes to all
those friends who provided me any assistance in what so ever manner in the
preparation of this study.

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

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

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The Bank of Punjab

Preface
B.Com (Hons.) curriculum is designed in such a way that student can take hold of
maximum knowledge and can get practical exposure to the corporate world in
minimum possible time. Business schools of today realize the importance of practical
knowledge over the theoretical base.

The internship report is necessary for the partial fulfillment of B.Com (Hons.)
Curriculum and it provides an opportunity to the student in understanding the industry
with special emphasis on the development of skills in analyzing and interpreting
practical problems through the application of theories and techniques.

It is a new platform of learning through practical experience, which gives the learner an
opportunity to relate the theory with the practice, to test the validity and applicability of
his classroom learning against real life business situations.

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The Bank of Punjab

Contents

AREAS COVERED BY THE REPORT ............................................................................... 5

ACKNOWLEDGEMENT ..................................................................................................... 6
1. EXECUTIVE SUMMARY .............................................................................................. 12
1.1 INTRODUCTION OF BOP / HISTORY ................................................................ 13
1.2 Vision and Mission statement............................................................................... 15
1.3 OBJECTIVES ....................................................................................................... 19
1.4 COMPETITORS ................................................................................................... 19
1.5 MAJOR CUSTOMER OF THE BANK OF PUNJAB ............................................. 20
1.6 ORGANIZATIONAL STRUCTURE ...................................................................... 20
DIVISION AND DEPARTMENTS ......................... ERROR! BOOKMARK NOT DEFINED.
1.7 Branch Network of Bank of Punjab ...................................................................... 23
1.8 Organizational Hierarchy ........................................ Error! Bookmark not defined.
1.9 FUNCTIONS OF DIVISION.................................................................................. 24

2. BRANCH STRUCTURE ................................................................................................ 30

STRUCTURE OF THE BRANCH ............................................. ERROR! BOOKMARK NOT DEFINED.
2.1 SERVICES ........................................................................................................... 31
2.2 Deposit section....................................................... Error! Bookmark not defined.
2.3 Nature of deposits .................................................. Error! Bookmark not defined.
2.4 Account Opening Section ..................................................................................... 40
2.5 Clearing Department ............................................................................................ 41
. .................................................................................................................................. 42
2.6 Remittance Department ....................................................................................... 42
2.7 Advances/Credit Department ............................................................................... 46

3 PLAN OF MY INTERNSHIP PROGRAM ....................................................................... 51

3.1 First and second week ......................................................................................... 52
3.2 Third and fourth week .......................................................................................... 52
3.3 Fifth week ............................................................................................................. 52
3.4 Sixth week ............................................................................................................ 52
3.5 Seventh week......................................................... Error! Bookmark not defined.
3.6 Eighth week............................................................ Error! Bookmark not defined.

4 TRAINING PROGRAM .................................................................................................. 52

4.1 ACCOUNT OPENING DEPARTMENT ................................................................ 53
4.2 ACCOUNTS DEPARTMENT ............................................................................... 54
4.3 REMITTANCE DEPARTMENT ............................................................................ 55
4.4 CLEARING DEPARTMENT ................................................................................. 56
4.5 HUMAN RESOURSE DEPARTMENT ................................................................. 57
4.6 ADVANCE AND CREDIT DEPARTMENT ........................................................... 58

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The Bank of Punjab

5 FINANCIAL ANALYSIS ....................................... ERROR! BOOKMARK NOT DEFINED.

5.1 Critical Analysis: ................................................................................................... 61
5.2 Financial Analysis ................................................................................................ 72

6 SWOT ANALYSIS ......................................................................................................... 78

6.1 Strengths .............................................................................................................. 78
6.2 Weaknesses......................................................................................................... 78
6.3 Threats ................................................................................................................. 79
6.4 Opportunities ........................................................................................................ 79

7 CONCLUSION ............................................................................................................... 80
8 RECOMMENDATIONS .................................................................................................. 82
9 BIBLIOGRAPHY ........................................................................................................... 83

