In the name of ALLAH the Most Beneficent & the Most Merciful.
Internship Report on Zarai Taraqiati Bank Ltd.2013
I have great sense of gratitude for the most Beneficent and Merciful Allah who has always helped me in all matters of life. I tried but He rewarded me more than the tried. I have deep feelings for whole of my family, in general, and for my Father, my Mother and my elder brother, in particular .They have always soothed me, elevated me and their words and du’a has floated me in the deep seas of troubles. All of my successes are due to the prayers of my family. I am thankful to all of my teachers and my class fellows and friends whom cheerfulness and guidance is an asset for me .I am especially thankful to the bank staff who has given me opportunity to get precious practical knowledge and also for their guidance during my internship. Without the help of all these I was not able to complete this report.
This Internship report is the compulsion put in by PMAS-AAUR (UIMS) for the award of master degree in business administration. In order to accomplish the task of completion of the degree, I choose the renowned and reputed organization that is the Zarai Taraqiati Bank Ltd. I went through 6 weeks internship training in the bank in order to perceive the true art and the practical picture of banks’ working and to go through the process by which the organization is making very good out of its limited resources. The report is based on the introduction of the bank, products offered, financial analysis and assignments I handled during my internship. The report is divided into two main parts; the first part includes the introduction of bank, its products and financial analysis while the second part is based on the assignments I handled during my internship. I am positive that the college will oblige me by giving its recommendation and consent for the approval of the degree and the purpose for which I have gone through training and report writing procedure will be served positively.
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Table of Contents
Part One: Chapter: 1 Introduction of Zarai Tarqiati BankLtd ________________7
Corporate Objectives_______________________________________ _________10
Transformation of ZTBL to R.F.I of the country and road to excellence.
Branch Network____________________________________________________ 11
Kissan Support Services Ltd
Services/Activities so far undertaken by KSS
Products and Services
ZTBL Locker Facility
Products offered to Meet Finance Need of Farmers
Types of Loans Advanced
Supervised agriculture scheme
Zarkhaiz (one window operation)
Sada Bahar Scheme
Tea financing scheme
Crop maximization project
PER ACRE CREDIT LIMITS
Growing Agro Forest Trees
Mature Orchard/Fruits crops
Types of Security
Moveable Property and Guarantees
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Debt Equity Ratio
A) Recovery Schedule
b) Issuance of Notices
c) Legal Action
d) Rescheduling of Loan Repayment Facility
e) Down Payment for Rescheduling of Loans
Assignments I handled during my Internship——————————————————-29
Organogram of Mian Channu Branch
Redemption of loanOpening of current account
1: Acquiring Original CNIC
2: Filling Current Account Form
3: Filling of Know Your Customer Form
4: Current Account Specimen Card
5: Registering name in the Current Account Register (Issuance of A/CNo
6: Filling of Deposit Slip of starting amount
7: Signing by AMO and Manager
8: Issuance of Cheque book
9: Opening account in the ledger of bank
ZTBL Flood Relief Fund 2010
Writing of Vouchers
1. Debit Voucher
2. Credit Voucher
3. Transfer Voucher
Sample of Debit/Credit Voucher
Sample of Transfer Voucher
Daily Transaction Scroll
Making Entries in the Ledgers
Disbursement and Recovery Entries
Revolving SBS Loan
Opening and Closing Cash
Dispatch and Diary
The Zarai Taraqiati (ZTBL) Bank Limited (formerly known as Agricultural Development Bank of Pakistan) is the largest public sector financial development institution with a wide network of 27 Zonal Offices, 9 Audit Zones and 352 branches in Pakistan. The bank serves around half a million clients annually and has over one million accumulated account holders. Zarai Taraqiati Bank Limited (ZTBL) (formerly known as Agricultural Development Bank of Pakistan) is the largest public sector financial development institution with a wide network of 27 Zonal Offices,9 Audit Zones and 352 branches in Pakistan. The bank serves around half a million clients annually and has over one million accumulated account holders.
