Ma`am Saiqa Anwar
Azeem Ali Tariq Butt
Amir Waqas Bhatti
(Fundamental of Accounting)
15 May, 2013
University OF Management & Technology
Table of Contents
Habib Metropolitan Bank Ltd. 6
Islamic Banking 8
Branch Network 16
Consumer Banking 23
Corporate Banking 34
Internal Control 36
SWOT Analysis 49
President Message 53
Final Report 55
Suggestions / Recommendations 56
All praises for Almighty Allah, the most Beneficent and Merciful, who guides us in
lacerate and congenial circumstances, without his help one cannot achieve his
Our sincere gratitude to University OF Management & Technology, they provided
us with the opportunity to work in HABIB METROPOLITAN BANK Ltd. of Pakistan.
Then we would like to thank Ma`am Saiqa Anwar, who guided us at every step
and provided us with her valuable advice and guidance whenever we asked. We
are very grateful for her, and her encouragement which enabled us to write this
Then we would like to thank our parents who do a lot of struggle for our better
and secure future and encourage us at every step of our life.
In the end we would like to thank all the staff members of HABIB METROPOLITAN
BANK Ltd., who have co-operated with us during project. They have provided us
with valuable information which helped us a lot in the completion of this report.
It was relatively a new phenomenon for us and we have learned a lot from making
HABIB METROPOLITAN BANK Ltd
Habib Metropolitan Bank Ltd. provides commercial and retail banking services to
individuals and businesses primarily in Pakistan. It offers auto finance, auto
leasing, basic account, call account, current account, education loan, Izafa
certificate, multiplier account, Mahana scheme, personal loan, savings plus
account, PLS savings account, and super current account, as well as access
ATM/debit cards. The company also provides international banking services
comprising correspondent bank network, foreign remittances, and trade finance
products and services. In addition, it offers Islamic banking deposit products,
which include current deposits account, PLS account, investment certificates,
historical profit rates, current weightages, and financing products that comprise
local murabahah for financing raw material and finished goods, local and import
murabaha, Islamic lease, commercial property financing on diminishing
musharakah basis, and house financing on diminishing musharakah basis. Further,
Habib Metropolitan Bank provides brokerage services. As of December 31, 2008,
it operated 110 branches, including 4 Islamic banking branches. The company was
formerly known as Metropolitan Bank Limited and changed its name to Habib
Metropolitan Bank Ltd. in October 2006. Habib Metropolitan Bank Ltd. was
incorporated in 1992 and is headquartered in Karachi, Pakistan. Habib
Metropolitan Bank Ltd. is a subsidiary of Habib Bank AG Zurich.
HABIB METROPOLITAN BANK Ltd has 12 subsidiaries all around the world which
are providing services to the esteem world.
Habib bank AG ZURICH
Habib Qatar Intl.
The Pakistan Credit Rating Agency (PACRA) has allotted both long-term and short-
term ratings of Habib Metropolitan Bank Limited at AA+ (Double A plus) and A1+
(A one plus), respectively. These ratings, being the highest amongst the local
private sector Banks, denote a very low expectation of credit risk emanating from
a very strong capacity for timely payment of financial commitments.
HABIB METROPOLITAN BANK - Islamic Banking
Our mission is to provide full range of Sharia’ah compliant products and
services to our customers with no compromise on Sharia’ah rulings.
Introduction to Islamic Banking Division
Habib Metropolitan Bank has developed sufficient expertise, necessary
infrastructure, information technology, and manpower to run Islamic
Banking customers who wish to avail Islamic banking products and
services are welcome to contact us to accomplish their banking
Our Islamic Banking Division is headed by an experienced banker who
is responsible for the overall operational activities of the Islamic
Banking Division. The Division has the advisory services of reputable
Shari’ah advisors who also help in developing Islamic Banking Products.
SEQUENCE OF ISLAMIC BANKING:
1947: The inception of Pakistan as the first Islamic Country created in the name of
1949: The Objectives Resolution was adopted by the first Constituent Assembly
based on the ideology of a sovereign Islamic state. This was the first step in the
conception towards Pakistan Constitution.
1956: The first Constitution defined Islam as the State Religion and all laws to be
according to the injunctions of the Quran and Sunnah
1962: The establishment of Council of Islamic Ideology (CII) was followed by the
conception of the second constitution of Pakistan.
1973: The third constitution of Pakistan was passed allowing comprehensive
legislation on Islamic principles and establishment of Federal Shariat Court.
1980: CII presents report on the elimination of interest genuinely considered to
be the first major comprehensive work in the world undertaken on Islamic
banking and finance.
1985: Commercial banks change their nomenclature stating all Rupee saving
accounts as interest-free. However, foreign currency deposits in Pakistan and on
lending of foreign loans continued as before.
1991: Procedure adopted by banks in 1985 was declared Islamic by the Federal
Shariat Court (FSC). The Government and some banks/DFIs made appeals to the
Shariat Appellate Bench (SAB) of the Supreme Court of Pakistan.
