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“INTERNSHIP REPORT ON ABN AMRO BANK”
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Table of Content
1- Title page 2- Table of contents 3- Executive summary 4- INTRODUCTION 4.1 Central background information 4.2 Company background 5-Company’s analysis (in terms of) 5.1 Operational analysis 5.2 Financial analysis 5.3 Marketing analysis 6- Environmental analysis(in terms of) 6.1 Industry and market analysis 6.1.1 Major Product lines market segments 6.2 Competitor analysis 6.2.1 Major competitors 6.2.2 Their market shares 6.2.3 Their Strategies 7- Brief on the department worked during internship 8- Conclusions and recommendation
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P
REFACE
Green colour has always been an inspirational one. Coupled with the beautiful logo that the bank displays it always inspired me to be a part of the group, part of the team, part of the culture and part of the tradition. Yes I am talking about none other than BANK ABN AMRO. First of all I would like to thank Almighty ALLAH, without whom nothing is possible. I am grateful to staff members and managerial staff of ABN AMRO Bank. First who has provided me as much information as they can and given me open handed welcome to visit their department and study the pattern of working there. I am especially thankful to the branch manager (F-07 Markaz) Mr. Ali Qazmi Manager operations Mr. Sharshar and Customer services department members for their kind consideration and helpful attitude through out the internship. A special thank to Mr. Shakir hussain and Mr. Ahmed Ali who gave a special attention to me and I learned a lot from them. A special thanks to my parents and family, who have been a constant source of motivation and support all through. THANK YOU this wouldn’t have been possible without your help. Last but not least I am also grateful to my uncle Mr.Imtiaz hussain for his efforts in arranging internship, guidance and support not only in formalizing the report but also in other spheres of life.
Zeeshan Hamid. October 2007
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E
XECUTIVE
S
3
UMMARY
The purpose of this report is to evaluate the performance of ABN AMRO Bank F-07 Markaz branch Islamabad. The report on ABN ANRO Bank has been carried out as an effort to meet the assigned project on “Study of an organization during internship”. The purpose of study was to enable me in understanding the different aspects of culture, structure and strategies adopted by the organization in order to be successful in the international / Global environment.
It was really a knowledge enhancement task and provided me with an ample opportunity to learn about the techniques to be a leader in the banking industry. Main thing to determine is that how ABN AMRO Bank is successful in banking industry. The project report constitutes background and introduction of the bank, its culture, and structure, absolute, comparative and competitive advantage enjoyed by the bank, operations, finance, marketing and the strategies that influence international operations of the bank. The report aims at appraising the working of ABN AMRO Bank, its functions and operations and also attempts to asses its performance. Certain recommendations are presented for the potential areas of improvement.
ABN AMRO Bank has aggressive growth plans in Pakistan. Its name is considered for quality and reputation. It offers a broad range of products to target different market segments.
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I
4 NTRODUCTION
4.1 CENTRAL BACKGROUND INFORMATION 4.1.1 Banking Banking in primitive societies existed in some form. The greatest invention of all times is considered to be the invention of wheel which made transportation easy and transportation opened a gateway to business and exchange of goods flourished. The initial business was done on “barter” which meant an exchange of “commodity for commodity”. There is a myth also about the invention of money, which tells that king Midas of Libya invented money in 800 B.C. Another statement states that the king of Babylonian empire named as King Hammurabi in 1700 B.C. made all the rules and regulations of lending and borrowing and interest etc. He wrote them on an eight feet stone in the center of the city. Two famous temples are also remembered for the lending and borrowing in different transactions. One was the temple of Ephesus and the second was known as the temple of Delphi. It is said that the first bank was established in Barcelona in Spain. Another statement tells that “Venice” and “Genoa” were the hub of financial transactions and the first bank was founded there in 14th century. The first public bank that was formed was in Germany in later part of the time. 4.1.2 Banking in Pakistan Before the partition of India and Pakistan in 1947, branches of British banks dominated banking in Pakistan. The first domestic banking institutions emerged in the 1940s, immediately after Pakistan's independence from Britain. These institutions include the Australasia Bank (today, Allied Bank Limited or ABL), Habib Bank Limited (HBL), Muslim Commercial Bank (MCB), and the National Bank of Pakistan (NBP). The NBP was wholly government owned but prominent merchant families established the other three. In 1948, the SBP was formed. It assumed the supervisory and monetary policy powers of the State Bank of Pakistan. From 1960 to 1970, a number of specialized development finance institutions (DFIs) such as industrial Development Bank of Pakistan (IDBP) and the Agricultural Bank emerged. These DFIs were either controlled directly by the state or through the SBP, and were intended to concentrate on lending to long-term projects in specific priority sectors. Banking and Financial services sector in Pakistan comprises the commercial banks and the non-banking financial institutions, including the development finance institutions (DFIs), leasing companies, modarabas (Islamic Mutual Funds) and investment banks. These are controlled and regulated by the State Bank of Pakistan (SBP). Pakistan is in