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Pakistan is an agricultural country and more than 60% of its population is working related to agriculture. A development in the agricultural sector will no doubt result in the development of the whole country. To keep With a view to meet this basic need the Agricultural Development Finance Corporation was set-up in 1951, and was entrusted with the task of providing financial facilities for the development and modernization of agriculture, including: Forestry, Fishery, Animal Husbandry, Poultry, Dairy Farming. Later on the Agricultural Development Bank of Pakistan was also established in September 1957, under the Agricultural Development Bank Act. The Bank is to provide credit in cash or in kind, warehousing and storage facilities to agriculturists, cooperative societies and other bodies, of which the majority of members are agriculturists. As the functions of the Agricultural Development Finance Corporation and Agricultural Development Bank were similar and since both were working with capital provided by the Government, they were merged into one organization known as Agricultural Development Bank of Pakistan on February 18. 1961. The Agricultural Development Bank of Pakistan was a banking company for the purpose of the Banking Companies Ordinance and the State Bank of Pakistan Act. On 14 December 2002 the Federal Government has converted the Agricultural Development Bank of Pakistan (ADBP) into Zarai Taraqiati Bank Ltd (ZTBL) and the new venture has started its operation with immediate effect. The new corporate structure redefines the banks statue as a public limited company with an independent Board of Directors promulgated under the presidential ordinance which aims 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 returns to the stake holder. After this incorporation all the assets and liabilities of ADBP became the assets and liabilities of ZTBL. This restructure was carried out with the aim to improve the working and role of bank in the agricultural development. The bank is completely owned by the government and it has head office in Islamabad.
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Ownership | Government |
Type of Institution | Specialized Bank |
Established | 1961 |
President & CEO | MS. ROOHI RAEES KHAN |
Equity | 18.7 Billion (2009) |
Headquarters | Islamabad, Pakistan |
Total Deposits | PKR 8.8 billion (as Dec.31st, 2009) |
Total Disbursement | PKR 77.7 billion (as Dec.31st, 2009) |
Homepage | www.ztbl.com.pk |
ZTBL is providing affordable, rural and agriculture financial services to the rural Pakistan, comprising 68 % of the total population. The Bank through a country-wide network of 352 branches is serving around half a million clients annually and over one million accumulated accountholders with the average loan size of around Rs.89, 000.
In August 2010, ZTBL continued to achieve AAA credit rating by JCR-VIS
Year | Entity | Stand Alone | Outlook |
2010 | AAA/A-1+ | B+/ B | Stable |
2009 | AAA/A-1+ | B+/ B | Stable |
The credit rating of the bank is due to the reason that bank enjoy sovereign guarantee of the federal government that covers its debt obligations to State Bank of Pakistan (SBP) and ensures safety of deposits under the Banks’ (Nationalization) Act 1974. The bank’s lending book is largely funded through SBP’s credit lines while contribution from deposits remains nominal. ZTBL is actively exploring different options for resource mobilization including bilateral/multilateral arrangements with financial institutions. In case these efforts materialize; it would diversify the existing funding source of the bank, thereby reducing reliance on the SBP.
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Dedicated to serve the needs of the farming community, by delivering financial products and technical services on a competitive and sustainable basis, in a convenient, efficient and professional manner, leading to success of the Bank and the farmers.
To play effective role in the promotion of economic growth, by enhancing the availability of credit to the agriculture sector, through reliable access to sustainable financing, special lending programs, technical assistance, and other products & services, and to promote career development opportunities for increasing professionalism and technical proficiencies of employees.
1. Develop and operate as a financially and operationally sustainable R.F.I of the country.
2. Assist rural community, particularly the small farmers, in raising their productivity and income levels through timely delivery of credit, advisory and ancillary services.
3. Build ZTBL’s image as a proactive, client friendly, financially & operationally sustainable with indigenous product deployment.
4. Establish and provide backward and forward linkages to strengthen agri. value added commodity chains.
5. Engage in public – private and wholesale – retail partnership to deepen outreach and reduce operating cost.6.To function as a rural commercial bank to mobilize rural capital formation and to commercialize the agriculture sector by delivering the true value of credit to the client.7.Provide a wide range of risk insurance products to its clients.