1999: The Shariat Appellate Bench of the Supreme Court of Pakistan rejects the
appeals and directs all laws on interest banking to cease. The government sets off
a high level commission, task forces and committees to institute and promote
Islamic banking on parallel basis with conventional system.
2003: A Musharakah-based Export Refinance Product is designed by the State
Bank in order to provide export finance to eligible exporters on the basis of
Islamic modes of financing. Efforts are underway to develop Islamic money
market instruments like Ijarah Sukuk to facilitate the banks in respect of liquidity
and SLR management
HISTORY OF HABIB METROPOLITAN BANK Ltd
Habib Metropolitan Bank was incorporated in Pakistan as a Public Listed
Company in 1992 under the name, Metropolitan Bank Limited. The Bank
commenced, duly licensed, full scheduled commercial-banking operations in
October 1992. Metropolitan Bank, from October 1992 to September 2006,
remained; vide its nationwide 51-branch on-line network, established as a
provider of trade finance services. On October 26, 2006 Habib Bank AG Zurichs
Pakistan Operations merged into Metropolitan Bank Limited and the merged
entity was named Habib Metropolitan Bank Limited (HMB). HBZ is the principal
shareholder of HMB.
HMB operates in all major cities of the country. HMB has its primary focus on
retail banking and trade finance and also offers E-Banking solutions and
Consumer Banking to its customers. The Bank’s Islamic Banking Division caters to
customers seeking Shariah compliant products. The group’s flagship and HMB’s
principal, HBZ (incorporated 1967) claims International ranking of 687 in terms of
capital. With Headquarters in Switzerland, the HBZ Group also operates in Hong
Kong, Singapore, United Arab Emirates, Kenya, South Africa, United
Kingdom and North America.
Habib Metropolitan Bank Limited opened its first branch in 2006 in the
city of Iqbal. It has been providing ISLAMIC BANKING services in the
Sialkot banking market and to its esteemed costumers. It grew its
network in a very short time and it earned Rs. 1 Billion from its exports
and imports last year
“Based on a foundation of trust, to be the most respected
financialinstitution,delighting customers with excellence, enjoying the loyalty of a
dedicated team, meeting the expectations of regulators and participating in social
causes while providing superior returns to shareholders.”
"The Mission of the Habib metropolitan Bank is to foster a
sound economic and financial environment which promotes the
development of its stakeholders and encourages a culture
of excellence and leadership."
Following are the values of Habib Metropolitan Bank Limited
Our shared beliefs create strong bonds that form the basis of long-term
relationships with customers and staff.
We have the energy and perseverance it will take to make an impact in
our customers’ lives and for the greater good of society.
we value and respect the communities we serve. Our doors are always
open; our customers always experience a warmhearted, hospitable
welcome and accommodating service.
Peace of mind
our customers can rest assured that their financial interests are being
managed by us to the highest ethical standards.
by banking with us our customers make a positive contribution to a
better society; their growth and our growth will benefit the world
OBJECTIVES AND GOALS:
To provide innovative high-quality products to its customers at
the lowest possible rates.
To facilitate the customers by providing high quality service.
To provide maximum satisfaction to its customers.
To give best performance in all dimensions as compared to its
To achieve the set goals regarding:
to compete with the market.
Around the world:
Habib Metropolitan Bank operates in more than 20 countries across
Habib Metropolitan Bank has 182 Branches working in 24 cities.
Name of Region________________________________________Number of Branches
Head Office Habib Metropolitan Bank Ltd
Company Registration Number K-o3892 (CUIN:0028018)
Company National Tax Number 0711167-3
Spencers Building, I.I
Chundrigar Road,Karachi -74200 Pakistan
Pasrur road (sub Sialkot Main)
Pasrur road near Pul Aik, Hajipura Sialkot
Allama Iqbal Chownk Railway Road G.P.O Box 2626 Sialkot
Ph. : 052-46024515
B VIII – 59/1/4Rh. Circular Road Sohawa Daska – Sialkot
Plot # 11-F, Model Town, Wazirabad Road, Ugoki, Tehsil & Disctrict Sialkot
Small Industry East Branch
27-28-A, Small Industry East, Sialkot
BOARD OF DIRECTORS
Mr. Kassim Parekh
Mr. Ali S. Habib
Mr. Bashir Ali Mohammad
Mr. Mohamedali R. Habib
Mr. Muhammad H. Habib
Mr. Tariq Ikram
Mr. Wazir Ali Khoja
Mr. Sirajuddin Aziz
President & CEO
Senior Executive Vice President
Executive Vice President
Senior Vice President
Regional Vice President
Assistant Vice President
Officer Grade 1
Officer Grade 2
Officer Grade 3
HEAD OFFICE ORGANIZATION CHART
HABIB METROPOLITAN BANK LTD offers a wide range of accounts suited to meet
individual customer. Main types of accounts offered by them are:
1. Saving Account
2. Current Account
3. Basic Banking Account
4. HMB Multiplier Account
5. HMB Super Current Account
1) SAVING ACCOUNT:
Saving account is further divided into following accounts:
a) Term Deposit Account.
b) Habib Metropolitan Bank Business plus Account.
c) PLS Savings Account.
d) HMB Saving Plus Account
A) TERM DEPOSIT ACCOUNT:
Maximum time period is 5 years.
