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Bank islami final report edited


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Bank islami final report edited

  1. 1. ACKNOWLEDGEMENTFor the completion of our report I am indebted to plenty of people for their very sincerecooperation that they extended to me at various stages. First and foremost problem that everystudent faces is the selection of a Report. I am very thankful to my supervisor Mr. Mr. AsadShahjan for helping me out in time of confusion. During our course and the execution of myreport, I had a real chance to learn from his vast experience and immense knowledge.I am very thankful to staff members of Bank Islami Branch Mansehra that they guided andprovided me valuable information regarding my report especially Mr. Shafqat Hussain(operational manager).Finally I am thankful to the most merciful and Almighty Allah who gives me the strength thatI fulfill my task efficiently. 1
  2. 2. EXECUTIVE SUMMARYA good banking system plays important role in development of country’s economy. The aimof this report is to show knowledge and observation of study during my six weeks internship.During internship I came to know about procedures and activities of banking.Bank Islami Pakistan limited is publically listed company was established on October 18,2004 in Pakistan.The report is divided into different chapters that cover all aspects of Islamic banking sector.The first chapter describes purpose and background of study.Second chapter shows the department’s products and value added services offered by BIPL.Third chapter is about activities performed and learnt by internee during period of internship.Fourth chapter is about financial analysis of different statements of BIPL and theircomparison with another Islami bank i.e. Meezan bank limited.Fifth chapter is about SWOT analysis of BIPL and its cornparison with MBL.Last chapter consist of weaknesses and recommendations which is necessary for bank tobeing change in order to satisfy their customers.BIPL is one of the few banks in Pakistan which has authentic deposits franchise, and offeringboth wholesale and retail banking products and services through its wide network. 2
  3. 3. LIST OF ACRONYMSBIPL Bank Islami Pakistan LimitedSBP State Bank of PakistanIPO Initial Public OfferingATM Automated Teller MachineDD Demand DraftPO Pay OrderCDR Call Deposit ReceiptRTC Rupees Traveler ChequeNIFT National Institution al Facilitation TechnologyNTN National Tax NumberCNIC Computerized National Identity CardIBCA Inter Branch Credit AdviceSWOT Strength, Weaknesses, Opportunities, ThreatsWTC World Trade CenterMBL Meezan Bank Limited 3
  4. 4. Table of ContentsChapter No. Contents Page No.Chapter No. 1 Introduction of Study1.1 Background of Study1.2 Purpose of Study1.3 Research Methodology1.4 Scheme of StudyChapter No. 2 Introduction to Banking2.1 Banking in Pakistan2.2 Overview of Organization2.2 a Bank Islami Idea2.2 b Accreditation by Sate Bank of Pakistan2.2 c IPO of Bank Islami2.2 d Network expression2.3 Nature of Organization2.3 a Deposited Franchise2.3 b Technology Infrastructure2.3 c Management Team2.4 Business Volume2.5 Financial High Lights at Glance2.6 Share Holding Structure2.7 Future Prospects of Organization2.7 a Vision Statement2.7 b Mission Statement2.7 c Objectives2.7 d Strategic PlanningChapter No. 3 Product services and Departments3.1 Introduction3.2 Departments3.2.1.1 Nature of the Deposits3. 2.1.2 Procedures for account opening3.2.1.3 Remittances Management3.2.1.4 Cash Management3.2.2 Credit Department3.2.2.1 Musharakah Financing3.2.2.2 Mudarabah Financing3.2.2.3 Working Capital Finance3.2.3 Consumer banking3.2.3 Online Banking3.2.3.1 Inter Bank Transfer Fund3.2.3.2 ATM or Debit CardChapter No. 4 Analysis4.1 Financial Analysis of BIPL through 4
  5. 5. statements4.2 Ratio AnalysisChapter No. 5 SWOT Analysis5.1 SWOT Analysis of BIPL5.2 Comparison of SWOT Analysis of BIPL with MBL and Albaraka Bank5.2.1 SWOT analysis of MBL5.2.2 SWOT Analysis of Albaraka Bank5.3 ComparisonChapter No. 6 Findings and Recommendations6.1 Weaknesses of Organization6.2 RecommendationsReferencesAnnexureChapter No. 1INTRODUCTION TO STUDY1.1 Background of studyBank Islami was established on October 18, 2004 in Pakistan and is the second full-fledgeIslamic commercial bank in Pakistan and expanding its branches throughout the country andalso offering different products to customers.1.2 Purpose of studies: • The purpose of study is to get information about structure and functioning of department of BankIslami limited Pakistan • To analyze, intercept and evaluate the financial data of BIL and comparing these data or information with current financial practice. 5
  6. 6. • To analyze the operations done in each department of BIL and work there practically. • To evaluate financial performance of BIL and compare it with other Islami Banks. • To improve the interpersonal communication skills.1.3 Research MethodologyIn this study data is collected through primary as well as secondary sources but mostlyinformation is based on my personal observations which help me to collect the data about thisspecific branch.Primary sources: • Discussion with customer manager and interview taken from staff numbers. • Personal observation.Secondary sources:Most of the useful information was obtained from already available manuals, journals,website of organization, annual reports, of BIL etc. information regarding bank policies,procedures and rules can be obtained from bank’s records and documents.1.4 Scheme of study:The report is divided into five chapters • 1st chapter is about introduction of study, which includes its background, purpose research methodology, introduction to BankIslami including its nature, performance, business volume, objectives and strategies. • 2nd chapter is about departments of bank including account opening department, cash department, remittance department, cleaning department. • 3rd chapter is about activities performed by interne. • 4th chapter is about SWOT and financial analysis of bank and comparison with other 6
  7. 7. banks and also including ratio analysis. • 5th chapter is about shortfalls of organization and recommendations.Chapter NO.2Introduction to bankingBanks are very useful for utilization of country’s resources and for growth of economy.Banks help in capital information by deposit surplus from public and advance these surplus inform of loans to businessman and industrialists, agriculturists under different scheme.There are different views about origin of word banking. Some says it deceived from an Italianword “banque” means bench. According to other view it derived from German work “bane”means a joint stock firm.According to Growther, there are three ancestor of banker i.e.The Mechanls the gold smith, money lenders.In short bank is a financial institution at lower rate of interest and give at higher rate ofinterest to those who need them.Banking in PakistanBanking is one of the fastest growing industries in all over the world. Banks play important 7