8. Open up its venues of operation to Domestic & International Banking Industry to avail comparative advantages.
The ZTBL restructuring plan covering the following;
•Governance: Establish an environment that facilitates good governance and accountability;
•Systems: Modernize operations through use of technology, networking, and communication tools;
•Business processes: Streamline products and delivery systems so as to reduce transaction costs, simplify operations, and increase outreach;
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•Products and services: Introduce products and services that are financially economically viable.
•Human resource development: Improve standards and skills of management and staff and strengthen training capacity; and
•Information Technology: Establish new hardware and software platform to support MIS, accounting system including forensic accounting, and risk management functions.
Head Office Islamabad, Paksitan
Tails of Regional Offices
Punjab | Sindh | Balochistan | Khaber Pakhtunkhaw | Gilgit Baltistan |
Islamabad 13 Branches | Karachi 15 Branches | D.I Khan 14 branches | Abbottabad 7 Branches | Gilgit 7 Branches |
Multan 8 Branches | Hyderabad 14 Branches | Turbat 6 Branches | Mingora 15 Branches | |
D.G.Khan 6 Branches | Mirpur Khas 14 Branches | Quetta 18 Branches | Peshawar 20 Branches | |
Sahiwal 15 Branches | Sukkur 15 Branches | D.M. Jamali 7 Branches | | |
Lahore 20 Branches | Larkana 18 Branches | | | |
Gujranwala 18 Branches | S.B. Nazirabad 14 Branches | | | |
Bahawalpur 13 Branches | | | Total Zones | 27 |
Sargodha 16 Branches | | | Total Audit Zones | 9 |
| | | Total Branches | 352 |
| | | |
Kissan Support Services Ltd.
Subsidiary of ZTBL
Kissan Support Services Ltd. Is a subsidiary of ZTBL which is established with a capital investment of 100 Million to help ZTBL in the achievement of its objective and also to make availability of trained human capital to the bank.
KSS Aim: To provide support staff to ZTBL & undertake its non core activities.
Kissan supportive service operates under its Memorandum & Articles of Association.
The main objectives of KSS are following:
• To provide to the Bank all kinds of support staff and ancillary services.
•To plan, organize and establish training facilities to impart training to the bank’s staff .
•Drip Irrigation System to assist the bank clients in marketing of their product and provide storage facilities.
• To assist the bank clients in marketing of their product and provide storage facilities.
• To provide welfare services to the employees of the Bank including education, vocational training, sports and recreation facilities.
• To invest any surplus money of the company not immediately required.
• To carry on any business, which may seems to the company capable of being conveniently carried on.
• To liaison & establish contracts with agricultural researchorganizations for development of efficient, effective andappropriate technologies
• To carry on business of providing consultancy, advisory and otheragency services and support services to Zarai Taraqiati BankLimited
• To provide to the Bank’s clients quality products and services forefficient and improved farming
Services/Activities so far undertaken by KSS
• Security Services to ZTBL
• Recruitment/provision of staff
• Janitorial Services provided to:
a. ZTBL Head office buildings
b. Ztbl Farms
c. Staff college
d. Printing stationery office
e. AV Unit
f. Old record office
g. Sports club
• Management of Sports Activities.
• Management of Sports Activities.
• Photocopy Services.
• Day to day minor repair and maintenance of ZTBL HQ Buildings.
PRODUCTS AND SERVICES
ZTBL Locker Facility:
Zarai Taraqiati Bank Ltd. apart from its core functional activity marked with country based agri-business, has started to serve its valued customers by offering lockers facility. Initially, this facility is being offered at following 11 branches:-
S. No Name of Branch
1) Islamabad Branch.
2) Main Branch Lahore.
3) Peshawar Branch.
4) Gujranwala Branch.
5) Faisalabad Branch.
6) Multan Branch.
7) Sahiwal Branch.
8) Sargodha Branch.
9) Khan Pur Branch.
1) Shafi Court Branch.
2) Main Branch Gulshan e Johar.