Minimum initial investment Rs.25000/-
Available in PKR, USD, GBP, EURO AND AED.
Available tenures 1 month, 3 months, 6 months, or 1 year to 5
Multiple profit payment options.
Quarterly, Bi-Annually, Annually or at Maturity.
B) HABIB METROPOLITAN BANK LTD BUSINESS PLUS ACCOUNT:
Your average balance should be Rupees 1, 00,000.
Profit of 0.7% is given to these account holders.
Online banking, ATM, cheque book, E-statement facilities is free.
No transaction charges.
Hold mail facility.
Online banking transactions.
Free utility bill payments through ATM.
Profit is calculated on monthly average balance.
C) PLS SAVINGS ACCOUNT:
Available in PKR, USD, GBP, EURO AND AED.
Free from any minimum balance charges.
Unlimited deposits and withdrawals.
Monthly/ half yearly profit payments.
d) HMB Saving Plus Account:
Eligibility Individuals Only
Initial Deposit Rs. 25,000/-
Indicative profit rates
Profit payment basis minimum balance during a month
Profit payment frequency quarterly basis
Statements of Accounts
ATM/ Debit Card
Web Info & Tele info
Online Funds Transfer
2) CURRENT ACCOUNT:
Mostly company’s accounts are current account.
Now they are converting to saving accounts.
Free from any minimum balance charges.
Unlimited deposits and withdrawals.
Available in PKR, USD, GBP, EURO AND AED.
ACCOUNT OPENING PROCEDURE:
Different procedures of account opening with slight changes are adopted for sole
proprietorship, partnership and companies. Documents required for account
Source of fund.
Account statement (after every 6 months).
Partnership deed (in case of partnership).
3) Basis Banking Account
Accounting Opening with Rs. 1,000/-
No minimum balance required.
First cheque book of 25 leaves issued free of charge. Additional cheque
book(s) at Rs. 100/- per book.
No limit on number of ATM / Deposit transactions.
Two cheque transactions will be allowed free per calendar month.
Charge of Rs. 25/- per chequ will be applied from third cheque onwards.
ATM / Debit Card
Web Info & Tele info
Yearly statement of account
Online Funds Transfer
4) HMB Multiplier Account:
The minimum amount required to open and maintain the account is Rs. 1
Profit is accrued on a DAILY product basis and credited to your account
Accrual of profit is on balance of Rs. 1 Million and above.
In case balanced of Rs. 1 Million not maintained for any day profit will
be paid @ 5.00 % p.a for the monthly.
Statement of Account
HMB ATM / Debit Card
Stop Payment of cheques
Web info & Tele info Services
5) HMB Super Current Account
The minimum amount required for opening and maintaining this account is
This is a current account, which can operate from any HMB branch
Cheques are acceptable at all HMB branches across Pakistan.
A non-remunerative account.
No deduction of Zakat or any levies on this account.
Statements of account
ATM / Debit card
Online funds transfer
Rent free locker
SERVICES GIVEN BY HABIB METROPOLITAN BANK LTD:
1) Phone banking.
3) SMS banking.
4) ATM card.
1) PHONE BANKING:
HABIB METROPOLITAN BANK LTD phone banking centers are equipped
with cutting edge technology and skilled phone banking officers who help you
with your queries and transactions 24/7 (24 hours a day, 7 days a week). Dial
111 14 14 14 home, office or from anywhere in the world using a touchtone
phone and avail banking assistance at your convenience. Individual account
holders, joint account holders, sole proprietor can apply for this facility.
You can avail following facilities through HABIB METROPOLITAN BANK LTD
a) Financial transactions.
b) Issuance of pay order (PO)/ demand draft (DD).
c) Funds transfer.
d) Balance and transaction inquiry.
e) Card services
f) Service request.
h) Complaint logging.
Financial transactions can take place in local currency only.
B) ISSUANCE OF PAY ORDER (PO)/ DEMAND DRAFT (DD):
Request for issuance of pay order and demand drafts without filling
Collect it from any branch of HABIB METROPOLITAN BANK LTD.
C) FUNDS TRANSFER:
You can transferup to Rs. 100,000 in a single day from one account
D) BALANCE AND TRANSFER INQUIRY:
Get details about your saving and Current Accounts.
You can inquire about your account balance.
Details of the last 5 transactions of your account.
E) CARD SERVICES:
You can activate your card(s).
If your ATM card is lost/stolen/misplaced, contact through phone
banking at any time of the day or night.
It will immediately block your card in order to prevent its misuse and
involvement in fraudulent activity.
