INTERNSHIP REPORT ON

ZARAI TRAQIATI BANK LIMITED

MAIN BRANCH MANSEHRA (30901)

Submitted by:
Asad Ali Khan
Roll# F-13/B03

Supervised by
Ikram-Ul-Haq

Government College of Management Sciences

Mansehra
SESSION

2013-2017
 INTERNSHIP REPORT ON
ZARAI TRAQIATI BANK LIMITED
MAIN BRANCH MANSEHRA (30901)

Submitted by:
Asad Ali Khan
Roll# F-13/B03
Supervised by
Ikram-Ul-Haq
This internship report is submitted in partial fulfillment of the
requirements for the degree of Bachelor of Business Administration
awarded by the Hazara University, Mansehra

Government College of Management Sciences Mansehra

SESSION
2013-2017
 Government College of Management Sciences
Mansehra

APPROVAL SHEET

Approval Committee

1. External Examiner

Mr.______________________ Signature______________________

2. Supervisor

Ikram-Ul-Haq Signature______________________

3. Head of department

___________________________ Signature_____________________

Designation Principal
 Dedicated

To my Loving Parents & my friends for helping me throughout my BBA

Hons
 Table of Contents
APPROVAL SHEET.................................................................................................................................3
Chapter 1.....................................................................................................................................................1
Introduction to Zarai Taraqiati bank............................................................................................................1
1.1 Background of Study..........................................................................................................................1
1.2 Objectives of study............................................................................................................................1
1.3 Scope of Study...................................................................................................................................2
1.4 Limitations of the work......................................................................................................................2
1.5 Benefits of the Study.........................................................................................................................2
1.6 Research methodology......................................................................................................................3
1.6.1 The major sources for Primary data includes..............................................................................3
1.6.2 The major sources for Secondary data includes.........................................................................3
Chapter 2.....................................................................................................................................................4
Organizational Structure of ZTBL.................................................................................................................4
2.1 Branch management structure..........................................................................................................4
2.1.1 Branch Manager.........................................................................................................................4
2.1.2 Credit manager...........................................................................................................................4
2.1.3 Operation Manager and Others..................................................................................................4
2.1.4 MOBILE CREDIT OFFICERS...........................................................................................................4
2.2 Departments /Divisions of ZTBL.........................................................................................................5
2.2.1 FINANCIAL CONTROL DIVISION:..................................................................................................5
2.2.2CREDIT DIVISION..........................................................................................................................8
Chapter 3...................................................................................................................................................23
FUNCTUINAL ANALYSIS..............................................................................................................................23
3.1 Formal organization.........................................................................................................................23
3.2 ADMINISTRATIVE ANALYSIS.............................................................................................................24
Chapter 4...................................................................................................................................................28
FINANCIAL ANALYSIS.................................................................................................................................28
 4.1 Balance Sheet..................................................................................................................................28
4.2 Vertical Analysis of Balance Sheet...................................................................................................30
4.3 Horizontal Analysis..........................................................................................................................33
4.4 Interpretation..................................................................................................................................34
4.4 Ratio Analysis.................................................................................................................................39
4.4.1 Liquidity.......................................................................................................................................40
Formula.................................................................................................................................................40
Net Working Capital..................................................................................................................................41
Formula.................................................................................................................................................42
Debt to Equity Ratio..................................................................................................................................43
Formula.................................................................................................................................................43
4.4.2 Solvency Ratios............................................................................................................................43
Debt Ratio.................................................................................................................................................44
Formula.................................................................................................................................................44
Equity Ratio...............................................................................................................................................45
Formula.................................................................................................................................................45
4.4.3 Profitability Ratios........................................................................................................................46
4.4.4 Efficiency.....................................................................................................................................48
4.5 Horizontal Analysis of Profit & Loss.................................................................................................49
4.6 Vertical Analysis of Profit & Loss......................................................................................................51
4.7 SWOT ANALYSIS...............................................................................................................................53
Strengths...........................................................................................................................................53
Weaknesses.......................................................................................................................................54
Opportunities....................................................................................................................................55
Threats...............................................................................................................................................55
Chapter 5...................................................................................................................................................56
Conclusion & Recommendations...............................................................................................................56
5.1 Conclusion.......................................................................................................................................56
5.2 Recommendations...........................................................................................................................56
References.................................................................................................................................................58
 Acknowledgments

Thanks to AL Mighty ALLAH who helps me in every field of my life including this internship
report. It is my proud privilege to release the feelings of my gratitude to several person who
helped me directly or indirectly to conduct this internship report work. I express my heart full
indebtness me owe a deep sense of gratitude to my teachers my supervisor Ikram-Ul-Haq and my
faculty for their sincere guidance and inspiration in completing this report.

I have written this report after completing 2 months internship in Zarai Taraqiati Bank
Ltd.During this period I remain with manager and also assist to AMO, BCO, MCO, CAD,
TELLER.

I also thank all my friends who have more or less contributed to the preparation of this report. I
will be always indebted to them.

The study has indeed helped me to explore more knowledgeable avenues related to my topic and
I am sure it will help me in my future.

Asad Ali Khan

 Executive summary

The socio-economic growth of any developing country depends mainly on the health of its
monetary based institutions. The banking sector is one of the institutions, which play a vital role
in the development of the country. Its involvement in the agriculture and industrial sector, trade
and commerce of the country makes it an integral organ of the overall development of the
country. With the advent of the modern technology and increased competition, banks are
undergoing major changes, thus making this field a challenging one. Banking sector, no doubt,
has a vital role in the development of our national economy. Moreover the role of ZTBL in five
provinces is of significant importance, due to the largest bank in agriculture sector, contributing
not only to four provinces, but also to the national economy.

Pakistan is basically an agricultural country and finance has been needed for its rapid
development with a view to meet this basic need the agricultural Development Finance
Corporation was setup 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 and dairy farming.
Later on, the Agricultural Development Bank of Pakistan was also established in sept -1957
under the Agricultural Development Bank Act. The bank is to provide credit in cash or in kind,
warehousing and storage facilities to agriculturists, co-oprative societies and other bodies of
which the majority of members agriculturists. As the functions of Agriculture Development
Finance Coporation and Agricultural Development Bank were similar and since both were
working with the capital provided by the Government, they were merged into one organization
known as Agricultural Development Bank of Pakistan on feb 18,1961.