Following are the approved rates for rent of lockers and key deposits against which lockers will be allocated:
Type | Specification | Rent per Annum | Rent after grace period | Key Deposit |
Small | 6-1/2”x4-1/2”x23” | Rs.1,200/ | Rs.1,500/ | Rs. 5,000/- |
Medium | 13-1/2″x4-1/2″x23″ | Rs.1,800/ | Rs.2,200/ | Rs. 10,000/- |
Large | 13-1/2″x8-1/2″x23″ | Rs.2,500/ | Rs.3,125/ | Rs. 15,000/- |
Life Time Locker Facility:
On lump-sum payment of locker rent for ten years entitle the lessee to avail the locker facility for life time, without key deposit.
Products offered to Meet Finance Need of Farmers
Zarai Taraqiati Bank Limited (ZTBL) is a specialized bank providing agricultural credit in rural areas of the country. Pakistan is an agricultural country and near about 60% of its population is working directly or indirectly related to agriculture industry. But instead of being an agricultural country Pakistan is still not gaining benefits from this sector which it can gain. Some time we even does not able to fulfill our food requirement and sometime we have bumper crop but does not have facilities to store them properly, in this way we are wasting our resources. To gain benefit from agriculture sector it is required to be modernized to increase the per acre production and also to build warehouses to store. The main hindrance in the modernization of agriculture is the unavailability of finance. The other financial institutions feel reluctant in giving finance to farmers due to high level of risk in the production of this field. To facilitate farmers and to help in modernization of agriculture sector the government has established this bank which is contributing its part in achieving government objective from many decades. ZTBL is offering a blend of products to fulfill the need of different types of customers.
Types of Loans Advanced
1) Short Term Loans:
Short term loans are loans for shorter period of less than a year. It includes, crop production working capital loans recoverable in lump sum commencing after the harvest/marketing of respective crops and within maximum period of 12 months.
2) Medium Term Loans:
Medium term loans are for a period of more than a year but less than 5 years. In includes, dairy farming and livestock etc. The installments of these loans are usually paid able in quarterly or half yearly basis.
3) Long Term Loans:
Long term loans are for a period of more than 5 years. These are development loans which require large amount and also need some time to show its result in the shape of better production. It includes loans for tractor, agricultural machinery, poultry farming, god owns and orchard in yearly/half yearly installments within maximum period of 8 years.
ZTBL is offering the following loan schemes to the farmers.
Supervised agriculture scheme:
Under this scheme agriculture loans are given for short, medium and long term loans up to Rs. 1.00 million per borrower/per case. The loans are sanctioned for In Fats, livestock, orchard, tractor, agricultural machinery tube well and irrigation facilities etc. under the scheme besides provision of credit, information are provided to the farmers for planning the farm, production, guidance for implementation of the scheme, marketing and repayment of loans.
Zarkhaiz (one window operation)
For timely and conveniently provision of credit to purchase inputs, loans are provided to the borrowers under One Window Operation being conducted twice a week during Rabi and Kharif seasons. Applications processed on the same day whereas sanction payments are made within three days at Branch. For Rabi Crops one window operation from October to January and for Kharif Crops from April to September each year which is extendable as per requirement of particular area.
Sada Bahar Scheme
For providing timely input loans for crops and working capital for poultry and fishery etc, the Bank has launched a Sada Bahar Scheme. Assessment for inputs requirements for the whole year is made at the time of first application. The amount so assessed is treated as Revolving Limit provided it is within the security limit. The Managers are authorized to sanction such loan limits up to Rs.O.500 million. Scheme’s main features are as under:
* Revolving Credit Limit is fixed to cater production credit and ancillary requirements of the farmers during one year period.
* The documentation once completed remains applicable for three years with yearly cleanup/renewal without any further documents.
* The borrowers can draw the credit in lump sum or in installments according to his requirement.
* Like-wise he can repay in lump sum or in installments during the year when his cash position allows him.
* Pass Book containing transactions in his SBS Account is supplied to every borrower free of cost.
Tea financing scheme
In order to increase the tea cultivation in District Mansehra, Swat,Mutta, Shangla par and Dir in Malakand Division, tea financing scheme has been introduced which would not only save the hard earned foreign exchange but would also help improve the socio-economic condition of the inhabitants of the area. The salient futures of the scheme are given as under:
• Maximum Credit Ceiling of Rs.60, 000/- per acre has been fixed.