F) SERVICE REQUESTS:
Requests for different services can be placed through this.
Request for duplicate statement.
Cheque book request.
Account linking to ATM card.
Stop payment of cheque(s).
It’s all in one call. You can inquire about your product(s)/services.
Monthly account related profit rates.
Currency exchange rates.
Branch and ATM locations.
And a lot more.
H) COMPLAINT LOGGING:
HABIB METROPOLITAN BANK LTD values its customers and would like to
identify ways to help improve its services. If for any reason you are not
satisfied with its services, a complaint can be registered simply by calling
Access your account with the click of a button. E-statement allows
you to read or print and reconcile your deposit account(s) statements
online. Available for all Rupee and foreign currency holders, all you need is
access to your email account to receive your E-Statement. All account
holders are able to avail this facility.
You can receive your bank statement via email on a daily, weekly,
monthly, quarterly, half yearly and yearly basis.
Printed statements can be misplaced E-statement stays in your
You can organize and access your account details anywhere and
3) SMS BANKING:
SMS Banking is a smart way to access your account(s) especially for people
on the go. HABIB METROPOLITAN BANK Ltd provides you with immediate
access to your account(s) 24/7(24hours a day, 7 days a week). No more
waiting in line, get instant access whenever, wherever you want.
SMS SERVICE INCLUDES:
Account balance inquiry.
Mini statement (last five transactions).
Cheque book request.
PIN change request.
Transaction alert (credit / debit transaction).
Up-to-date products and services, promotions, announcements and
Individual account holders.
Joint account holders (1 person only).
HOW TO REGISTER:
Complete the registration form and submit it at your nearest branch. A
welcome message will be sent to you the next working day advising you
to contact Phone Banking using your registered SIM on 111 14 14 14
for SMS PIN generation.
4) ATM CARD:
HABIB METROPOLITAN BANK LTD offers a unique ATM service powered
with Biometricauthentication system which allow customer access to ATM
after finger print authentication. It requires a PIN code. It provides safe
and secure service 24/7.
No annual charges.
Free of cost cash withdrawal.
Attractive cash withdrawal limit.
Rs. 25,000 is per day limit of cash withdrawal through ATM.
Funds transfer facility.
Cheque book requests.
Duplicate statement requests.
In case of lost, call on helpline of bank and your ATM will be blocked.
Facilities of HMB:
o Habib Auto Finance
o Habib Auto Lease
o HMB Education Loan
o HMB Izafa Certificate
o HMB Mahana Scheme
o HMB Personal Loan
a) Habib Auto Finance
o HMB Auto Finance is available up to Rs. 3 Million
o Minimum Down Payment is 15% of the total amount.
o Processing Fee is Rs. 4,000/-
o Vehicle to be registered in the name of customer and marked HAP
with the Bank.
b) Habib Auto Leasing
o HMB Auto Leasing is offered to all our commercial & corporate
o Minimum down payment is as low 10% of the total amount.
o Auto lease limit depends on the strength of the company‟s financial
and credit checks.
o A processing fee is charged at 0.5% of the lease amount.
o The vehicle is to be registered in the name of bank.
o The insurance cost to be borne by the customer.
c) HMB Education Loan
o Financing for education Loans are available for
o Diploma courses
o Financing for tuition fee, books and material.
o A Mark-up is charged at concessional rate.
o There is no processing fee.
o The tenor is from 6 to 6o months.
d) HMB Izafa Certificate
o Izafa certificate are issued in multiple(s) of Rs.10,000/-, Rs. 25,000/-,
Rs.100,000/- , Rs. 25,000/-,Rs. 100,000/-, Rs. 250,000/-, Rs.
1,000,000/- and Rs. 2,500,000/-
o HMB Izafa certificate are offered as 7 year deposits certificate.
o Offering attractive profit rates upto 14.29% p.a
o Investment doubles in seven year.
o Easy loan facility.
o Your profits grow daily.
o Can be linked to any of the regular account.
e) HMB Mahana Scheme
o 1,3 &5 year deposit scheme in multiple of Rs. 25,000/- &
o Easy loan facility.
o Encashable any time.
o Monthly profit credited to your account automatically.
f) HMB Personal Loan
o Clean loans are offered up to Rs. 500,000/-
o A processing fee of 1% of the loan amount or Rs. 2000/- is
charged whichever is high
Habib Metropolitan Bank offers full range of Trade Finance products and
services to its customers. Due to its wide network of correspondent banking
arrangements with most reputed international banks, it offers seamless
trade services to importers and exporters. Refinance and other trade
related products are also made available to eligible customers
GLOBAL TRADE FINANCE FACILITY (GTFP)
INTERNATIONAL FINANCE CORPORATION (IFC)
Habib Metropolitan Bank Limited is the first bank in Pakistan to join the
Global Trade Finance Programmed (GTFP) of International Finance
Corporation (IFC). By virtue of our joining the GTFP, our bank is now listed
in a panel of prominent banks in 70 countries.