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The Bank of Punjab

Economic Review:
During the first eight months of FY20, prudent monetary and fiscal policies, supported by
the IMF‟s Extended Fund Facility program, helped the economy move progressively along
the stabilization path. The economy also saw a notable, smooth transition to a market-
based exchange rate system, which was pivotal to addressing the external imbalances
and rebuilding the foreign exchange reserves buffer. This structural adjustment, along with
the government‟s adherence to its commitment of zero SBP borrowing, improved overall
monetary management and functioning of financial markets. A significant contraction in the
twin deficits was visible from the start of the year. However, just as early signs of this
recovery were beginning to emerge, the global and domestic spread of the coronavirus
(COVID-19), and ensuing containment measures, hit the economy hard. Manufacturing,
retail, transport and trade-related activities were disrupted, causing a severe contraction in
real GDP growth. At this critical point, better macroeconomic fundamentals and subdued
inflation risks provided policy space to extend relief measures to businesses and
households; without these measures, the economic and social fallout of the COVID crisis
would have been much worse. The Country‟s external and fiscal sectors posted strong
performances compared to last year, before the domestic spread of COVID -19. In
particular, the current account had posted a significant improvement in the first 8 months
of the year. The economy also saw a record surge in foreign investment in the domestic
debt market, as global fund managers expressed confidence in better macroeconomic and
exchange rate policies while tapping on the interest rate differential and tax-related
reforms. The elevated level of foreign exchange inflows allowed the SBP to unwind its
short-term forward and swap contracts to the tune of US$ 5.2 billion during the period.
Similarly, on the fiscal front, the consolidation momentum gathered pace during the pre-
COVID -19 period, as reflected in the first primary surplus over the first nine months of the
fiscal year since FY16. On the revenue side, the government reversed multiple tax
concessions given last year, which led to an increase in the GST rate on petroleum
products, resumption of collections on telecom, and an increase in the minimum threshold
for income tax collection. Trends in inflation also pointed toward subsiding demand-side
pressures. Although inflation in the non-food-non-energy segment of CPI remained at an
elevated. Nonetheless, supply-side pressures remained strong in the food market, as
temporary disruptions triggered speculative sentiments and contributed to price build-up.
Thus, at the time the COVID -19 infections began to increase, the country had already
made noticeable gains on the macroeconomic stability front. This made it possible to
extend aggressive policy support to businesses and households to help them cope with
the necessary mobility restrictions and ensuing supply-chain disruptions. Those in special
need of immediate policy support included manufacturing firms and a number of services
concerns, especially in the hospitality industry. Wherever possible, the adoption of digital
channels supported business continuity, but given the weak digital landscape, most
businesses struggled. Although the agriculture sector remained largely immune to the
COVID -19 shock (since major crops for the year had already been harvested), repayment
risks began to emerge in the farm segment of micro loans. Consequently, the scale and
breadth of the needed efforts meant that the relief measures would entail large fiscal and
quasi-fiscal costs, requiring adjustments in the consolidation agenda. Accordingly, the
government expanded the volume and outreach of its ongoing social uplift programs,
enabling over 12 million households to receive emergency cash transfers (Rs 12,000 per

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family) for meeting essential needs. At the same time, the SBP arranged cut in policy rate
by 625 bps in a roughly 3-month time period, which not only favorably re-priced most of
the existing loans by the private sector, but also made borrowing viable for firms that
would otherwise have been priced out due to high interest rates and weakened
profitability. Importantly, the SBP also rolled out multiple unprecedented schemes,
including the deferment of principal repayments; subsidized financing for firms to pay
salaries to their employees; relaxations in operational criteria for export related refinance
schemes; and concessionary refinance facilities for investment projects and hospitals.
Businesses have shown a keen interest in these financing schemes and actively used
them to plug their cash flow gaps. Put together, the estimated liquidity impact of the SBP‟s
relief measures was equivalent to 4.0 percent of GDP. As things stand, Pakistan has
managed to control the virus spread to a great extent during its first wave. While the
prevalent risk of another spike calls for a continuation of social distancing norms, the
reopening of the economy, including services, has helped reduce some of the uncertainty
around the overall macroeconomic outlook

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The Bank of Punjab

1. EXECUTIVE SUMMARY

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

Functionally it is divided into different divisions with each division headed by a

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

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

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

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

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The Bank of Punjab

1.1 INTRODUCTION OF BOP / HISTORY

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

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

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

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

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

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The Bank of Punjab

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

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

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The Bank of Punjab

1.2 Vision and Mission and Value

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Introduction of new policies and revamping existing ones:

The new vision and strategy required a cultural shift within the organization for which
existing policies and procedures needed to be streamlined and new once introduce to
reflect the paramount focus on the welfare of the employees. For such purpose the
following policies were introduced:
 Diversity & Inclusion
 Internal Communication Policy
 Gift Policy
 Prevention from Harassment Policy
 Staff Finance Policy (amended)
It is worth highlighting that the management has amended the existing staff finance policy
to incorporate the best industry standard. The mark up on staff finances was reduced by
1%making bop one the most competitive bank in terms of IRR on staff finance. In addition
to this the maximum staff house finance limit was enhanced to RSs. 50 million from
existing Rs.30 million, and the restriction of minimum period to avail the second house
finance has been reduced to five years from the existing 7 years. Additionally, the
Motorcycle transport loan has been made markup free, whereas the Staff Transport
finance limit has been increased from Rs. 5 million to Rs. 8 million to manage the impact
of increase in the vehicle prices. These policy changes are a reflection of the
management's resolve to focus the present year for the welfare of the employees.

External Collaboration:
In pursuit of the same philosophy, and to provide the most effective learning opportunities to
the employees, to transform BOP into a Centre of Learning & Excellence, the People &
Organizational Excellence Group inked MOUS/agreements with learning institutions par
excellence namely IBA Karachi.

Diversity & Inclusion:

In line with the management's policy of bringing a cultural shift within the organization to
create an inclusive environment which embraces individuals' unique differences and fosters
inclusion; the People & Organizational Excellence Group entered into MOUS with

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The Bank of Punjab

organizations such as COMCON and STEP for the inclusion of differently abled persons into
the organization and helping the Bank to create a culture of diversity.
Learning & Development:
Capacity building of the staff is one of the key areas as we transition towards our journey
to be the top learning organization. The cultural shift towards transforming BOP into a
Centre of Learning & Excellence is the central pillar of the new strategy. In pursuit of this,
the People & Organizational Excellence Group has entered into an agreement with the
Institute of Bankers Pakistan, Karachi; an institution par excellence, engaged in the
training & development of the bankers in the country for provision of virtual courses for all
employees of the bank.