• Farmers owing land up to five acres are eligible to avail loans.
• Credit will be given in 3 installments: first year Rs.30, 000/-,2nd year Rs.15,000/- 3rd year Rs.15,000/- provided the disbursed loan is used properly.
• The credit would be repayable within 1 year with 6 years grace period with prescribed markup of 9% per annum. Rebate of 1 % will be allowed in mark-up on timely repayment and proper utilization of the loan.
Crop maximization project:
Ministry of Food, Agriculture and Livestock (MINF AL), Government of Pakistan has launched Crop Maximization Project in 109 villages in various districts throughout the country to increase the productivity/yield of crops. Under the project MINFAL has to provide funds of Rs, 299.893 million to ZTBL for disbursing loans to the project farmers for purchase of inputs. Till the time funds of Rs.468 Million have since been received by the Bank for the purpose. These funds are to be revolved for meeting input credit needs in the project villages, till30th June, 2014 after which Bank will return the principal amount to MINFAL. Accordingly Credit needs of the project farmers are being met by respective ZTBL branches through Village Organizations formed for the purpose. Duly the currency of the project Bank is authorized to charge 4% per annum mark-up on loans to project growers to meet its operational cost, however in case of default Bank’s normal rate of return i.e. 9% p will be applicable.
PER ACRE CREDIT LIMITS
Major Crops |
Wheat | 16,000 |
Paddy (Rice) | 19,000 |
Sugarcane | 30,000 |
Cotton | 21,000 |
Maize | 20,000 |
Minor Crops |
Over all Credit Limit Borrower | Rs. 1.000Million |
Sada Bahar Scheme under one window operation or otherwise | Rs. 0.500 Million |
Potato | 36000 | Bajra | 11000 |
Tobacco | 29000 | Jawar | 11000 |
Mustard Mung | 11000 | Gram | 12000 |
Tomato | 19000 | Guara | 3000 |
Mash | 3000 | Caster Oil | 6000 |
ASSIGNMENTS I HANDLED DURING MY INTERNSHIP
ORGANOGRAM OF RAWALPINDI BRANCH
Redemption of loan
On the payment of all the dues by the loan (principal + interest), he can free his land (or any other security provided) from any charge created by bank for the purpose of loan. For this purpose he will have to present the following documents:
1. Application for redemption
2. Stamp Paper of rupee 20
3. Last receipt of amount paid
4. Cheque book (if issued)When the loan provides these documents to assistant officer (Or any officer appointed for these sort of work), the assistant officer asks the peon to bring the Loan Case File of the borrower. After the file is received by the assistant officer, he checks the documents that whether all the documents are there in the file. Then he makes required entries in the Passbook. The example of entries is given below.
After these entries the officer then sends the file to Manager for signature. On approval from the Manager for the Redemption Application the assistant officer attaches all afore said documents within the file and record in the “
File Movement Register
” that file has been moved from the record room for the redemption purpose. Than the file is send to AMO (Assistant Manager Operation) for further process. The loan is given the date of next week to collect his “Passbook”. During this period AMO checks the record of the loan to confirm that the entire due amount with respect to that particular loan has been paid and then he signs to give approval to assistant officer to issue “Passbook” to the loan. The AMD (Assistant Manager) and Manger both also sign the notice issued in the name of Patwari and The sildar that the land can be transferred to the loan as the loan has been fully paid by him. Then file again comes to the assistant officer, he checks the signature both in the notice and Passbook and then stamped both. Now the Passbook is ready to issue. Before issuing Passbook the officer record that passbook is issued to the loan in the “Dispatched Register”. On the issuance of Passbook to the loan, the officer verifies that the person receiving the documents is the original owner of the land which is mortgaged with the bank. After getting the Passbook, the loan goes to Patwari and Tehsildar for the change of record back to his name. The one thing which is interesting here is obtaining Stamp Paper from the borrower. This is not a requirement but bank has made it practice so that if in the near future, it finds that some amount is still due by the borrower than it can write on the stamp paper whatever it wants and then can claim the due amount from the borrower. This is precautionary measure adopted by bank because once the Passbook issued to the borrower and the land again transferred to his name, the
bank will be in no position to recover any amount which is unexpectedly left due.