Through this programmed, IFC will extend guarantees on our behalf, which
will provide us opportunities to globally expand our trade business by
enhancing our presence in the emerging markets and countries with which
we have negligible or no business
TRADE FINANCE FACILITATION PROGRAM (TFFP)
ASIAN DEVELOPMENT BANK (ADB)
Habib Metropolitan Bank Limited has also joined Trade Finance Facilitation
Program (TFFP) of Asian Development Bank (ADB). ADB‟s main partners are
governments, private sector, nongovernment organizations, development agencies,
community-based organizations and foundations. Our association with ADB‟s
TFFP program as an issuing bank reflects the level of understanding and
confidence they have in the operational efficiency of our institution.
Import Letters of Credit
Advising of Export Letters of Credit
Standby Letters of Credit
Foreign Bills Purchased – Negotiation/Discounting
Structured Trade Financing
Local Currency Export Refinance Facility through SBP
Foreign Currency Export Financing (FCEF) through SBP
Foreign Currency Loans for International Trade
Internal controls are actions taken to make sure that right things happen and
wrong things don’t. Internal control is broadly defined as a process, affected by an
entity's board of directors, management and other personnel, designed to
provide reasonable assurance regarding the achievement of objectives. It plays an
important role in preventing and detecting fraud and protecting the
organization's resources, both physical (e.g., machinery and property) and
intangible (e.g., reputation or intellectual property such as trademarks). It is
divided in the following categories:
1. Effectiveness and efficiency of operations.
2. Reliability of financial reporting.
3. Compliance with applicable laws and regulations
BANKING CONTROL SYSTEM:
There are two types of banking control system:
2) Bank internal control.
State bank of Pakistan provides some policies and rules for banking
that should be meet by the banks. State bank of Pakistan set some
boundaries for every bank and bank should work with in these boundaries.
For the check and balance on banks state bank introduces INTERNAL
CONTROL UNITS. State bank introduces various regulations and manuals
for proper working.
a) Prudential statements.
b) Foreign exchange manual.
2. BANK INTERNAL CONTROL
SBP introduces internal control units for proper check on internal rules and
regulations of the bank.
A) INTERNAL CONTROL UNITS:
Internal Monitoring Unit is basically established at SBP BSC (Bank) to
monitor and control the functionality of the BSC Bank so that Bank can operate in
an effective way. Before going to explain Internal Monitoring Unit, first I would
like to explain internal control of any organization. It is the department of bank
who works on the instructions given by SBP. Its basic function is to check the
procedure that the management is working properly or not. They have complete
check and balance on all the policies of bank. SBP monitor all the operations of
bank after every 2-3 months. SBP introduces CIRCULARS for proper check on
internal rules of bank.
Circulars are made for internal control of bank .Internal rules of bank is known as
CIRCULARS. It includes letters, notifications etc. which is forwarded regarding
internal control of bank.
Every bank has different departments working. HABIB METROPOLITAN
BANK has 5 departments and all are working under Branch Manager. Mostly
banks have 2 departments working,
1) Human resource management.
2) Sales and liability department.
3) Operations department.
4) Trade department.
5) Credit department.
1) HUMAN RESOURCE MANAGEMENT:
Human Resource Management (HRM) broadly refers to a positive
approach to the management of an organization’s people who individually and
collectively contribute to the achievement of sustainable competitive advantage.
It basically refers to the management and development of the employees, to
match with the business strategy of the organization.
Habib metropolitan bank‟s human resources function is regarded as
strategically important and displayed its resilience through a challenging
year by ensuring the smooth functioning of the bank from a staff and staff-
related matters perspective.
The HRM philosophy is based on positive commitment towards the development
ofemployees for ensuring their growth, development and performance to
enhance human capital in the bank. The HRM model is composed of policies that
promote mutual growth for achieving mutual goals coupled with mutual
responsibilities and rewards, which in turn will yield both better economic
performance and greater human development.
Development of Employees
To ensure the proper development of employees and to cope with the current
market trends and business needs, we have a comprehensive &meticulous
training structure in place, which is not only a blend of sharing ideas, solutions
and a comprehensive understanding of Islamic banking, but also a
motivating and nurturing blend of education and exposure that ensures a holistic
and comprehensive development.
HABIB METROPOLITAN BANK provides the tools needed for our people
to develop world-class analytical, leadership, management and relationship-
building skills. Because they deal with a broad range of issues in Islamic
banking, they learn what it takes to lead in financial services. The bank
ensures its commitment to the individual competence of all employees with
the primary focus on personal skills and the immediate demands of the job.
Policies for Employees
We also realize the importance of recognition & reward policy.
Achievement is a milestone in the individual‟s career as well as in the
Bank‟s growth, and thus needs to be recognized in the most effective
manner. We are continuously striving to make our policies more customized
& competitive to improve the working environment, to foster teamwork, to
encourage innovation, and to ensure career progression.