Pakistan is basically an agricultural country and finance has been needed for its rapid
development with a view to meet this basic need the agricultural Development Finance
Corporation was setup in 1951 and was entrusted with the task of providing financial facilities
for the development and modernization of agriculture, including forestry, fishery , animal
husbandary poultry and dairy farming.
The new corporate structure redefines the bank’s status as a public limited company registered
under companies ordinance’ 1984 with an independent board of directors which aims at ensuring
good governance, autonomy, delivering high quality.

ZTBL is a key R.F.I of Pakistan providing affordable rural and agriculture financial/ non-
financial services to the rural Pakistan, comprising 68% of the total population. The bank
through a country-wise network of 416 branches.

Later on, the Agricultural Development Bank of Pakistan was also established in sept -1957
under the Agricultural Development Bank Act. The bank is to provide credit in cash or in kind,
warehousing and storage facilities to agriculturists, co-oprative societies and other bodies of
which the majority of members agriculturists. As the functions of Agriculture Development
Finance Coporation and Agricultural Development Bank were similar and since both were
working with the capital provided by the Government, they were merged into one organization
known as Agricultural Development Bank of Pakistan on feb 18,1961.
The general direction and supritendence of the affairs of the bank are entrusted to the board of
directors. Which consist of 12 members, Chairman appointed by the Federal Government.
 Chapter 1

Introduction to Zarai Taraqiati bank.

Starting with the name of Allah, I am going to write my internship report as part of
the academic requirement for the completion of Two year’s study in BBA Hons.
Therefore, we the students of Management Sciences are required to undergo an
internship program for the period of 6 weeks as an internee in an organization. This
internship helps me to gain the practical knowledge of working environment of the
banking sector of Pakistan.

1.1 Background of Study

Pakistan is basically an agricultural country and finance has been needed for its rapid
development with a view to meet this basic need the agricultural Development
Finance Corporation was setup 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 and dairy farming.
Later on, the Agricultural Development Bank of Pakistan was also established in sept
-1957 under the Agricultural Development Bank Act. The bank is to provide credit in
cash or in kind, warehousing and storage facilities to agriculturists, co-oprative
societies and other bodies of which the majority of members agriculturists. As the
functions of Agriculture Development Finance Coporation and Agricultural
Development Bank were similar and since both were working with the capital
provided by the Government, they were merged into one organization known as
Agricultural Development Bank of Pakistan on feb 18,1961.

1.2 Objectives of study

As part of the academic requirement for completing BBA Hons students are required
to under go eight Weeks of internship with an organization. The internship is to serve
the purpose of acquainting the students with the practice of knowledge of the
discipline of banking administration.

 To understand the various operations of the bank and work in different

departments.

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  To analyses the financial and operational performance of ZTBL.
 To study the organizational management structure.
 To make possible recommendation in the light of analyses.
 To study the working environment of the organization.
 To apply the knowledge gained in practical field.

1.3 Scope of Study

The time duration of two months is insufficient for conducting complete study and
observation of a large bank. Being a student specializing in finance, the focus of this
study is on its financial aspects including the financial health of the bank and its
comparison with previous year’s performance. Some of the problems faced by the
bank have been identified and some recommendations have been suggested to
overcome these problems and to improve the prevailing financial condition of the
bank.

1.4 Limitations of the work

There are some limitations which internee had to face during the internship program,
which are described as under:

 The period of two months was too short to properly understand and analyze all the
operations of bank.

 Staff members avoided to give all information due to the matter of secrecy. So it
was very difficult to collect the relevant information and to learn accordingly.

 Manager and other staff members have busy schedule due to this reason it was a
great problem for them to spend time with internee, so it is not easy to learn or to
gain knowledge from them.

 Some of the data was confidential and that was not made available to me.

1.5 Benefits of the Study

An internship grooms a person personally, academically and professionally. At the
end of internship, one gets a certificate, which acknowledges his work for that
specific company. This adds to his experience, an internship is a great opportunity to
improve interpersonal skills. Practical also provides the opportunity to gain self-

2
confidence. Moreover, it Figure out what one’s strengths are and also a good time to
identify one’s weakness so that he can improve them.

1.6 Research methodology

ZTBLis one of the leading and establishes banks of the country. It has a large setup of
departments and a big organizational structure. While working in a City branch
Mansehra of the bank, it is not possible to thoroughly cover all the areas of the bank,
as it requires more time and two months are in no way sufficient to do so. Different
tools and techniques were used to gather relevant information for writing the report.
Secondly, journals from regional head quarter and staff college was also reviewed
which gave very useful information about the functioning of the bank. I also visited
the national bank of Pakistan’s official web site, which gave very useful information
about the services provided by the bank.

1.6.1 The major sources for Primary data includes

 Personal observation

Personal observations during the internship period

 Interviews of management

Short interviews of the bank’s management

 Discussion with staff members

1.6.2 The major sources for Secondary data includes

 Annual reports of Bank

Annual reports of the last three years

 Books

Relevant course books

 Internet

Official web site of ZTBL and some other relevant sites mentioned in the
references

3
 Chapter 2

Organizational Structure of ZTBL

2.1 Branch management structure

*BRANCH MANAGER
*ASSITANT MANAGER (OPETRATION)
*ASSISTANT MANAGER DESK
*BRANCE COMPLIANCE OFFICER
*TELLER/CASH OFFICER
*MOBILE CREDIT OFFICER
*SENIOR ASSISTANT
*ASSISTANT/TYPIST

2.1.1 Branch Manager

The branch is headed by the branch manager who is responsible for the efficient
functioning of the branch.

2.1.2 Credit manager

He is the head of the credit department and responsible for the extension of the credits
under the supervision of the branch manager.

2.1.3 Operation Manager and Others.

Keeping in view the size of the branch the operation manger is directly responsible for
some of the operational functions depending on the nature of activities in the branch.
The operations are comprises of Cash Counter Services and customer services. The
Branch Manager with the assistance of relationship officer(s), (if required) will
concentrate and fully devote to credit marketing and business / deposit development.
Operations manager will report directly to the Branch Manager.
A Compliance Officer is also is also present in this branch. He is responsible of the
checking of the all the work done in the branch. Whenever an inspector came to the
bank, he provides him all documents, which he require for inspection.