  8. 8. role in economic development of country.Pakistan Banks Association established in 1953, its main objective is to co-ordinate theefforts of banking industry. At the time of partition, Pakistan was in difficult situation to runits own banking system with out resources. Therefore it was recommended that reserve bankof India have continue to wok in Pakistan until 30th September 1948. Before establishment ofSSBP all banking activities were conducted by reserve bank of India. By 1970, Pakistanstarted flourishing in banking sector. Now all banks follow and are working under bankingordinance 1962 and controlled by SB and now there are three types of banks sewing inPakistan i.e. Government banks, Private banks and Foreign banks.OERVIEW OF THE ORGANIZATIONBank Islami-The Idea:-The idea of BankIslami was conceptualized by Jahangir Siddiqui & Company Limited andDCD Group in late 2003. The idea was formulized by Mr. Hassan A. Bilgrami, appointed asAdviser to the sponsors on March 16, 2004. A detailed business plan was then prepared and aformal application was submitted to the State Bank of Pakistan on May 26, 2004. OnSeptember 26, 2005, Dubai Bank joined the Sponsors and became one of the foundingshareholders of BankIslami by investing 18.75% in the total Capital.Accreditation by State Bank of Pakistan:The State Bank of Pakistan issued a No Objection Certificate on August 19, 2004 andBankIslami Pakistan Limited, the second full-fledge Islamic Commercial Bank in Pakistan,was established on October 18, 2004 in Pakistan.BankIslami Pakistan Limited was the first Bank to receive the Islamic Banking license underthe Islamic Banking policy of 2003 on March 31, 2005. The Bank focus on Wealth 8
  9. 9. Management as the core area of business in addition to Shariah compliant Retail Bankingproducts, Proprietary and Third party products, and integrated financial planning services.Initial Public Offering of BankIslami:BankIslami Pakistan Limited made a public offering of Rs. 400 Million, at par, from 6th to8th March. The Initial public offering (IPO) of BankIslami received great response from thegeneral public as the applications received were 9 times higher than offered, fetching nearlyRs. 3.5 Billion, against the demand of Rs. 400 Million.Network Expansion:BankIslami started its operations on 7th April 2006 with its first branch in SITE, Karachi.The Bank had 10 branches, nine in Karachi and one in Quetta by the end of 2006. By the endof year 2007, its branch network grew to 36 branches in 23 cities. In 2008, the Bank opened66 new branches nationwide which expanded its network to 102 branches in 49 cites. Thisgives BankIslami the distinction of having the fastest expanding network in Pakistan.NATURE OF THE ORGANIZATIONBankIslami Pakistan Limited is the 2nd largest Islamic Bank in Pakistan. It offers bothwholesale and retail banking products and services through its distribution network.Deposit FranchiseBIPL is one of the few banks in Pakistan which has a genuine deposits franchise. Instead oftargeting large, rate sensitive accounts, BIPL as strategy focused on retail customers who arestable, less rate sensitive and loyal. Current and Saving Accounts recorded impressive 9
  10. 10. growth. Even growth in Fixed Deposits was propelled by our five and ten depository productswhich now accounts for 21% of the deposit base.Technology InfrastructureBIPL technology infra-structure was further strengthened during the year with fulldeployment of state of art shariah complaint core banking system, iMAL. BIPL is the largestuser of Linux in Pakistan which has helped to have a stable, cost effective platform comparedto their peers. BIPL market share in ATM transactions has improved to 11th position amongst1-LINK membersManagement TeamMost of the BIPLs senior management team has had work experience at global banks andhave strong execution track record.BUSINESS VOLUME(Rs. in 000) 2007 2008 2009 2010Deposits 9,934,282 12,477,955 27,987,378 3,81,98,320Advances 3,962,867 6,527,531 13,282,152 1,66,70,125Investments 3,864,027 5,019,525 681,3191 1,37,32,132Total Assets 1,447,473 19,088,600 34,286,771 4,50,35,703Shareholders 3,844,726 5,191,821 4,740,293 47,66,386EquityLoss After (37,023) (52,930) (478,939) (46,550)Tax 10
  11. 11. Financial Highlights at a glanceProfit and loss accountRupees in million 2010 2009 2008 2007Return Earned 3,806.20 2,177.14 1,464.84 599.64Profit paid 2,057.53 1,222.17 729.53 303.84Net spread 1,748.67 954.97 735.32 295.79Fee, Commission, 148.10 315.91 141.39 71.46Brokerage & ExchangeIncome from core 1,896.77 1,270.88 876.71 367.25bankingProvisions 7.42 (111.20) (130.56) (28.37)Other income 59.01 26.78 54.75 68.83Operating Expenditure (1,918.66) (1,766.12) 1033.90 510.59Profit/ Loss before tax 44.54 (579.66) 233.00 102.89Taxation 2.01 89.83 177.55 64.29Profit/ loss after tax 46.55 (489.82) 55.45 (38.60) 11
  12. 12. Balance sheet 2010 2009 2008 2007Assets 45,036 34,272 19,085 14,446Financing 16,670 10,457 6,343 3,931Deposits 38,198 27,987 12,478 9,934Share Capital 5,280 5,280 5,280 3,200Shareholder fund 4,766 4,725 5,188 3,843Number of staff 1,347 1,471 1,188 563sNumber of branches 102 102 102 36 Total Deposits RS in million 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2008 2009 2010 12
  13. 13. Total Assests RS in million50,00045,00040,00035,00030,00025,00020,00015,00010,000 5,000 0 2008 2009 2010 Total Financing RS in million18,00016,00014,00012,00010,000 8,000 6,000 4,000 2,000 0 2008 2009 2010 13
  14. 14. Branck Network RS in million 120 100 80 60 40 20 0 2008 2009 2010SHARE HOLDING STRUCTURESponsors: Bank Islami is a joint venture among three shareholders namely, DCD Group, Dubai Bank & Jahangir Siddique & Co. Ltd.SHARE HOLDERS RS IN MILLION %Dubai bank PJSC 1,310.53 24.82Jahangir Siddique & Co Limited 1,112.56 21.07DCD Group 1,028.48 19.47M.Hssan A Bilgrami 5.81 0.11Chief Justice ® Mahboob Ahmed 1.31 0.02General Public 1,821.00 34.49TOTAL 5,280 100Reference: BIPL annual report 2009 14
  15. 15. Button5Future Prospects of the OrganizationValues StatementBankIslami is strongly committed towards its core values of: • Product authenticity • Customer focus • Meritocracy • Integrity • Team work 15
  16. 16. • Humility • InnovationVision Statement“The Vision of BankIslami is to be recognized as the leading Authentic Islamic Bank”Mission StatementThe Mission of BankIslami is to create value for our stakeholders by offering Authentic,Sharia Compliant and Technologically advanced product and services. We differentiateourselves through:  Authenticity  Innovation  Understanding our Clients need  Commitment to excellence, and  Fast, efficient and seamless delivery of solution. As a growing institution, the foundation for our performance lies on our human capital and BankIslami remains committed to becoming an employer of choice, attracting, nurturing and developing talent in a transparent and performance driven culture.Objective: • To achieve sustained growth and profitability in all areas of business. To build and sustain a high performance culture, with a continuous improvement focus. • To develop a customer service oriented culture with special emphasis on customer care and convenience. • To effectively manage and mitigate all kinds of risks inherent in the banking business. 16
  17. 17. • To maximize use of technology to ensure cost effective operations, efficient management information system, enhanced delivery capability and high service standards. • To manage the bank portfolio of the business to achieve strong and sustainable shareholders return and to continuously build share holders value. • To explore new avenue for growth and profitability.Strategic Planning: • To comprehensive plan for future to ensure sustained growth and profitability. • To facilitate alignment of the vision, mission, corporate and with the business goals. • To provide strategic initiatives and solutions for projects, products, policies and procedures. • To provide strategic solutions to mitigate weak areas and to counter threats to profits. • To identify strategic initiatives and opportunities for profits. • To create and leverage strategic assets and capabilities for competitive advantage. • Future prospectus is to improve risk management, which considered being one of the essentials for sustainable success in the business. Based on the risk management guidelines issued by state bank of Pakistan; a risk management strategy has been developed for accessing and mitigate / controlling risk. 17
