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CHAPTER NO 1

INTRODUCTION

1.1 HISTORY OF THE BANK

Pakistan is one of the agricultural country, about 75% of its population is directly or

indirectly associated with agriculture. Due to its widespread and extensive canal

system, its land is very fertile. The Agricultural Development Finance Corporation

was setuped in 1951, keeping in view the need of finance to rapid development of

agriculture sectored. It also provides financial facilities for the development and

modernization of agriculture, including forestry, fisher, animal husbandry, poultry and

dairy farming.

Under the Agricultural Development Bank Act, the Agriculture Development Bank of

Pakistan came in being in September 1957. Under this Bank, the agriculturists, co-

operation societies and others were provided the facilities of credit in cash,

warehousing and storage. Agricultural Development Finance Corporation and the

Agricultural Development Bank were similar in function and government provides

capital to both of them. later On February 18, 1961, due to their similar functions

these both came under the single banner of Agricultural Development Bank of

Pakistan.

Agricultural Development Bank of Pakistan (ADBP)

Under the ADB Ordinance 1961, the Agricultural Development Bank of Pakistan

(ADBP) was established originally. Then, ADBP was reorganized into a public limited

company, with the purpose of ensuring better governance and the provision of high

quality financial services to its rural clientele. Then all assets, business, contracts and

liabilities of ADBP were taken by the Zarai Taraqiati Bank Limited (ZTBL and on
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December 14, 2002 and started its countrywide operations as a public limited banking

company.

The ADBP had than become the single largest institution in the country catering to be

viable credit need of the agriculturists and in disbursing over Rs. 5000 million per

annum for the development and modernization of agriculture.

1.2 CONVERSION OF ADBP INTO ZTBL

Agriculture Development Bank of Pakistan (ADBP) was converted into Zarai

Taraqiati Bank Ltd (ZTBL) by the Federal Government and it started its operations

with profound effect. It was restructured accompanied with new board of directors

and was titled as public limited company. Its aim under the presidential ordinance was

to ensure good governance, autonomy, delivering high quality, viable and timely

financial services to a greater number of clientele in the agricultural and rural segment

of the country with adequate return to the stake holder. In 1984 Zarai Taraqiati Bank

(ZTBL) under the companys ordinance was registered with SECP as a public limited

and by virtue of finance order, all assets, liabilities proceeding undertaking of the

ADBP stands transferred to and vested in Zarai Taraqiati Bank with effect from

December 14, 2002.

The conversion of ADBP into ZTBL had a conditionality of the Asian Development

Bank (ADB) loan framework as per which a restructuring exercise was initiated. The

restructuring process entailed ADBs Rural Finance Sector Development Program

(RFSDP) with the objective to transform ZTBL into a sustainable Rural Finance

Institution. It also included the up-gradation of Information technology (IT)

infrastructure for which funds from ADBs loan were to be utilized. As part of the

overall organizational revamping strategy, the bank has taken several 0initiatives to

enhance its lending activities while adopting a prudent approach with regards to credit
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quality. Kisaan Support Services (Pvt.) Limited (KSSL), a subsidiary of ZTBL, has

been engaged to sell fertilizer to farmers at subsidized rates, while a Memorandum of

Understanding (MOU) is signed between KSSL and Pak Arab Fertilizer to ensure

timely availability of agricultural inputs.

The main aim behind the restructuring of ADBP and its conversion into ZTBL is

extend swore credit to the needy segment of highly productive and yielding Agri and

non-farm activities. It was done keeping in the mind that this step shall greatly add to

the credit distribution mechanism.

National Operation

The Zarai Taraqiati Bank Limited runs its operation in whole Pakistan and also out

side Pakistan and the persons conducting such business. The banks total manpower is

7665 having 4515 officers and 3150 staff. It has 49 regional offices and 342 branches

through out the Pakistan including the Federally Administered Tribal Area (FATA),

Federally Administered Northern Area (FANA) and Azad Jammu and Kashmir. ZTBL

while completing its period of 42 years operational activities tried to serve the

forming community through the country for their medium and long-term development

credit needs.

Organization

First the head office of the ZTBL was located in Karachi and was shifted to Islamabad

later during 1973. Presently there are 9 division and 33 departments in the head office.

It has 49 regional offices and 343 branch offices apart from 8 audit directorates in the

field, two staff colleges at Islamabad and Karachi. To cater for loan requirement of the

forming community at their door steps over 1408 Mobile Credit Officers have been

deployed in the field, each covering 25 villages in an average.

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BOARD OF DIRECTORS:

Syed Qamar-Uz-Zaman Shah

CHAIRMAN BOARD

Mr. Muhammad Zaka Ashraf

PRESIDENT/ CEO

Mr. Yawar Zia

DIRECTORS

Mr. Qamar Zaman Chaudhry

Mr.Muhammad Iftikhar Khan Mohmand

Mr. Tauqir Ahmad Faiq

Dr. Khalid Ahmad Khokhar

Mr. Imam Bux Sheikh

Mr.Muazam Ali

VISION STATEMENT

Emerge as a Leader in provision of agriculture credit by promoting and sustaining

productivity through a market/agribusiness focus. To bridge yield gaps of all

agriculture commodities and to ensure that the welfare of farming population is

radically improved and the environment is protected from harmful human

interventions.

MISSION STATEMENT

To become a leader in guiding entrepreneurs & farmers implement an agribusiness

and marketing led approach that brings strong commercial orientation in production
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catering domestic and international markets. As a specialized agriculture development

bank, deliver pragmatic technology and optimal solutions to farm communities and

rural areas across all agro-ecological zones with sensitivity to economic growth and

equity. Develop close partnership and linkages with all its clients to dramatically

transform, restructure and revamp the agriculture scene and enhance its outreach by

investing wisely and judiciously in new approaches, ideas and means of mass

communication.

1.3 CORPORATE OBJECTIVES

The prime objective of ZTBL incorporated under the companies ordinance 1984 is to

provide Srural and agriculture sector and mitigates poverty. The credit facilities in

rural areas shall be provided in cash or kind at a market based a mark-up rate that

ensures operational and financial sustainability of the bank.

The ZTBL is to Develop and operate as a financially and operationally sustainable

R.F.I of the country. To assist rural community, particularly the small farmers, in

raising their productivity and income levels through timely delivery of credit,

advisory and ancillary services. Build ZTBL's image as a proactive, client friendly,

financially & operationally sustainable with indigenous product deployment.

Establish and provide backward and forward linkages to strengthen agri. value added

commodity chains. Engage in public - private and wholesale - retail partnership to

deepen outreach and reduce operating cost. It functions as a rural commercial bank to

mobilize rural capital formation and to commercialize the agri. sector by delivering

the true value of credit to the client. Provide a wide range of risk insurance products

to its clients. Open up it venues of operation to Domestic & International Banking

Industry to avail comparative advantages.

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1.4 NATURE OF BUSINESS

Zarai Tarqiati Bank is to provide credit facilities to the farmers, including hiring and

renting of any thing which it may advance way of loan and the provision for ware

hosing facilities of such terms and subject to such conditions as may be prescribed by

its rule to agriculturists for the purpose of agriculture and to persons engaged in

cottage industries in rural areas and provide sustainable rural financing services,

particularly to small farmers.

1.5 TYPES OF LOANS

Banks provides loans through various products/schemes for short, medium and long

term depending on the cash flow of the borrowers.

The bank gives special focus and importance to fulfill the genuine and real needs of

the small farmers in terms of production loans (seed, fertilizers, pesticides, POL, labor

charges etc) as well as for working capital purpose. These loans are provided to the

needy farmers in cash and kind under various schemes like Sada Bahar, Awami Zarai,

General Credit and One Window Operations Zarakhazi Schemes.

The bank also provides Development loans to farming community like tractors, allied

agri-equipments/implements, besides loans for poultry and livestock, fisheries,

orchards, plantation, and irrigation schemes etc.

MAXIMUM CREDIT LIMIT

Maximum limit of loan is Rs.1.00 million per borrower/party.