4
2.1.4 MOBILE CREDIT OFFICERS
Each Mobile Credit Officer is given a major cycle and is allocated 10 to25 villages
based on Qanungo circles. He has to visit the villages in his jurisdiction at regular
intervals to identify viable prospective borrowers, guide them, provide technical know
how, discuss the feasibility of their credit proposals, process the loan at the spot
(under One Window Operation) and recommended it for sanction and ensure that the
loan is actually utilized for the purpose for which it was drawn and that it results in
increasing the productivity of the farm and income of the farmer.
1- Assessment of credit should be based on future productive ability of farm
coupled with personal capabilities of the farmer because under this system
supply of inputs and services directly increase the productivity of the farm.
Project appraisal is an essential requirement of agricultural credit. Mobile
Credit Officer should, therefore, have the ability to appraise the scheme of the
intending borrower.
2- The MCO should maintain a regular and continuous contact with the farmers
and recover the loans/installments from them right in the village, immediately
after harvest/marketing of the crop.
3- The farmers should be required to visit the branch only for the execution of
documents and drawl of loan amount. At all other times it is the Mobile
Credit Officer of the Bank who has to visit the farmer in his village.
4- The farmers with good track record should be motivated to avail all their
productive credit needs exclusively from the Bank, to avoid monetary
assistance from non institutional sources which resultantly may tax their
repayment capacity without substantial benefits.

2.2 Departments /Divisions of ZTBL

2.2.1 FINANCIAL CONTROL DIVISION:
This division comprises professionals headed by the SEVP.
The service charge on all services are also determined and advised by this division to
operations group for implementation of same through the branches.
This division is also responsible for taxation, fund management and local investment
activities based on short term and long-term investment policies of the bank.

5
Finance And Accounting Operations

The ZTBL finance and accounting operations system has been drawn up with a view
to facilitating the expeditious transaction of branches, zones and head office dealing
with public and at the same time safeguarding the banks interest. Specialized
department of the bank formulates and accounting operations system use in ZTBL.
Each and very entry is passed at branches and at zonal level is being regulated by
established standard Format. No branch is allowed to deviate from standard
procedure as outlined by the bank management and SBP. In case of any deviation,
penalty is imposed on the concerned branch. However in case of any ambiguity, the
matter is taken up with the Zonal office and the concerned Zone refers the case to the
head office for clarification. Head office notifies any change in established procedure
through circulars letters. ZTBL use double entry book keeping system according to
the established financing and accounting operation system. Debit and Credit entries
are passed on through designed Dr and Cr vouchers and these are maintained at
branches for record keeping.
On daily basis the following books are balanced and printed for record purpose.
1:Bank’s cash scroll
2:Printing and stationary
3:B T Sheet
4:Cash carry register
5:Bank’s general ledger
6:Supplementary
7:Telephone register
8:Voucher register
9:Staff advances register
10:Token register
11:Dead stock register
12:Diary register
13:Despatch register
14:Account opening register.
On monthly basis branches prepare different type of statement and sent to the Zonal
office. The ZonalOffice consolidate these statement received from Zones and end of

6
year head office prepare Profit and Loss and other financial statements showing the
overall performance of the bank in the form of annual Report.

FUNCTIONS OF ZTBL FINANCE DEPARTMENT

*ACCOUNTING SYSTEM OF THE ZTBL:
Accounting is often characterized as ‘’the language of business employed to
communicate financial Information” It is concerned with process of recording,
sorting and summarizing data resulting from Business transactions and events. The
bank’s standard accounting system is based on the principles of Double entry
bookkeeping ; these principles are universally accepted and followed. It is therefore
Imperative at the outset to discuss these accounting principles. ZTBL deal three types
of accounts-
1:The accounts of persons with whom the business deals. These are called Personal
Accounts.
2: The accounts of properties dealt in by farmer in shape of different type loan. These
accountsare classified as real or Assets Accounts.
3:The accounts pertaining to sources of income and expenditures.we called these
accounts as Nominal
Or Ficctitous Accounts.

RULES GOVERNING DEBITS AND CREDITS:

1. Personal Accounts
Debit the account of the receiver and credit the account of the giver.
2. Real or Assets Accounts.
Debits- what comes in
Credits- what goes out
3. Nominal Accounts.
Debits- Expenses or losses
Credits- Income and gains

FINANCE SYSTEM OF ZTBL.

ZTBL being afinancial institution, proper arrangements are made to facilitate
the work of auditors and to enables him examine the Books ofaccounts.
7
 ZTBL finance system play a dynamics roll in bank’s development. Today,
external factors i.e. heighten corporate competition, technological changes,
volatility in inflation and interest rate, world wide economic uncertainty,
fluctuating exchange rate, tax law exchange and ethical concern have an
increasing impact on ZTBL finance system.
In ZTBL at Zonal office level finance system has no existence, but Zonal
office is directly linked with head office.
In head office finance system is controlled by finance system group headed by
an Executive vice president perform the following functions.
1:Financial Accounting
2:Taxation
3:Equity of the bank
4:Investment
5:Fund management.

2.2.2CREDIT DIVISION.

ENTERTAINMENT OF LOAN APPLICATION.

*APPLICATION FORMS.
i)-Loan applications should be entertained on the prescribed form of the bank
(Annex-3) (IBS-55/R). Price of one form is Rs.20/- and are issued on their
serial order. Under one window operation the loan application forms are
supplied, free of cost.
ii)-Loan application form should be available at the counter of all branches of
the bank for sale to public during office/business hours.
iii)-In case the loan applied for falls within the sanctioning powers of the
manager, one copy of the loan application form may be obtained. In case the
loan is to be sanctioned by Zonal chief, Zonal credit committee the application
may be obtained in duplicate. In case the loan is to be sanctioned by Central
credit committee, the applicants may be asked to submit three copies of the
loan application.

8
 iv)-The documents required to be furnished with the loan application forms for
various schemes and against different kinds of securities.