1.2.3 CORE VALUES

These are the values we celebrate:
Our Customers:
As our first priority
Profitability:
For the prosperity of our stakeholders that allows us to constantly invest, improve and
succeed
Corporate Social Responsibility:
To enrich the Lives of community where we operate
Recognition and Reward:
For the talented and high performing employees
Excellence:
In everything we do
Integrity:
In all our dealings
Respect:
For our customers and each other

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The Bank of Punjab

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

1. To provide speedier services to the common man.

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

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

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The Bank of Punjab

1.5 MAJOR CUSTOMER OF THE BANK OF PUNJAB

Some major clients of the bank of Punjab are given bellow;

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

1.6 Organizational Hierarchy

Chairman

Managing
Director

General
Manager

Regional
Officer
Area
Manager
Branch
Manager

Operation
Manager

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1.7 ORGANIZATIONAL STRUCTURE

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1.8 Branch Network of Bank of Punjab

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Head Office and the main branch of BOP is situated in Gulberg 3, Lahore and Egerton,
Lahore respectively.

The Bank has been divided into seven regions.

 Lahore Region

 Faisalabad Region

 Gujranwala Region

 Rawalpindi Region

 Karachi/Quetta Region

 Multan Region

 Peshawar Region

1.9 FUNCTIONS OF DIVISION

1.9.1 Administration/Human Resource Division

G.M

Admin & Officer‟s Training

Establishment Institute

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

1.9.2 Operations Division

G.M

Computer Dept.

Stationary Dept.

Eng. & Maintenance

O & M Department

This Division is concerned with the operational working in general banking, which is
concerned with the routine working of the bank. Any problem or ambiguity arise in any branch

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working are rectified and suggested for correction by this division. This Division usually takes
technical procedures involved the decisions like commissions. And also,

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

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

1.9.3 BUSINESS DEVELOPMENT DECISION

G.M

Marketing PRP
Cell Department

It is the other name of the marketing division. It promotes the bank cause i.e. deposits and
work for the over all development of the bank. Deposits are the lifeblood of any bank. Without
deposits bank cannot perform any function of banking. This division fixes the deposits target
of every branch by keeping and eye over the potential customers in the area. It gives
motivation to branches to achieve their targets through different campaigns and schemes like
cash prizes and special increments. It publishes a bulletin in which those branches are
encouraged who achieves their monthly targets. The main function is to develop and attract
the customers and depositors. It also manages:
 Advertising policy
 Sales promotion.
 Schemes offered by the bank

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The Bank of Punjab

1.9.4 CREDIT DEVISION

G.M

Agriculture Credit Wing

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

 Prepare the policies regarding the sanctioning loan

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

1.9.5 INTERNATIONAL DIVISION

G.M

International wing

Forex Money
Market
Investment

Eng. &
Maintenance

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

1.9.6 FINANCIAL DIVISION

G.M

Balance Sheet
Results Monitoring
SBP Affairs and
Compliance.

Shares Dept.

Company Affairs

It controls the routine financial matters. The permission of special expenditure incurred in the
branches, and other such cases. The daily position and HO Extracts are daily sent to this
division by all the branches. This division not only estimates the profit and loss of every
branch but also prepare overall income statement and balance sheet of the complete bank. It
also keeps record of total deposits of the bank and then their classification in the form of loans
into different sectors of economy. The basic functions are:

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The Bank of Punjab

 Monitoring the fiscal and financial policies of the bank.

 Deals in exploring means for investing surplus bank funds.
 Maintenance and investment of Gratuity and Pension Funds of the employees.

1.9.7 RECOVERY DIVISION

G.M

Law Department

The recovery division, which was established in 1994 to assist in regularizing the difficult loan
accounts, has rendered valuable services in this respect. To effect recoveries in an efficient
manner, a policy has been framed in accordance with the guidelines issued by the State Bank
of Pakistan Moreover, recovery cells at regional levels have been set up to assist the head
office. This division looks after the matters of recovery of loans with the assistance of legal
advisors

1.9.8 Audit and Inspection Division

G.M

Audit of Rectification
Branches and Persuasion

This department ensures appropriate system of checks and balances. It checks all the
irregularities, errors and forgeries if any, under the rules and regulations formed by the
Government of Punjab. For this purpose it doesn‟t only keep an eye on the branches in

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their surrounding area but also conduct surprise and comprehensive audits of the
branches.

2. Branch Structure

Unfortunately the branch has not got sufficient staff to meet the needs. The staff is less

and present officers got burdened when some times more than usual customers come

especially in the beginning of every month. The request for more staff has been sent to the

Regional office since 2006 but no appropriate actions have been taken still now. If we

compare it to the other banks we come to know this staff is far less than them. There is no

system administrator, only one cash officer and one billing officer is there which is not

appropriate for such a busy branch. The burden is accumulated on few peoples and there

is no chance of relief in near future.

Table 1:
Designation No. of Employees
Branch Manager 1
Operation Manager(OG-l) 1
Officer Grade ll 1
Officer Grade lll 2
Cash Officer 2
Messenger 1
Gun Man 2
Peon 2

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2.1 Products & Services

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SERVICES PROVIDED TO CUSTOMERS

The following are the services being provided to the claims.

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

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

2.3 Account Opening Section

Account opening is the first step towards establishing a relationship between the customer
and the bank. The Bank of Punjab is offering basically two types of account:

 Current deposit account

 Profit & loss sharing account

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The necessary condition for a customer, who wants to open an account with the bank, is
introduction, which is preferably by the bank officers or any account holder of the bank. The
different categories of accounts that are available are as under.

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

2.5 Clearing Department

Clearing is the most important department of the bank performing various functions.

Clearing House:
A clearinghouse is an organization of the member banks, working under SBP and which is for
the purposes of setting inter banks claim resulting from transmission of funds from one bank
to another. The branch cheque/instruments are credited into the account of the customer.