  18. 18. Chapter No. 3PRODUCT, SERVICES & DEPARTMENT3.1 IntroductionBankIslami Mansehra branch is newly opened branch in Mansehra city; also bankIslamihistory is not too much old. It’s all about to 5 to 6 year old. The organization of BankIslamiMansehra branch is a complete banking system but it is covering modern technologies likeATM. This banking system is collection of interrelated departments that works together toachieve the objectives of the organization. BankIslami is a hierarchical system in that itincludes other sub departments and these are integrated to work together.In the internship of six weeks I worked in different departments to see how the practical work 18
  19. 19. is done and compared it with the theories I studied during my bachelor courses. Eachdepartment has its own importance and value to the organization. But the basic thing was thatdepartments have to integrate to improve the performance.3.2 DEPARTMENTS:BankIslami Mansehra branches divided into different departments. •Credit Department •Operations Department •Consumer Banking.a) Credit DepartmentThe main purpose of this department is to extend loans to its clients for the productivepurpose. Credit Department is also called Corporate Banking Group.Bank is offering different type of financing in her branches. This type of financing are basedupon Islamic mode of financing. Just like MUSKUN home financing, Islami Auto Ijara-newvehicle and same with imported vehicles.b) Operations Department:Operations department of the BankIslami is responsible for the overall operations of the bank,Customer Services Department, Remittance Department, Clearing Department, AccountsDepartment, etc. all come under it.c) Consumer BankingConsumer banking is the Marketing Department of the BankIslami. At BankIslami,consumers are treated very well. They are of the opinion that customers must be satisfiedwith the services provided by the Bank. All of the Branches try to make sure that customersare satisfied with the services being provided by the Bank.3.2.1 Operations Department:BankIslami accounts are same as other commercial banks accounts but in some accounts theycan offer Islamic mode transactions. Accounts are given below. Nature of the depositsBank deposits can be broadly classified as 19
  20. 20. •Islami current Accounts •Islami foreign current Account •Islami Bachat account •Islami Mahana Munafa Account •Islami Amadni Certificatea) Islami current AccountsWith Islami Current Account, you can have complete peace of mind that your funds are safeand utilized in Halal avenues only. Islami Current Account is ideal for customers who havefrequent transaction needs and require unlimited access to their account to meet their personalor business expenses. Also, customer has access to entire online network of for convenienceof instant and secure intercity transactions. So enjoy full control over your funds in a Shariahcompliant manner. •A minimum balance of Rs. 1,000/- only to open the account •Joint Account facility up to four joint account holders •Access to the entire online branch network •Free unlimited online intercity transactions •Free 1 Card, BankIslamis ATM & Debit card •Access to all ATMs linked to MNET and 1 Link throughout Pakistan •Interbank Funds transfer facility through ATM •Facility of making instant payments at Orix terminals for grocery, fuel ,dining and other purchases •Free Internet Banking service •Free Account statement facility •Hold mail and Stop payment facilityb) Islami foreign current AccountBankIslami Islami Foreign Currency account is ideal for businesses and individuals whowould like to diversify their investment in different currencies to ensure security againstcurrency fluctuations or want to keep foreign currency account to meet their business needs.Also, customer can have easy access to foreign currency with no hassles of foreign exchangeconversion when you have to travel abroad or remit funds abroad to meet education, leisure 20
  21. 21. or business needs. •Safe Deposit Lockers •Hold Mail & Stop payment facility •A minimum balance of USD 100/-or equivalent in GBP or EURO to open the account •Joint Account facility up to four joint account holders •Available in USD, GBP & EURO •Free Account statement facility •Free Internet Banking servicec) Islami Bachat AccountIslami Bachat account is of bundle of benefits. It helps customer to keep up with tradition ofsavings with the convenience and safety of a professional and understanding bank. Also,customer can earn highly attractive profits on customer savings with the flexibility of makingas many transactions on customer account as you want. Islami Bachat Account is ideal forcustomers who need to draw money for monthly expenses but would also like to earn on yourhard earned savings. Corporate Employers can also avail this account to provide convenience,flexibility and halal profits to their employees by opening their salary accounts with us. •Monthly profit/loss payment on daily product basis •Differential and specific pool allocation possible for large deposit holders •Profit announcement at the end of every month •A minimum balance of Rs. 5,000/- only to open the account •Joint Account facility up to four joint account holders •Access to the entire on line network of 102 Branches in 49 Cities •Unlimited over the counter deposits and withdrawals, free of charge •No restrictions on intercity transactions •Free 1 Card, BankIslamis ATM & Debit card •Access to all ATMS linked to MNET and 1 Link throughout Pakistan •Facility of making instant payments at Orix terminals for grocery, fuel ,dining and other purchases •Free Internet Banking service 21
  22. 22. d) Islami Mahana Munafa AccountLong term investments yield high returns but delayed profit payment. With our IslamiMahana Munafa Account you dont compromise on any. Now you can enjoy the freedom ofhalal monthly gains for a prosperous present while building your wealth for a secure future.Also, Islami Mahana Munafa Account will provide you with security, convenience andflexibility of investment tenure to suit your needs. •Free Internet Banking Service •Hold Mail & Stop payment facility •Safe Deposit Lockers •100% interest free •Available in Pak Rupees •Tenure of investment are 1, 2, 3, 5 & 10 years •Minimum amount of investment is Rs. 10,000/- only •Profit/loss payment on monthly basis until the maturity date •Payment of amount of investment on the maturity date •Differential and specific pool allocation possible for large deposit holders •Profit announcement at the beginning of every month •Free facility of transfer of profit and invested funds in nominated Islami Current or Isla- mi Bachat Account •Monthly profit/loss payment on daily product basis •Free Six monthly Account Statement facilitye) Islami Amadni CertificateWhy take interest when you can earn Halal profit on your investment. With Islami AmadniCertificate customer hard earned investment works harder to yield high expected profits soyou can build your wealth for a prosperous future. You get the best of both worlds in a safe,secure and flexible package to perfectly meet your needs.If you are a salaried individual, a businessperson or a corporate entity with some long terminvestment funds to spare, our Islami Amadni certificate is an ideal solution for you. With ourIslami Amadni Certificate, the higher your investment the higher will be your return and thattoo in a Shariah compliant manner. Also, you have the flexibility to choose amongst variousinvestment tenures to suit your personal or business needs. 22