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the process of adopting an Islamic (Shariah) financial system, under which interest-based banking is not allowed. However, this has not been made into a law as yet, and exists only on paper, and most banks provide an anticipated profit rate in advance. Since 1990 the Government of Pakistan (GOP) has introduced various reforms in the financial services sector enhancing the level of autonomy enjoyed by the SBP. The number of banks operating in Pakistan has increased, which in turn has resulted in increased competition. The banking sector, in general, has shown good progress during the last few years. During previous five years, the combined total assets of domestic banks, showed an average annual increase of 22 percent, while combined deposits have recorded an increase of 27 percent per annum. A total of forty-six commercial banks, including twenty-one foreign banks, are operating in Pakistan. Additionally, sixteen Investment Banks, twenty-nine Leasing Companies and fifty-three Modaraba Companies provide a mix of financial services. Opportunities for new foreign banks exist in consumer banking, corporate bonds, investment banking, leasing and housing finance sectors. Good reputation enjoyed by the existing foreign banks will be helpful for new entrants. Some challenges, however, do exist in the form of growing economic conditions in Pakistan and the turnaround possibilities in Nationalized Commercial Banks (NCBs) through privatization.
4.2 COMPANY BACKGROUND ABN AMRO is a leading global financial institution, offering a full range of banking products from retail and investment banking to asset management and private banking. With roots in the Netherlands going back to 1824, ABN AMRO is listed on the New York Stock Exchange and Euro next. It is the largest bank in the Netherlands and Europe's eighth largest with assets of EUR 987 bln (as at 31 December 2006). It operates 4,500 branches and offices in 53 countries and has 110,000 employees worldwide. In Asia, ABN AMRO has been active since 1826 when it opened its first branch in Jakarta to finance business ventures in the Dutch East Indies. The bank has been operating for well over 100 years in a number of countries in the region. Committed to Pakistan since 1948, ABN AMRO Pakistan has a strong commercial banking presence as well as an established retail franchise which offers a complete product suite including credit cards, consumer loans and deposit accounts. The bank is a leader in product innovation in the local market and is represented in key financial and government policy forums in the country. Its acquisition of Prime Bank in April this year further strengthens its position in Pakistan. With assets of PKR 124 billion, about 5,000 employees and over 80 branches in 24 cities, the combined entity is the second largest foreign bank and one of Pakistan's top 10 banks in a rapidly growing market.
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This facilitates the commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers. They perceive the requirements of the customers and match them with quality products and service solutions. During the past seven years, they have emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow and today.
4.2.1 Mission Statement: "ABN AMRO's mission is to create maximum economic value for our shareholders through a constant relationship focus on the financial services needs of our chosen client segments and a strict adherence to our financial targets. We are operating in three principal customer segments, whereby the objective is to maximize the value of each of these businesses as well as the synergies between them. Excellence of service to our clients and leadership in our chosen markets are of paramount importance to our longterm success. The Bank's corporate values play an integral role in the fulfillment of our mission."
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C
OMPANY
A
NALYSIS
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The company analysis of a firm comprise of many factors and revolves around all the internal activities, which refers to the operations carried out, strategies that are a part of the marketing mix and the environment in which the firm or company has to survive. All these factors are linked to one another in some form and make a chain of necessities for the achievement of a successful status in the market. Alfalah is no different than any other firm and faces the same trio on its face ahead.
5.1 OPERATIONAL ANALYSIS The operational analysis enlightens the procedures and methods that a firm adopts to carry out and perform its work. Different departments are accordingly formed and tasks are specified. Thus workload load is divided between different departments and to responsibilities are delegated to carry out function properly. There are also different departments, which carry out several functions specifies and as a result of coordination between them it provides its services. The different departments at ABN AMRO Bank carry out different functions are as follows. 5.1.1 Deposits Department There is an Officer In-charge of Deposits who is responsible for all the functions of Deposits Department. The main functions of the Deposits department include: § § § § §
Opening/Closing of a local Rupee or foreign currency account. Issuance of Cheque Books Issuance of Bank Statement Assistance in Clearing Procedure Capturing the Specimen Signatures into the Computer
5.1.2 Cash Department The Cash Department consists of an Assistant Manager, Chief Cashier and three Tellers. Chief Cashier manages the actual cash flows of the Cash Department while Tellers receive Cheques and deposits. The Assistant Manager however takes care for the all activities involved in the movement of Cash inside and outside, the clearance, collections, the Brinks Security cash management and so on.
