Deposit Report On Ubl

Credit Management 1

Rabia Iram Credit Management

2nd Assignment Presented to: Miss Saba Allama Iqbal Open University, Islamabad

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 2 Acknowledgment By the Grace of Almighty, the most Merciful, the most Beneficial, I'm today submitting my 2nd Assignment report, at the end of my pragmatic experience and I'm glad to have it with UBL, where you come first, only if you're the customer. Thirst of learning is inside you, and whatever the environment, if you're willing to learn, you do. At UBL, I had a new, challenging, yet a perfect environment to learn. My parents' prayers and their teachings were always with me and hereby I will like to take this opportunity to show my gratitude to all those who made my internship an adventurous outwit. .

.

Here I am, from more professional and rather corporate environment of UBL main branch Okara. I never knew what it all going to be. As I enter the branch, it took me a minute to realize that the person sitting in the half fortified walls is the manager. Maybe I was expecting him in a glass sheeted room. At a glance, I grasped the interesting personality of the manager and today at the end of my internship; he’s one of the persons I’ll always remember. Sir I learnt from you is always going to be respected, no matter whatever business field I choose. Those tips are always in my memory bag. Despite of the most hectic schedule, my teacher helped me so much. I'm really grateful to you for clarifying my concepts and making me learn from your experience. Whatever I learnt from you will definitely help me in my upcoming study and the professional life ahead. Thank you so much for being so cooperative and so helpful every time. I hope I have been up to your expectations. Rabia Iram

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 3

Table of Contents S. No.

Title

Page No.

Acknowledgment Table of Contents Deposits Types of Bank Deposit Accounts Introduction to UBL Birth of UBL Functions of UBL UBL’S Structure, Management &Workforce UBL’s Network Operational Hub Organogram Deposit department Types of Account SWOT Analysis Strengths Weaknesses Opportunities Threats Recommendations Bibliography

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

2 3 4 6 10 10 10 11 12 12 16 17 19 20 21 22 22 23 26

Credit Management 4

Deposits Info point Deposits is the primary tool designed to assist in fulfilling your banking strategy and tactics. It offers a unique combination of comprehensive information, flexibility, and efficiency. 1. Internal sources Internal sources are private funds which comprise 1. The capital assigned for the investment of the branch 2. Legal reserve 3. Free reserves 4. Cash contribution assigned for the real estate investment in foreign currency, according to conditions mentioned below. Uses of internal sources The internal sources of funds of a foreign bank branch (private funds) could comprise the establishment costs, equipment, furniture, estates, securities issued by the State or guaranteed by the State, shares of Lebanese companies in which the State participates. Exceptionally, a branch can acquire parts, shares, or real estate, provided that the acquisition occurs in settlement of a bad or doubtful debt. However, these assets must be liquidated within two years. If, for any reason beyond its control, the branch is unable to do so, it must refer to the Central Bank. 2. External sources The external sources are composed of deposits and cash balances received or borrowed from the public. - Deposits The Code of Commerce considers the branch the owner of the received deposit which it should return in full, in one or several payments, upon the first request by the depositor, or according to the maturity or prior notice set in the contract.

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 5 The interest is due as of the working day following the date of deposit and until the day prior to its withdrawal, unless an agreement to the opposite exits. - Certificates of deposit The branch can issue, in its main office only, certificates of deposit against deposits it receives. Before accepting long term deposits against the issue of certificates of deposit, the branch must notify the Central Bank, in written, of the total value of the issue and other clauses and conditions, as well as any update. The branch operating in Lebanon is prohibited from issuing certificates of deposit, unless the prior approval of its general management is obtained. The total value of outstanding certificates of deposits issued by the branch should not exceed, at any time, six times its assigned capital (net). Certificates of deposit may be nominal, to order, or to bearer, denominated in Lebanese Lira or in any other deposit currency. Temporarily, and until further notice, the branch can only issue certificates of deposit to the order of a given person, provided that they include a clear and explicit statement prohibiting their endorsement. Uses of external sources: The foreign bank branch uses its external sources to carry out, on its behalf, various credit operations (discount, guarantees, overdraft or commercial credit against real or personal guarantees or against documentary credit, public and private notes payable....) The branch management must invest at least 30% of the branch's deposits in Lebanon. 3. Fiduciary sources of funds: Fiduciary sources are rights and movable assets whose owners give the branch the right of management and disposition, in its name but for their benefit, for a specified period of time. These sources of funds are recorded off-balance sheet. Uses of fiduciary sources of funds:

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 6 The branch uses its fiduciary sources of funds in various placement and investment areas determined by the contract between the right and movable asset owners and the branch, according to existing rules and regulations. A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank, and represents the amount owed by the bank to the customer. Some banks charge a fee for this service, while others may pay the customer interest on the funds deposited.

Types of Bank Deposit Accounts Bank deposits serve different purposes for different people. Some people cannot save regularly; they deposit money in the bank only when they have extra income. The purpose of deposit then is to keep money safe for future needs. Some may want to deposit money in a bank for as long as possible to earn interest or to accumulate savings with interest so as to buy a flat, or to meet hospital expenses in old age, etc. Some, mostly businessmen, deposit all their income from sales in a bank account and pay all business expenses out of the deposits. Keeping in view these differences, banks offer the facility of opening different types of deposit accounts by people to suit their purpose and convenience •

Checking accounts: A deposit account held at a bank or other financial institution, for the purpose of securely and quickly providing frequent access to funds on demand, through a variety of different channels. Because money is available on demand these accounts are also referred to as demand accounts or demand deposit accounts.

•

Money market deposit account: A deposit account with a relatively high rate of interest, and short notice (or no notice) required for withdrawals. In

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 7 the United States, it is a style of instant access deposit subject to federal savings account regulations, such as a monthly transaction limit. •

Time deposit: A money deposit at a banking institution that cannot be withdrawn for a preset fixed 'term' or period of time. When the term is over it can be withdrawn or it can be rolled over for another term. Generally speaking, the longer the term the better the yield on the money

•

Demand Deposit

Here money is not deposited for a specific time period. Investor can withdraw money at any time. Bank is responsible to return the money on customer’s demand. This account allows you to demand your money at any time. •

Term Deposit

Under this scheme money is deposited for a fixed period of time so it is also called Fixed Deposit. Investor can withdraw the money only after the time period. Premature withdrawals are also allowed by paying a penalty. Interest is calculated on monthly, quarterly or yearly depends on the bank and scheme. Many banks offer loan or overdraft facility as added features with fixed deposits. Term deposits are a safe investment and it is therefore a very good option for conservative, lowrisk investors. •

Recurring Deposit

This is another type of fixed deposit in with investor pay a small amount every month for a specific time period. For example pay Rs.1000/- every month for a period of 5 years. After 5 years he will get the principle with interest accumulated. A Recurring Bank Deposit is a good option for regular savings. Some recurring accounts are discussed below:

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 8 a. Home Safe Account: Small savers find it convenient to deposit money under this scheme. For regular savings, the bank provides a safe or box (Gullak) to the depositor. The safe or box cannot be opened by the depositor, who can put money in it regularly, which is collected by the bank’s representative at intervals and the amount is credited to the depositor’s account. The deposits carry a nominal rate of interest. b. Cumulative-cum-Sickness Deposit Account: Regular deposits made in this type of account serve the purpose of having money to meet large expenses in case there is sudden illness or other unforeseen expenses. A certain fixed sum is deposited at regular intervals in this account. The accumulated deposits over time along with interest can be used for payment of medical expenses, hospital charges, etc. c. Home Construction deposit Scheme/Saving Account: This is also a type of recurring deposit account in which money can be deposited regularly either for the purchase or construction of a flat or house in future. The rate of interest offered on the deposit in this case is relatively higher than in other recurring deposit accounts. •

Saving Account

This is a kind of demand deposit with limited number of withdrawals during any specific period. Savings Accounts provide principal security and a modest interest rate. Now banks also put some restriction on the minimum balance. If customer don’t maintain the minimum balance customer has to pay a penalty. Now saving account comes with many features like ATM and Debit Card, Cheque Book, Free Internet Banking with Bill Pay, Fund Transfer Prepaid mobile charging, Free Telephone Banking etc. •

Current Account

This is another kind of demands deposit like saving account with unlimited withdrawals. There are many different Current Accounts available in today. From

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 9 specialist young people bank accounts to Current Accounts (with overdraft), Cheque Accounts, Basic Bank Accounts, Student Accounts, Graduate Accounts, Foreign Currency Accounts and Current Accounts with special offers. •

Fixed Deposit Account: Many a time people want to save money for long period. If money is deposited in savings bank account, banks allow a lower rate of interest. Therefore, money is deposited in a fixed deposit account to earn an interest at a higher rate.