  23. 23. Islami Amadni Certificate offers you the following key salient features: •Available in Pak Rupees •Investment can be done for 1, 3, 6, 12, 24, 36 or 60 months •Minimum amount of investment is Rs. 10,000/- only •Payment of profit/loss and amount of investment on the maturity date •Quarterly profit payment for investment of 12 months and above •Differential and specific pool allocation possible for large deposit holders •Profit announcement at the end of every month •Free Account statement facility •Free facility of transfer of profit and invested funds in nominated Islami Current or Isla- mi Bachat Account •Free Internet Banking service having free Term deposit enquiry facility •Facility of premature encashment available. In such a case, the corresponding period weight age would apply, unless stated otherwise3.2.1.2Procedures for account openingIn order to operate an account with the bank, a customer has to open an account. In largebranches Grade 1, II or III officers is made responsible for opening new accounts. Howeverin small branches, the manager himself fulfills all the formalities for opening new accounts. Itis necessary because in case of fraud unintended overdraft, or negligence, the bank will havea source to trace out the customer. Such source is established by asking the customer to bringan existing customer of the bank that will introduce him to the bank. In order to protectagainst losses resulting from fraud or unintended overdraft the account opening activity hasbeen formalized through certain steps. These steps include •Formal Application: Customers are required to fill in the prescribed account opening form, which the bank provides to the customers free of cost. In this basic information about himself is provided by the customer like his name, address, occupation and nature if account he wants to operate. •Obtaining introduction: Introductory references are quid pro quo for opening the ac- count. For this it is necessary that an existing customer verify the authenticity of the facts provided in the account opening form. 23
  24. 24. •Specimen Signature: The customer gives the banker a specimen signature generally tak- en on a card specially designed for this purpose. Name of the customer and account num- ber are entered on it. This specimen signature is used later on by the bank to verify the signature on cherubs drawn on the bank by comparing these signatures on the card and the other on the cheques. •Minimum Initial Deposits: The customer has to make a certain minimum deposits to open an account. However, later on customer can withdrawn part of this amount but must maintain minimum deposits to avoid closure of the account or service charges. •Operating the Account: When the account is opened banker customer relationship is established. The customer in order to be able to operate the account is given the following documents: •Pay-In-Slip Book: This book is issued to the customer containing slips upon which money is deposited. Each slip contains blank spaces for amount, account number, date, depositor signature and name of the account holder. •Cheque Book: The customer to withdraw the money from the bank uses Chequebook. Chequebook consists of 10, 25, 100 leaves. When new cheque book is required by the customer he has to fill in the cheque book” requisition slip” with two signature on it and give it to the concerned officer who on verification of the signature will issue new cheque book. •Qualification of the Customer: The relation of the banker and the customer is purely a contractual one. Therefore any person who is capable of entering into a contract accord- ing to the Section 11 of the contract Act 1872 can be a customer. However the following qualifications are necessary for a person to become a customer. •He must be of the age of majority •He must be of sound mind •He must not be disqualified under any law. Remittances ManagementOne of the important functions of a bank is to transfer funds for customers from one locationto another. Remittances department deals with the transfer of money for customer from onebank to another or from one branch to another. 24
  25. 25. Cash ManagementCash department basically handles cash receipts and cash payments. The procedure for whichis given belowa) ReceiptsCash department receives money from customers for crediting it to their respected accountsfor which then used for paying their bills or remitting to their creditors and suppliers as thecase may be. When depositing cash the client fills the prescribed form of pay and slipswherein he provides basic information like the amount to be deposited, date, account natureand number etc. then he hands over the form and paying slip along with the money to thecashier to the counter. The cashier signs and stamps the form or paying slips and returns onecopy of the same to the depositors. After the hours, all pay and slips to the computer section,which credits the same, their respective accounts.b) PaymentsWhen bank receives money from customers, it undertakes to repay the same upon demand.The money can be withdrawn through cheques, drafts or pay orders. However before makingpayments, bank satisfies itself that the instrument is valid and there is sufficient balance in thecustomer account to support the payment. For making payments the procedure followed.Cheque is first presented to token clerk. Token clerk notes down date, amount on the cheque,and account number in token register, assign token number to cheque on the back of it givestoken to the customer and then forwards the cheque to an officer to the check the signatureand verify it with signature on specimen card which the customer signed at the time ofopening the account. The cheque is then forwarded to the computer department forverification of the balance. The cheque is then forwarded to the cashier who makes paymentto person who presents the token.The process may differ from what mentioned above depending the nature of cheque.A cheque is defined as written order of a depositor to pay to or to order of a designated partyor bearer, a specified sum of money on demand.3.2.2 Credit DepartmentBankIslami offer different mode of financing according to Islamic mode. There are main twotypes of Financing modes in bankislami Mudarabah and Musharakah. Other modes offinancing are divided in two categories Short term financing and long term financing. 25
  26. 26. Musharakah FinancingIn Musharakah, a joint enterprise is formed for conducting some business in which allpartners share the profit according to a mutually agreed pre-determined ratio, whereas, theloss is shared in the ratio of capital investment. From Shariah perspective, Musharakah is oneof the preferred modes of financing.The scope of Musharakah is broad. Musharakah can be applied to fulfill project financingneeds as well as working capital financing needs of Corporate Clients. Since Musharakahtransactions are based on pure profit and loss sharing arrangement, therefore, the risksassociated with such transactions are greater as compared to other financing modes. Due tothis reason, Musharakah transactions are executed subject to satisfactory review of feasibilityof the proposed transaction/project. Mudarabah FinancingMudarabah is a kind of partnership where one partner gives money to another for investing ina commercial enterprise. The investment comes from the first partner who is called Rabb-ul-Maal while the management of the business is an exclusive responsibility of the other, who iscalled Mudarib. The profits generated are shared according to a mutually agreed pre-determined ratio, whereas, loss is borne by Rabb-ul-Maal unless the loss is due to negligenceof Mudarib. Working Capital Finance (shot term financing)At BankIsami, we understand that your business needs constant access to low cost andflexible financing, in order to meet day-to-day funding needs. Our teams of experiencedRelationship Managers with wide sector experience offer you effective cash flowmanagement by way of financing arrangements suitably structured to your needs and yourrisk profile.Cash is the lifeline of your business. Let your business have a blooming & prosperous lifewith our Working capital finance facility. To fulfill your working-capital financingrequirements, BankIslami offers a wide range of products as follows:a) Murabahah Financing:Murabahah is a type of sale in which the seller discloses the cost of goods and profit to the 26