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5.1.3 Securities Department The Bank provides the facility of issuing and encashing all Government of Pakistan Securities at its counter. Monthly reporting to SBP Islamabad is done regarding the position of these securities. Government securities are the Risk Free Investments, and provide secured returns to the investors. The Government securities issued and encashed at the Bank’s Counter are as follows: § § § § §
Special Saving Certificate SSC (Registered) Special Saving Certificate SSC (Bearer) Defense Saving Certificate DSC (Registered) Foreign Exchange Bearer Certificate (FEBC) Foreign Currency Bearer Certificate (FCBC)
Bearer certificates are those for which there is no concept of ownership. That is why these are also called Black Money. These certificates don't bear the names of owner. Daily reporting to SBP is made regarding the sales position of securities. Various forms such as FEBC-7, FCBC-4, and DBC-4 etc are used to serve this purpose. The banks earn commission from SBP on issuance of these securities at only 0.5%, and on SSC (Bearer) it is 0.25%. 5.1.4 Credit Department The function of Credit Department, as obvious from its name is to extend credit, i.e., To Provide Finance to Its Customers. Two types of finance facilities are available at this branch: 5.1.4.1 Running Finance (OD Facility). The client is authorized to borrow (overdraw) up to an agreed amount in excess of his/her bank balance. This upper limit is called line of credit. It is also called overdraft (OD) facility. The mark-up (interest rate) is on the amount drawn from the bank, and for the period it is kept. A nominal Commitment Fee is charged on the indrawn amount. 5.1.4.2 Loans/Advances. A loan is made when the bank advances a fixed sum for a definite period of time. The amount is placed to the credit of a borrower who can draw cheques against the sum for any amount.
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The interest is charged for the whole amount earmarked whether drawn or not. There are three types of loans provided by the bank: a. b. c.
Demand Finance (D/F): The customers pay back the loan in installments within the period of 1-5 years. Term Finance (T/F): The customer pays back the loan in the form of installments within the period of 5-7 years. Long Term Finance (LT/F): The period of making payments in the form of installments back to the bank is 7-10 years.
The purpose of these types of financing is usually to meet the working capital needs of the company. Some individuals may also take running finance for their domestic needs. If the limit of running finance exceeds Rs.50, 000/- there is a 1% Central Excise Duty charged in addition to usual markup rate. SCG extends credit for only fully secured loans. The collateral that may be accepted for this purpose include: § § § §
Hypothecation of Stocks Lien over Government Securities and Foreign Currency Deposits. Pledge of Stocks Mortgage of Land/Plant
The most appreciated collateral are GOP securities and FC deposits, since these are the most liquid collateral, and in case of default, can be easily converted into cash and hence, very low risk is involved. Then comes the hypothecation/pledge of stocks, although it is not appreciated but yet is considered. Since it is costly & cumbersome to monitor sticks & have physical inspections & reports it's also very risky. Mortgage of land/plant is not desired at all in bank’s credit culture. However, if prospect client is large enough, and a lot of other business opportunities are also expected from him, mortgage could be considered and negotiated. Even when collateral are most liquid, a cash margin of is kept for the risk involved. At what markup rate, a credit is extended. It depends. If prospect client has low risk & is strong enough, it may be low. For a high risk or small client it may be high. However, this rate is usually negotiated. In any case, the rate is usually between 5% to 14% p.a. or even higher. There are certain prudential regulations of SBP for making loans. Some of the major & important clauses are: § §
Banks can lend up to 34% of its total deposits to private sector. (This Credit Deposit Ratio has now been abolished by SBP) Debt-Equity ratio should be 60:40.
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5.1.5 Remittance Department Remittance department provides many services including, issuance of TTs, Drafts, Pay Orders, encashment certificates, balance statements, deposit slips and so on. Telegraphic transfer is: §
5.1.5.1 Telegraphic Transfers (TT’s). This is the quickest method of making remittances (national and international). Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to the specified person. It is a costly transfer of money.
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5.1.5.2 Correspondent Banks. To expedite the transactions, the areas where Alfalah is not located, it has its correspondent banks.
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5.1.5.3 Local and International Correspondents Banks. There is also a sizable list of international banks, which serve as SCG correspondent banks at the places where SCG Bank is not located.
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5.1.5.4 Reporting to SBP. Remittance department makes the reports for SBP regarding all Foreign Currency transactions/movements e.g., making a T.T. of US Dollars to New York, and similarly, receiving any foreign currency instruments. SBP is reported for all foreign exchange issued and received.