Human Resources is committed to providing an ideal professional
environment that enables our employees to pursue the highest possible level
of professionalism as well as supporting their personal fulfillment. We
believe that our strategic mix reinforces in our employees the ability to think
„out of the box‟ and discover new ideas, concepts, while challenging the
status quo. This will further ensure a competitive advantage to MBL through
enhanced loyalty, commitment and motivation.
2) SALES AND LIABILITY DEPARTMENT:
This department works as blood for bank it brings customers and deposits
for bank. It is helpful in making business development.
3) OPERATIONS DEPARTMENT:
This department deals with cheques and cash handling. Cash withdrawal, cheque
withdrawal, cheque clearing, locker facilities etc.
4) TRADE FINANCE DEPARTMENT:
This department is related with imports and exports. It helps in opening LC (letter
of credit) for import and export. It has further two departments:
1. Import section
2. Export section
In the common words import means bringing of commodities into a country from
outside by sea or air.
Requirements to be fulfilled:
When a person wants to import, he must have to register his name, his company
name. The EPB makes a registration with an application. There are two
requirements that he has to fulfill.
• Importer must have a current account in that bank.
• He should be the member of chamber of commerce.
Parties of Letter of Credit:
It has following parties:
• Importer (buyer)
• Opening bank (bank that issues L/C)
• Negotiating bank (who makes the payment)
Condition for opening Letter of Credit
The bank will open Letter of Credit only if importer has an import license.
Import license in Pakistan is issued on the following basis:
C&F (Cost and Freight)
Insurance of shipment is borne by importer, while exporter pays the freight
under this condition.
CIF (cost insurance and freight)
Exporter has to pay both insurance and freight under this condition, but not
applicable in Pakistan.
CIF & C.I
When goods are shipped on CIF and C.I (commission and interest) basis, it
means the price quoted includes cost, freight, insurance, commission and
FOB (Freight on Board)
When freight of goods shipped, is not realized in advance by shipping
company, it is then to be paid by the importer on delivery of goods at the
port of destination
L.C opening process:
Credit report of beneficiary
Copy of NTN certificate s
Copy of sales tax registration
Copy of chamber of commerce membership
There are the following steps in which LC perform mechanics
When the both parties become agree on the term and condition,
importer requested that its bank to issue a letter of credit in favor of the
The issuing bank then sends the letter of credit to the advising bank
advising bank after all conformation Send the LC to the exporter
Flow of goods:
Upon receipt of the LC, exporter review that it completely
corresponds to the term and conditions in the purchase and sales
agreement ,if he is satisfied, arranges for the shipment of goods.
After making the shipment the seller sends the documents evidencing the
shipment to bank where credit is available.
The bank checks them against the Letter of Credit. If documents are as
per Letter of Credit, the bank will pay. The bank will send the documents
to issuing bank. Issuing bank will check the documents and if they are as
per the requirement of Letter of Credit, it will affect payment. Issuing
bank after it is satisfied will send the documents to the importer upon
terms agreed between buyer and issuing bank. Buyer takes the transport
documents to the transporter of goods to have delivery of shipment.
Documents required by L/C:
o Transport documents
o B/L (in case of sea)
o AWB (in case of air transport)
o Insurance documents (issued by insurance co.)
o commercial invoice (description of goods)
o Other documents
o Certificate of origin
o Packing list
o Bill of Exchange
Modes of payment:
The payment of goods may be in the following ways;
The Letter of credit in which the payment is received within two weeks
from dispatch of documents.
The payment is made after a specified number of days after the
presentation of required documents by beneficiary.
Export plays the major role in the economic development of the country; it
is the one of the major sources of earning foreign exchange without
additional burden of the economy.
“Exports means export of all eligible commodities through authorized
banking channels admissible under exchange control regulation”.
Export department has three branches;
(c) Export refinance
(a) Export Registration Procedure:
The exporter must have export license and a current account with bank.
When party has registered then either he enters into a contract with
reporter or receives L/C. then he prepares goods and ship them, but before
shipment and after contract he comes to bank and gets 4 copies of E-form
against invoice fills out and takes them to custom department after getting
certified by the bank, where the E-forms are verified documents required
• E-form (duplicate & triplicate)
• Request letter by party
• Insurance certificate
• Packing lists
• Bills of exchange
• Bills of lading or air way bills
• Certificate of origin
E-form is the first and foremost requirement of export. It confirms that
exporter is known to bank. It is a form whereby an exporter a declaration
Full details of receipt quantity and value of goods
Term of sale
CIF (cost insurance & freight)
C&F (cost & freight)
DA basis (documents against acceptance)
Name & address of importer and exporter
Modes of transport & transport documents
Copies of E-form:
E-form consists of 4 copies;
1-orignal copy is for custom authority (sent to SBP at time of shipment)
2-duplicate copy is for bank’s record
3-triplicate is sent by bank to SBP at time of realization
4-quardruplicate is for exporter’s (client) on record
Issuance of E-form:
E-form is issued to exporter after receiving the documents bank attaches
recovering letter with them that contains the instructions for payments and
documents are sent to foreign banks. All payments are received through
telex then client’s account is credited. Triplicate copy of E-form is
completed and attached, bank charges are filled on it and documents are
submitted to SBP and thus export file is closed.