BANK CHARGES TO BORROWERS.

a) Price of LA Form
Rs. 20/-
b) Appraisal Fee-
Production loan up to Rs.50000/-
0.5%
Production loan above Rs. 50000/-
1%
Development loan irrespective of loan amount
1%
Red Meat Financing Package
2%
Postal charges under all loans/Scheme expect white Revolution.
Rs.50/year
Postal charges under white Revolution Scheme.
Rs.500/year
Renewal Fee under Sada Bahar Scheme
Rs. 10
( On yearly
Basis)

ENTERTAINMENT OF LOAN APPLICATION

MCO will issue receipt (Annexure-4) of loan application with prescribed documents
from walk-in-client in the branch as well as in the field. In his absence Deputy
Manager, Assitant Manager (operation) or desk will issue receipt to the walk-in-
clientand hand over the loan application to the MCO for further processing. In case
loan application is not considered by the MCO fit for futher processing the applicant
may be informed giving reasonsof nn entertainment of loan application in writing.

LOAN APPLICTION THROUGH ATTORNEY.

9
A loan application submitted through attorney should normally be discouraged as far
as possible as this is exposed to various risks. However in some cases it can be
accepted. There are two major kind of power of attorneys, which can be used for
taking loan. (i) special Power of Attorney (ii) General Power of Attorney.
Appraisal of Loan Applications.
Following documents (Annexures-13) are used for appraisal of the loan proposals:-
1- Index sheet.
2- Loan application farm.
3- Credit Investigation Report.
a) Credit investigation Report ( Computer Forms )
b) Security and valuation ( under/outside Pass Book )
c) Security 7 valuation ( Plot and Building)
d) Summary of security value and Credit Limit.
e) Appraisal of proposed Investment.
f) Details of Revolving Finance Limit.
g) Details working of Revolving Credit Limit.
4- Opinion of Legal adviser/Re-appraisal Certificate.
5- Sanction orders ion secured cases.
6- Sanction orders in surety cases.
S.N Name of property Maximum credit limit
O of appraised value.
A- Immoveable properties
1 Agricultural Land
a) Under Pass Book 80%
b) Outside Pass Book 70%
c) Under 66%
Alienability Certificate
2 Commericial/Industrial 80%
Land under pass book
3 Urban Residential/Commercial 75%
plots in all localities Outside Pass
Book
4 Residential/commercial Buildings 70%
Outside Pass Book
5 Lease Hold rights of a leased land 70%
(99 years lease)
B- Moveable property

10
6 Unconditional Bank Guarantee of Up to maximum
authorized scheduled Banks amount of an
unconditional bank
guarantee of a
scheduled bank after
keeping sufficient
margin for unpaid
interest, cost, charges
and expenses.
7 Gurantee issued by Federal or Full amount of Loan
Provincial Governments plus return and other
charges etc.
8 Government Bonds Full amount of a bond
with one or more
sureties after keeping
sufficient margin for
unpaid return, costs,
charges and expenses.
9 Government Securities 85% of face value of
marketvalues
whichever is less.
10 Deface saving Certificates/F.E.B 75% of the face value
Certificates
11 Fixed/term Deposit Receipts 85% of face value.
12 NIT Units 80% of face value of
market
value whichever is
less.
13 Life Insurance Policies 85% of surrender
value with the
condition that life kept
alive by prompt
payment of premium.
14 Pledge of potatoes/seed potatoes. Up to 75% of Govt
Support price or
market value which

11
 ever is less.
15 Personal Surety Up to 50% of
appraised Value of
properties of two
Sureties or as
specified under
Various Scheme by
H.O.
16 Any permissible property if 50% of the balance
already encumbered with other appraised value after
agencies deducting double the
amount of previous
encumbrance. Fewer
amounts can only be
deducted after Head
Office prior
Permission giving full
just factions. However
Bank refuse to accept
such Security for any
reason e.g want of
clear title.

Surety loans.
i- Short term loans besides being secured by the aforementioned securities,
can also be secured up to Rs.25000.
ii- Loan on surety basis be discouraged. However, due to the genuine needs of
farmers, Zonal chiefs will make separate allocation of funds except for
those areas where Head office specially allows surety loans.
iii- All the Zonal chiefs posted in Khyber Pakhtun Khah Province can increase
per branch surety loan limit for Rs.500 million up to Rs.10,000 million
during fiscal year according to genuine credit needs of the farmers on the
recommendation of respective branch manager.

12
 iv- At the end of each fiscal year, Zonal chief would review the recovery of all
such surety loans and in case recovery %age falls short of the secured loan
the surety limit should be revised. The concerned MCOs/Managers/ZC
would be responsible for recovery and proper utilization of such surety
loans.

Pre-Sanction Documents Require.

1) Agricultural land under Pass Book System
a)- Loan application on the prescribed form(IBS-55/R)
b)- Green copy of the agricultural pass book
c)- A copy of computerized national identity card
d)- Latest two photo graphs

Sanction Of Loans.
The manager/zonal chief and ZCC will sanction the loans within their
delegated sanctioning powers after full appraisal of the cases has been made
procedurally.
Intimation of sanction of loan and its terms and conditions should be
communicated in duplicate as per Annexure-25(IBS-147) and its acknowledgment be
obtained from the borrowers on the duplicate copy of the case to legal advisor for his
opinion.

CERTIFICATE TO BE SENT TO THE REVENUE OFFICER FOR

CREATION OF CHARGE.
After sanction of loan, the Branch Manager should draw up a certificate in the form
at Annexure-26 in triplicate, and send immediately along with the pass book to the
Revenue officer concerned through any member of the staff including the MCO who
shall try to get back one copy of the same after authentication by the revenue officer
on the same day or within three days at the latest revenue officer shall endorse the
pass book and certify that the specified parcels of land for the amount of loan as
entered in the borrower’s pass book have been registered and entered in the ‘’RED’’
copy of the pass book retained in revenue office. Carbon copy of charge certificate is
also acceptable but original may preferably be obtained.
13
The loan will be disbursed only on receipt of the foil and green pass book duly
endorsed by revenue officer. The branches should retain the original pass book after
creation of charge of the bank.

VERIFICATION OF MUTATIONS IN 100% CASES.

According to sub-rule (5) of rule 6 of LACIP rules 1973 the second copy of the
certificate of creation of charge shall be sent by the revenue officer to the concerned
Patwari or Tappedar for entering mutation in favor of the lending bank. The branches
are, therefore, duty bound to check and verify the mutation entries to safeguard the
bank’s interest.
DOCUMENTATION

As soon as the loan is sanctioned, sanction letter should be issued and acceptance of
terms of loan should be obtained from the borrowers.