  27. 27. buyer. Through this short-term financing mode, BankIslami can finance the asset purchaserequirement of the Corporate Customers.The Customer, intending to utilize the Murabahah facility, identifies the commodities(assets) it needs to purchase through Murabahah facility. BankIslami purchases the assetsfrom Supplier and then sells the same to the Corporate Customer against an agreed price(including disclosed profit portion) on deferred payment basis.b) Istisna Financing:Istisna is a contract of sale of specified items to be manufactured/constructed, with anobligation on the part of the manufacturer/seller to deliver them to the buyer uponcompletion.Istisna can be used for made-to-order commodities where the buyer (BankIslami) wouldorder a specific good with some specifications to be manufactured by the Corporate Client ina particular period of time and deliver to BankIslami after completion.c) Salam Financing:Salam is a sale, whereby, the seller undertakes to supply some specific commodity to thebuyer at a future date in exchange for an advanced price fully paid on the spot. As a matter ofprinciple, the sale of a commodity which is not in the possession of the seller is unlawful.Thus, the practice of Salam is legalized as an exception and is allowed under certain term andcondition. Salam is allowed for commodities only which are homogeneous and fungible innature i.e. every unit of the commodity should be identical and substitutable in nature e.g.sugar, rice, wheat etc. Therefore, Salam is an ideal mode for financing for agriculturalconcerns. Salam financing can also fulfill all working capital requirements ofmanufacturers/traders dealing in homogeneous commodities. Project Financing (medium and long term)BankIslami offers medium and long-term financing facilities for infrastructure, BMR andindustrial projects in all sectors directly or on syndication basis.a) Ijarah:Ijarah is a contract, whereby, BankIslami will lease out an asset to the Corporate Client andreceive periodical rentals from the Client for the use of that asset. The asset will remain in theownership of the Bank throughout the term of Ijarah. At the end of the Ijarah term, the assetcan be purchased by the Client at an agreed price.Ijarah is mainly used for long and medium term fixed asset financing for infrastructure, BMR 27
  28. 28. and industrial projects.b) Diminishing Musharakah:The product of Diminishing Musharakah is offered on the basis of Shirkat-ul-Milk. Shirkat-ul-Milk means partnership of persons in an undivided property. Process of DiminishingMusharakah financing involves BankIslami taking share in the ownership of a specific assetalong with the Corporate Client and then gradual purchase of the Client of BankIslamisownership share in the asset throughout the term of Diminishing Musharakah. At the end ofthe Diminishing Musharakah term, Client becomes the sole owner of the asset. DiminishingMusharakah is mainly used for long and medium term fixed asset financing forinfrastructure, BMR and industrial projects. Diminishing Musharakah is also an ideal modefor Real Estate Financing.3.2.3 Consumer bankingSame as other BankIslami offers same services as online banking, Transfer funds, Lookersfacilities, ATM card facilities. Online BankingBankIslamis has a wide network of 102 Branches in 49 Cities all of which provide OnlineBanking services. Online Banking means that all our 102 Branches in 49 Cities are connectedwith each other so that you can instantly access your account and make transactions in anyBankIslami Branch. The following are the key benefits that you will get out of using ouronline branch network: •Cash Deposit for immediate credit to a remote branch. •Remote Cheque Encashment from any online branch. •Instant Funds Transfer between any 2 online branches. •Balance Enquiry and Statement of Account from any Online branch3.2.3.2 Inter Bank Transfer FundDo you want to provide ease and convenience to your friends, family, colleagues andbusiness associates. With our Interbank funds transfer (IBFT) facility you can easily transferfunds in their accounts via your ATM. Now, when dealing with you they can ensure hasslefree funds transfer in their accounts. No nuisance of waiting for Cheque clearance or going to 28
  29. 29. the branch to deposit Cash or Cheque.IBFT facility enables you to send and receive funds Online from and to any Account holderof 1Link IBFT participating member Banks. Following are the key benefits that you will getout of using our IBFT facility: ATM or Debit CardIt is a Shariah compliant ATM/Debit card, all in one, which acts as a complete replacementfor cash. Now you have the freedom to access your Bank account 24 hours a day to makeinstant and cashless payments at a multitude of shops, outlets and restaurants in addition to itsuse on our ATM network. ATM Card:You can withdraw cash anytime and anywhere from around 2,500 ATMs countrywide linkedto both the M-Net and 1-Link switches. Debit Card:You can buy grocery, fill fuel, dine-out and make purchases at over 3,600 retail outlets linkedto the Orix Network countrywide.Chapter NO 4 29
  30. 30. ANALYSIS 4.1 Financial Analyses of BIPL BALANCE SHEET AS AT 31ST DECEMBER (Rupees in 000)ASSETS 2010 2009 2008 2007 2006Cash and Balances with treasury banks 3.035.148 4,217,515 2,175,413 1,433,166 338,222Balances with other banks 569.622 2,059,550 2,207,490 2,577,491 790,709Due from Financial institutions 4.513.132 4,018,813 40,351 625,037 412,131Investments 13.732.132 6,813,191 5,019,525 3,864,027 493,008Financing 16.670.125 13,282,152 6,527,531 3,962,867 959,133Operating fixed assets 2.066.680 2,395,304 1,910,648 1,093,324 441,428Deferred tax assets 402.183 347,016 265,257 90,418 27,130Other assets 4.046.681 1,153,230 942,385 801,143 562,913Total Assets 45.035.703 34,286,771 19,088,600 14,447,473 4,024,674LIABILITIESBills payable 563,020 485,608 353,646 84,998 23,830Due to financial institutions 353,000 156,160 245,939 70,000 50,000Deposits and other accounts 38,198,320 27,987,378 12,477,955 9,934,282 1,778,008Sub-ordinate loan - - - - -Liabilities against assets subject to finance - - - - -leaseDeferred tax liabilities - - - - -Other liabilities 1,154,977 917,332 819,239 513,467 169,949Total of Liabilities 40,269,317 29,546,478 13,896,779 10,602,747 2,021,787NET ASSETS 4,766,386 4,740,293 5,191,821 3,844,726 2,002.887REPRESENTED BYShare capital 5279,679 5,279,679 5,279,679 3,200,000 2,000,000Reserves 9,310 - - 30