Market Share in terms of Advances

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 10

United Bank Limited

BIRTH OF UBL: On November 9, 1959, UBL was notified and included as a private schedule bank with authorized capital of Rs. 20 million; issued and paid up capital of Rs. 10 million divided into 1 million shares of Rs. 10/ each. Currently BOD and president/ CEO Mr. Amar Zafar Khan being a member of this newly formed set up manage UBL. Chairman His Highness Shaikh Nahayan Mabarak Al Nahayan and Deputy Chairman Sir Mohammed Anwar Pervez are the two supreme controllers of the bank’s affairs. Another development is the appointment of director operation, Nauman Hussain by the newly privatized bank. FUNCTIONS OF UBL: UBL is a commercial bank, which transacts the business of banking in accordance with the provisions of BCO, 1962. Section 7 of the Act authorizes banks to engage in the prescribed form of business. In the light of this section UBL’s functions can be categorized as under:  Agency services  General Utility Services  Underwriting of loans raised by the Government or public bodies and trading by corporations etc.  Providing specialized services to customers, and

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 11  Hajj-related services. UBL’S Structure, Management &Workforce Anthropology of the work environment is a must to know in order to utilize workforce. So here we start up with UBL operations. UBL at operations: UBL’s business function has been divided into 12 Heads. 1. Commercial Banking: includes the functions of deposits, advances & Foreign Exchange. 2. Human Resource Department: HRD refers to the human resource management (HRM) functions of preparing employees to work effectively & efficiently in the organization. It includes training, education and Development (TED). 3. International Operations: oversees business activities. 4. Country Operations: Domestic business activities. 5. Global Operations & utilities: Global business activities 6. Audit: Audit operations check & balance the activities. 7. SAM: The banks are in the business of risk taking and there are occasions when economic stocks or business cycles or frequent changes in the policies of Political Govt. do turn their assets bad and sour. To manage these infects and high degrees of risk portfolio of Bank’s SAM s are formed, which are staffed with specialized, experienced expertise. The UBL’s policy to transfer the accounts classified as Doubtful or Loss as per Prudential Regulations NO.11 to SAM where on case-to-case basis strategy is developed to manage the account. The salient features of line of action adopted at SAM are; Recovery process, Litigation &Write offs 8. Credit Policy: Plan for a sound, effective credit risk management. 9. Country corporate Banking Group: to overlook the managerial functions of branches of different countries.

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 12 10. Investment Banking: plan, invest, and regulate public shares. 11. Corporate Affairs/CFO: Corporate level functions are performed under this head. 12. Global Treasury: plan, invest, and regulate the bank’s reserves. UBL’s Network: UBL’s operations are divided into ten regions Karachi, Hyderabad, Lahore, Multan, Sialkot, Peshawar, Islamabad, Azad Kashmir, Quetta and Faisalbad. A “Regional Chief Executive” who supervises the sales functions of the region heads each region. The Regional Chief Executive would not be involved in routine administrative activities but would instead focus on business development in the region. Operations side is managed by the “Regional Operations Head”. These ten Regions supervise 88 “HUBS” which have replaced the former “Zonal Offices”, which are controlling offices, which guide and control the stand-alone spoke branches, core banking function are carried out in Hubs. While the spoke branches handle the day-to-day routine business. Post Office’s Functions: which directly reports to spoke branches and their function are to facilitate the customers through collecting the utility bills. Operational Hub Organogram: Hub System being the strength of UBL could be well justified as we move through the structural chart within the “Hub operational system” Which explains wider span of control and bifurcation of sales & operations as effective composition of centralized authority. Regional Chief Executive