LENDING CRITERIA

The bank advances preferably to small farmers and following criteria is observed in

overall distribution.
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Subsistence farmers 70%

Economic farmers 20%

Big farmers 10%

Production loans 77.5%

Development loans 22.5%

The management adopts lending recovering linkage criteria to ensure smooth

operations of the bank and honor its obligations.

1.6 SECURITY

The bank provides loans under Agri-Pass Book System as well as other collateral

acceptable to the bank. Simplification of loan documents is in order to facilitate the

farmers, the Bank has simplified the loan documentation to be applicable for three

years of the loan period. The main loan documents which are presently being used in

the branches of the bank are as under loan application form IB-7 Revised loan

Agreement-cum-Guarantee Charge Creation Certificate/Sanction Mutation entered in

bank favor sanction latter for loan

1.7 MAJOR LENDING SCHEME

Sada Bahar Scheme

One Window Operation/Zarkhaiz Scheme

Crop Maximization Project-II

White Resolution Scheme

Red Meat Financing Package Scheme

Green Revolution Scheme

Sairab Pakistan Scheme

Crop loan Insurance Scheme

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Banazir Tractor Scheme

Awami Zarai Scheme

Establishment of Model Village

1.8 PERFORMANCE AND PROGRESS OF PROJECTS

LOAN DISBURSEMENT

During the year 2015 loans amounting to Rs.77.680 billion were disbursed to 567.415

borrowers as compared to Rs.70.698 billion availed by 571,946 borrowers during the

year 2014. Thus growth in amount was 10%.

DISBURSEMENT POSITION DURING THE LAST 5 YEARS

Years Disbursement No of
Production Development Total
Growth Borrowers

Served
2011 33.42 5.941 39.36 - 441,536
2012 47.77 4.72 52.52 33% 443,874
2013 50.22 5.7 55.91 6% 475,756
2014 58.52 12.17 70.7 26% 571,946
2015 61.72 15.96 77.7 10% 567,415

Bank disbursed total of Rs.77.680 billion in 2015 as against Rs.39.356 billion

disbursed during the years 2011, with borrower network of 567,415 and 441,536

respectively. The cumulative growth during the period under remained 97% in terms

of amount and 29% in terms of borrowers.

1.9 HO ACCOUNT DEPARTMENT

Day first: 19-7-2015, Zulfkar ali Satti In charge Payroll unit

Pay Roll Unit

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Payroll unit of ZTBL consists of 700 employees. Its role is to manage Advances given

to the employee, allowances, benefits and tax deduction over the salaries of the

employees etc. there are five types of the advances as mentioned bellow:

House building allowances

Computer allowances

Personal loans

Car loan

Motor cycle

There is 4% markup charged over the employees on the house building allowances

while no markup is charged over the personal loans, which is in the benefit of the

employees. Non clerical staff is given 18% allowance, while clerical staff is given

15% allowance on the basic pay.

Allowances and benefits are given on the basis of the scales of the employees. There

are different scales of the employees as mentioned bellow:

1 to 3 Scale for non clerical employees

4 to 7 scale for clerical employees

7 onwards for officers

The amount of allowances and advances are transferred through a transfer voucher.

Different types of the vouchers are used in ZTBL such as debit voucher, credit

voucher and transfer voucher. The credit and debit voucher are in the branches of the

ZTBL, while transfer voucher is used in the ZTBL Head Office.

Day 2: 20-7-2015 Munir hussain OG 2

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ZTBL consists of staff training school, which facilitates the refresher courses in

training program to the existing employees of the ZTBL. Training school preplan the

training schedule for the upcoming year, which is approved by the higher authorities

and send letter to different training zonal offices for training purpose.

Employees coming form the different branches are entertained through lecture on

banking sector and are given techniques to improve skills required in this current

world of competitive environment. ZTBL hire the trainer of the program both

internally as well as internally.

1.10 LECTURE FEE

These trainers charge the lecture fee, which is disbursed by the HO Account

Department. The entry is passed in the GL Head (General Leger Head) as debit the

speaker fee and credit the ZTBL. Above transaction is done, while using the excel

format as mentioned bellow:

S. No. PP No. Account No Speaker Amount

Amount of the lecture is given to the speakers with respect to the grade vice.

Minimum amount is Rs400 for grade 16 to 18, and maximum amount is Rs600 for 19

grade officer.

It is required for the external speaker to open account into the ZTBL for error free

transaction. This transaction usually takes two days to take place.

1.11 Leave In Cashment

When leave of the employee is not approved by the bank then that leave is changed

into cash. The criteria for this mentioned by the SBP, which stats that it is only

possible when there is 180 days balance of the employee, below this it would not

work.
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This transaction takes place as follow

Employee Credit

Bank credit

1.12 EDUCATION STIPEND/ ALLOWANCE

Education stipend is special relief for all staff including non clerical, clericals and

officers, where as education allowance is only opportunity available to non clerical

and clerical staff. The employees apply through the application forms, while

submitting that to the Staff Welfare Department Three children are allowed for the

stipend allowance and 300 are added in the salary of the employee. For the education

stipend minimum 65% marks criteria is set by the bank. Students of the 6th to 8th are

given Rs224 per month, 9th and 10th are given Rs376 per month, where as students of

the XI and XII are given Rs388 per month and bachelors to master are given Rs400

per month. Top 10 students in their studies are awarded Rs1200 per child.

PRESIDENT CLUB CHARGE

President club charges are Rs1300 per month.

PAYMENT OF SPECIAL DUTY ALLOWANCE

It is the criteria of the bank that if the employee will perform special duty after the

bank timings then he will be given special duty allowance. Employees who perform

special duty from 5 PM to 8 PM or 10 PM then they are given Rs200 per day.

ARREAR OF SALARIES

Arrears are the result of increment, promotion of the employees or other differences

of the actual salary and paid salary. These arrears are handled by the payroll unit

Day 3

Sher Allumgeer AVP IBR UNIT

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1.13 IBR UNIT

HO Account Department consists of IBR unit, in which reconciliation of the

transaction takes place. These transactions are of two types, one is transaction in

between branches and other is in between and head office. Central Accounting system

Head Office Islamabad is used for reconciliation purpose. It consists of central

accounting file/ entry quarry. Again it consists of two files, one is originating file and

other is respondent file. From originate file funds are transferred, while from

respondent file funds are received. In these accounts transfer voucher is used as base.

When errors occurred in the transaction then the balances does not tally. Errors in

these accounts mostly occur due to wrong code of branch or mixing of both debit and

credit accounts or through other wrong entry. To solve this problem of errors

reconciliation method is used. Inter reconciliation unit in HO Account Department

collects whole data from country wide branches and if there is problem of

reconciliation, IBR Unit inform the branches to reconciliation the transaction. If there

is error in the data collected in IBR Unit then software shows the status of 99. After

reconciliation when balances tally then the software show the status of 00. The head

office sends advices to branches through mail and list form. According to the

prudential regulations issued by the State Bank of Pakistan reconciliation should take

place with in 30 days, but for certain times it takes place after due date.

EMPLOYEES FUNDS UNIT

HO Accounts Department of ZTBL consists of Employee fund unit. Major

responsibilities of this unit consists of activities related to the managing funds,

investment of surplus funds, payments of retirement benefits of gratuity, pension,

GPF, GTI, BF grants etc. to out going employees. It is also the responsibility of this

unit to prepare the accounts of the funds annually and these are later audited by
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external auditors. Further more it records the contribution towards employees funds

and maintains individual accounts in visionary funds where ever applicable. It

maintains the book of accounts of trust funds and invests the surplus funds and

manages the audit with the help of Chartered Accountants Firms. It facilitates the

payment if benefits of Benvolevent Funds, Pensions, Provident, Gratuity and Group

Term Insurance (GIT). It also facilitates the payments of various benefits just as death

compensation/donation to deceased employees family and marriage grant to clerical

staff etc. It manages outstanding staff advances of employees who die during bank

services. It recovers funds provident funds advances. It facilitates the arrangement of

actuarial valuation study as required under International accounting standarad-19

This unit consists of trustees, who manage these funds through operational staff of

this unit. The regulations, standards and instructions of the banks are kept at first

priority while managing these funds. According to the regulations of the bank, Head

of the Accounts and in charge of employee funds are chief trustee and trustee

according to their functional position. To select the chief trustee, according to the

Banks fund regulation two third rules is applied.