The clearing can be:

 Outward
 Inward

2.5.1 Outward Clearing

The instrument collected or stored bank wise and a schedules is prepared separately for each
bank mentioning the total number of instruments and the amount of the instruments. Then
these are recorded in a register called “OUTWARD CLEARING REGISTER” then a main
schedule is prepared showing the total number of cheque and their aggregate amount being
presented in the clearing

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The cheque/instruments are handed over the clearing branch. Central clearing branch issue
CREDIT ADVICE to the branch for passing credit to its customer immediately. The branch on
receiving credit advice debits the clearing account and credits the respective customer
accounts.

2.5.2 Inward Clearing

On receiving cheque/instruments from central clearing branch, the in charge checks the
number and amount of cheque received in clearing must tally with the main schedule received
from central clearing branch.
This cheque/instrument are entered in “INWARD CLEARING REGISTER” for the
cheque/instrument passed in clearing is a credit advice for the aggregate amount of cheque
passed in clearing is prepared, drawn on central clearing branch.

2.5.3 Reserves at State Bank of Pakistan

Deposit held by bank at SBP serves as check clearing and collection balances. Rather than
physically transferring funds between banks, check clearing and collection can be done by
simply debiting or crediting a bank‟s account at SBP.

2.6 Remittance Department

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

 Demand Draft (DD)

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

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Now we discuss all these in detail: -

2.6.1 DEMAND DRAFT (DD):

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

Procedure of Preparing Demand Draft:

A draft voucher is filled which contains the following information:
 Name of the parties involved
 Date
 Amount to be sent
 Account number (if DD is crossed)

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

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Parties involved in the Demand Draft

The following parties are involved in demand draft;

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

2.6.2 MAIL TRANSFER (MT):

It is the transfer of money from one branch to another branch of the same bank through mail
service. In mail transfer there is no need of advice as the amount is directly credited to the
receiver‟s account.

Procedure:
1. First a voucher is filled in which the sender writes the amount to be sent,
name, account number of the receiving person with the branch name and
date.
2. A credit voucher is filled in order to deduct exchange, postage charges
according to the amount of the mail transfer.
3. The sender deposits the total amount in the cash department.
4. The cash officer gives the vouchers to the officer after affixing received cash
stamp and writing the amount in red ink.
5. Then the officer writes the amount paid in the cash scroll and gives the MT to
his assistant.

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6. MT leaf is filled according to the information provided in credit voucher. He also

writes the same information in the MT register. Then he gives the MT leaf and
MT register to the officer for authentication.

2.6.3 TELEGRAPHIC TRANSFER (TT):

This is the most urgent method of remitting the money from one place to another place. This
method is used when the sender desires to send urgently, in this case the sender request the
manager of the branch to issue TT.

Procedure:
For sending the TT the manager and officer apply a test. In the test the manager and officer
uses a coding technique. They write their own code numbers, which is allotted, to them as the
bank branch code. After making all the conformation the concerned branch makes the
payment to the receiver. If the sender wants to convey the same message through telephone
then he has to pay the charges of telephone along with the TT charges. First the person
deposit the TT amount along with the charges through the credit voucher then his TT sent to
the relevant branch.

2.6.4 PAY ORDER (PO)

A pay order is a written order issued by the bank on its own branch, drawn upon and payable
by itself to pay a specified sum of money to the person. The purpose of a pay order is to
transfer the fund from one place to another. It is usually not issued in favor of the parties of
other cities. Usually the pay order is issued for the local transfer of money from one person to
another or from the person to any other department. It is used for different purposes. The
purpose may be the repairs of the branch or renovation of the branch.

Procedure:
The procedure of a pay order varies with the nature of the purpose. If the work is of huge
amount then first the manager writes a letter to the Zonal Chief in order to get sanction of the
work. Then the advertisement of the work is given in the newspaper in order to invite the
contractors. But if the work is small then the branch manager has discretionary power to

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select the party whose rate is lowest. After finishing the work the contractor submits the bill of
work on his stamp pad. Then the bank issues a pay order, against the pay order the contactor
gets the amount from the issuing branc

2.7 Advances/Credit Department

“Major source of bank‟s Income”

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

2.7.1 Principles while advancing

Basically there are five principles that must be duly observed while advancing money to
borrowers.
 Safety
 Liquidity
 Disposal
 Remuneration
 Suitability

2.7.2 FORMS OF LENDING

Many there are two types of advances:

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

However they are further classified as:

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

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2.7.3 Running Finance

This form of finance was previously known as “overdraft”. When a customer requires the
temporary accommodation, his bank allows withdrawal his account in excess of credit
balance, which the customer has in its account, a running finance occurs. The
accommodation is thus allowed collateral security. When it is against collateral securities, it is
called a “Secured Running Finance” and when the customer cannot offer any collateral
security except his personal security, accommodation is called a “Clean Running Finance.”
The customer is in advantageous position in running finance because he has to pay the mark-
up only the balance outstanding against him on daily product basis.

2.7.4 Demand Finance

This is common form of financing to commercial and industrial concerns and is mad available
either against pledge or hypothecation of goods produce or merchandise. In Demand Finance
the party is financed up to a certain limit either at once or as and when required. The party
due to facility of paying mark-up only on the amount it actually utilizes prefers this form of
financing.
 Ordinary Shares
 Preferred Shares
It can be;
 Quoted or Unquoted
 Registered
 Bearer
 Inscribed

2.7.5 Advances against Immovable Property (Mortgage)

A mortgage is the transfer of and interest in specific immovable property for the purpose of
securing the payment of the money, advanced or to be advanced. By way of loan, and
existing debts or the performances of the engagement this may raise the financial liability.