  31. 31. Accumulated loss (554,985) (577246) (98,307) (45,377) (8,354) 4,734,004 4,702,433 5,181,372 3,154,623 1,991,646Advance against future issues of share capital - 681,409 -Surplus on revaluation of assets-net of 32,382 37,860 10,449 8,694 11,241deferred tax 4,766,386 4,740,293 5,191,821 3,844,726 2,002,887 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER (Rupees in 000) 2010 2009 2008 2007 2006Profit / return on financing, investments and 3,806,209 2,193,891 1,468,688 602,060 100,00placements earned 8Return on deposits and other dues expensed 2,057,533 1,222,169 729,528 303,842 18,665Net spread earned 1,748,676 971,722 739,160 298,218 81,343Provision against non-performing financings - net (7,424) (89,780) (130,556) (28,372) (1,001)Provision for diminution in the value of investments - (15,000) -Provision against sukuk murabaha - (6,418) -Bad debts written off directly - (7,724) (111,198) (130,556) (28,372) (1,001)Net spread after provisions 1,756,100 860,524 608,604 269,846 80,342OTHER INCOMEFee, commission and brokerage income 87,821 37,854 112,117 61,207 3,430Dividend income 1 - 1,741 23,150 13,569Income from dealing in foreign currencies 60,276 278,054 29,273 10,248 740Gains on sale of securities - 2,356 31,273 41,922 24,179Unrealized Gain / (loss) on revaluation of - (926)investments classified as held for tradingOther income 59,006 24,423 21,735 37,54 3,555Total other income 207,104 342,687 196,139 140,281 44,547 1,963,204 1,203,211 804,743 410,127 124,88 9OTHER EXPENSESAdministrative expenses 1,895,476 1,755,503 1,028,232 507,252 145,52 6Other provisions / write offs 11,528 -Other charges 11,657 10,617 5,663 3,338 13,762Total other expenses 1,918,661 1,766,120 1,033,895 510,590 159,28 8 31
  32. 32. 2010 2009 2008 2007 2006 44,543 (562,909) (229,152) (100,463) (34,399 )Extra ordinary / unusual itemsLOSS BEFORE TAXATION 44,543 (562,909) (229,152) (100,463) (34,399 ) 42,268Taxation -Current - (12,549) (87) (4,004) (1,021) -Prior years (4,276)-Deferred 2,007 96,519 176,309 67,444 27,332 46,550 83,970 176,222 63,440 26,311LOSS AFTER TAXATION (592,225) (478,939) (52,930) (37,023) (8,088)Accumulated loss brought forward (9,310) (98,307) (45,377) (8,354) (4,529)Accumulated loss carried forward (554,985) (577,246) (98,307) (45,377) (12,617 ) Horizontal Analysis Cash and Cash Balances Cash and cash balances are increasing every year. Balances with other banks: Balances are increased in 2006 and 2007 and decreased in 2009 and 2010. It is due to advances and investments. These two years BIPL used these funds in investments and advances rather than keeping balances with other banks. Investment: BIPL investment are increased years by years for last five years . The reason is fewer funds are used in investment in fully paid up shares of listed companies and unlisted terms finance certificates. Advances: In BIPL there was increase in advances year by year. Operating fixed assets: 32
  33. 33. Operating fixed assets are increased through out years Other assets: Ratio of the other assets is also showing the trend towards increase for last five years data. Liabilities: Bills payable: In BIPL five years comparison of bills payable shows that in the year 2004 to 2007 ratios are slightly increase but in year 2008 & 2009 it increased quickly.Ø Other liabilities:Ø It also shows the increaseØ Share Capital:Ø In BIPL share capital increased in 2004 but remains the same in 2008 to 2010. Horizontal Analysis of the profit and loss account Markup/return/interest expense There is an increase in 2007 to 2010 in the markup/return/interest expense because return on deposits are increased due to increase in rate on deposits and increase the amount of fixed deposits. Administrative Expense The administrative expenses are increasing every year because of expansion of the branch network. 4.2` Ratio Analysis 33
  34. 34. Liquidity Ratios: Liquidity represents the ability of a bank to efficiently and economically accommodate deposits withdrawal as well as fund increase in assets.1-Current Ratio:The current ratio measures the number of the firms current assets cover its current liabilities.Current ratio = Current assets / Current Liabilities2006Current Assets 2,103,975Current liabilities 243,779Current Ratio 863.07%2007Current Assets 5,436,837Current liabilities 668,465Current Ratio 813.33%2008Current Assets 5,365,639Current liabilities 1,418,824Current Ratio 37818%2009Current Assets 11,449,108Current liabilities 1,559,100 34
  35. 35. Current Ratio 734.34%2010Current Assets 1,21,64,583Current liabilities 20,70,997Current Ratio 587.37% Analysis of Current ratios of BIPL Current ratio shows a firms ability to cover its current liabilities with its current assets. If value of current ratio is grater then one it means that firm can pay all its current liabilities from its current assets but if value of current ratio is less then one it means that firm is unable to pay its currents liabilities from its current assets. For last five years current ratio in BIPL are strong. 2-Working Capital Ratio Working capital is the difference between current assets and current liabilities. Working capital is used to check liquidity of the organization. Working Capital = Current Asset- Current Liabilities 2006 Current Assets 2,103,975 Current Liabilities 243,779 Working Capital 1,860,196 2007 Current Assets 5,436,837 Current Liabilities 668,465 35
  36. 36. Working Capital 4,768,372 2008 Current Assets 5,365,639 Current Liabilities 1,418,824 Working Capital 3,946,815 2009 Current Assets 11,449,108 Current Liabilities 1,559,100 Working Capital 9,890,008 2010 Current Assets 1, 21, 64,583 Current Liabilities 20, 70,997 Working Capital 1, 00, 93,586 Analysis of Working Capital Working capital is better in 2010 which means that assets are utilized more efficiently in 2010 as compared to other years.Cash Ratio Cash and cash equivalent are the most liquid assets. It is used check the liquidity of the organization. 2006 Cash Equivalent 1,128,931 Total Assets 4,024,674 Cash Ratio 28.05 2007 Cash Equivalent 4,010,657 36
  37. 37. Total Assets 14,447,473Cash Ratio 27.762008Cash Equivalent 4, 383,,058Total Assets 19,088,600Cash Ratio 22.962009Cash Equivalent 6,277,328Total Assets 34,286,771Cash Ratio 18.312010Cash Equivalent 36, 06,011Total Assets 45,035,703Cash Ratio 08.007Analysis of cash ratio of BIPLHigher cash ratio also shows the higher rate of satisfaction like other liquidity ratios.Cash ratio is more important liquidity ratio. In 2005 cash ratio was 6.51%, itincreased quickly in 2006 to 28.05%, but it shows declining trend in 2007 to 2009. In2010 it decreases dramatically to 8.007 %.Leverage RatiosLeverage ratios of a firm show the extent to which a firm finances its operation fromthe outside sources and money. The leverage can be determined from analysis ofowner equity in business, total liabilities, current and long-term liabilities. Long-termassets and total assets of the business.Debt to Total Assets RatiosIts shows that how much assets have been financed by liabilities. 37
  38. 38. Debt RatioDebt Ratio = Total Debt / Total Assets2006Total Debts 2,021,787Total Assets 4,024,674Debt Ratio 50.232007Total Debts 10,602,747Total Assets 14,447,473Debt Ratio 73.392008Total Debts 13,896,779Total Assets 19,088,600Debt Ratio 72.802009Total Debts 29,546,478Total Assets 34,987,378Debt Ratio 84.452010Total Debts 40,269,317Total Assets 45,035,703Debt Ratio 89.41Analysis of leverage ratioFinancial leverage is the extent to which a firm is financed with debt. In BIPL, 2010is heavily financed because debt was the major source of financing in 2010. 38
  39. 39. Debt to Equity Ratio:Debt equity is calculated by dividing total liabilities of the bank by the tall ownerequity.Debt to Equity Ratio = Total debt / shareholders equity or Debt ratio / 1- Debtratio2006Total Debts 2,021,787Share holder equity 2,000,000Debt to equity Ratio 1.012007Total Debts 10,602,747Share holder equity 3,200,000Debt to equity Ratio 3.312008Total Debts 13,896,779Share holder equity 5,279,679Debt to equity Ratio 2.632009Total Debts 29,546,478Share holder equity 5,279,679Debt to equity Ratio 5.602010Total Debts 40,269,317Share holder equity 5,279,679Debt to equity Ratio 7.62 39