The redemption process in short can be described as the following:
• Submission of Application
• Acceptance of application by manager
• Record of file in the “File Movement Register”
• Entries made in the passbook
• File send to AMO for checking of loan status
• On approval from AMO, the Manger and Assistant manger signed the notice to issue Passbook
• The passbook dispatched to loan with notice to Tehsildar to transfer land back to his name
• After the land is transferred to the loan name, if he wishes he can withdraw the amount from his current account and can close his account. Usually the loan do not redeem their land because they want to avoid the cost and wastage of time when in the future they again have to gain loan from the bank. So, they usually remain the land in the name of the bank even after they have paid the whole loan amount. During my internship I have seen people who has paid loan more than 10 years ago but they came to bank after such long time to redeem their land and the reason behind their redeem was that they want to transfer it to someone others name otherwise they may not come for redeem. I have also seen one of the clients who has paid loan in 1985 but his land is still in the name of the bank and they have not redeemed it. After the death of the client his sons came to know that the land could not be transfer to their name because it is still mortgaged against the loan which their father had paid in 1985. So, at that time they reach bank for redemption because the bank always maintained record so their file found from the record room after little efforts. All this shows the confidence the people has on the bank and also shows that in practical life anything can happen.
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:
1. Acquiring original CNIC
2. Filling the Current Account Form
3. Filling of Know Your Customer
4. Filling of Current Account Card
5. Registering name in the “
Current Account Register
”, (Issuanceof A/C No.)
6. Filling of deposit slip of starting amount
7. Signing by AMO and Manager
8. Issuance of Cheque book
9. 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:
• Type of account
• Branch Name
• Branch Code
• Father Name
• CNIC Number
• 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 holder’s 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:
• Account number
• CNIC number
• 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)
4: Current Account Specimen Card:
Name: | Account No. |
Address: | Type of Account |
Name of Account Holder: | Name of Account Holder: |
This side is used to write the name of account holder both in Urdu and English. | This side is used to obtain the signatures of 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.)
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 Number: It is account number issued to holder. It is a serial number, so I used to write the next number when I have to open an account. Example: 1567 | Date of opening of Account: | Opening balance of Account: | Name: Father Name: Address |
6: Filling of Deposit Slip of starting amount:
To open an account in the ledgers of bank the account holder requires to deposit an initial amount. This amount in ZTBL is usually 1000; however it depends on the amount of loan sanctioned like some loans required to deposit a larger amount with the bank before issuance of loan from the bank. The example of such loan is of Tractor because I have not be given chance to stay with an MCO, so I don’t know what exact amount is required to deposit with the bank for any particular loan. The Deposit Slip which I used to fill during my internship consist the following information:
Zarai Taraqiati Bank Ltd. Depositor’s Copy | Zarai Taraqiati Bank Ltd. Bank Copy |
Branch Name: Branch Code: Date: | Branch Name: Date: Branch Code: |
Name : Account Number | Name: Account Number: |
Particulars | Amount | Particulars | Amount |
| | | |
| | | |
Total Amount | | Total Amount | |
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 30 the account holder has been issued a cheque book. In the bank where I 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.
9: Opening account in the ledger of bank
Unlike other banks, ZTBL is still working on manually written ledger books. However, the bank is also gradually computerizing its records. 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 Rawalpindi branch where I have completed my internship has 52 ledgers at that time with the current account holder of 11595 at the date of 15September 2010. 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 Tariqiati Bank Ltd. Branch Name: Rawalpindi Branch Code: Name: Signature: Father: Address: Account No: |
Cheque book: |
Date | Particulars | Debit | Credit | Balance | Signing Authority |
04-05-2011 | By cash | | 1000 | 1000 | |
04-05-2011 | Loan Paid | | 50,000 | 51,000 | |
06-05-2011 | To cheque. (no.) | 50,000 | | 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 but without a signature no one can check the validity of a cheque. So, I have observed that the signature and thumb impression is used to take in the right side of ledger book where a lot of space is available. The other option which I have mentioned here but not included in the ledger book is the cheque book number. It is also practice to write down serial of cheque book in the space available. It makes it possible to confirm that the cheque book which the customer is using to transact with the bank is associated with that particular bank account or not. Here I have also made few entries which show how a transaction is recorded in the ledger book. Absolutely, the date is the first option than the particulars which shows what exactly happen on that day. Like in the first entry the bank account has been opened with an amount of 1000. So, I have written “by cash” in the particulars which represents that the person has transacted in cash. Then I credited the amount which shows that this money is given by the customer and in the balance column it has increased the balance with the same amount of 1000. The next column is used by the signing authority (AMO in my case) to confirm the transaction.