Regional Operational Head Proposed

Area Manager

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Head Office Branch Operations

Credit Management 13

Area Operations Manager

Supv. Cash

Supv. Funds Transfer

Supv. Customer services

Hub E- Coordinator

Teller

Data Supervisor

Data input

Cash withdrawal Cash (CHQ deposit) Cash sorting Clearing/TD License A/c. to A/c. transfer Checks Retorn Travel checks ATM Cash DD/ PO

Clean collection Telegraphic Transfer Mail Demand Draft Pay orders Govt. Sec. Issuance /encashment Dual control sec. stationary

A/c opening Cheque books Stop payment Standling instructions TRD/NDR etc. Rec Trade Finance document Forward to TPC Loans (limit input) Lockers Hold mail Zakat Certificate License Dual Custody Sec. stationary

Technical Support/ net work Instalk / update Unibank system Support It/ Telecom Related areas

End of day Distribution of Reports Record Keeping Data input & checking Customer voucher

Dispatch Procedure: 1. Record in outward Mail Register with Date usually documents that send are OBC, IBCA, IBDA, RTC, TT, and IT etc. 2. Code serial No. on Instruments 3. Send to the destination as written on the stamped envelop 4. Write serial No. on envelop as remainder 5. Record Receipt No. got from Courier Service (TCS) according to the serial No. Given into the dispatch Register 1. Deposits:

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 14 Banking is the service industry. The lifeblood of banking is deposits without which no bank can function and earn profits. In order to accelerate growth & increase market share, the bank’s operations have been organized on functional lines. Sales & marketing have been separated from operations. The sales staff makes efforts to acquire fresh, cheap/ low cost deposits and market new products in accordance with the policies advised by HO from time to time. The operational staff is engaged in operational work, which includes providing prompt, efficient & personalized service to customers so that the deposits acquired by the sales team is retained. The branch staff works under the direction & supervision of branch Sales Manager. He heads the branch. He allocates & monitors Sales targets allocated to his sales force & also supervises Operations. A Client Prospect Register is maintained in each branch. Sales visits and results are recorded in this register against individual names. The results are recorded daily & are also display on the white board of the branch. These figures are then conveyed to the Area Manager of the respective Hub & are discussed / reviewed in weekly meetings at the Hub Branch with the Area Manager. Thus a customer may be desirous of opening an account in a branch b/c of two factors •

He may be Walk-in-customer

•

He might have been persuaded by a Sales call

•

The walk-in-customer is directed to supervisor / branch Operations Manager who assists him in completion of account opening formalities. In case member of a sales Team mobilizes fresh deposit, assistance from the Sales Staff may be completed initial formalities of account opening.

In order to increase the volume of deposits and motivate staff members as well, incentive awards for Sales & Operations Staff are announced (SDIA & BPIA). These facilities Pay-for-performance culture result in achieving a customer focused organizational structure. As soon as an account is opened, the responsibility to retain this account rests with Operational Staff.

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 15 Functions at the Deposits Desk: •

Maintenance of Account Opened & Close Register

•

Supervision regarding completion of formalities on AOF/ SSC to be sent to Hub

•

Posting of Cheques & Vouchers

•

Checking of Daily Activity Sheet received from Hub

•

Reporting of Stop Payment Instructions, standing instructions to Hub

•

Convey information regarding death/ insolvency/ insanity of the customer (if any) to Hub All work related to cheques book issuance / delivery

•

Preparation of consolidated summary of all transactions to be reported to Hub

•

Provide confidential reports to other banks, Govt. Agencies & Foreign Commercial attaches (if require)

•

Maintenance & Handling of Time Deposits

•

Collection of utility bills

Financial Highlights of UBL as on December 31, 1998, 1999 & 2000 (PKR & USD in Millions) 1998 Shareholders Equity Total Assets Deposits Loans and Advances Investments Operating Profit / (Loss)

1998

(PKR) (USD) 7,715 133 139,992 2,416 117,718 2,031 48,468 836 47,955 827 78

1

1999

1999

2000

(PKR) 8,050 154,450 127,133 61,714 44,954

(USD) 139 2,665 2,194 1,065 776

(PKR) (USD) 8,803 152 155,211 2,678 128,679 2,220 74.156 1,280 33,102 571

760

13

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

2,013

2000

35

Credit Management 16 Deposit department: As per the definition of “Banking” under see 5(b) of BCO 1992 one of the main functions of a bank is to accept deposit. Deposits are the backbone of any bank; other functions of the bank primarily depend upon the type and size of deposits. Types of Account: a.