  40. 40. Analysis of the Debt to equity ratioGreater the debt greater risk for the firms shareholders. In 2006 risk for theshareholders was very low as compared to the other years decrease debt to equityratio was very small on the contrast risk was very high in 2010 because of heavyfinancing.Equity multiplierOwner equity to fixed assets ratio“Owner equity to fixed assets ratio” shows that how much money does owner inrelation to fixed assets invest. If the owner equity is greater then the fixed assets, itmeans that owner finances a part of current assets. When owner equity is less thanfixed assets it means that creditors obligations have been used to finance a part offixed assets.Total owner equity divided by fixed assetsEquity Multiplier = Total assets / shareholders equity2006Total Assets 4,024,674Share Holder Equity 2,000,000Equity Multiplier 2.012007Total Assets 14,447,473Share Holder Equity 3,200,000Equity Multiplier 4.512008Total Assets 19,088,600Share Holder Equity 5,279,679 40
  41. 41. Equity Multiplier 3.622009Total Assets 34,286,771Share Holder Equity 5,279,679Equity Multiplier 6.492010Total Assets 4, 50, 35,703Share Holder Equity 52, 79,679Equity Multiplier 8.53Analysis of the equity multiplierIn BIPL it is a better in 2010 it means that bank has about 8.53 in total assets of 100of equity.Coverage AnalysisCoverage ratios analysis the ability of a firm to cover or service its financialobligations.Gross Spread Ratio:This ratio shows the firms overall effectiveness of operation. Gross profit divided bynet sales.2006Net Markup / Interest income 81,343Interest earned 100,008Gross spread ratio 81.34 41
  42. 42. 2007Net Markup / Interest income 298,218Interest earned 602,060Gross spread ratio 49.532008Net Markup / Interest income 739,160Interest earned 1,468,688Gross spread ratio 50.332009Net Markup / Interest income 971,722Interest earned 2,193,891Gross spread ratio 44.292010Net Markup / Interest income 17, 48,676Interest earned 38, 06,209Gross spread ratio 45.94Analysis of gross spread ratioIt is measure of the efficiency of the firms operation. Gross spread ratio of BIPL ishigh in 2005 as compared to the other years. Only because of low expenses during theyear.Investment to Total assets RatioInvestment / Total assets2006 42
  43. 43. Investment 493,008Total Assets 4,024,674Ratio 12.252007Investment 3,864,027Total Assets 14,447,473Ratio 26.752008Investment 5,019,525Total Assets 19,088,600Ratio 26.302009Investment 6,813,191Total Assets 34,286,771Ratio 19.872010Investment 1, 37, 32,132Total Assets 4, 50, 35,703Ratio 30.49Advances to Total Assets RatioAdvances/ Total Assets2006Advances 959,133Total Assets 4,024,674 43
  44. 44. Ratio 23.832007Advances 3,962,867Total Assets 14,447,473Ratio 27.432008Advances 6,527,531Total Assets 19,088,600Ratio 34.202009Advances 13,282,152Total Assets 34,286,771Ratio 38.742010Advances 1, 66, 70,125Total Assets 4, 50, 35,703Ratio 37.01In 2010 advances to total asset ratio of BIPL decreases to 37.01.Operating Expense RatioNon Markup Expense / Gross Income2006Non Markup Expense 159,288Gross Income 124,889Ratio 127.54%2007 44
  45. 45. Non Markup Expense 510,590Gross Income 410,127Ratio 124.50%2008Non Markup Expense 1,033,895Gross Income 804,743Ratio 128.48%2009Non Markup Expense 1,766,120Gross Income 1,203,211Ratio 146.78%2010Non Markup Expense 19, 18,661Gross Income 19, 63,204Ratio 97.73%Cost to Sales RatioThe ratio is obtained by dividing cost of sales by net sales. The following are the costof sales of BIPL over five years of operations.Markup expense divided by markup earned.2006Markup Expense 18,665Markup Earned 100,008Cost to sales ratio 18.662007Markup Expense 303,482Markup Earned 602,060 45
  46. 46. Cost to sales ratio 50.412008Markup Expense 729,528Markup Earned 1,468,688Cost to sales ratio 49.672009Markup Expense 1,222,169Markup Earned 2,193,891Cost to sales ratio 55.712010Markup Expense 20, 57,533Markup Earned 38, 06,209Cost to sales ratio 54.05 46
  47. 47. Chapter NO 5SWOT ANALYSIS5.1 SWOT Analysis of BIPLDue to globalization and management studies now organizations cannot survive until theycompete with their surroundings and then internationally. SWOT analysis is the kind of toolwhich is used to analyze the organization’s performance in relation to its internal and externalenvironment strength; weakness, opportunities and threats face by BIPL are as follow.Strengths • It has a competitive advantage of doing less marketing as compassed to conventional banking and as a result better cost control. • For speculative motive less money is used due to which there is reduction in volatility in investment and chances of investment failure. • It is feasible location wise and geographically • To attract new customers and retain potential customers by beginning innovative products and service like BIPL offers e-banking, phone banking etc. • As bank made on name of Islam in Pakistan so, it have advantage of religious position in a country. • Saving can be mobilized and increasing deposits of banks using as charities and zakat fund schemes etc. 47
  48. 48. Weaknesses • To complete with conventional banks a lot of capital is required and large amount of recourses have to maintain to meet any loss situation in Islamic finance modes of investment. • To do job efficiently and serve Islamic financial services, training is required for improving skills of management and staff. • Staff of BIPL is less experienced and young • Work I more than the employees working houses • Main weakness o BIPL is lack of specialization i.e. employees are rotated from one job to another job of totally different characteristicOpportunities • Due to Islamic banking new markets have emerged like Islami mortgage, Islamic insurance and other investment projects etc • BIPL offers value added services and products to customersThreats • Market demand is less as compared to conventional interest based banking. • After 9/11 attacks on WTC environment of Islamic banking in west has declined. • For implementation of Islamic banking a lot of legislation is required especially in non-Muslim countries. • Increasing competition in Islamic banking sector • Poor economic condition of country. 48
  49. 49. 5.2 COMPARISON OF SWOT ANALYSIS OF BIPL WITH MBL & AL-BARAKA BANK5.2.1 SWOT ANALYSIS OF MEEZAN BANK:Strengths • Continued to expand its branch net work. • It is the strength of Meezan bank that I provides healthy and fair working environment. • Shareholding is very strong. • Full fledged Islamic bank • Highly invested in technology.Weaknesses • Charges are very high for different activities as compared to competitors. • Low promotion and advertisement of produce and services. • Restricted shariah based policies. • Few services are offered by Meezan bank as compared to competitors. • There is no credit card facility • No long term relations maintain with customers.Opportunities • Increasing demand of Islamic financial products and services. • Market share in creases through branch expression through out the country. • Due to Islamic banks (Meezan) people are moving from conventional banking to Islamic banking. 49
  50. 50. Threats • Charges in govt policies • Political instability • High interest rate change by SBP • Due to changes in foreign exchange rates value of financial instruments fluctuates • Entry of new competitors.5.2.2 SWOT Analysis of al-Baraka bank strength: • Commitment to Islamic shariah • Staff are qualified and experience in field of management and banking • Relationship of manager with staff and staff with customers is quite good. • High job satisfaction • Environment is friendly and co-operative • Senior management is competent.Weaknesses • Centralized decision making which results loss of confidence among employees and mgt. • Lack of marketing effort • Less internal recruitment for new posts. • Lack of training at all levels • Lengthy process of recruitment.Opportunities 50