This unit manages different types of the funds for different purposes as figure shown

in the table :

Sr. No. Name of Fund Purpose

1 ZTBL Employee Benefit Fund To write-off/adjust house building and

conveyance advances of all officer/staff who

die during Bank service and payment of death

compensation.
2 ZTBL Benevolent FundPayment of BF grant as admissible under rules
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(Officers)

3 ZTBL Benevolent Fund (Staff) Payment of BF grant as admissible under rules;

Funeral charges & Marriage Grant

4 ZTBL Pension Fund Payment of pension as admissible to

employees on superannuation or voluntarily

exit from service after completion of 25 year of

service.
5 ZTBL Gratuity Fund (underGratuity is paid to employees having less then

SSR-1961) 10 year of service. After 10 years of service the

gratuity is transferred to pension fund.

6 ZTBL Gratuity Fund (underPayment of gratuity as severance benefit to

SR-2011) employees regulated under SR-2011

7 ZTBL Employees ProvidentPayment of account balances during service

Fund or/and accumulated Provident Fund to member

at exit from service.

8 ZTBL General Provident FundPayment of account balances during service

(Officers) or/and accumulated Provident Fund to member

at exit from service.

9 ZTBL General Provident FundPayment of account balances during service

(Staff) or/and accumulated Provident Fund to member

at exit from service.

10 ZTBL Contributory ProvidentPayment of account balances during service

Fund or/and accumulated Provident Fund to member

at exit from service.

CENTRAL ACCOUNTS DEPARTMENT OF ZTBL

AIMS & OBJECTIVES

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The central accounts department of ZTBL formulate and maintain accounting polices

and procedures manuals accounting standards to ensure dissemination and

implementation across the bank. It formulates and prepares financial statements

keeping in the view of the requirement of Bank. It also makes sure the proper

accounting of Assets, liabilities, and Income and Expenditure.

FUNCTIONS

Central accounting department issues instructions related to accounting polices and

procedures.

Central Accounts Department of ZTBL consists of five units like Policy Unit,

Accounts Unit, Corporate Tax Unit, Fixed Asset unit, Prepayment Unit.

POLICY UNIT

Policy Unit plans accounting procedures of accounting in both head office and

branches and coordinate with other departments with in the head office on the

different policy meters. It deals coordination of external auditors and arrange payment

to them. It formulates bank charges schedules and circulates among the branches and

submits to SBP on half yearly basis. It deals with management letter and executive

summary and suggests guidelines for adjustment of suspense account. It performs

administrative functions for the department such as sanction of leaves and budget

preparation. This unit also provides guidelines to the branches regarding rectification

of accounting errors and audit observation.

ACCOUNTS UNIT

The Account unit of the Central Accounts Department coordinates with concerned

departments for the timely production of statement of affairs. It prepares financial

statements whiling compiling balances under relevant group of heads from trial

balances. It makes the list of abnormal entries for rectification. It prepares quarterly,
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half yearly and yearly financial statements for the audit committee. It prepares annual

capital adequacy ratio statement for certification by external auditors.

TAX UNIT

The Tax unit of the Central Accounts Department of the ZTBL provides guidelines of

deduction of the tax under the ordinance of income tax 2001 and collects tax payment

documentary evidences for tax deducted. It communicates and coordinates with tax

consultant, SBP and income tax authorities and collects related to the tax refund case

form consultant. It pays advance tax and prepares the statement along with tax related

audit.

FIXED ASSETS UNIT

It sends out timely formats and procedures for the fixed assets to the Zones, Branches,

and Head Office Department. It deals with collection of fixed assts schedules as well

as other required documents from branches and head office department. It compiles

and summarizes the fixed assets schedules on country level along with data

maintenance. This unit on quarterly basis compiles the addition and deletion of fixed

assets. It works to monitor and verify the disposal of fixed assets and depreciation

charged by the departments and head office on quarterly basis. It calculates and

accounts for the deferred tax assets and coordinates and cooperates with external and

internal auditors on the different issues of the fixed assets of the bank.

PRE-PAYMENT VERIFICATION UNIT

Pre-payment unit of the ZTBL Bank is designed to verify all payment structures

related to the Head Office. It checks availability and competence of sanction of the

competent authority. It works to check procedural compliance and completeness of

documents.
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1.14 BUDGET AND FUND MANAGEMENT DEPARTMENT

AIM AND OBJECTIVE

The main aim of Budget and Fund Management Department of ZTBL Bank is prepare

the financial plane for the credit limits, fund review and to arrange additional

resources for maintenance of additional liquidity for efficient distribution, timely

discharge of liabilities and operations of Bank.

FUNCTIONS

Budget and fund management department of ZTBL mainly develops the policies,

procedures and standards for the budget planning and analysis. It coordinate and

cooperate with administrative and government in order to resolve budget issues. It

automates budget process and preserves the data and obtains approval from Board of

Directors for annual budget. It gather the data of various departments and analysis that

for their performance. Further it consists of four units as described bellow.

Budget Planning Unit

Budget Analysis Unit

Treasury Unit

Fund Reconciliation Unit

1.15 BUDGET PLANNING UNIT

The Budget planning unit of the Budget and fund management department of the

ZTBL develops departmental polices procedures and standards for the financial

management and budget planning processes and parameters. It communicates with

administrative and governance groups in order to resolve the budget issues. It

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compiles and process necessary information for the preparation of annual reports. It

generally evaluates and review expenditures and submits to the audit committee. Its

further role is to provide information and analysis for the purpose of the annual

planning and effective efficient decision making.

BUDGET ANALYSIS UNIT

It generally analyzes and monitors financial activities of departments which show

their performance. On the basis its analyzed results performs the highly effective

steps. It develops assumptions and strategies for future budget cycle.

TREASURY UNIT

Treasury Unit is engaged in the arrangement of the fund for the different purposes to

the branches and maintains their records. It manages Banks accounts with SBP and

commercial banks such as MCB, HBL, and UBL and so on. It checks out the

appropriate balances in the branches if there are excess balances then its calls for and

if there is less balances then it transfer the funds and also declare the deposit rates for

the depositors. It performs the role of coordinator while performing the role of

coordination with SBP, commercial, Internal and External auditors on the matters of

treasury. It deals the matters of investment of surplus funds provided by the branches.

FUNDS RECONCILIATION UNIT

It mainly plays the role of reconciliation of Bank accounts with other commercial

banks at Head Office, due maintenance of check and balance of funds received or

remitted from other branches. Advices issued by branches are responded by Funds

Reconciliation Department. It also monitors the reconciliation of bank accounts with

other commercial banks.

1.16 REGULATORY REPORTING DEPORTMENT

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The regulator gives instructions What to do, when to do and hoe to do as Government

agencies and SBP etc, while reporting means perpetrations of the reports and

submission of the reports to the regulators. Thats why this department reports certain

information to the regulators and ensures it that bank has compiled all instructions.

AIMS AND OBJECTIVES

It aims to fulfill the statuary reporting requirements and provides financial reporting

to the management for the specific purposes. Its objective is to provide and ensure the

effectiveness in meeting statutory reporting obligations. It makes prompt and accurate

analysis to aid effective decision making. In last it ensures the implementation of the

Basal-II.

FUNCTIONS

It reformulates and redesigns system of data capturing, its consolidation and

subsequent reporting keeping in mind regulatory requirements. It ensures the

implementation of updated reporting requirements, which are update time by time. It

analysis the financial results and repots it to concerned authority and arrange

compliance with external and internal auditors. Further more it performs the job

suggested by the regulatory authority.

REPORTING PROCESS

There are mainly five steps in reporting process, which are defined bellow:

DATA CAPTURING

This is the step in which data is gathered from various sources such as field offices,

deportments such as CAD and ISD and from financial reports such as Accounts, D/R

Series etc.

CONSOLIDATION
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In this step the gathered data is consolidated in to single hole, because this data is

collected from various sources.

DATA VERIFICATION

In this step collected data is verified weather the collected data is valid and true or

not, because the collected data is not all ways reliable. It needs very careful

examination due to possible errors and mistakes, which are later rectified for report

generation purpose.