DISBURSMENT OF LOAN
Once a loan has been sectioned, efforts should be made to start the disbursement as
soon as possible. However sometime delay occurs due to the non- receipt of non-
encumbrance certificate/charge creation certificate, non-execution of agreements or
mortgage deeds etc, by the party. The payment/disbursement made in two ways.(1)
Cash disbursement (2) Disbursement in kind.

DISBURSMENT IN CASH
Before its disbursement of loan the envelop through which sanction letter has been
dispatched may be received back from the borrower with copy of sanction letter
containing acknowledge/acceptance of terms and condition of sanction letter for
placing in safe life of the concerned borrower. After completing the documentation
and signing check list (Annexure-88) Assistant Manager (Desk) would record
payment order on the file on the basis of which Assistant Manager Operation would
prepare the transfer voucher which would be signed by the AM (Desk)/Deputy
Manager (Being 1st signatory) as the case may be an Assistant Manager Operations
(Being 2nd signatory). The receipt from the loanee for the amount of loan paid in cash
or through deposit account of the borrower should be taken on the prescribed form as

14
at IBS-144/A. The disbursement of loan under one Window Operation cases be made
with Zonal Chief’s approval on the counter in cash for which acknowledgment or a
receipt of payment of the borrower shall be obtained on the back of the credit voucher
besides IBS-144/A.

DISBURSEMENT IN KIND.
In kind loan cases, where supply order has to be issued, the equity contribution should
be kept in sundry deposit Account. The amount of loan sanctioned should be the net
amount after excluding borrower’s contribution. The supply order will be issue in
favor of manufacture/supplier, after documentation including agreement in (IBS-
149/A) for the full amount for supply of goods to the borrowers.

IDENTIFICATION OF THE SIGNATURES OF THE LOANEE.

For the purpose of proper identification, the signatures of the loanee (thumb
impression in case of illiterate loanees) should be verified by the disbursing authority
with the signature/thumb impression already attested by Mobile Credit Officer on the
loan application form and also available on CNIC.
REPAYMENT OF LOANS.
Principles governing term of Repayment.
Repayment installments of loans are fixed on certain basis principles. These
installments would would normally come out of the surplus income left with the
borrower after meeting the cost of production, land revenue, water rate etc.
Recovery dates must coincide with the harvest time of the main crops if the areas as
well as with the main crop of individual borrower in case of medium and loan term
loans.

As a rule, 50% of the surplus income should be left with the borrower to meet the cost
of production and his own expenses. The remaining 50% should be taken into
consideration towards the repayment of loans installments.

In fixing the total period of recovery of the loan advanced, life of the assets to be
created out of the bank’s loan should be kept in view. Whenever installments of
repayment are revised due to refixation/re-schedulement, change of rate of return etc.
the same should be promptly conveyed to the borrower through the MCO with proper
15
acknowledgement/registered post. Further, the revised recovery schedule giving the
amount of revised installments should be feed to the computer to be fail.

SUPPLY OF RECOVERY SCHEDULES TO BORROWERS.

The System Development department has developed the software for production of
recovery schedule for borrowers on the prescribed letter and it is being supplied to all
Zonal computer Centers. In this letter date and and amount of installment conveyed to
the borrower for his convenience.

RECOVERY PROCEDURE
Recovery schedule in each loan case is fixed, which is communicated to each
borrower after disbursement of loan. However, in case of default or failure in
repayment of any installment at due date, the mark-up shallcontinue to be charged
and last installment due to this may differ from the amount of installments fixed at
the time of disbursement.

PROCDURE UNDER INTEREST BASED SYSTEM.

IF the borrowers do not repay the Bank’s dues on due dates, reference is made to
collector after meeting the formality of issuing the Demand Notice and Legal Notice
Procedurally. However, Bank charges markup/return on principal outstanding till full
repayment of loan, apart from recovering 2% revenue commission payable to the
provincial Governments for recovery of the Bank’s dues, as arrears of land revenue.

SPEICAL ASSETS MANAGEMENT LOANS.

The ZTBL, in compliance of relevant Prudential Regulations of State Bank of
Pakistan is charging off of stuck up loans on regular quarterly basis. These loans
become a part of SAM loans and being managed separately, all stuck-up loans
transferred to doubtful loan ledger (DLL) prior to 2005 and loans transferred to Dud
loans register (DLR) in 2005 are also a part of SAM portfolio. The SAM portfolio
therefore includes:

*SAM Loan may include all types of loans like general credit loans, agri-
business loans and micro finance loans.

16
 *All loans in doubtful loan ledger (DLL) before 31-12-2005 and
transferred to SAM.
*All loans in dud loans register (DLR) on 31-12-2005 and transferred to
SAM.
*Loan charged off on completion of 3 years in default and return thereof.

The charge off of a certain loan, however, does not mean cessation of bank’s right to
recover its entire due from the borrower through litigation or any other way. The
security held with the bank or repossessed by it, may be disposed off, and amount be
adjusted/appropriated accordingly, as per policy of the bank within provision of the
law.

SAM PORTFOLIO MANAGENENT STRUCTURE.

DEALING DEPTT.
Special assets management department (SAMD) will monitor the SAM loans at H.O
under recovery and SAM division SAMD will issue periodic target to Zones or any
specific targets with the approval of the competent authority. It will also serve as
secretariat for write off/remission committee to Head Office.

SAM DATA AND REPORTS.

ITSD (Information technology system development department) maintains the SAM
loans data and record based on feed back from Zonal computer center. Branches
provide the updated data to Zonal computer center at the end of each week for feeding
to ZCC and onward transmission to ITSDD at H.O who is to generate and provide
date on regular basis to SAMD. The periodic reports are also provided as and when
required by management and SAMD.

OUTSTANDING AMOUNT.
‘’Outstanding’’ means cumulative loans, advances and credits by the bank to its
borrower and perforce payments made by bank on behalf of borrower plus markup
and expenses incurred and committed less all amounts paid by the borrower as on a
specific date.

1- OVER DUE (OD).

17
 Part of loans, advances and credits by the bank to its borrowers, markup and
perforce payments made by bank on behalf of borrowers including expenses
fallen due on that specific date but not repaid up till that specific date and are
overdue shall be treated as recoverable. Over dues include past years dues
(PD) and out of current year dues (CD).