  51. 51. • Better Management • Location of branch is very suitable place • Proper utilization of internal expertise being major change in organizationThreats • Increasing competition in both domestic and foreign market. • Good job opportunities offer outside attract our current employees. • Other organizations are using better HR Technique.5. 3 Comparison • Meezan bank has 204 branches through out the country while BIPL has 102 branches so; Meezan bank has strength of increasing market share in country through expending its branch net work. • Meezan bank provides training facility to their staff members as compared to BIPL. • Location wise BIPL is better that Meezan bank. • Work is over loaded to employees in BIPL as compared to Meezan Bank. • Services and financial instruments offered by Meezan bank are charged highly as compared to its competitor BIPL. • As compared to other conventional banks BIPL,MBL and Albaraka bank are not following marketing strategies like advertisement. • Few services are offered by Albaraka bank than BIPL and MBL. • Process of recruitment is lengthy in Albaraka and MBL than in BIPL. 51
  52. 52. Chapter NO 6FINDINGS AND RECOMMENDATIONS6.1 SHORT FALL / WEAKNESSES OF ORGANIZATIONAccording to my observation, it is pointed out that there are some short comings inBankIslami Mansehra.Low Job Satisfaction:It is becoming clear that the true lasting competitive advantage comes through humanresources and how they are managed. BIPL is not focusing on this critical issue as the jobsatisfaction level of the employees working at BIPL, was quite low.Lack of Specialization:The employees are constantly rotated from one job to another job of the totally differentcharacteristic in and they do not have know-how of the working in other unrelateddepartments. But I think this is not a very good tactics used by the management. Otherwisethe situation might be like this “ Jack of all and master none.Centralization:There is a high degree of centralization in the bank. Almost all the decision-making is in thehands of the upper management. But centralization is effective up to a certain level otherwiseit becomes inefficient and at times costly too. I personally observed that delay occurred in theoperations of the employees only due to the fact that they had not got any instructions fromthe head office.Lack of Training Facilities:Presently there is no specific training program arranged for the new recruiters. They have tolearn based on their observations and also their mistakes. It takes a bit time for the fresh one 52
  53. 53. to learn the banking the result is huge amount of blunders, mistakes etc. resulting in monetaryand non-monetary losses for the bank. There is pressure not only on the new learner but alsoon the person placed upon with this responsibility.Less Experienced Staff:The no. of experienced and well trained staff is very low. Majority of the staff working in thebank branches is quite young and inexperienced. If the bank failed to bring down its highemployees turnover, then it would be lacking the most important resources of an organizationi.e. the experienced staff.Customers unawareness about chargesMostly customers are unaware about charges for DD, TT, PO etc. so manager should tellthem charges before giving form, through which wastage of time minimize.Overburdened workEmployees are overburdened, so they have to stay at branch till late at night. Due to highwork load efficiency of employees are effected.Lack of appreciationSometimes bank ignored the good performance of employees. If hard work of employees arenot appreciated, then they become dishearten and losses his interest in work.RECOMMENDATIONS It was an interested experience to do internship in BankIslami Pakistan Limited. The staff was very cooperative and due to their help I learned big deal about modern banking. I suggest that such an internship program highly integrative for the students of commerce education so that the students should be inquired with the knowledge of practice world .I 53
  54. 54. do summarize that it would be a great help to me in selection of job or future field of work. Here I am putting some suggestions, which will enable the bank to compete with other banks more effectively & efficiently. It is observed that the employees were overburdened so they have to stay at branch till late at night. In this way their efficiency is affected and hiring more employees can reduce their work. The employees should be assigned jobs for specific period and than they should rotated to other department so that they gain knowledge/ experience of other jobs. BankIslami should properly advertise and Communicate to public about the services provided by it, so that more customers will be attracted. The bank’s management should give more incentives and pay scale of officers should be revised & improved. System and operations should be more defined and organized. Administration drawbacks should be improved by the strict control of general issues. Expenditures must be control, which are very high. BankIslami has not strong position in market. So BankIslami should do heavy advertisement both electronically and print media to create public awareness. Branch manager should also arrange training programmers for existing employees to improve their performance. Proper distribution of work should follow to run the organization in smooth way. There should be a complaint box in bank for hearing complaints of customers because most of the people feel hesitation to go to manager for complaint. IT department should be establishing in order to maintain connection with other banks.REFERENCESAnnual ReportBIPLs Annual Report 2010BIPLs Annual Report 2009BIPLs Annual Report 2008BIPLs Annual Report 2007Staff of BIPL Mansehra Branch 54
  55. 55. 55
  56. 56. Annexure-IMANAGEMENT OF THE BRANCH DESIGNATION NO OF EMPLOYEES Branch Manager 01 Operation Manger 01 Officer Level I 02 Officer Level II 01 Officer Level IV 02 Cashier 01 Service quality Officer 01 Telephone Operator 01 Gunman 02 Peons 03Annexure-IIMANAGEMENT OF THE BANKISLAMI- (In Alphabetical order)Mr. Adnan Hamid Head, Administration & General ServicesMr. Arsalan Vohra Head, Risk ManagementMr. Asad Alim Head, Information SystemMr. Khawaja Ehrar ul Hassan Head, ComplianceMr. Faisal Shekh Head, Product Development 56
  57. 57. Mr. Farooq Anwar Head, OperationsMr. Hassan A. Bilgrami Chief Executive OfficerMr. Muhammad Furqan Head, Credit AdministrationMr. Muhammad Imran Head, Consumer & Retail BankingMr. Muhammad Shoaib Khan Head, Treasury & Financial InstitutionsMr. Rehan Shuja Zaidi Head, Internal AuditMr. Shamshad Ahmed Head, Trade FinanceMs. Sheba Matin Khan Head, Human ResourcesMr. Syed Akhtar Ausaf Head, CreditMr. Syed Mujtaba H. Kazmi Head, Corporate FinanceMr. Syed Shah Sajid Hussain Head, FinanceAnnexure -IIIMANAGEMENT HIERARCHY Chairman Board of Chief Executive Head of Regional 57 Area Area Operations
  58. 58. Button5Annexure IVPROVINCE WISE BREAK UP OF BRANCHESSIND PUNJAB BALOCHISTAN NWFP ISLAMABAD AJK TOTAL37 37 13 8 5 2 102AnnexureManagement of the branchDesignation NameBranch Manager Mr. Zulfiqar AliOperation Manager Mr. Shafqat HussainCustomer Service Executive (Account Mr. Sarmad ImtiazOpening)Customer Service Officer (Clearing and Mr. Yasir Ali 58
  59. 59. Remitance)Customer Service Officer Cash Mr. Mazher Lodhi 59