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The transfer is called the „mortgager‟ and the transferee the „mortgagee‟ the principal money
and interest of which payment is secured for the time being and instrument by which the
transfer is affected, is called the letter of the mortgage deed.

Availability of adequate flows of credit for industry and agriculture are for the growth and
development of an economy. This acquires added importance when agriculture is the core of
the economy as also the sector where the bulk of the poor are concentrated. Growth and
productivity in Pakistan's agriculture has slowed down in recent years and is, therefore, of
serious concern given its importance for the economic prosperity of the country. Apart from
various other weaknesses in the infrastructural support of the agricultural sector, inadequacy
and lack of efficacy of credit, flows to support agriculture related activities has been a major
constraining factor.

Agriculture is the largest sector of the economy. It contributes 25 percent to GDP, provides
raw materials to 80 percent of industry and employment to over 50 percent of the population.
This is a sector that has the shortest gestation period for investments and, therefore, a
remarkable capacity to bring about a turnaround in the economy. This important sector in
Pakistan is suffering from a number of maladies and is consequently witnessing stagnation in
productivity.
Due to policy and administrative requirements, the savings in the agriculture sector remain low
and, therefore, the sector has perpetually remained capital starved. The pricing of input and
output in agriculture over the years has forced the majority of farmers in Pakistan to plough
back their incomes into agriculture and non-institutional credit, and has more often than not
served to weaken their potential earnings. Needless to say, that shortage of savings and lack
of availability of capital is one of the major reasons for poverty in the country. The agricultural
and rural sectors in Pakistan in general and in Punjab in particular are, therefore, suffering
from severe under-development. Under a desirable development model, Punjab can:
* Increase agricultural production to meet the country's requirement of essential
foods items and industrial raw materials.
* Develop agro-based industry in the rural sector for economic value addition;
* Generate additional employment opportunities in rural as well as adjacent small
towns/cities;

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* Control massive migration to the urban centers that in turn is causing a number of
social, administrative (i.e. law and order) and economic problems for the urban areas.
* Promote poverty and improve the income generating capacity of the agriculture
based population.

Never before in the history of Pakistan, has the development of the agricultural and food
sectors been as critical as at this occasion and appropriate short and long term measures are
necessary for its revival, sustenance and stability. Supply of credit by Financial Institutions for
meeting the specific needs of agriculture and rural sectors are essential components for
improvement in both short and long-term development of the country. This has assumed even
greater importance in the present situation of declining water availability. Per acre, production
is plummeting. The per acre yield of most of the crops is stagnant rather diminishing. The
most important factors responsible for this downward trend in productivity are: -

2.7.6 FACTORS RESPONSIBLE FOR LOW YIELD PER ACRE

Imbalanced fertilizer use

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

SCARCITY AND INEFFICIENT USE OF WATER

Natural and mechanical water resources.

NON-USE OF MECHANIZED FARMING PRACTICES

Lack of education and resources, motivation to use advanced tools for agriculture:
High cost, low output, unskilled labor intensive
Non-availability of credit and financial assistance to the agriculture sector
.
The importance of availability of credit to the agriculture sector has always been
recognized by Government and given Top Priority. Specialized institutions have been
in place for a number of years. However, these institutions have failed to realize the full
potential from the sector and at times contributed to its further deterioration. It is

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therefore of paramount importance that The Bank of Punjab through well thought out
policies ensures that it does not repeat the follies of the past.

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

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

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

customers/borrowers not to borrow from any other source whatsoever. This is
important to ensure against any multiple borrowing and more importantly to restrain the
borrower from falling into a debt trap.
The Bank of Punjab has been at the front position in contributing to the
Agriculture Sector at a limited scale and has initiated schemes in agreement with the
State Bank of Pakistan approved/eligible programmes for the assistance/help of the
agriculture farmers.
Presently, the Bank is financing farmers in some specific areas only. The State
Bank of Pakistan has expanded the scope of its scheme and included a number of
items eligible for credit under Agri-finance Schemes.
In terms of the importance, priority and current needs. We have short listed the
items from the State Bank of Pakistan's list provided under cover of its Circular letter
No. ACD/1044/1050/PD/P-08/2001 dated 26.04.2001
.
The list of eligible items for Agri-Credit is mainly divided in two sectors; i.e.
Farm-Credit And
Non-Farm Credit
Farm Credit is further bifurcated into:
Short-Term
Medium-Term
Long-Term Credit.

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3. PLAN OF MY INTERNSHIP PROGRAM

Operations of the branch are controlled by Branch Manager and Operations Manager. Staff of
the branch includes Branch System Administrator, Operations Staff including:
 Grade I officer
 Grade II officer
 Grade III officer
 A cash officer
 Billing officer

Starting and ending dates of Internship:

I started internship on 1st July, 2021 which ended on 6th August, 2021.

Name of training departments and duration:

The duration of the internship program was 2 months. The staff of the branch was much
cooperative. They imparted me training in all departments of the branch i.e.
 Accounts Opening
 Accounts Department,
 Remittance Department,
 Clearing Department,
 Human resource department,
 Credit and Advance.

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3.1 First and second week

In the first two weeks of the internship, I worked in Accounts Opening Department in which I
learnt how to open an account, how to close an account and how to operate an account.

3.2 Third and fourth week

In the third and fourth week, I worked in Accounts Department in which I learnt various
functions of Accounts Department.

3.3 Fifth week

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

3.4 Sixth week

In the last week of my internship, I worked in Advance and Credit (Finance department)
where at I learnt about the allocation of funds in different portfolios.
I worked in Clearing Department where I learnt about Inward Clearing and Outward clearing.