5.1.6 Data Center/Technology Departments The Bank is equipped with a number of latest original IBM/Compaq computer systems. Almost every officer has a computer installed on his table. All these computers are interconnected on LAN with each other. Novell NetWare version 3.11 (20 users) is installed for interconnecting the computers. These entire computers are sharing the same data. However, not every one has access to every item of data. There are Data Logs assigned to each officer according to his own needs. Passwords are used to have check over these logins. There is a special room that serves as the main Data Center. All the computers (in operation) are controlled from there. Highly trained computer personnel (mostly from International HO) are there to take care of all these computer systems. In spite of computers in operation section, Credit Department has also got its own latest original Compaq computer systems. In addition to the usage of latest general packages like Windows, MS Office etc. The Bank uses its own custom made software to aid the
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specific requirements of its different departments. These systems keep the uniformity during WAN reporting to HO Karachi and Amsterdam. 5.1.7 Audit Department There is an Internal Audit Department, whose responsibility is held with an Internal Checking Officer (ICO). ICO daily checks all the bank transactions for their validity. He confirms whether proper personnel signatures, proper stamping is made, signing personnel are in their limits, etc follow the transactions. ICO also reviews the source documents (vouchers, cheques, deposit slips etc.) and the computer printouts of the transactions of all the departments of the bank. There are four types of audits: §
5.1.7.1 Internal Auditing
ABN AMRO Bank’s auditors annually do this auditing. They come from Karachi Head Office and audit all the reports, statements and transactions for their authenticity, compliance with yearly budgets, and exceptions. §
5.1.7.2 External Auditing
Ferguson Chartered Accountants are the external auditors of the Bank. They audit the branch for the purpose of taxation and financial statement preparation. §
5.1.7.3 SBP Auditing
SBP also performs branch audit for the purpose of verification that whether the branch is following proper rules and regulations, whether it is maintaining the proper documentation and so on. This type of auditing is usually done once in two years.
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5.3 MARKETING ANALYSIS The marketing analysis of the bank focuses the promotional campaign, the four P’s of marketing are also in vision of the bank that it uses for its marketing (called 4 pillars) i.e., product, price, place (distribution) and promotion. For more lucidity they shall be explained briefly here.
5.4.1 Product The products at ABN AMRO are its various banking services, which are its Deposits (PLS and Non-PLS, Term Deposit), Remittances, and ATM & Credit Cards, Loans, Insuarace, Relationship privilege and Lockers etc. The Credit Extension is also a service. 5.4.2 Price The prices for various services of Bank are given in the booklet "the Schedule of Bank Charges". The prices at the bank are quite competitive with those of other banks working nationally. 5.4.3 Place The Bank has over 25 branches through which it offers services to its clients. The distribution channels are its employees who deal with customers. 5.4.4 Promotion Various promotional techniques as advertising, personal selling etc. are used. The promotional strategies of the Bank vary according to the market conditions. However, the following techniques are mostly used: §
5.4.4.1 Advertising Advertising in News Papers and Television is used as a marketing tool. However, it is often used when a new product is introduced.
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5.4.4.2 Selling Points There are various Marketing Strengths of the Bank, which are promoted in order to attract customers, both for deposits and corporate clients. Main marketing strengths are given below:
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5.4.4.3 Various Information / Marketing Broachers The Bank publishes various introductory brochures for the general guidance of the customers. These include the Schedule of Bank Charges, VISA Card Information, and Savings & Term Deposit Information etc.
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5.4.4.4 Personal Selling Personal selling is also a norm at the Bank. The branch has well learned sales executives i.e., Business alumnae. Personal selling is used both for attracting individual and corporate clients.
Different areas have been assigned to different sales executives, and a scheduled report is made for all calls made. These are the marketing activities that the bank projects in order to stay alive and prominent having an identification of its own in the market and to attract more customers.
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E
NVIRONMENTAL
A
NALYSIS
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6.1 INDUSTRY & MARKET ANALYSIS The environmental analysis of the bank comprises of the two major aspects. § §
External Environment. Internal Environment
6.1.1 External Environment The external environment includes the Competitors, their market share, the corporate policies that the competitors boast, the Value-Added Products such as Credit cards, ATM cards, Travelers Cheques etc. it entails all these marketing slogans. Thus external environment also includes the perspective of people about the organization and in contrast the other competitor. The most important factor of external environment is that it includes the State Bank Policies and restriction of state bank for the foreign banks in trading. It also deals with the State bank restricted policies for allowing branching network, interest rates, and checks that every thing is according to the constitution of Pakistan. To follow the banking laws by the banks working in Pakistan is one important part of the external environment. Foreign bank do work under the policies of the State bank but have their own corporate policies that are dictated from the head office and it is practiced that there should be no conflict between the two. International Corporate policies for the banks as well as the laws of Pakistan have to be compatible to each other and there should be harmony among the two otherwise the Banks will go beyond the limits where it either go bankrupt or on the other hand threat the Pakistani banks as far as market share is concerned. Therefore both the extremes are not comforting. When . we study Alfalah in the perspective of all the prevailing circumstances of the external environment, we come to the conclusion that the bank is maintaining a harmony among all the variables. Like other competitors they also keep an eye on the country situation, the political game, and the ups and down of govt. etc. The bank obeys all the rules and regulations dictated by the State Bank of Pakistan and work in fully amiable conditions.