2- PAST DUES (PD).

Past dues means an amount payable or owning by the customer to the bank,
whether by way of principal, mark-up or expenses incurred by the bank to
meet obligations under any instrument, which was payable as per recovery
schedule in last year but delayed or which the bank has to per force incur to
safeguard its interest or fulfill its commitment and carried forward in next year
but yet not recovered.

3- CURRENT DUES (CD).

Current due means any amount payable or owing by the customer to the bank,
whether by way of principal, mark-up or expenses incurred by the bank to
meet obligations under any instrument, which has fallen due during the current
year as per recovery schedule communicated to the borrower by the bank or
which the bank has to per force incur to safeguard its interest or fulfill its
commitment payable with the recovery installment.

NON PERFORMINGLOANS (NPL).

Loans classified as OAEM(other assets especially mentioned), substandard,
doubtful, and loss under item based criteria of ‘’prudential regulations for
agricultural financing’’ issued by State Banks of Pakistan will be treated as
non performing loans.

SPECIAL ASSETS MANAGEMENT (SAM) PORTFOLIO/LOANS.

All the charged off amounts in terms of prudential regulations for agriculture
financing vide SBP BPD circular No.27 of 2005 and all residual amounts from
DLL/DLR will be termed as SAM portfolio/loans.

18
HUMAN RESOURCE DEPARTMENT

*Recruitment
There was no set rule for recruitment. Although a procedure has been given in
the staff (service rule), yet the same was only followed to the extent of the
procedure and was nor done in the true spirit. The main point in recruitment
i.e. merit was seldom adhered to. Political involvement that is rampant in our
culture also played havoc with ZTBL, resultantly every change in government
saw a large number of new industries. There have been no select criteria for
selection of employees to lower or officer/executive grades. This was done at
times through simple interviews; however there have been instances, when
regular tests have been conducted for recruitment the post of the officers.
*selection process
Selection is divided into following steps.
Short-listing of the application
In the step thousands of candidates apply for limited posts available. The head
office sent the calls to only those candidates who fulfill the requirement of the
job advertised.
1. TESTs
The Pakistan bank council under the supervision of the Pakistan banking
and finance commission conducts test. In the test the application are
further short-listed.
2. Interviews
For the interview only those candidates are called which qualify the
written test . different types of questions are asked from the candidate by
the interviewing board, which include.
I. Question about the personal background extra ordinary activities
during education and about personal contacts.
II. About the role of banking in current situation of the economy.
III. Role of foreign enterprise in public economy etc.
A part from these questions the candidate personnel interests are
also discussed and an effort is made to have the understanding of
the individuals personality and after these question an evaluation is

19
 made weather the candidate will prove an asset to the organization
or not.
3. Merit list
After the final result, the successful candidates are sent the appointment
letters and they are asked to sign the agreement with the bank person.
4. Training
The staff collage receives junior bank officers’ for further training in
banking course lasting from six to nine weeks with about 25 students in
search course. The collage is residential one and provides a measure of
colligate atmosphere, which help to iport a sense of camaraderie, which in
itself is of great value. It is also of interest to record that the staff collage
receives trainee from abroad as well as domestic, which helps to create
worthwhile reference to banking business.
The staff courses are designed not only to impart, technical instructions,
but also to develop qualities of judgment decision. The collage is one of
the most important institution set up by bank because its students are
likely to be drawn those men who may except to rise the senior most
executive positions which the bank offers. It is business of the staff college
to keep in touch with all that is going on the world of banking and finance
and so revise its instructions as to keep pace with development in Pakistan
and wish changes in outside.
ROLE OF FINANCIAL MANAGER.
Financial manager is concerned with acquisition financing and
management of assets with some overall goals in mind. The financial
manager of ZTBL bank like all other financial managers has responsibility
to make decisions about three major areas that are:
*Investment Decision
*Financing Decision
*Asset Management Decision

*INVESTMENT DECISION
The investment decision is the most important decision of the bank’s three
major decisions. The Chief Financial Officer of ZTBL bank begins with
determination that how the sources of the bank are properly invested by
20
minimizing the risk factor and to gain maximum return. For this purpose
he sometimes follow the portfolio investment policy.
*FINANCIAL DECISION
The second major decision of any organization is financing decision.
Financial manager of ZTBL decides and introduce new and effective
loaning schemes, which are not only beneficial for ZTBL but also for the
overall economy of the country.

*ASSET MANAGEMENT DECISION

The third important decision of any organization is assets management
decision. Once the assets have been acquired and appropriate financing
provided these assets must still be managed efficiently. The financial
manager is charged with varying degrees of operating responsibility
requires that the financial manager be more concerned with management
of current assets then with that of fixed assets. A large share of
responsibilities for management of fixed assets would reside with
operating manager who employs these assets.

USE OF ELECTRONIC DATA IN DECISION MAKING.

In management the most important thing is right decision making at right
time. Therefore, it is the essence of management. Managers are constantly
required to evaluate alternatives and make decisions regarding a wide
range of matters. Decision making involves uncertainty and risk. Decision
making also involves qualitative and quantitative analyses and some
decision makers prefer one from of analyses to the other. Decision making
can be affected not bony by rational judgment but also by non rational
factors such as the personality of the decision maker, peer pressure, the
organizational situation, and others.
Following are the software used by the bank.
 DMS Deposit management system, is used for streamlining the
deposit.
 FOCS. Field operational control system is used for minimizing the
discrepancies in field work.

21
  NIVS.NADRA identity verification system is used for verification of
I.D cards from NADRA.
 Besides these ICRMS (Internal credit risk management system) is also
used for monitoring the credit risk in ZTBL.
MOBILIZATION OF FUNDS IN ZTBL:
In line with SBP policy top management of ZTBL make different policy for
mobilization of fund. The Board of Directors and expert management after working
out detail cost benefits analysis formulate different mobilization schemes keeping on
view their earning capacity. Before launching a scheme bank’s management use it on
trial basis at selected branches. And if perm well, the same is fully marketed through
the entire network of branches.
At present, the following methods/schemes are used for mobilization of fund in
ZTBL.
1: Current Account
2: Saving Account
3: Term and Fixed deposit account
4: NIDA Account
5: Monthly income scheme
For the mobilization of these funds banks offer competitive rate keeping in view the
competitive rate of other banks.