4 TRAINING PROGRAM

First Day in Bank of Punjab

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

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4.1 ACCOUNT OPENING DEPARTMENT

Procedure of account opening:

Account Opening Form

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

Completion of the Form

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

Specimen Signature Card (SSC)

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

Signature Difference Form

If client‟s signature differs from the CNIC, the signature of the client is taken on a signature
difference form.

Computerized Checking
The bank officer is connected via internet to the NADRA website and checks the record of his
customer‟s social life. If the record of the person is ok, then the officer of The bank
authenticates the record under his signature and stamp and send it to the Branch Manager.

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

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Cheque Book Issuance

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

Procedure for Closing of an account

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

Procedure of issuance of Bank Statement

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

Procedure for ATM/PIN Issuance

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

4.2 ACCOUNTS DEPARTMENT

When I completed my training in Account Opening Department, the Branch Manager sent me
to Account Department.

Account department is responsible for budgeting keeping record of the revenue and expenses
all transaction that are take place in the bank and their physical prove (voucher) are come to
the account department next day these voucher are also posted to computer and the
computer generated report of daily transaction is created in IT department and then they send
to the account department to match or tell to computer generated report and their voucher of
daily transaction and save it as a physical record that these transaction are take place in the

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bank at following date. The report generated by the accounts department on a daily, weekly,
monthly, bi-yearly and yearly is written in a proper format. It is neither necessary nor possible
to get up to date all of these reports in a short period of time.

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

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

4.3 REMITTANCE DEPARTMENT

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

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

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

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4.4 CLEARING DEPARTMENT

I learnt their about clearing of different cheques and remittance handling. I was told there
the main objects of clearing.
I received all the clearing cheques and made a schedule of these cheques after making
entries in outward and inward clearing registers and sent the same to main branch where at
all the cheques were sent to NIFT(National Institutional Facilitation Technology)

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

TYPES OF CLEARING

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

Outward clearing:
When cheques of our bank are deposited in other Banks and these cheques are sent to us
for verification, we debit the of our client after verification their account.

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4.5 HUMAN RESOURSE DEPARTMENT

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

ISSUING OF CHEQUE BOOKS

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

 Maintaining Dispatch register and Inward Mailing register was also included in
duties assigned to me. I also used to help different employees in their work.

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

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

 Amount in words and figures tallies.

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

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

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4.6 ADVANCE AND CREDIT DEPARTMENT

Advances and credit department is the most important department in the bank in this
department advances are giving to the business man, exporter etc. before giving advance,
credit worthiness of the borrower is taken into account i.e. character, capacity, collateral,
credit terms etc. advances are also given to different banks.

Principles while Advancing

Five principles that must be properly pragmatic while advancing money to borrowers‟ i.e.
 Safety,
 Liquidity,
 Disposal,
 Remuneration and
 Suitability

Types of Lending
There are three types of lending short term, medium term and long term. However they
are further classified i.e. Running finance, Demand Finance, Cash Finance and Letter of
Guarantee.

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5. Financial Analysis

During the year 2020, Bank's income on advances declined by 16% mainly due to
slowdown in economic activities and low credit demand in the market supplemented by
downward movement in SBP benchmark rates. However, there was 44% increase in
return on investments due to prudent management of funds and channelization of same to
more lucrative / secure investment avenues.

During the year 2020, Bank's expense on payment of profit on deposits increased by 12%
which was well in line with overall growth in profit bearing deposits and movement in SBP
Policy Rate. Markup on Borrowings increased by 61% owing to increase in volume of
Borrowings in line with Bank's strategy. Markup expense on subordinated loans showed a
decline of 22% due to early retirement of subordinated loan by the Bank. Further, markup

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on lease liability against Right of Use Assets increased by 20% due to increase in branch
network and annual increase in rent of properties.

During year 2020, Non Markup Income (excluding Gain on Securities) improved by 23% as against
2% during year 2019. Slowdown in economic activities due to Country-wide lockdown adversely
impacted the business and trade volumes of Banking Sector. However, the Bank was successful in
mitigating the impact and its Fee & Commission Income showed a modest growth of 6%. Dividend
Income registered a rise of 32% while Foreign Exchange Income also increased significantly. The
Bank was able to realize substantial Capital Gains on Securities amounting to Rs. 8.47 Billion
during 2020. Other Income registered a growth of Rs. 308 Million mainly on account of Gain on
disposal of Non-Banking Assets.

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5.1 Fiscal year is January – December

 Balance Sheet (2020 VS 2019):

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 Profit & Loss Account (2020 VS 2019):

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 Changes in Equity:

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 Cash Flow Statement (2020 VS 2019):

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5.1.2 Three Years' Vertical Analysis (Rupees in Million)

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Vertical Analysis Commentary:

Investments & Advances remained major components of Asset Mix of the Bank. The Bank
opted to channelize incremental funds in Risk Free Investments and grow Advances Book
in a very careful manner. Accordingly, the mix of Advances reduced to 36% in 2020 as
against 46% in year 2015, while the mix of Investments improved to 52% as against 37%
in year 2015. Owing to be Branch Expansion and products diversification, the Bank was
able to post a steady growth in Deposits with a CAGR of 17%. Borrowings were the
second largest component of Liabilities which stood at 14% as against 12% in 2015."
Markup Income has shown a steady growth with main contribution from income on
Advances and Investments. The contribution of markup income constitutes 87% of the
total revenue for year 2020. Markup Expense has also increased due to growth in Deposit
base and change in minimum rate of profit on PLS Deposits. Concentration of Non Markup
Income for year 2020 remained at 13% mainly on account of realization of capital gains.
The concentration of Non Markup Expense remained at 18% for the year 2020 & 2019.
The rise in Non-Markup Expenses is in line with Branch Expansion, investment in new
technologies and inflationary parameters.