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As far as the competitors are concerned, they are also watched and a surrounding of positivism is sought. Thus bank stands on its own place in the society with its symbolic heritage and culture. 6.1.2 Internal Environment The Internal Environment means the environment at the bank. Thus it refers to the inside departmental relationship in the bank. It includes: § § § § § § § §
Organizational culture. Centralized/Decentralized system Hierarchy. Norms and values of an organization Course conduction for the employees Rewarding the employees. Promotion policies. Appraisals.
At Alfalah all the above aspects carry high importance and value. The organization culture is very clear and surrounds around hard work and dedication. The system work in full coordination and the delegation of authority flows from top to bottom. The manager is accessible anytime to any body in the bank. Thus creating a more peaceful and homely environment. Employees are regularly sent on placements and new courses are introduced. Thus employees get educated about the innovative measures they can take in dealing with customers. There are certain schemes for the employees also. Promotion policies are not specifically applied but there is a regular increase in the pay. As the employees get senior and serve the bank for a longer duration of time, there salary gets on increasing and hence there seniority is paid in form of higher salary. Certain senior staff members are also given promotion and are sent on foreign visits. Those employees about whom customer have good opinion are also rewarded. Thus the internal environment of the bank has its own significance and traits.
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6.2 MAJOR PRODUCT LINES AND MARKET SEGMENTS ABN AMRO Bank has five Strategic Business Units or SBU’s, these units are listed below:
1. Branch Banking § § § §
Deposit Rates Remittances Foreign Trade Lockers
2. Consumer Banking § § § §
Credit Cards Auto Loans Home Loans Consumer Durables
3. Electronic Banking § § §
Phone Banking ATMs Online Banking
4. Corporate Banking § §
Trade Finance Structured Finance
5. Treasury and Investment § § § § § § §
Money Market Forex Market Investments Government Securities Custodianship Financial Advisory Nostro Account
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6.3 COMPETITORS ANALYSIS In every industry a firm or company is faced with tough competition from other companies of the same route. The key to survival for every firm is innovation and keeping its image unique, upholding its traditional values and brand name. A corporation may not be perfect in every field but a moderate approach towards customers makes it stable and reliable. The firm policies should be an amalgamation of its strong and weak points so that a modest blend of products is offered. 6.3.1 Major Competitors In banking industry ABN AMRO Bank has also other multinational competitors like: § § § § §
Standard Chartered Bank. Askari Bank Union Bank. Citi Bank Alfalah Bank
In addition to these there are many others. All these banks have their roots back in their own culture and heritage. They have their own specific policies and strategies. Thus the banking industry comprise of such banks, which have different backgrounds and unique marketing style. They all combine to provide a fair chance of selection for customers. 6.3.2 Market Shares As such no financial organization in Pakistan is unable to determine the correct market share of the banking industry. Also banks do not disclose certain confidential information to the general public and internees. Still generally foreign banks in Pakistan contribute to about 35% to the whole banking industry. Out of which Askari, Citi, Standard Chartered, Muslim Commercial, Alfalah banks share the major market. 6.3.3 Goals Every business organization has a main goal before starting the business and they strive hard for the achievement of their ultimate goal. Similarly these banks also have a goal i.e. to maximize profit by offering unique and distinct products to their clients. Every department in these banks also has a goal which heads towards the main goal for example as in Mortgage Department. Marketing personnel not only call their clients but they personally meet them and give them updated information about their unique new products.
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6.3.4 Strategies These banks build their financial services on mainly three pillars that when put together efficiently, gives them a significant advantage: §
First, they have created more distribution channels-both physical and virtual than any other company in financial services, thereby serving customer segments across the entire wealth spectrum.
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Second, they have created an unparalleled footprint, being locally embedded in more than 30 cities and the leading domestic player in most.
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Third, the breadth of its products and services creates cross-services opportunities through its global distribution channels that are unavailable to any other company in the industry.
This unique combination of strategies gives these banks enormous strategic flexibility for growth. These strategies are not permanent and hence changes with circumstances in the market which can be the customers buying habits, country political situations, seasonal targets, competitors policies, internal changes in the bank policies and effects of international trade. Thus these market-targeting policies of banks changes with time and hence they are not uniform in their approach. Here are some of the trends of competitors.