22
 Chapter 3

FUNCTUINAL ANALYSIS

3.1 Formal organization

Formal organization includes the activities of two or more person, which are
cautiously determined groups and coordinate towards a given objective. It provides
base when people are able to communicate with other, when they have common
purpose and they are willing to work.
ZTBL is a formal organization. Bernard referred to an organization as a formal when
the activities of two or more persons are coordinated towards a given objective. The
formal organization comes into being when people are able to communicate with one
another or willing to act and share a purpose.
In theoretical terms it provides basis for communication with one another but in
practice it is not exercised because an employee at high level cannot get straight away
to manager or SVP and ask him about of his problem faced by him, because first
he has to talk to his immediate superior and follow a proper channel of
communication.

Difference between theory and practice

A vast difference exists between theory and practice and ZTBL has written procedure
but practical work done by employees is a bit different from written procedures.

Bank duty to maintain secrecy

They don’t care about maintaining secrecy, especially during the rush hours. They
speak loudly about the account position and while getting clearance of cheque the
person can easily get the whole information from the ledger. The deposit clerk must
be careful while passing any cheque. In this regard another shortfall is in giving the
information about the balance on telephone.

23
Excessive paper work
It is notified that due to the lengthy procedure of paper work the bank employee are
over burdened. They are unable to give proper attention to the clients and face
difficulties in getting their job done. One reason for lengthy procedure and excessive
paper work in the bank is the lack of computerized technology.

More accounts fewer deposits

Efficient banking is one, which does not emphasize on number of accounts but on
greater amount of deposits. ZTBL is more interested in increasing its number of
account irrespective to its deposit. The main reason behind it is that bank does not
provide personalize service to all the account holders and does not improve its quality
and services.

Delegation of authority
Manger has very limited authority; he has to take the approval from his management
authority i-e. In case of advance he has to take the approval of general and regional
manager. The other problem is created, when the manager is not present in his office,
the customer having to wait for hours. This discourages both customer and officers
because they have to suffer a lot.

3.2 ADMINISTRATIVE ANALYSIS

Job analysis is not effective

Only on the basis of job analysis it can be decided how a right person could be hired,
trained, compensated or promoted. It Is very important for an organization that nature
of the job is described and job specification are mentioned. Most of the employees are
simple graduate and do not have proper background about their job. This creates
problems both for organization and for the employees. In ZTBL salaries are given
according to the seniority and grades. People with simple or complex responsibility
are getting the same salary and facilities. This creates dissatisfaction among
employees.

24
Carelessness in opening of account
When customer comes to open an account, the staff does not bother to check his/her
place phone number and permanent address. It is important because in case of
overdraft by mistake or anything which places his account in debits it will be difficult
to trace him. On the other hand he may be involved in any fraudulent activities against
the bank. In this case the bank will be in awkward position.

Lack of specialized training

ZTBL does not provide adequate facility of specialized training to their staff. Training
is generalized rather than specialized. As the worker finishes his training, he is
inducted into a specific field without having great deal of knowledge about the field.

Low profit rates

Most of the customers shifted their account to the National Saving Center because of
the low rates of saving deposit discourages the customers. Bank should increase their
profit rates to attract customers.

Delays in loan advancement

It has been observed that there is delays in sanctioning of cases from the head office,
which results in customer dissatisfaction.

Lack of appreciation
Another very important thing which is ignored in the bank is appreciation of the
employee on their good performance. If hard work and performance of employee is
not recognized and appreciated they become dishearten which results in decline in
performance.

3.3 PERSONAL MANAGEMENT ANALYSIS

Need for better training program

25
Need of training is greatly emphasized all around the world. Training of the personnel
is part of human resource management. It has been noticed that the training program
of ZTBL is not adequate.
Once the candidate is selected and placed on the respective job. It become essential to
train him adequately for the task. They should learn new methods for motivating
customers. The training programmed of the bank should include scientific techniques
to improve the decision-making and interpersonal as will individual needs of the
employee both specialized to fresh as well as on job to maintain the high standards of
service.

*Developing Managerial Leadership

Leadership is a practical term of visible clear on objectives and communicating better
control on financial and administrative matters. Manager is not only responsible for
their own units in business, but also in people terms i.e training, recruiting, grievance
handling and taking immediate initiative in crisis situation to take major decision
affection the future of the banking community.
*Recruitment Policy
Human resource are the lifeblood of the organization. If the personnel are recruited
carefully they can become asset to the organization in the case of carelessness a
liability on the organization. Bank is not following its recruitment policy properly due
to favoritism, nepotism and political pressure. Both the top authority and staff union
tries their best recruit their favorities, indulgence of political pressure add salt to the to
the wounds. The persons selected through these channels are infantile and do not
work for the betterment for the bank.
*Promotions
Promotion in ZTBL is purely on the basis of seniority, the new young person having
high qualification remains behind for quite a lot of time. Top management and staff
union put pressure for the promotion of their favorites, which gives a sense of
deprivation to the deserving employee and their efficiency is affected. As the concept
of promotion is attached with better in terms of greater responsibility, more prestige,
greater skills and increased rate of salary. Thus a better and impartial policy of
promotion needs to be followed.
*Transfer

26
Transfer means when a person is shifted from one place to another place. It is done
either that person is needed more on the other branch or for improving his skill
variety. It is the policy of the Bank to transfer each employee 3 to 4 years.

*Lack of the business communication

There is no proper way to give information to their customer. To avoid this minor
dissatisfaction and tension in the mind of customer, and deficiency of the service, it is
recommended that the bank should provide brochures etc containing information in
details.