REPORT GENERATION

On the basis of analyzed and verified data is injected in the form of reports which is

provided by SBP.

Submission

In this last step the complete formed reports are submitted to the regulatory authorities

such as SBP. The main sources of submission are courier and online.

PERSONAL EXPERIENCE

My internship was started on 4th of July at Operation Division of the ZTBL Taunsa. .

Firstly I met with Sir Tanveer Ahmad Sahib, he is the BM of Taunsa Branch. . He

warmly welcomed me in the ZTBL Taunsa branch and gave the Brief introduction of

the ZTBL and purpose of the organization. After spending one week at Taunsa Branch

where I learnt about Branch Operations. Further I was referred to the ZTBL

Islamabad Branch, because of my own interest to gain more knowledge about the

other departments of ZTBL. I spend my first two weeks of Internship at ZTBL Head

Office Branch. As I wanted to the get information and knowledge about work which

is going on grass root level, where the basic work is performing.

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During internship period (6 to 8 weeks) in ZTBL, I learned a lot of knowledge from

the experts and highly qualified persons. It was necessary to fulfill the practical

requirements of the degree of master of business administration.

CHAPTER NO 2

2.1 LEARNING AND PERSONAL INTERNSHIP EXPERIENCE

Practical world is different from that we studied in books. When students getting their

degrees from their institutions, every one have its mind set goal, either he wanted to

start his personal business or wanted to get a good job. Internship is the compulsory

academic requirement where you are studying in the institute. As Im student of BBA

(Hons) and I selected the ZTBL Bank for my learning experience because ZTBL is

the developmental organization of the Pakistan. Its technology is used for the high

production development, so that it was our nicer chance to get into this to enhance the

learning approach and get good experience from the organization.

2.2 BRANCH OPERATIONS

Opening of Current Account

In the ZTBL, the current account usually opened only when the person comes

there for a loan. On the approval of loan, his sanctioned amount is usually

credited to his current account. The procedure of opening of Current Account

is not very complicated. The following are the main point in the opening of a

new account:

Acquiring original CNIC

Verification of CNIC from NADRA

Filling the Current Account Form

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Filling of Know Your Customer

Filling of Current Account Card

Registering name in the Current Account Register, (Issuance of

A/C No.)

Filling of deposit slip of starting amount

Signing by AMO and Manager

Issuance of Cheque book

Opening account in the ledger of bank

1: Acquiring Original CNIC

It is mandatory to check the original CNIC of the person before opening of

current account. In the ZTBL it is routine to open account when manager

sanctioned and signed the amount of loan. Because at that stage it becomes

essential to have an account in the bank otherwise the amount of loan will not

be paid.

The other documents required to attach with the forms are:

2 recent pictures

Copy of CNIC.

2: Filling Current Account Form

After obtaining original CNIC the form for current account is filled with the

information written on the CNIC. The form includes the following

information:
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Type of account

Branch Name

Branch Code

Name

Father Name

CNIC Number

Address

Occupation

Nationality

Contact number

Date of birth

Marital status

Mother name

Name, CNIC, Contact of MCO who knows the person personally

Next of Kin (The person who will have right to operate the account in

the event of the account holders death or any other mishap)

Starting amount

3: Filling of Know Your Customer Form

The Know Your Customer form is also attached with the current account

opening form and contains the following information:

Name

Account number
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CNIC number

Address

Purpose of opening of account

Monthly income

Source of income

Type of customer (i.e. Walk in)

Public figure

Usual mode of transaction (i.e. in cash, cheque)

Etc

4: Current Account Specimen Card

Name: Account No.

Adress: Type of Account:

Name of Account Holder Name of Account Holder

This side is used to write the name of This side is used to obtain the signatures of

account holder both in Urdu and English. the account holder for verification of cheques

in the future if required.

Signing Authority:

One side is used to obtain the signature of account holder; I usually take 3

signature of him in the right side of card. While the left side of card is used to

write the account holder name in both Urdu and English.

5: Registering name in the Current Account Register (Issuance of A/C No.)

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After filling the required forms the name of the new account holder is

registered in the Current Account Register. This register requires writing

down the name of account holder, his father name, Address and the starting

amount.

These are the following blocks made in the register requires to fill.

Account Date of Opening Balance Name:

Number: Opening of Account Father name:
It is account number issued to of Account Address:

holder. It is a serial number,

M Bashir Ahmad
so I used to write the next S/O Dur
15-09-2012 1000 Muhammah
Number when I have to open Taunsa

an account.

Example: 1567

When the account number is issued, it is also written in the Account Opening

Form and Know Your Customer Form.

6: Filling of Deposit Slip of starting amount

To open an account in the ledgers of bank the account holder requires

depositing an initial amount. This amount in ZTBL is usually 1000; however

it depends on the amount of loan sanctioned like some loans required

depositing a larger amount with the bank before issuance of loan from the

bank. The example of such loan is of Tractor because 1 have not be given

chance to stay with an MCO, so I dont know what exact amount is required

to deposit with the bank for any particular loan.

The Deposit Slip which I used to till during my internship consist the

following information:

Zarai Taraqiati Bank Zarai Taraqiati Bank Ltd.

 26

Ltd. Bank Copy

Depositor's Copy
Branch Name: Branch Name: Date:

Branch Code: Branch Code:

Date:
Name: Name: Account Number:

Account Number:

Particulars Amount Particulars Amount

Total Amount Total Amount

Rupees in words: Rupees in words:

Depositors Signatures: Depositors Signatures: Signing Authority:

Signing Authority:

7: Signing by AMO and Manager

Then the forms and deposit slip is signed by AMO (Assistant Manager

Operation) and Manger to verify that all the requirements of opening an

account is met by the account holder.

8: Issuance of Cheque book

Than on depositing of a nominal fee of rupee 50 the account holder has been

issued a cheque book. In the bank Taunsa Shrif Branch where 1 have

completed my internship, the cheque book is issued by the cashier when the

person deposits his starting amount of account and the amount of issuing of

cheque book. Also there is Centralized System of Printed Cheque Books in the

name of the Account Holder.

 27

9: Opening account in the ledger of bank

ZTBL is fully computerized bank and also working on manually written

ledger books. However, These ledger books are large books with a number on

front of it which helps in finding the record of any particular person. The

ZTBL Taunsa Sharif branch where I have completed my internship has 45

ledgers at that time with the current account holder of about 8500 at the date

of 31 August 2016. There will absolutely many accounts which will not be

alive.

When the depositor deposited the amount his name and other particulars is

written down in the ledger so that he can transact with the bank in the future.

The ledger of current account contains the following information.

Zarai Tarqiati Bank Ltd. Page no. 177

Branch name: Taunsa Sharif
Branch Code: 20216
Name: Signature:

Father:

Address:
Date Particulars Debit Credit Balance Signing
authority
15-09-2016 By cash 1000 1000
15-09-2016 Loan Paid 50000 51000
16-09-2016 To Checque, (no.) 50000 1000

The above given table is the example of information usually written in the

current account of a customer. There are also many other column available

in the ledger books but they all are not used in the bank. There are some

options which are not printed there but it is a practice to write that

information, like there is no column of signature

 28

Write the ledger name and its page number on the front of new cheque

book.

Write the account number on every cheque of new cheque book

Take the Thumb Impression of every customer on the cheque

For the man take left thumb impression and for women take right or both

No cheque will be paid to anyone else than account holder if it is a loan

account

Fill the cheque in Urdu if the customer signs in Urdu or gives Thumb

Impression only.

Also fill the memorandum attached with in cheque book with each cheque to

record all the transaction for future reference of client and to the bank also.

All the cheques are required to be signed by respected authority before

payment of cash, like AMO (Assistant Manager Operation). Before his sign no

cheques can be passed, he also cheques the entries made by clerk in the

ledgers before passing cheques. In this way the entries originated by any

person is double checked which reduce the chances of any mistake.

Whenever a cheque of more than 50000 is come to cash it is required to write

a voucher of With Holding Tax with it so that the amount of tax can be

deducted from the payment. The vouching will be discussed later on.