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D
EPARTMENTAL
B
RIEF &
C
7
ONTRIBUTION
7.1 DEPARTMENTAL BRIEF During my six week internship program at ABN AMRO Bank –F-07 Markaz branch worked at the Accounts Opening department, Remittances, Clearing and Credit Department. INTERNSHIP EXPERIENCE – The first task which was assigned to me was ‘accounts opening’. This develops relationship among the bank and its customer. Following is the procedure for opening an account – OPENING OF AN ACCOUNT – For opening an account, first of all an account opening form is required. This form is an entry to the banking system through ones deposits in the form of cheques and cash. Requirements Two most important requirements for opening an account are • Original and photocopy of ID card. • Introduction A person can be introduced by any staff member or by any account holder. Type of Accounts • Current account • PLS Saving • Savings (FCY) • Term deposit • Notice deposit • Call deposit • Others Some of the most popular types of accounts and their opening procedure are mentioned below – CURRENT ACCOUNT – In this type of accounts the client is allowed to deposit or withdraw money as and when he likes. He may, thus, deposits or withdraws money several times in a day if he likes. There is also no restriction of amount to be deposited or withdrawn. However, there is requirement of minimum balance maintenance of Rs. 10,000/-. Usually this type of account is opened by the businessmen. No profit is paid by the bank and no service
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charges are deducted by the bank on current deposits account. These types of deposits are also exempt from compulsory deduction of Zakat. PLS SAVINGS – This type of account is for those persons who want to make small savings'. This type of account is opened with a minimum deposit of Rs. 10,000/-. Under this scheme deposits can be made only up to a-costing amount and withdrawals are allowed twice a week or 8 times a month. If a big amount is required a seven days notice is required before the withdrawal. The profit is paid on these accounts on the minimum balance during a month for the whole of that month. Zakat & other withholding taxes are deducted as per rules of the government. TERM DEPOSIT ACCOUNT – This is a type of term deposit in which a receipt is issued for varying tenors ranging from 1 month to 5 years or more. These are in the form of receipts and profit on these receipts is paid biannually. These receipts are en-cashable after expiry of the period for which they were issued. Different profit rates are applied to different type of TDRs. ACCOUNT OPENING PROCEDURE FOR INDIVIDUAL ACCOUNT – The first step to open an individual account is to fill the account opening form SF – 1AA – 1 ( see annexure), Know your customer form SF-1B-1 which is then checked by the operational manager and signatures are taken on a Signature Specimen Card (usually known as SSC). After checking all the information the account is opened on SYMBOLS and customer is then free to deposit or withdrawal any time. If the customer is desirous of ATM card and Cheque book he has to fill out a form for ATM request SF – 1C revised (see annexure) and can collect after one week from the branch. The following are the requirements to open an individual account – 1. Attested photocopy of computerized National Identity Card / passport of individual. 2. In case of salaried persons, attested copy of his service card or any other acceptable evidence of service, including, but not limited to a certificate from the employer. 3. In case of a person unable to properly sign, two recent passport size photographs of the new account holder besides taking his right and left thumb impression on the specimen signature card.
ISSUANCE OF ATM CARDS AND CHEQUES BOOKS – Customers who wish to apply for ABN AMRO’s ATM card or for their Cheques books have to fill out an ATM request and a Cheques Book requisition slip. This is then posted online and approved by the operational manager. The request is responded by ABN AMRO Bank’s head office and Cheque books along with the ATM cards are sent to the
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requesting branch after one week of time. Customers can then collect their ATM cards or their Cheque books any time from the branch from 9am to 5pm. Their ATM cards are activated online and Cheque books numbers are also posted online. Customers’ signatures are verified before handing over the card or the Cheque book. Customers are further advised to use their ATM cards after one-hour of activation as it normally takes one hour for activation of the ATM card by the Head office. They are also guided on the security issues e.g. pin codes, safety of Cheque books and careful handling of ATM card. REMITTANCES DEPARTMENT – One of the most frequently utilized banking services is transfer of funds of remittances through banking channels. Funds can be transferred from one account to another account or accounts between the branches of the banks. There are two kinds of remittances KINDS OF REMITTANCES – Inward Remittances – Funds are coming in. It is favorable Outward Remittances – Funds are going out. It is unfavorable Local remittance can be done in following ways at ABN AMRO BANK Ltd • Pay order • Demand draft • Telegraphic transfer • Mail Transfer • Online transactions PAY ORDER – Payment Order is meant for bank’s own payment but in practice it is also issued to our customer r making payments. “A pay order is a written authorization for payment ,made in receipt form issued and payable by the bank, to the person named and addressed therein on his giving a proper discharge therein,” • It is issued by and payable by the same branch of the bank. • It is neither transferable nor negotiable and as such it is payable to payee named therein. • Pay order cannot be issued to a minor • A receipt form and therefore it is payable only after discharge of the payee on adequate revenue stamps.