Negotiation means discounting of a foreign bill of exchange. Bank provides
another facility by providing finance in the form of negotiation of a bill. The
bank purchases the bill and provides funds to party against.
The exporter receives his L/C form importer through advising bank. Then he
ships the goods and comes to bank for negotiation i.e. he sells the
documents to bank and gets payment after complete checking of
documents. Now bank is responsible for further process. The bank receives
the payment and the file is closed.
But if client does not negotiate the document and gets a loan against the
documents then he will be responsible till the amount realized at maturity.
The bank receives mark-up on the loan.
Scrutiny of documents:
The most importer job is to scrutinize the documents whether they are
according to the requirements of Letter of Credit or not.
Cases of Negotiation:
The bank negotiates in 3 cases;
1. If the bank is satisfied with documents, it makes payments on the spot.
2. When exporter has sent documents for collection and bank receives
acceptance through telex it will pay.
3. Without getting acceptance the bank may negotiate depending on the
will of the customer.
4. In case the bank is not satisfied it takes an Identity from client.
Discounting the Bill:
Exporter has to meet various payments & expenses, so in order to meet the
customer’s needs; the exporter avails this facility and discounts the bill.
After discounting the bill amount is credited to customer’s a/c, the
discounted amount is expense of party and on the other side, income of the
bank documents required for negotiation:
Only those documents are required that are backed by Letter of Credit
because only in this case bank is secured for receiving the payment.
Discrepancies in the documents:
After checking the documents discrepancies are pointed out, the exporter
takes them back & removes them. Then again presents documents for
negotiation. If documents with discrepancies are sent to foreign banks, it
informs the importer if importer accepts the documents with error then
importers bank is authorize to deduct the discrepancy fee under foreign
bank charges. Normally discrepancies are of nature as follows;
• Late submission of documents
• Late shipment
• L/C expired
• Invoice mistakes
• L/C overdrawn
• Name and addresses of exporter are not as per L/C
5) CREDIT DEPARTMENT:
This department is related with loan facility, loan sanction method etc.
Large capital base.
Rank in top 10 banks of Pakistan.
Continuous growth in ROE.
The bank‟s management realizes the necessity of existence of
effective internal controls to ensure smooth operations in the current
technical and swift business environment.
The bank has efficient and experienced management making
Credit rating in long-term “AA+” and in the short term “A1+”.
The financial statements, prepared by the management of the bank
present fairly the state of affairs.
Loans are given only to known, reputable clients to avoid chances of
fraud. Very low nonperforming loan.
Effectively handled the current economic recession.
Bank is continuously focusing on developing new and innovation
products to attract their target market.
Strong customer relationship.
Asset utilization is very good.
Only valued client is important.
Bad portfolio diversification (54% advance to textile industry)
Advertisement on electronic media has not been seen.
Declining standards of banking after merger. Inter-organizational
conflicts after merger.
Compromises upon polices to keep customer happy.
Majority of shares are owned by the one family.
Low consumer finance.
Less job satisfaction of employees.
Customer facing problem of NADRA verification while opening
their accounts because its process is time consuming
Promoting generally on seniority basis.
Scope in Islamic banking.
To go global fully.
Low exposure to consumer banking providing opportunity to explore
The year 2010 will prove to be another demanding year for the
banking with scattered. Diversification, innovation and mission
driven approach are the key to success which bank should adopt.
Should emphasize much on e-banking. Profit margin will be good.
The bank being Swiss incorporated, it bank follow dual banking
regulation i.e. of Pakistan as well as Switzer-land which attracts
SBP policy to allow Islamic banking business separately.
Bank introduces Islamic banking in country that attracts large number
New schemes for deposits and finances should be introduced
Opportunity to open branch in ruler area to increase its branch
network and gain more profit.
Facing a strong competition by its competitors. High reliability on
only one market segment i.e. Textile. (54%)
Increasing competition in the banking sector. Entry of many foreign
Strict policies of the State Bank of Pakistan.
Current economic crunch.
Rising deposit rates.
People losing trust in banks.
Decline in private and public sector credit due to tight monetary
Foreign banks in market having more marketing budgets.
These above credit rating denote
HMB is one of the top ten banks in Pakistan.
A very high credit quality.
A very low expectation of credit risk.
A very strong capacity for timely payment of financial
o Bank Alfalah
o Arif Habib Bank
o Bank al Habib
o National Bank of Pakistan
o Standard Chartered Bank
2012 was a great year of recovery and progress. It was a year during
which Pakistan and its banking sector paced ahead of the recession and financial
turbulence that had been incurred. Despite muted private credit demand, decline
in foreign exchange reserves, currency devaluation and increase in fiscal
monetization by the government, the economy remains resilient and is expected
to close the fiscal year with a growth of rate of 3 to 4 percent. The external
account, bolstered by inward remittance flows, and the deceleration in inflation
are the beacons of the economic hope, four months away from fiscal year-end.