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5.1.3 Three Years' Horizontal Analysis (Rupees in Million)

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Horizontal Analysis:
Bank's Asset Base has registered consistent growth during 2015-2020 and it crossed Rs. 1.0 Trillion
mark in 2020. During year 2020, Total Assets registered the highest growth of 26% while CAGR
for 2015-20 remained at 18%. Deposits also grew at a steady rate with a CAGR of 17%. Highest
growth of 23% was registered in year 2017 while YOY growth for year 2020 remained at 21%.
During the period 2015-2020, 230 Branches were opened by the Bank. Owing to consistent growth
in profitability, the Equity registered a steady growth with highest YOY growth of 27% in year
2018 while YOY growth for year 2020 remained at 12%. On profitability side, Markup Income of
the Bank registered a CAGR of 22% during 2015-2020. The main components were Markup earned
on Advances & Investments. In line with Bank's strategy to grow Advances portfolio cautiously and
divert incremental funds towards investment in risk free Government Securities, the major
contribution came from Markup Income on Investments. 89 Markup Expense also registered a
CAGR of 25% due to above stated growth in Deposits. It also includes impact of change in
Minimum Profit Rates on PLS Deposits in line with change in SBP Policy Rate. The Cost of
Deposits was effectively managed by the Bank through focus on low cost CASA Deposits." Non
Markup Income registered as CAGR of 11% during 2015-2020. The main contribution was made
by Capital Gains realized on Securities during different years. The Fee Based Income also
registered as steady growth. Operating Expenses registered a CAGR of 18%. The rise is mainly on
account of personnel/property expenses in line with expansion in Branch network (231 Branches
added) and investment in new technologies. Provision Charge posted a CAGR of 13% with highest
level of Rs.14.7 Billion during year 2017 to retire LOCs issued by GOPb. The Charge of Rs. 6.9
Billion for year 2020 includes General Provision of Rs. 3.3 Billion and Specific Provision of Rs. 1.7
on subjective basis."

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5.2 Financial Analysis

Three Years' Financial Performance
(Financial Ratios 2018-2020)

 Liquidity Ratio:

2020 2019 2018

Current Ratio 1.1348 1.1376 1.155
Quick Ratio 1.1348 1.1376 1.155
Cash Ratio 0.0706 0.0509 0.086

Liquidity Ratio's
1.5
1
0.5
0
Current Ratio Quick Ratio Cash Ratio

2020 2019 2018

(Figure 5.2.1)

Interpretation

 Current Ratio:

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

Current ratio=current assets/current liabilities.

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

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 Quick Ratio:

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

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

Just because the banking sector not dealing with inventory and inventory is zero,
then the quick ratio will be same as current ratio.

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

Cash ratio=cash/current liabilities.

 Leverage Ratios:
2020 2019 2018
Debt to Asset 0.86 0.86 0.86
Debt to Equity 6.83 7.18 6.39
Equity multiplier 7.38 7.18 7.4

Leverage Ratio's
10
5
0
Debt to Debt to Equity
Asset Equity Multiplier

2020 2019 2018

(Figure 5.2.2)

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Interpretation

 Debt to total Assets Ratio:

It is the percentage of total funds provided by creditors.

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

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

 Debt to Equity Ratio:

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

calculated by:

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

 Equity Multiplier:

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

Equity multiplier=total assets/total equity.

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The Bank of Punjab

 Coverage Ratio:

2020 2019 2018

interest coverage 2.12 2.015 1.928

 Interest Coverage:
It indicates the firm ability to cover interest charges. And BOP results shows greater
than 1 so it‟s good for BOP.

Interest coverage=EBIT/interest expenses

 Efficiency Ratios:

2020 2019 2018

Inventory turnover 0 0 0
Total Assets turnover 0.079 0.082 0.079

Interpretation

 Inventory Turnover:

It tells about whether a firm holds excessive stocks of inventories and whether a firm
slowly selling its inventories compared the industry average.in case of BOP it should
be zero because of zero inventory.

Inventory turnover=CGS/Inventory

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 Total Assets Turnover:

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

Total fixed asset = sales / total asset

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

 Profitability Ratio:

2020 2019 2018

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

Profitability Ratio's

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Gross Profit Net Profit Margin Return on Assets Return on Equity
Margin

2020 2019 2018

(Figure 5.2.5)

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Interpretation

 Gross Profit Margin:

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

Gross profit margin = gross profit / sales

 Net Profit Margin:

It shows the after tax profit per rupee of sales of BOP.

Net profit margin = net profit / sales

 Return On Assets:

It tells after tax per rupee of asset of BOP.

Return on assets = net income / total assets

 Return On Equity:

It tells after tax per rupee of stockholders investment in the BOP.