Writing of Vouchers

Vouchers are the important evidence of all the transactions takes place in the

bank. In the accounts department of ZTBL it is the back bone, every

transaction of bank with reference to cash required a voucher to be drawn

against it.
 29

The vouchers are of three types:

1. Debit Voucher (Receipt of Amount)

2. Credit Voucher (Payment)

3. Transfer Voucher

1. Debit Voucher

Debit Voucher is used when bank received any amount from anyone. The

example is of deposited amount by the depositors, the payment of loan by the

loanee etc.

2. Credit Voucher

It is used for the payment of any amount by the bank to anyone. Like the

cheque drawn on bank, the expenses of bank itself etc.

3. Transfer Voucher

As the name shows it is used when the amount is required to transfer from one

head to another. The example is the transfer of utilities bills accepted by the

bank to the respected utilities provided company (Mepco, PTCL etc.). The

transfer of return to the income account of bank, it is also used when the loan

is sanctioned so it is required to transfer amount of loan to the loanee account.

Another use of transfer account is to correct mistakes in the ledger, for

example if an account is mistakenly debited in place of another account. So

the transfer voucher can be written to credit the first account and debit the

second one to correct the mistake.

In the end of day all the vouchers written during the day is required to be

write down in the daily Scroll (which will be discussed later on) and then all

the vouchers of day is sewed and then sealed so that no new voucher can be

placed or removed from the record. These vouchers used to store in record
 30

room and they keep piling up there. Every voucher has at least two copies,

one for the customer and one for the bank record. For easy recognition the

vouchers are made of different colors.

Debit Voucher (Have three copies and in white color)

Credit Voucher (Have two copies and in blue color)

Transfer Voucher (Have two copies and in yellow color)

The debit voucher for the deduction of With Holding Tax from the cash

withdrawal of more than 50,000 will be filled in the following way.

First the name or branch, its code and the date is required to write. Than the

information from whom this tax is collected, his name, father name, his

village and city name will be written. After that in the particulars it will be

written A/O of With Holding Tax and in the GL Head (General Ledger

Head) the head number of With Holding Tax (which is 3056 in the ZTBL)

will be written. The amount will be written after calculating 0.6% of

withdrawal amount. In the total the same amount will be written again and

then this amount will be written down in words. In the last the signing

authority will sign in.

In this voucher of W.H Tax only a few columns of the voucher is used, the

other columns can be used for other types of transactions. The explanation of

each column is given below:

1: Particular:

In particulars the reason of the transaction is written down. For example,

Amount of Recovery etc.

2: Loan Case no./ Account no./ Advice no.

 31

If the voucher is of recovery than in this column the loan case number of the

loanee who has come to pay loan will be written. This column has 6 blocks to

write, due to shortage of space these block cant be shown in the above

sample of voucher.

Loan Case no./ Account no./ Advice no.

3 9 6 7 0 0
3: G.L Head (General Ledger Head)

It is the General Ledger Head which is required to debit. These are standard

heads used in the entire branches of ZTBL. Like 3056 is the G.L Head for

W.H Tax, it will be same when any branch of ZTBL will collect this tax from

his customer.

4: T.R Code

This code is rarely used for debit and that is why I dont have complete

information about it. In the recovery voucher this column is used, when MCO

collects the cash than I used to write 14 and when loanee himself comes to

pay loan I used to write 15 in that place. So, it helps when the voucher is

recorded in the computer room to understand the type of transaction.

Like, in the credit voucher I was asked to write 01 code for all the expenses of

the branch and 02 for the expenses of the Zonal Branch. So, it helps computer

to understand the type of transaction. These codes can be different in different

banks.

5: R.O Code
 32

Originated/Respond code is used to show that whether a transaction is

originated or responded. For example in the W.H Tax example the word O

will be written in this column which will show that this debit voucher is

originating this transaction. And when this amount will be transferred to the

respected head in that voucher the word R will be written which will show

that this voucher is responding to any transaction.

6: Effective Date

It is the date on which the amount is received. It can be different from the

date on which the voucher has been written down. For example, on 13

September an MCO is on a tour to the villages which are under his circle;

during his visit he collects recovery of 100,000 from someone. He will issue

receipt to the loanee as evidence that MCO has collected cash from him and

on the next day (14 September) when he will come to the bank that MCO will

deposit cash as a recovery in the name of that loanee. Because the cash has

been collected by him a day before the voucher of recovery is written down so

the effective date on voucher will be 13 September while the date of Voucher

in right upper side column will be the date of 14 when the voucher is written.

Why the effective date required? The answer of this question can be

understood from the above example. The loanee has paid the MCO on 13

September, while the amount is deposited by the MCO on 14 September. So,

no interest is required to be charged for the day of 14 September because the

amount has been already collected a day before. If the effective date will not

be written than there will be discrepancy between the amount collected by

MCO and the amount calculated in the accounts in the time of writing voucher
 33

because the amount calculated in the accounts department will include the

interest of one more day than collected by MCO.

7. Amount

This column used to write the amount, it is also divided into many blocks so

that when write any amount it will be easily readable later on. Like the first

block in Rs. Column from right side is for figure of hundred and the next

block is of thousands.

Amount

Rs. Ps.
11 000 -
2 09 000 -

Total 2 20 000 -

8. Contra Voucher/Contra Branch No.

This column is used when we are responding to some other voucher or branch.

During my internship I have used it once time. One of the customer of a bank

has received tractor in the Benazir Tractor Scheme but the company failed to

deliver the tractor on the agreed upon date. And it is a contract between the

bank and the company that when company will not deliver the tractor on the

agreed date, it will be charged with the penalty of 150 rupee per day. So, the

bank had a claim on the company of rupee 25,000 due to late delivery to the

customer. The company has transferred this amount to the bank account, so

definitely the bank has a voucher written against it. Now this penalty is in the
 34

bank account which it has to transfer to the customer who has faced difficulty

due to late delivery. So, when I transferred the amount from bank account to

the customers account 1 was actually responding to the first voucher created

with which the amount was transferred from company to the bank account.

So, I was asked to write the voucher number of that first voucher in the

column of contra voucher of new voucher with which 1 am transferring

amount to customers account so that in future when any one need to find out

that from which reason the account of the customer is credited, he can easily

find the contra voucher number from the voucher written to transfer amount to

the customer account. And when he will open the contra voucher number, he

will find that the amount was transferred by the company as penalty to the

bank account.

So, in short it is used where we are responding to any other voucher or

branch. The Exact view of contra voucher/contra Branch No. and Record

no./CA Code are the following. These two head come under the main head of

Sundry/Suspense & Central A/C only which is not displayed in the voucher

sample due to shortage of space.

Sundry/Suspense & Central A/c only

Contra Voucher/Contra Branch No. Record no./CA Code

3 9 6 7 0 0 0 1

9. Record No./CA Code.

Record number is the number of the entry in any contra voucher to which we

are responding. A voucher can have many transactions written on it as you can

see that there are number of rows available in the voucher to write on. So,

giving contra voucher number is not the only thing we need to write to give
 35

exact reference, we also need to give reference of Record no. of that

particular transaction in that voucher. And CA code is used when we are

responding to any Contra Branch No.

10. Rupees in Words

Rupees in words are compulsory to fill so that to avoid any mistake in writing

amount in numbers and also to avoid any misconception in future.

11. Enel (Enclose)

Enclose is number of receipt if any attached with the voucher. Like if I want

to write a credit voucher to pay some employee who has bought stationary for

the office use so I will attach the receipt of the stationary he has bought from the

shop with the voucher and I will write (1) in the enclose so whenever anyone will see

the voucher he will know that there is a receipt attached with the voucher.

12. Signatures

There are three spaces available to sign in the voucher. These spaces are for the

person:

One who has prepared it

One who has checked it

And signing authority who passes this transaction

But I have not seen anyone signing the first two places, the only signature place is

used is of signing authority because it is compulsory. Both Debit and Credit vouchers

have same columns and lines to write on. But the transfer voucher is different from

these two, it has the same columns and lines but it is divided into two parts. Upper

side is for the debiting an account and in the down side is for crediting an account.