ZTBL Flood Relief Fund 2010:
Heavy monsoon rains started to hit Pakistan from 22 July 2010, causing flash floods in several parts of Khyber Pakhtunkhwa, Baluchistan,Punjab and Pakistan Administered Kashmir. This flood have caused huge destruction, hundreds of villages have been swept away. Death toll has risen to more than 1500 people, at least 1.2 million homes have been damaged and an estimated 17.2 million people have been affected by the floods. Floods have caused widespread damage to public infrastructure, with roads submerged and tens of bridges swept away, many hospitals and an estimated 7,173 schools are being severely damaged. Power and communication lines are down in many areas. The economic cost is also huge. Thousands acres of agricultural land has been flooded, at least 3.2 million hectares of standing crops have been damaged and at least 200,000 livestock animals have been lost. This is a snap shot of the situation after the flood and the damage finales timates are yet to make. To help the victims of this flood ZTBL made Flood Relief Fund 2010 and the head office asked all the branches to collect the fund for this flood relief fund. According to circular issued by Head Office every branch make it sure to convince the borrower, depositors and general public to contribute in this fund for this purpose the following procedure is required to follow:
• From any loan of below 200,000 or any payment from the account of customer below this limit should be deducted with amount of at least 100 rupee to contribute in the flood relief fund. However, it is required to make sure that avoid double deduction from any particular person’s payment. But if anyone wants to contribute more than 100 or more than one time he can give at any time.
• From any payment of more than 200,000 but less than 500,000the rupee of 500 should be deducted to charge to flood relief fund keeping in view the double deduction.
• From any payment of more than 500,000 the amount of 1000 should be deducted.
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.
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 loan 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 loan 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 room and they keep piling up there.
Every voucher has at least two copies, one for the customer and onefor 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)
In particulars the reason of the transaction is written down. For example, Amount of Recovery etc.
2: Loan Case no./ Account no./ Advice no.
If the voucher is of recovery than in this column the loan case number of the loan who has come to pay loan will be written. This column has 6 blocks to write, due to shortage of space these block can’t 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 don’t 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 loan 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:
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, on13 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 loan 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 loan. 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 loan has paid the MCO on13 September, while the amount is deposited by the MCO on 14September. So, no interest is required to be charged for the day of 14September 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 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.
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 Benzir 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 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 customer’s account I 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 I am transferring amount to customer’s 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 when 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.
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 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. Encl (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 tationary he has bought from the shop with the voucher and I will write (1) in then close so whenever anyone will see the voucher he will know that there is a receipt attached with the voucher.
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 credited to complete the whole entry. The sample of Transfer Voucher has been given in the next page.
Daily Transaction Scroll
Daily transaction scroll is written by operations officer every day in a bank. It is the record of all the cash inflows, outflows and transferred on a particular day.
The above are the sketch of columns used in the upper side of scroll page. Sheet number is used when there are more vouchers to write and they cannot be written on a single sheet so the next sheet is required to use in such situation the number of sheet should be written so that they can be arranged in a proper way.
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. I have found many columns unused in the ledgers of Sada Bahar Loan Scheme or they have been used to write other information which is different from the heading of columns.
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 BaharScheme) which is a revolving finance scheme. Every loan 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 loan 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 loan and Loan Case Number is used as an account number from which he can operate. The information which is required to write in the ledger sheet when anew loan has been passed and ready to disburse are following:
• Loan Case Number
• Maximum limit
• Date of maturity
• Cheque book number after entering the above information the loan can be disbursed to the loan 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 with draw 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 loan 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.