Individual Account In this account a single customer operates the account. The banker will run

the account according to the rules, but if the customer gives special instructions the Bank will have to follow it. b.

Joint account: In this type of account two or more than two persons will open the account.

The account will be operated by one account holder in case of (either of the survival). If the instructions are not given, all the account holders will have to sign the check. A) Current Account: These are non-profitable demand accounts. The account can be opened with minimum amount of rupees 1000/-. These accounts are usually maintained for business purpose. Due to enormous competition UBL has introduced daily profit current account for corporate clients called (UNISEVER) minimum balance required is Rs. 100,000/-. If minimum balance requirement is not met, bank is authorized to recover predetermined charges. B) PLS Saving Account These accounts were intended with the aim of encouraging thrift among people. These accounts can be opened either in Pakistani rupees or in few major currencies of the world. Bank offers (4%- 6%) return on these accounts. The basic feature is the profit and loss sharing as according to non-interest based banking system. These accounts can be opened in the name of; individuals, joint names, trust accounts, charitable organizations.

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 17 Term Deposits: Term deposits are also called fixed deposits. These can be with drawn after a specified period of time. Interest is paid to the depositor on all fixed or term deposits. The rate of return varies with the duration for which the amount is kept with bank There are two types of term deposits. STDR’S – Special Term Deposit Receipt (local currency): Special Term Deposit Receipts are issued for different periods of maturity ranging from one month to 5 years, having attractive returns. There is no limit on denominations. NTDR’s – Notice Term Deposit Receipt (local currency): These are term deposit with special features that these can be withdrawn any time but after giving a predetermined and pre agreed early notice.

SHORT TERM LIABILITIES

4% 2% 0%

B/Payables Borrowings ST Deposits - Current Lease and Others

94% ADVANCES TO DEPOSIT RATIO: This ratio shows the companies advances employed per unit of deposit. This ratio of UBL over the recent three years shows a decreasing trend. In 2001 it was 56% while in 2002 it was 46% and in 2003 it is 45%.

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 18

Advances to Deposit 100.00%

56.46%

46.74%

45%

1

2

3

56.46%

46.74%

45%

50.00% 0.00% Advances to Deposit

Advances to Deposit

INVEST TO DEPOSIT: This ratio shows the company’s investment employed per unit of deposit. This ratio increased in 2002 as compared to 2001 but in 2003 it again decreased. It is because of industrial development factors in the country by which lending have been increased and investment is slightly decreased. Investment to Deposit 41.63%

50.00%

28%

20.22% 0.00% Investment to Deposit

Investment to Deposit

1

2

3

20.22%

41.63%

28%

ADVANCES TO DEPOSIT RATIO: This ratio shows the companies advances employed per unit of deposit. This ratio of UBL over the recent three years shows a decreasing trend. In 2001 it was 56% while in 2002 it was 46% and in 2003 it is 45%.

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 19

Advances to Deposit 100.00%

56.46%

46.74%

45%

1

2

3

56.46%

46.74%

45%

50.00% 0.00% Advances to Deposit

Advances to Deposit

INVEST TO DEPOSIT: This ratio shows the company’s investment employed per unit of deposit. This ratio increased in 2002 as compared to 2001 but in 2003 it again decreased. It is because of industrial development factors in the country by which lending have been increased and investment is slightly decreased. Investment to Deposit 41.63%

50.00%

28%

20.22% 0.00% Investment to Deposit

• i.

Investment to Deposit

1

2

3

20.22%

41.63%

28%

Deposit Department: Newly designed AOF has an inbuilt deficiency of restricted space and cannot accommodate more than two names.

ii.

Identification of customer’s signature is very important particularly when cash is to be withdrawn by him. Manual practices pose problems in those branches where automation has not been done yet.

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 20 iii.