Because when we use to transfer amount from one account to another account than

there should be one account which is required to debit and the other account should be
 36

credited to complete the whole entry. The sample of Transfer Voucher has been given

in the next page.

Cashier and operation officer writes his own scroll at the end of day when they have

to close the cash. The closing balance in both these scrolls must be same otherwise

there are some transactions which have not been recorded correctly either by the

cashier or the operation officer.

Making Entries in the Ledgers

In ZTBL the record of current accounts and loans are manually maintained. There are

many records which have been computerized but still the hand written ledgers are

used. Making entries in the Ledgers requires simple concept of debit and credit.

However the understanding of banking practices are required so that to follow the

exact way of recording any transaction because usually the column written on the

ledger books are not used for the purposes for which they are made. The employee

usually has established their own way of writing transactions in the ledgers the way in

which they feel easy.

Disbursement and Recovery Entries

When a loan is sanctioned and ready to disburse it is recorded in the respected

ledgers. I am here taking example of SBS (Sada Bahar Scheme) which is a revolving

finance scheme. Every loanee has a unique Loan Case Number which is the base of

all the record of his loan. When a loan of SBS is sanctioned its amount is not

transferred to the current account of the loanee like it is used to transfer in the AZS

(Awami Zari Scheme). In SBS the Loan Case Number is used for all types of

transactions, when a loan is sanctioned it is recorded in the SBS ledger with the name

of loanee and Loan Case Number is used as an account number from which he can

operate.
 37

The information which is required to write in the ledger sheet when a new loan has

been passed and ready to disburse are following:

Loan Case Number

Name

Parentage

Address

CNIC

Maximum limit

Date of maturity

Cheque book number

After entering the above information the loan can be disbursed to the loanee when he

desires. Because almost all the customers of ZTBL are low earning farmers and they

require immediate cash to meet their expenses so they draw a cheque on the bank on

the same time when their loan is entered in the ledger book. In SBS farmer can

withdraw the amount till he has reached maximum limit and the return will only be

paid on the amount which he has taken out as a loan.

The entries of disbursement can be easily explained by taking an example that the

loan has be sanctioned and it is recorded in the ledger now loanee want to withdraw

the total sanctioned amount of 50,000. The entry of this transaction will be in the

following way at 01-01-2010:

Date Particulars Principal Return Total

Debit Credit Balance Debit Credit Balance
Outstan
01-1-16 To Cheque 50,000 50,000 50,000
No.
 38

31-8-16 To Return 1,480 1,480 51,480

01-09-16 Recovery 18,520 31,480 1,480 Nil 31,480

After four month a computerized outstanding balance report of all the loans is given

to each branch, it is called OBL (Outstanding Balance Ledger). The bank also adds

return to the principal amount of each loan case, like it is shown in the date of 31-08-

16. (The interest rate on SBS is 9%)

Now suppose that loanee has reached bank on 01-09-16 and he wants to pay 20,000.

The entry is shown in the date of 01-09-16. It is rule in the bank that when the bank

recovers any amount from the loanee than first return amount will be reduced and

then the principal will reduced. Here in this example, the loanee wants to pay 20,000,

so first interest will be deducted which is 1480. To pay return we will credit it with

1480 and then the principal will be credited with the remaining amount (20,000-

1480=18,520) as shown in the above diagram. Due to this payment the principal is

also reduced to 31,480 and because the total return has been deducted that is why the

total outstanding amount is also 31,480.

SECURITY AND LOAN DOCUMENTATION

INDIVIDUALS

SECURITY OF AGRICULTURE LAND UNDER PASS BOOK

Loan Application on the prescribed form.

Green copy of the agricultural pass book.

A copy of computerized national identity card. In case of its non-availability

and attested copy of old national identity card, a receipt of NADRA for

issuance of CNIC along with an undertaking in writing that a copy of CNIC

will be submitted Immediately on receipt.

Latest two photo graphs.

 39

Loan Agreement

Charge Creation Certificate.

PRIVATE AND PUBLIC LIMITED COMPANIES cont

Agreements/ Security Documents

Financing agreement

Mortgage of immovable property

Memo of deposit of title deed.

Agreement to mortgage on deposit of title deed

Agreement to create mortgage on future assets

Deed of pledge

Hypothecation agreement

Loan bond

Irrevocable general power Demand promissory note.

Personal guarantee

PARTNERSHIP FIRMS

Reference from the Banker. Non-encumbrance Certificate from the register,

joint stock companies should be produced before the disbursement of loan (s).

At the time of loan documentation Embossed Common Seal of the company

must be got affixed on the documents alongwith signatures of the authorized

signatories of the company.

Certified true copy of Certificate Of Registration.

Certified copy of the latest audited Balance Sheet, in case the partnership is

already in business.
 40

Certified copy of the latest audited Balance Sheet, in case the partnership is

already in business.

A Resolution passed by the partners toa obtain loan from Bank. Three

specimen signatures of the authorized signatory/ signatories duly attested by

the Managing Partner reference from the banker.

Mortgage deed.

Memorandum of deposit of title deeds.

Agreement to mortgage on Deposit of Title Deed.

Share Certificate of Directors with Blank Transfer Deed along with agreement

relating to Pledge of share.

INSURANCE DOCUMENTS

Responsibility for arranging insurance of

o Security assets

o Assets created out of banks loan

Class of Insurance (fire, marine accident etc.)

Selection of insurer

Comprehensive insurance policy

Period of insurance

Sum insured

Insurable interest Cost of insurance (insurance premium)

Risks covered

Payment of premium

Settlement of insurance claim

 41

REDEMPTION OF CHARGE

Repayment of outstanding loan liabilities

Closure of loan account

Redemption of charge/ Mortgage Deed

Release of Security documents/ title deeds

Return of Pass book

Core objectives of branch operation:

To comply Law and regulator requirement.

To record and store financial events so that it may be used in future.

To support Business operations.

To monitor Business strength and judge periodic performance.

To facilitates interacting parties in settlements of duties - right relations.

To assist decision making.

Determinant Factors:

The type of business _ the entity falls into:

Sole proprietor,

Partner ship,

Unlisted Limited Company.

Public Limited Company.

The Nature of Business:

 42

Manufacturing

Trading

Services

Numbers of Products being offered by business.

Numbers of Customers being handled by business.

The involvement of public money being used for business operations.

The industry category in which a business is operated.

2.3 HEAD OFFICE ACCOUNTS DEPARTMENT

Team Members

Mr. Haider Ali Jan Arbab (Senior Vice President)

Mr. Ghulam Muhammad (Vice President)

Mr. Muhammad Ali (Assistant Vice President)

Mr. Tariq Ejaz (Assistant Vice President)

Mr. Muhammad Naseer (Assistant Vice President)

Mr. Zulfiqar Ahmed Satti (Grade - 1)

Mr. Shaheen Iqbal (Assistant Vice President)

Mr. Sher Alam Khan (Assistant Vice President)

INTERNSHIP EXPERIENCE
 43

I started my internship in ZTBL form Monday 11th of July2016. On the first day of

Internship at Head office Islamabad I was introduced by the office members and the

Branch accounts Department in which we are doing the internship. Next day I was

briefed with details about the employee fund unit. Recording of contributions towards

employees funds and maintenance of individuals accounts in provident funds where

applicable. Next day I was told about different funds. There are of basically the

following funds.

ZTBL Employee Benefit Fund

ZTBL Benevolent Fund (Officers)

ZTBL Benevolent Fund (Staff)

ZTBL Pension Fund

ZTBL Gratuity Fund (under SSR-1961)

ZTBL Gratuity Fund (under SR-2011)

ZTBL Employees Provident Fund

ZTBL General Provident Fund (Officers)

ZTBL Contributory Provident Fund

ZTBL General Provident Fund (Staff)

Next day I was briefed with details about the employee fund. The funds are managed

by the trustees through operational staff of the unit. Each activity of funds is managed

in accordance with the funds regulations and Banks instructions in this regard. Fourth

day I was sent in payment unit and introduced the unit & office staff. Next day I was

briefed with details about the function of payment unit. The main function of payment

unit is to make the payments of branch expenses. Make all payments at branch and

application of Income Tax as applicable. Provide tax chalans to Suppliers/Contractors.