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.
Revolving SBS Loan:
Now suppose a situation where loan wants to pay his entire outstanding loan and then wants to withdraw it again. This usually happens when the MCO want to achieve his recovery target or the time period of one year is completed from the date on which the loan has withdrawn the amount. It is compulsion for every loan to return his entire loan at least once in a year, if he will not pay his loan within one year, he will be treated as defaulter and he can withdraw only 90% of sanctioned amount from his running SBS finance. But in SBS the default situation is rarely occurs because when the limit of one year is near to end, the loan can revolve his loan by paying only interest of the loan. This can be explained by continuing the last example, on 01-05-10 the loan has paid 20,000 and his remaining outstanding balance is now 31.480. Now suppose he comes again on01-06-10 and wants to revolve his loan, on that day the following entries will be made in his loan account.
Opening and Closing Cash:
In the beginning of every day the cashier opens the cash in time. The cash remains locked in the safe and it requires two keys two open. One key is always remains with the cashier and the other key remains with the manager; however manager can further gives it to someone else. In the branch where I have completed my internship, the AMO has the second key.
It is a register which have information about the keys of the safe. Whenever a person gives the key to someone else, he writes in the key register the name of person who has received the key and that other person signs it. Usually the keys remain with the cashier and another officer of the bank but when one of them is on leave it is required to give responsibility of keys to someone else because during their absence the cash of bank can’t remain closed.
Whenever the cash is placed inside or remove from the safe it is recorded in the safe register. In the morning when cashier brings out cash from the safe he writes the date, amount and denomination in which cash he has obtained. And same information is required to enter when the cash is again placed in the safe in the evening. The person who gets cash from the safe or puts it also signs it.
Dispatch and Diary:
Dispatching and receiving letter is the routine work in any bank. The letter which the bank sends to others is dispatched while the letter which the bank received is called diary. The bank maintains the proper record of every document which is dispatched or received.
Implementation of Information Technology:
The following are the problems which I have felt during my internship which is required to be noticed to increase the pace of growth of the bank. Although the bank is computerizing its operations but it is far behind other commercial banks, it needs to speed up implementation of Information Technology so that to perform its operations efficiently and effectively. Information technology will help bank in finding and stopping malpractices and other irregularities and this will result in much better performance. Providing computers and software is not the only solution, the bank needs to train its employees so they can use this new technology for the betterment of the organization. The bank has many experienced employees but they have no or very little know how of IT and many of them is not interested in learning it. So, training the new and young employees is a better option because they have will to learn and also they are people who will have to work for a long time with the bank. Investing in young employee is better than training those who are near to their retirement.
Motivation of Human Capital:
Human capital no doubt is a precious asset for any organization, without skilled and motivated employees no organization can survive in this competitive environment. ZTBL has mix of experience and young staffs which provide excellence blend of required skills and enthusiasm for progress.
Almost all the banks in Pakistan has refurnished their branches to provide better services to its customers, the branches bank of today is completely different from the branches of 10 years ago. That all is started when City Bank come in Pakistan with a new idea of modernized decorated branches. After it all the banks has adopted this concept and they build and refurnished their entire network of branches. But ZTBL is still working on the old style; the branches have not the furniture, fans, rooms etc. according to their requirements. The concept of air conditioning which has become an essential part in all other banks is a thing about which the bank has not even think, there are even less fans than required. It is true that bank does not have a need to make their branches like all other banks but it is required to provide at least the basic necessities to make the working of the employee comfortable and also to facilitate its customers.
ZTBL is a specialized institute which provides financing facilities to the people of rural areas and in this way it is contributing its part for the development of the country. Due to a government owned organization the politicians and other higher authorities sometime use it to give benefits to their families and friends and this also effects the growth of the bank. However the bank has improved itself a lot, the profit of the year of 2008-9 and decline in Non Performing Loans are clear signs of improvements. The few things on which the bank has to focus Is implementation of information technology with faster pace, improving branch infrastructure and working of its human capital to make them motivated.