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PARTIES TO PAYORDER – Following are the parties to the pay order Purchaser – Is a person, firm, company, or local authority Issuing / paying branch – Which issues / pays on presentation Payee – Is the person named therein? PREPARATION OF A PAYORDER – The customer duly fills in the funds transfer application form SF-100 If the pay order is to be issued in cash a cash credit voucher is prepared, the customer presents it at cash counter. The cash officer after receiving payment gives this to remittance in charge. If the pay order is to be issued in transfer, the customer presents its Cheque, through which the account is debited. Entry in daybook and pay order issued register The pay order is allotted a serial number according to ear of banks operation and serial number of issuing branch to be allocated from register Like PAB/57/925 In computerized branches, there isn’t any need of a pay order register. So the record is automatically updated in computer. PAYMENT OF A PAYORDER – The pay order can be paid back in clearing or transfer. Whenever a pay order is paid date is marked against the pay order register. (Not for computerized branches), whereas it is paid in the system for automated branches. ISSUANCE OF A DUPLICATE PAYORDER – In case a duplicate pay order is to be issued (like if it is misplaced / damaged or lost in transit) a duplicate pay order can be issued. A letter indemnity CF -15 is obtained from purchaser. A note of damaged/lost pay order is made in register. DEMAND DRAFTS – • Demand draft is a written order, drawn by one branch of the bank upon another branch of the same bank, or upon other bank under special arrangements to pay a certain sum of money to or to the order of specified person. • Demand draft is a negotiable instrument. Demand draft is not issued and payable to bearer nor drawn on branches in the same city.
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TELEGRAPHIC TRANSFER – “A telegraphic transfer is issued or transfer of funds from on branch of the bank to another branch of the same bank.” • The message is conveyed through fax or phone. • Telegraphic transfer is not negotiable. • Funds transferred through TT are payable to payee only. • Following Re the parties to Telegraphic transfer • Applicant – A person, firm, company or local authority who desires to remit funds to another branch. Drawee branch – On which TT is issued Payee – The person named therein to pay. The instructions are sent to drawee branch through coded language called test ISSUANCE OF TT – • The customer fills the funds transfer application form. • Full name of payee is mentioned on the form,-. • Instructions regarding payment are given like whether the TT is to be credited in payee’s account or on proper identification of banker through ADVICE & PAY • A record in TT issued register is made separately branch wise • Charges are taken either in cash or through debiting the account of customer through Cheque or voucher. • A TT number is allotted to each TT .it is serial # an telegram # • LIKE 14R 5 • The message is written on SF -119 • The entry is also recorded at telegram dispatched register. • Then the test is applied by the authorized officer. • Then a confirmation of cable sent is prepared on SF 189-A containing o Telegram serial number o Remittance number o Mode of payment o Amount o Name of beneficiary o Account number o Test number • The message is conveyed through telephone, or fax or mail.
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CLEARING DEPARTMENT – Every banker acts both as a paying as well as a collecting banker. It is however an important function of crossed Cheques. A large part of this work is carried out through the bankers clearing house. A clearing house is a place where representative of all banks of the city get together and settle the receipts and payment of Cheques drawn on each other. As the collecting banker runs certain risks in receipt of their ownership the law has provided certain protections to the banks. The Negotiable Instrument Act, 1881, lays down hat drawer or holder of a Cheque or draft may cross the instrument generally or specially. It further lies down that a crossed Cheque can only be paid to a banker, who collects it for a customer in good faith and without negligence. TYPES OF CHEQUES COLLECTED – Transfer Cheques: are those Cheques, which are collected and paid by the same branch of bank. TRANSFER DELIVERY CHEQUES – Are those Cheques, which are collected and paid by two different branches of the same bank, situated in the same city. CLEARING CHEQUES – Are those Cheques, which are drawn on the branches of some other bank of the same city or of the same area, which is covered by a particular clearing house.
COLLECTION CHEQUES – Are those Cheques, which are drawn on the branches of either the same bank or of another bank, but those branches, are not in the same city or they are not the members of clearing house. FUNCTIONS OF CLEARING DEPARTMENT – • To accept Transfer, Transfer delivery, clearing and collection Cheques from the customers of the branch and to arrange for their collection. • To arrange the payment of Cheques drawn on the branch and given for collection to any other branch on ABN AMRO BANKor any other members or sub member of the local clearing house. • To collect amount of Cheques drawn on members, sub-member of local clearing house, sent for collection by ABN AMRO BANKBranches, not represented at the local clearing house. RECEIVING & SCRUTINY OF CHEQUES – • Receiving and scrutinizing the Cheques and other deposit instruments, and the pay-in-slip at the counter. • Fixing the stamps.