Return on equity = net income / total equity

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The Bank of Punjab

6. SWOT ANALYSIS

THE BANK OF PUNJAB

6.1 Strengths

 Fundamentally sound bank

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

6.2 Weaknesses

 Presence in less developed areas leading to high operating cost

 Self-satisfaction (Structural & Environmental)
 Weak & Inconsistent MIS rendering decision making difficult
 Limited International presence. Low NRI business
 More dependence on conventional low margin business
 No Income from Financial Products such as Insurance, Mutual Fund, Credit
Card etc.
 “State” Ownership has affected level playing field and competitive ability
 Less flexibility in dealing with strategic HR & operational issues
 Imbalance in distribution/ deployment of staff
 Inadequate skills for modern banking

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 Changing environment, adoption of technological advancement, marketing of

products requires change in the mind-set of employees
 Low per employee productivity

6.3 Opportunities

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

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

6.4 Threats

 Aggressive marketing by competitor banks

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

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7. CONCLUSION

As we know nothing is perfect, there is always a room for improvement; following are my
suggestions for the betterment of BOP:

 BOP is in the process of providing the services of Automated Teller Machine. In

order to compete with other banks ATM services must be provided throughout
the country as this service is becoming very popular in customer focus banks.
 The bank is also in process of computerizing its records which is good sign but
it is going on with small progress Computerization must be done on early basis.
This will help in increasing efficiency of work done, customer‟s satisfaction,
decrease the stationary cost and resultantly it will increase profits.
 In past BOP has always being suffered bad Government policies. Government
intervention should be avoided completely.
 Employees Training programmed must be introduced on continuous basis so
that employees get updated with latest developments and innovations
especially related to customers.
 Bank should introduce incentive plans for employees on regular basis so that
employees may work whole heartedly for the welfare of their organization. While
giving incentives qualification, work, experience, hard work and such other
factors must be consider.
 Mismanagement of resources must be avoided as much as possible as it
decreases profit but also discourage hard workers and honest employees.
 Fresh graduates must be recruited. As the combination of Experienced and
fresh people can produce better results and it will improve the efficiency of
management.
 BOP is going towards mobile banking but the problem is that a common client
has no idea of its usage due to lack of marketing. I think that a proper marketing
program must be launched for client‟s awareness.
 Bank should help the society by providing interest free loans to talented
students.
 There is a great need of proper training of employee.

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 The behavior with the customers should be improved.

 The employee‟s way of dealing should be improved.
 The bank should take step to monitor the implementation of HR activities.
 The HRM department of BOP is not so good as compared to other well known
organization. They have made separate sections within HRM department each
section is assigned with different task. The implementation of HR activities is
very low.
 The Hr staff is friendly and cooperative.
 Some employees in the department just do the same job, they become master
of practicing job but they know almost nothing and are losing their knowledge
about their jobs.
 They keep their data confidential I face great difficulty in collecting data related
to HR department of BOP.
 The Bank of Punjab is using its own software which is not so good. The
features of the system are not so advance it needs some modification.
 Another important factor which can be considered as a short fall is, that most of
the employees are not aware with the advance studies related to their fields this
can also affect their job performance.
 The procedure for evaluating the performance of employees is not fair and
rational.

At the end I conclude that due to the assistance of all branch employees I have been able to
learn many new things associated to the banking sector, I was able to run the day
successfully at the end of each day, arranging all the vouchers, maintaining record of branch
manfully, filling account opening forms of customers, filling cheques of the customers and
handle other tasks as well.
Bank of Punjab is a competitive organization and in the market share to overall banking sector
BOP is at third position as relative to other banks in the Pakistan.
On the other hand I am able to complete this report under the supervision of my Advisor
Mr. Akmal Ishfaq and make all concepts clear in proper way.

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The Bank of Punjab

THE BANK OF PUNJAB is a good organization in the way that anybody can join it for his/
her long-term career. Overall working environment is comfortable. Management is very
strong and above that it‟s a government bank. Employees of the Bank of Punjab, Sialkot
works more than their working hours and the working environment is friendly. It also shows
their devotion, obligation to the organization. Customers are satisfied as best possible.

8. RECOMMENDATIONS

BOP is one of the leading commercial bank in the Pakistan but according to my point there
are some recommendations in order to improve the worth of its system and to improve its
products and services
After doing a deep study following are my recommendation,

 ATM machine must be installed so that increases the income of branch.

 Improvement in the salary package to motivate the employees.
 On the bases of performance, rewards should be assigned to increase the
productivity
 There is shortage of staff in the branch. In order to improve the services of
the BOP proper staff should be hired in the relative branch.
 To retain or attract customer, bank should adopt competitive rates for its
services.
 Branch should focus on the consumer banking as well because it is a good
source of income to branch.
 Proper facilitated branches should be maintained to gain value customer.
 The bank pays high profit to its customers and provides excellent services
but there is a lack of publicity of its services on part of its clients.
 The pay of BOP employees is less than other banks, which is an indication
of discouragement among employees.
 The employees have no direct access to higher authority and a large
hierarchy of persons is involved. This creates frustration in employees in
solving their problems.
 In most branches there is no facility of fax machines, which results in late
delivery of messages and dealings.
 The size of almost all branches of The bank of Punjab is very small. It
creates difficulty for the customers as well staff members for proper dealings,
which always gives congested atmosphere.
 The grading system of the bank is not fair and the criteria for grading system
are not mentioned. Due to unfair grading the employees of the bank are not
happy.
 The HRM setup needs careful attention for betterment and improvement.

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9. BIBLIOGRAPHY:

 Annual Reports of Bank of Punjab

 News letter of BOP
 Employees
 http://www.bop.com.pk/
 Personal observation

10. SOURCES:
 http://www.bop.com.pk
 www.investing.com
 www.dps.psx.com
 www.investopedia.com
 http://www.sbp.com.pk/
 http://www.wikipedia.org/
 http://www.ibp.org.pk
 PSX Analytics Apk
 Financial Management by Van Horne
 Principles of Managerial Finance by Gitma

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