In cases where the presence of customer himself is must, is sometime compromised due to influences of\r fear of loss of customer.

SWOT ANALYSIS: SWOT is useful tool for providing a framework for analysis of an organization. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. It is a common approach to make assessments in terms of internal and external environment of the organization, and to formulate strategies analyzing its internal strengths and weaknesses, external opportunities and threats, coming up is the SWOT analysis for the UBL. STRENGTHS: •

It is one of the largest private banks with a deposit base of Rs. 94883/millions showing constant growth over the period from 1999 till the day.

•

It has a well-knitted and adequately equipped branch networking system that efficiently covers both the domestic and international markets.

•

It is involved in both corporate and retail banking.

•

The bank is actively emerging and is engaged in international trade and foreign exchange transactions. Foreign trade volume showed an increase of 17% over the previous year.

•

Advances investment of the bank shows a constant growth pattern. The current year’s growth rate is 32%.

•

The overall efficiency of the bank operations and management ability can be noticed by looking at to its income pattern and provisions/write off practices. o Net revenue from funds increased by 18% for the current period. o Provisions decreased by 14%. o Total income increased by 16%.

•

UBL is actively participating in international markets and has recently introduced credit cards in UAE, Behrain, and Qatar, being backed up by 24 hours call center out of UAE.

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 21 •

The bank is owned by parties of financial repute and credit worthiness like, SBP with 48.69% interest, Best Way group and Abu Dubai group with 25.50% of interest each. Others are GOP, NBP Trustee Department, State Life Insurance Corporation etc.

•

The bank is run by highly professional recruited from and trained by foreign banks like Citi Bank.

WEAKNESSES: •

Due to risks such as political, economic and legal etc the bank has suffered losses the main reason was that of piling up of large amount of unrecoverable loans and debts which has adversely affected the image of the UBL.

•

Accumulated losses pushed the bank to cut down its promotional activities in order to reduce expenses for last few years.

•

During the nationalization life span of the bank political lords used influence in bank business and selection of employee at each level and thus adversely affected the bank’s efficiency and effectiveness.

•

Administrative expenses are 51% of the mark up revenue.

•

Promotions are carried out on annual basis ignoring the importance of capabilities and performance outputs.

•

The bank has large number of employees who are simple graduates with no banking knowledge.

•

Ineffective system of recruiting and selection.

•

Lengthy credit processing and documentation procedures.

•

Unsatisfactory working conditions.

OPPERTUNITIES: •

Growing policies of the GOP on business and economic sectors provide UBL an opportunity to efficiently meet with the business people

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 22 requirements of instant cash facilities e.g. the government intentions of developing housing and agriculture sectors. •

The efficiency of stock market and sound exchange reserve level is providing a good opportunity for effective investment decisions.

•

Foreign remittances are another area as present world wide control systems over transfer of currencies through illegal channels has facilitated the area for the banks.

•

Reconstruction of Afghanistan is a golden opportunity where the bank can effectively participate.

•

Expansion of IT platform and internet based banking system.

•

Interest of businesses in leasing facilities provides a healthy opportunity for banks.

•

There is a large pool of unemployed MBAs who can be hired to achieve professionalism on its organizational culture.

•

Outsourcing of promotional companies or use of available excellent promotional facilities.

•

Entering new market segments.

•

Increase the product range to meet the broader range of customers’ needs.

THREATS: •

Increase in competition due to increasing number of foreign and domestic private banks offering highly specialized and attractive services.

•

Growing global technological advancements and adaptation of modern style of management in banking sectors.

•

Extensive promotion campaigns run by competitors.