 44

In the first day of 2nd week I was in payroll unit where introduced by the office

members and payroll unit. Next day I was briefed with details about the function of

payroll unit, such as preparation of Payroll of Employees posted at branch and

disbursement thereof, calculation of income tax, deduction and deposit with State

Bank of Pakistan In the third day I was in inter branch reconciliation unit and was

introduced by the office members and inter branch reconciliation unit. Next day I was

briefed with details about the function of inter branch reconciliation unit. Last day of

2nd week I discussed these main points such as timely reconciliation of inter branch

transactions and communication in this regard with Other Branches and Zonal Offices

and generating reports of Inter Branch Transactions - Originating & Responding- wise

outstanding entries.

2.4 FUND MANAGEMENT DEPARTMENT

Team Members

Mr. A.D Abid (Senior Vice President)

Mr. Iftikhar Hussain (Vice President)

Mr. Shahid Tuafel (Grade - 1)

Mr. Aftab Udin (Grade - 1)

Mr. Khalid Qamar (Grade - 1)

Mr. Hammid (LATE) (Junior Manager)

 45

In the first day of second week I was introduced by the office members and

introduced by the fund management Department in which I was doing the internship.

On the second day I was introduced by the various documents like, Advices and

Vouchers. Next day I was briefed with details about this important document of

ZTBL. In ZTBL advices are used for the purpose of financial transaction there are two

types of advices such as Debit advices and Credit advices.

Next day I was briefed with details about the vouchers. There are there types of

vouchers such as Debit vouchers, Credit vouchers and Transfer vouchers. Debit

vouchers have white colour, credit vouchers have blue colour and transfer vouchers

have yellow colour.

2.5 BUDGET DEPARTMENT

Team Members

MR. A.D ABID (SENIOR VICE PRESIDENT)

MR. WAQAR HUSSAIN (VICE PRESIDENT)

MR. ZAFAR IQBAL (ASSISTANT VICE

PRESIDENT)

MR. AHMAD ALEEM (GRADE - 2)

MR. ASHRAF SIDDIQUE (GRADE - 2)

MR. KHALID KHATAK (GRADE -3)

MR. AMJAD (SENIOR ASSISTANT)

 46

On the first day of 4th week I was introduced by the office members. Next day I was

introduced by the Budget Department in which I was doing the internship. Budget

Department is basically to develop a budget process which clearly identifies issues,

incorporates planning, establishes accountability factors and provides follow-up

reporting. In the second day of I was told by the allocation of budget. Allocation of

budget is done on two bases such as Demand based budget and Expenditure trend

based budget (with some % increase like 10%). Next day I was briefed with details

about this allocation of budget. In demand based budget allocate on the demand for

this purpose budget department check the demand of branches and head office and

allocate the budget. Expenditure trend based budget is one in which department

allocate the budget of branches and head office same as last year or some percentage

increase in the last year budget allocation. Next day I was introduced with other

important term such as Contingency / unforeseen reserves.

Budget department also appropriation of capital and revenue expenditure for

additional funds from contingency/unforeseen reserves for new schemes introduced

during the year.

2.6 CENTRAL ACCOUNTS DEPARTMENT

Team Members

Mr. Rana Mujahid Ali (Senior Vice President)

Mr. Ali Abbas (Vice President)

Mr. Farooq Aftab (Vice President)

Mr. Ali Hassa (Assistant Vice President)

Mr. Muhammad Saleem (Grade - 1)

 47

Mr. Muhammad Iqbal (Grade 1)

In the first day of 5th week I was introduced by the office members and introduced by

the central accounts department. Next day I was briefed with details about the pre

payment verification unit fund unit. I briefly discussed about the function of these

units such as verify all payments relating to head office and check budget/ceiling.

In the last day of this week I was in accounts unit. We are briefly discussed about the

function of these units such as prepare quarterly, half yearly and yearly financial

statements and its agenda for presentation to audit committee & board of directors,

compile balances under relevant group of heads from trial balances for preparation of

financial statements and produce list of abnormal entries/balances for rectification.

2.7 REGULATORY REPORTING DEPARTMENT

Team Members

Mr. Khalid Mehmood (Senior Vice President)

Mr. Mubashir Umar (Vice President)

Mr. Muhammad Ali (Assistant Vice President)

Mr. Jameel Ahmad (Assistant Vice President)

Mr. Kashif ur Rehman (Grade - 1)

First day of 6th week I was introduced by the office members and introduced by the

regulatory reporting department. Next day I was given brief details about the
 48

functions and objectives of this department such as improve effectiveness in meeting

statutory reporting obligations, prompt and accurate analysis to aid decision-making

and periodic financial reporting to the management.

In the third and fourth day of this they gave me the trial balance and said to make a

balance sheet. During balance sheet formation I faced some problems so as I

discussed these with office members and I finalized the balance sheet. In the last day

of this week I made financial analysis of balance sheets such as Horizontal analysis

and Vertical analysis.

CHAPTER 3

3.1 PERFORMANCE ANALYSIS OF THE COMPANY

SWOT ANALYSIS

STRENGTHS

It provides the loan at cheaper interest rate as compare to the other Banks.

In Pakistan, majority of the farmers is poor thats why farmers are required to

get loan from the bank so ZTBL has a very vast market to operate in.

ZTBL gets most of the funds from different developmental institutions

including Government, ADP, and SBP etc. so in case of bad debts the bank

wont have to suffer a lot.

It is affiliated with different research institutions and it has all sort of

agricultural machines and technology so it can easily achieve its aim which is

the development of agriculture in Pakistan.

ZTBL has a staff college for the training of its employees in Islamabad,

through proper training more efficient team of employees can be made which

shall be beneficial in tough banking competition.

 49

One of the core competency of the bank is its MCOs because ZTBL is the only

bank which has a team of highly experienced and properly trained MCOs who

can easily disburse loan and can achieve recovery target quickly hence risk of

bad debts is reduced.

Through different computer softwares data is kept and maintained. Some of

these softwares are CFOCS, DMS, MIS, and HRIS etc.

ZTBL has no competitors in the market, some banks started lending facility

for Agri business but due to lack of efficient team of MCOs those banks had to

suffer heavy loss.

The farmers have a trust on ZTBL because of its operations and the behavior

of mobile credit officers.

Audit zone performing its job in a better way to rectify the errors and fraud

cases.

WEAKNESSES

Sometimes the lending is done on political basis. Due to the influence of

political leaders the recovery system is affected which leads to bad debts.

The bank has no treasury department due to which funds are not being

properly utilized and the bank is missing a great opportunity to earn profit.

There is exuberance of old, non technical and uneducated employees in ZTBL.

These employees are promoted to senior level management on the basis of

seniority due to which performance is affected.

Some cases of nepotism are often seen in the bank when loans are given by the

branch managers to their relatives and fake data is maintained.

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Most of the employees even seniors managers are computer illiterate. They

can even check their emails properly. So IT implementation seems to be failed

in the bank due to rigid attitude of employees because they are not adaptable

to change.

They are lacking of banking online system.

OPPORTUNITIES

By utilizing the efficient team of MCOs the bank can have heavy amount of

deposits.

The bank can set up its treasury department in Karachi for proper utilization of

the funds and for maximum profit earning.

The bank can reduce its expenses by laying-off non performing employees.

The bank has a good reputation in the market and its employees are highly

trained for agri business development planning so it can also operate in Middle

East because the Arabs are now focusing on agriculture.

ZTBL can become a leading commercial bank by slightly changing its culture.

It is already equipped with highly experienced bank officers.

THREATS

As the economy situation is very bad and the country is facing liquidity crunch

thats why ZTBL may have to face difficulty in getting funds.

In order to overcome the liquidity problem the bank has started operating in

commercial banking market but due to inefficient commercial banking

practices ZTBL may have to face a severe situation.

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The climate of the earth is rapidly changing due to which heavy rains and

floods are often anticipated. This is an alarming situation for ZTBL to operate

in the market being an agri lender.

The bank has a very small profit margin because it gets funds from SBP at 6%

and provides funds to the farmers at 8% only.