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• • • •
Scrutiny and receipt by the authorized officer. Returning the counter file to the depositor. Certificate and confirmation by the officer in charge of the department. , Separating the Cheque into transfer, transfer delivery, and clearing Cheques.
BANKERSHOULD CHECK THE FOLLOWING – • The instrument should be neither stale/ nor post-dated. • If the instrument is crossed not negotiable it can be for the third party (an endorsee of an order Cheque, or a holder of bearer Cheque). • The Instrument should not bear any unauthorized alternation. • The instrument should not be mutilated. • The amount in words and figures should be same. • The instrument should be drawn on any local branch. • If cheque is "crossed Account Payee's" only or "Payee's Account", it should only be accepted for collection for the payee's account. • The cheques or drafts should not be crossed specially to any other bank. • A cheque payable to a firm should not be accepted for credit to a partner's account. • A cheque payable to one of the joint account holders should not be collected for the joint account without the payee's endorsement, or consent. • A cheque drawn by a customer in the capacity of agent, Attorney, or Manager of his company or firm, should not be collected for credit to his personal account. • Pay orders, although negotiable should not be collected for third parties. • Do not collect an instrument in the account of an agent or of the servant of the payee or endorsee of the instrument. • “Not transferable" instruments, like Telegraphic Transfer, or Mail Transfer Receipt, Pay-slips, and Treasury Receipts, should be collected for a person other payee. • If an account is new or the balance or operation of the account is not satisfactory, satisfy yourself about the title of the customers to the instruments before accepting the deposits. • Branch agent's permission should be obtained before accepting a third party Cheque or draft for the credit of the member. • If the payee is a Government Department, Government Official, or a trust account the instrument cannot be collected, but for the payee's account. • If the payee of an instrument is UBL, it can be collected for credit of the drawers account, or the amount of the instrument may be utilized as desired by the drawer in writing. • Cheque payable to a trust, account should not be collected for credit to a trustee's account. • All the endorsement should be regular, and no endorsement should be missing.
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C
ONCLUSION
A R ND
08
ECOMMENDATIONS
8.1 CONCLUSION
All in all I think that ABN AMRO is an exceptional bank with a rich background of highly qualified and professional human resource, they have a very unique culture, the bank is contributing immensely to the overall economy of Pakistan, and they offer relief to the general public as they have quite nominal rates on all their products. It has truly been a pleasure working with these very fine people; they helped me learn a great deal from their experience and personal work.
8.2 RECOMMENDATIONS “Advice is seldom welcome; and those who want it the most always like it the least” Recommendations suggest improvements in areas which have room for polishing and progress. Criticizing several factors at ABN AMRO F-07 Markaz Branch does not mean that these aspects are permanent flaws of the branch. Instead, it is intended that these mistakes be removed. For the confiscation of these errors, certain recommendations are forwarded: 8.2.1 Customer – Oriented Attitude: The bank staff should be properly educated about the customer’s value. The bank should use the marketing approach and customer satisfaction should be taken into account. There should be no status discrimination between customers. The bank staff should be courteous to all customers. A customer is fascinated and brings other customers also to the bank if the service is efficient and courteous. Being courteous does not cost anything instead it makes one more human. The bank’s staff should be courteous with everyone regardless of the volume of their deposits.
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8.2.2 Training and Development Program: The SCG claims of training and educating its employees but practically speaking it should initiate a good employee training and development plan. This would help employees to know more about their specific job and its actual requirements. The employees can be given chance to serve in different departments, hence they can become aware of the mutual requirements and importance of the coordination between the different departments of the bank. Thus they can work in harmony and collaboration with each other. This would develop the proficiency, insight and administrative capabilities of the employees. This also helps in avoiding monotony of performing the same job again and again. This would also be a factor of motivation for the employees who works in over loaded departments. The rotation would provide them all with equal chances of serving in same kind of working conditions.
8.2.3 Equity Concept: All the departments should be given with an equivalent load of work this would result in a friendly relation between employees as well as it will boost the coordination between different departments. Another suggestion would be that the staff should be involved in the decision making process. So that they can make arguments about their status of work after accepting the new responsibilities. This would also clarify the issue between staff members and responsibilities and authorities will be properly delegated, resulting in the ending of the confusions about work and responsibilities. It would also give a feeling of own ness and security to the workforce of being very much a part of the bank.
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