•

Unemployment, lower level of income and prices like problems in the motherland coupled with low rate of industrialization, geo political adverse

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 23 conditions, religious factor, lack of consistency in policies due to political instability are some of the other major threats. This SWOT analysis is a mirror image of the bank’s present conditions. Some efforts are made and others are still required to be made in order to improve the situation. The management can develop elaborate strategic plans for capitalizing the available opportunities. The bank should maintain principal of professional management and adhere to sound and sophisticated banking rules and regulations so that confidence and trust of the public in the institutions could be re earned RECOMMENDATIONS Recommendations are considered to be the most important part of an internship report, without which no report is considered complete and meaningful. This part of the report is based on the previous sections i.e. review and analysis. Moreover, for bringing suggestions, discussions have been conducted with the staff of UBL officers, who not only provided the basis for recommendations but also pointed out some areas, where the change for the development is utmost important. Realizing the importance of this section, efforts have been made to give feasible recommendations, which are categorized under the following headings. Training for Credit Management: Special trainings on credit management should be imparted to the finance dealing staff. Financing is main fountain bank’s income. Sound finance are extremely necessary for opening of springs of the smooth inflow of the income. CREDITS AND ADVANCES DEPARTMENT: The defaulted loans have showered the process of development of banking sectors in Pakistan and have reduced the lending capacities of banks. In result of which economic growth has reduced and rate of industrialization has become lowered. Defaulted loans being the major cause for this depression, various suggestions and recommendations have been given with focus on UBL to overcome the drawbacks of this department. Training for RM’s:

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 24 Exclusive mandatory training concerning all possible aspects like, financial management and organizational management etc is required to be developed and designed to achieve i.

Risk assessment ability

ii.

Understanding of all legal matters

iii.

Early detection ability Skill of any loans becoming bad

iv.

Ability to develop and suggest sound strategies when needed.

Fake financial presentation: The bank should confirm that the provided figures by the borrowing organization are fairly audited and that the auditors are on the approved list of the bank and they have clear opinion about the affairs of company and nothing has been made secret. The bank should have expert to examine various changes and developments for years in areas of the borrowing corporation like; i.

Financial condition

ii.

Cash generation

iii.

Ability to pay back

iv.

Operational performance

The focus should be on identifying and explaining significant changes and developments in payback of loans, profit maximization, capital flow and operating expenses etc. the bank should take critical view of the financial and should assess changes occurred during the favorable and slack reason for the company. Poor Management: A large number of industrial units and projects become sick because of poor management. When a business becomes sick or fails it is unable to return the loans, it has taken, and as a result such loans become bad debts, to avoid this, it is the responsibility of UBL, to ensure that the company to which loan is sanctioned enjoys good management skills and reputation. This can only be confirmed, if the bank assesses the management of the borrower party by taking care of i.

Length and type of experience

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 25 ii.

Qualification and integrity

iii.

Reputation of managerial skills and style of management being used

iv.

SWOT analysis

v.

Financial procedures and documentation followed by employees

vi.

Span of authority and responsibility

vii.

Decision making skills of employees

viii.

Risk management of employees

Securities: i.

Physical verification of the property offered as a security is must rather to rely on the documents. Investigation should also be conducted if the property is of ancestral nature or joint property.

ii.

The competent consultants should do valuation of the property and mere completion of formatives should not be taken into account.

iii.

Maintain in safe custody all collateral i.e. shares, govt. securities, property title deeds, mortgage documents etc.

iv.

Bank must ensure receipt of periodical statements of stock and receivables from customers, as per frequency specified in the credit approval.

v.

Bank should also do the periodic physical checking and evaluation of pledged inventories as per terms of the approvals, i.e. using applicable margins, such that the drawing power adequately covers out standings amount at all times.

vi.

Bank officials must ensure that the goods hypothecated or pledged are covered through a valid insurance policy with appropriate risk coverage, adequately covering the bank’s amount.

vii.

Concerned bank staff should ensure compliance with the institutional credit policies and procedures as laid down in the policy book or credit manual and advised from time to time by the credit committee or top management.

viii. ix.

Ensure compliance with local regulatory requirements. Confirm timely submission of correct information in the prescribed format as may be required by the central bank.

REFERANCE:

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad

Credit Management 26 •

Meenai, S A, (1999) Money & Banking in Pakistan, Karachi: the Elahi’s Book Corporation.

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UBL (2000). Deposit Manual. Karachi.

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UBL. (2002 – 2003). Annual Report. Karachi.

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Van Horne, J. C & J.M Wachowicz, (1998), 10th Edition. Fundamentals of Financial Management. New York, Prentice Hall International Corporation.

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http/. www.ubl.com.pk

Presented to: Miss. Saba Allama Iqbal Open University, Islamabad