2012 was also the year in which HabibMetro transcended milestones of the past
and set higher benchmarks for the future. It delivered upon its brand promise of
superior customer service as it fortified its legacy. A reinvigorated and reaffirmed
brand identity was launched earlier in the year, with the user-friendly
nomenclature “HabibMetro” accentuating the Group’s heritage.
While undertaking this branding initiative – which received a positive response
from the market and customers – the Bank continued to augment its local
footprint. 20 new branches spanning 7 cities were added to the branch network
during the year, enhancing the Bank’s branch outreach to 183 branches across 28
cities Pakistan-wide. Of these welcome additions, 11 new branches were opened
in Karachi, taking the Bank’s deposit base exceeded RS. 200 billion and PARCA
awarded the premier AA+ and A1+ credit ratings to the Bank for the
On the 21st
of October of the referenced year, HabibMetro accomplished the
significant time-mark of having successfully served its customers for two decades.
anniversary was celebrated pan-Bank with gusto and enthusiasm;
branches across the country were decorated, while giveaways were enjoyed and
letters of appreciation were dispatched to the customers. A special media
campaign was designed and executed to engage the customers and market in
general, while an internal Current Account campaign was mobilized to motivate
and reward teamwork in the branches.
Following this, the annual internal Cricket Tournament was held towards the end
of the year. This event exemplified and further infused the teamwork and spirit of
a sportsmanship that give HabibMetro it’s most inherent and sustainable
competitive advantage. For the outstanding display of vigor therein, I commend
all the teams and players who participated enthusiastically.
Going forward and progressing further, we aim to continue in the broad tactical
direction of our 5-point strat strategic plan that comprises efficiency
enhancement, capacity development, customer base augmentation, product
offering expansion and capitalization of business opportunities. To do so, the
roadmap of the current year delineates that focus is to be rendered upon Islamic
Banking, Corporate Banking, Transactions Banking, Retail Banking, Vendor
Financing and Commercial Banking business segments of the Bank. The
Management looks forward to the facilitation of your performance in enhancing
revenue from core banking and increasing profitability of trade business, while
plugging in efficiency leakages. In addition to this, the Bank’s footprint is
scheduled to penetrate 21 new cities during the year – with the 30 new branches
opened therein to bring HabibMetro’s branch count to 213 branches spread over
49 cities across Pakistan, at the end of 2013, InshaAllah.
To accomplish the above-mentioned strategic undertaking, I along with the
Bank’s Management, await your unstinted support and unparalleled efforts.
Habib Metropolitan Bank was incorporated in Pakistan as a Public Listed Company in
1992 under the name, Metropolitan Bank Limited. The Bank commenced, duly
licensed, full scheduled commercial-banking operations in October 1992.
Metropolitan Bank, from October 1992 to September 2006, remained a highly rated
bank and, vide its nationwide 51-branch on-line network, established as a
distinguished provider of trade finance services. On October 26, 2006 . Habib Bank A
G Zurich`s Pakistan Operations merged into Metropolitan Bank Limited and the
merged entity was named Habib Metropolitan Bank Limited (HMB). Demonstrating a
strong commitment to Pakistan economy, HBZ is the principal shareholder of
HMB.Now holding a number of 180+ branches in all over the world, Habib
metropolitan bank is excelling in the field of banking. HMB operates in all major
cities of the country. The Bank ranks within Top 10 in Pakistan with a strong vision to
be the most respected Financial Institution. HMB has its primary focus on retail
banking and trade finance and also offers highly innovative E-Banking solutions and
Consumer Banking to its customers. The Bank's Islamic Banking Division is fully
capable of catering to customers seeking Shariah compliant products. With
Headquarters in Switzerland, the HBZ Group also operates in Hong Kong, Singapore,
United Arab Emirates, Kenya, South Africa, United Kingdom and North America. The
Pakistan Credit Rating Agency (PACRA) has allotted both long-term and short-term
ratings of Habib Metropolitan Bank Limited at AA+ (Double A plus) and A1+ (A one
plus), respectively. These ratings, being the highest amongst the local private sector
Banks, denote a very low expectation of credit risk emanating from a very strong
capacity for timely payment of financial commitments. The Overall taking care and
looking forward to the demands of the customers HMB differ from other banks. They
meet the true demands of their employees the environment of the bank is very good
and the staff is well qualified.
They should provide CREDIT CARDS, as it is a very beneficial facility for their
customers who shop online and live overseas.
They must give incentives to the junior staff members.
They should not take care of the customer on the basis of a strong account
or strong financial statement rights should be equal code of ethics should
be applied as it is the basic aspect of every firm , bank or business.
They should provide some more facilities for the senior citizen like other
A FINAL PROJECT ON
HABIB METROPOLITION BANK Ltd