Agricultural crop rate decreasing each year

3.2 RATIO ANALYSIS

CURRENT RATIO

FORMULA: Total current assets/Total current liabilities

(Values are in %)
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Ratio 2013 2014 2015

Current Ratio 0.86 0.99 0.96

Current ratio has improved last year as the traditional value of the current ratio is 2. In

2014 the current ratio of ZTBL was 0.99 last year in 2015 it decreased to 0.96 but the

difference is very low as compare to last year. The analysis of current assets showed

that almost 50% of current assets comprise cash. This is a healthy sign for the ZTBL.

2013 2014 2015

3.3 DEBT TO EQUITY RATIO

FORMULA: Total Debt/Total Equity

Ratio 2012 2013 2014 2015

Debt to Equity Ratio 0.34 0.29 0.20 0.18

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The debt to equity ratio of the ZTBL is decreasing since last years as in 2012 D/E

ratio is was 0.34 and in 2015 it is 0.18. The reason is that the company is mainly

financed by equity, which is evident from low Debt/Equity ratio. The debt is being

paid over the period of time. Hence the company apparently not properly utilizes this

source of finance.

3.4 TOTAL DEBT TO TOTAL ASSET RATIO

FORMULA: Total Debt/Total Asset

Ratio 2012 2013 2014 2015

Total Debt to Total0.17 0.17 0.13 0.10

Asset Ratio
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The trend in above given table shows that the Total Debt to Total Asset Ratio

decreases continuously, as in 2012 it was 0.17 and in 2015 it is 0.10. The reason is

that the company is equity based and low financial leverage, accordingly there is very

low Debt/Total assets ratio. This trend is continuing over the past five years.

3.5 INTEREST COVERAGE RATIO

FORMULA: EBIT/Interest Charges

Ratio 2012 2013 2014 2015

Interest Coverage10.16 13.69 36.7 65.42

Ratio
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The interest coverage ratio of ZTBL increases as we move from 2012 to 2015. The

company has very high interest coverage ratio. This is mainly due to low debts and

increase in the profits over the years. It is evident from the previous five years data.

3.6 TOTAL ASSETS TURNOVER

FORMULA: Sale/Total Assets

Ratio 2012 2013 2014 2015

Total Assets Turnover 0.41 0.51 0.51 0.52

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The Total Assets Turnover Ratio of ZTBL in 2013 is 0.51 and in 2015 is 0.52. There is

slit difference it suggests that the assets turns over ratio over the period remain static

especially during last two years.

3.7 Net Profit Margin

Formula: Net Income/Sale

Ratio 2012 2013 2014 2015

Net Profit Margin 0.29 0.29 0.34 0.39

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The Net Profit Margin of the ZTBL increases as we move from 2012 to 2015 which

suggests that there is decrease in expenses and expansions.

3.8 ROA

FORMULA: Net Income/Total Asset

Ratio 2006 2007 2008 2009

ROA 0.13 0.15 0.18 0.20

The ROA of ZTBL in 2012 is 0.13 and in 2013 is 0.20, which increases as we move

from 2012 to 2013. The return on Assets ratio has increased over the period of time,
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which indicates that assets are effectively managed and utilized. We saw a trend of 2

to 4 percent increase in each year.

3.9 ROE

FORMULA: Net Income/Equity

Ratio 2012 2013 2014 2015

ROE 0.26 0.26 0.28 0.34

ROE of ZTBL in 2012 is 0.26 and in 2015 it is 0.34. It is due to increase in net profit.

We have observed an increase of 5 to 8 percent in return on equity in previous year

from 2012 to 2015.

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3.10 EARNING PER SHARE

FORMULA: Net Income/Share O/S

Ratio 2012 2013 2014 2015

Earning per Share 2.61 3.56 4.53 5.72

The Earning per Share of ZTBL increased in 2012, which is 2.61 and in 2015 it is

5.72. As a result of proper utilization of resources and decrease in costs, the net profit

of the company has been increased over the years. The second reason is that the
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company enhances its infrastructure at a low cost. All these arrangements results in

increase of earning per share.

3.11 PAYOUT RATIO:

FORMULA: Dividend per share/Earning per share

Ratio 2012 2013 2014 2015

Payout Ratio 0.86 0.67 0.77 0.87

The Pay out Ratio of ZTBL in 2012 is 0.86 and in 2015 it is 0.87. The dividend

payout ratio has increased tremendously. This shows that less percentage of funds is

re-invested during the year.

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The company is being operated in highly technological area should make

comprehensive planning for sustainability in post deregulation era of interest sector in

Pakistan. If we observe the recent year trend, all the described items on top have a

positive sign showing future growth and compact current position. If we look at profit

after tax we see that it improves significantly over the years due to reduction in cost

and increase in assets. This is a good sign for the organization to expand the business.

The organization also expanded its Assets significantly showing the worth of the

organization. Interest coverage ratio of the organization is increased due to reduction

in debt to equity ratio. Debt to equity ratio depict that company is more equity

financed and financial charges are reduced. However in my opinion company should

utilize optimal financial structure and enhance debt side of financing to reduce more

fixed cost of the company profit.

3.12 Liquidity ratios:

Liquidity reflects the ability of company to meet its short term obligations using

assets that are most readily converted into the cash. Assets that may be converted into

cash in a short period of time are referred as liquid assets that are listed in financial
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assets as current assets. Current assets are often referred as a working capital because

these assets represent resources needed for the day to day operations of the companys

long term, capital investments. Current assets are used to satisfy short term

obligations. The amount by which current assets exceed current liabilities is referred

as the net working capital.

CHAPTER NO 4

4.1 CONCLUSION AND RECOMMENDATIONS

RECOMMENDATIONS

ZTBL should improve the Management system.

They should be employee and customer oriented.

They have to introduce the dress coat into the organization.

Loaning procedure should be easier and convenient to the customers and easy

processing system.

They should adopt the new agriculture technology for the high level production to

increase the GDP level of the country.

ZTBL has to play vital role for introducing new energies to overcome the problems of

the fuel and bio gas.

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Political involvement should be eliminated so that they can take good decision and

actions for the better disbursement.

Marketing department should play vital rol for introducing new products.

They should also play role for advertise their products and features and functions of

the products.

ZTBL Head Office has to update the annual reports and manuals annually.

They should hire the employee on the merit basis.

Their employees have to knowledge about their organization and about its department

where they are working.

Employees should be qualified and productive.

ZTBl has to introduce again for Project Financing scheme. Because the scheme was

successful before but due to the some hurdles it was closed. But it really highly

benefited the whole country.

The banks logo and its color should be changed.

Fresh and energetic graduates should be select for the recruitment on the merit base.

Bank should also be male and female oriented for the better performance of the

organization.

ZTBL has to started Online banking system so that their customer will get benefit

from their services and number customer will increase to their organization.

ZTBL has to introduce ATM card service to facilitate their customers

ZTBL has to focus on commercial banking also

Introduction of New Branches to expand their business.

Introduction of DMS to overall branches.

4.2 CONCLUSION:
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During my internship here in ZTBL, I found that ZTBL has high level of

professionalism and challenging environment and its culture is friendly. ZTBL seems

Top Agriculture Financing in the future as indicated by the financial indicators. It

keeps energy and potential to serve the deserving clients in all over the world. The

bank has set itself a vision to be a world-class bank. This can only be achieved with

dedication and a passion to excel in every activity. I really admire ZTBLs policy

makers for designing investor friendly and customer oriented products. The bank is

really working well and contributing a valuable part in the economy of Pakistan

through tax, giving loan to government, giving loans to the businesses for their

survival and expansion, generating a well skilled human resource and employment

etc. During this internship, I really learned Professionalism, leadership skills,

communication skills, problem solving skills, situation analysis skills and how to

become a good mentor etc.

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Regulatory and reporting deportment

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Grades of Bank

SEVP

EVP

SVP

VP

AVP

Grade-
1

Grade-
2

Grade-
3
Assistants

Non- Clerical
clerical Staff
staff

ZONES & BRANCHES LOCATIONS

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With an integrated network of over 27 zonal offices and 342 branches in Pakistan