27
 Chapter 4

FINANCIAL ANALYSIS
4.1 Balance Sheet

BALANCE SHEET

AS AT 31 December 2016.2015

  2016 2015

  (Rs. In '000') (Rs. In '000')

ASSETS  

Cash and balances with treasury banks 75732185 61265859

Balances with other banks 7201459 10058662

Lending to financial institutions 2809752 2867744

Investments 556770384 566564304

Advances 364333516 316771355

operating fixed assets 35225865 31536887

deferred tax assets -- ------

Other Assets 34617075 31915210

  1076690236 1020980021

LIABILITIES

Bills payable 13291328 11975237

Borrowings from financial institutions 77438993 118615031

Deposits and other accounts 795689546 706239715

Sub-ordinate loans -- -----

Liabilities against assets subject to

finance lease -- -----

Deffered Tax Liabilities 12889649 12482287

28
Other liabilities 31420650 29491131

  930730166 878803401

NET ASSETS 145960070 142176620

REPRESENTED BY:

Share capital 11130307 11130307

Reserves 53512633 51491384

Unappropriated profits 55509013 52631368

  120151953 115253059

Non controlling interest 509331 512076

120661284 115765135

Surplus/ (deficit ) on revaluation of

securities 25298786 26411485

  145960070 142176620

29
4.2 Vertical Analysis of Balance Sheet

  2016 2016% 2015 2015 %

  (Rs. In '000') (Rs. In '000')

ASSETS  

Cash and balances with treasury 7 6

banks 75732185 61265859

Balances with other banks 7201459 0.6 10058662 0.9

Lending to financial institutions 2809752 0.2 2867744 0.2

Investments 556770384 51 566564304 55

Advances 364333516 33 316771355 31

operating fixed assets 35225865 3.2 31536887 3

deferred tax assets -- -- ------ --

Other Assets 34617075 3.2 31915210 3.1

  1076690236 100 1020980021 100

LIABILITIES

Bills payable 13291328 1 11975237 1

Borrowings from financial 8 7

institutions 77438993 118615031

Deposits and other accounts 795689546 85 706239715 84

Sub-ordinate loans -- -- ----- --

Liabilities against assets subject to --

finance lease -- -----

Deffered Tax Liabilities 12889649 1 12482287 2

Other liabilities 31420650 3.3 29491131 4.3

  930730166 100 878803401 100

30
31
Interpretation

Vertical analysis is the proportional analysis of a financial statement, where each

line item on a financial statement is listed as a percentage of another item.
Typically, this means that every line item on an income statement is stated as a
percentage of gross sales, while every line item on a balance sheet is stated as a
percentage of total assets.

The most common use of vertical analysis is within a financial statement for a
single time period, so that one can see the relative proportions of account
balances. Vertical analysis is also useful for timeline analysis, to see relative
changes in accounts over time, such as on a comparative basis over a five-year
period. For example, if the cost of goods sold has a history of being 40% of sales
in each of the past four years, then a new percentage of 48% would be a cause for
alarm.

Cash and balances with treasury banks increased from 6% to 7 % in 2016, Balances with
other banks increased 0.9% to 0.6% in 2016, Lending to financial institutions is same 0.2% in
both 2015 and 2016, Investments increased from 55% to 51% in 2016. Advances decreased
from 31% to 33 % operating fixed assets are same in both years Other Assets decreased
from 3% to 3.2%.

Bills payable is same 1% Borrowings from financial institutions increased from 7% to 8%.
Deposits and other accounts decreased from 84% to 85%. Deffered Tax Liabilities are same
in both years 2015 & 2016. Other liabilities decreased 2% in 2015 and 1% 2016.

32
4.3 Horizontal Analysis

2015 vs
  2016 2015 2016 %

  (Rs. In '000') (Rs. In '000')

ASSETS  

Cash and balances with treasury 2.3

banks 75732185 61265859

Balances with other banks 7201459 10058662 -28

Lending to financial institutions 2809752 2867744 -2

Investments 556770384 566564304 -1.7

Advances 364333516 316771355 15

operating fixed assets 35225865 31536887 11

deferred tax assets -- ------ --

Other Assets 34617075 31915210 8.46

  1076690236 1020980021 5.4

LIABILITIES

Bills payable 13291328 11975237 10.9

Borrowings from financial institutions 77438993 118615031 -34.7

Deposits and other accounts 795689546 706239715 15

Sub-ordinate loans -- ----- --

Liabilities against assets subject to --

finance lease -- -----

Deffered Tax Liabilities 12889649 12482287 3.2

Other liabilities 31420650 29491131 6.5

  930730166 878803401 5.9

NET ASSETS 145960070 142176620 2.6

33
 REPRESENTED BY:

Share capital 11130307 11130307 0

Reserves 53512633 51491384 3.9

Unappropriated profits 55509013 52631368 5.4

  120151953 115253059 4.2

Non controlling interest 509331 512076 -0.5

120661284 115765135 4.2

Surplus/ (deficit ) on revaluation of -4.2

securities 25298786 26411485

  145960070 142176620 2.6

4.4 Interpretation

Horizontal analysis is the comparison of historical financial information over a

series of reporting periods, or of the ratios derived from this financial
information. The intent is to see if any numbers are unusually high or low in
comparison to the information for bracketing periods, which may then trigger a
detailed investigation of the reason for the difference. The analysis is most
commonly a simple grouping of information that is sorted by period, but the
numbers in each succeeding period can also be expressed as a percentage of the
amount in the baseline year, with the baseline amount being listed as 100%.

A common problem with horizontal analysis is that the aggregation of

information in the financial statements may have changed over time, due to
ongoing changes in the chart of accounts, so that revenues, expenses, assets, or
liabilities may shift between different accounts and therefore appear to cause
variances when comparing account balances from one period to the next.

From the above mentioned analysis following are my Result about the Operations of
branches of ZTBL for the year 2016, Assets are things that a company owns and are
sometimes referred to as the resources of the company. An asset is a resource with

34
economic value that an individual, corporation or country owns or controls with the
expectation that it will provide future benefit. Assets are reported on a company's
balance sheet, and they are bought or created to increase the value of a firm or benefit
the firm's operations.

Assets are things that a company owns and are sometimes referred to as the resources

of the company. An asset is a resource with economic value that an individual,

corporation or country owns or controls with the expectation that it will provide future

benefit. Assets are reported on a company's balance sheet, and they are bought or

created to increase the value of a firm or benefit the firm's operations. The Horizontal

analysis result for Assets in ZTBL’s Balance sheet are explained below. Cash &

balences with treasury bank in creased 2.3 %.Balances with other banks decreased

-28% while lending to financial institutions decreased -2% which indicates the

increase in profit for the bank advances increased 15% operating fixed assets in 11%

other assets decreased 8.46. A firm's assets that do not include cash, securities,

receivables, inventory and prepaid assets, and can be convertible into cash within one

business cycle, which is usually one year. Other assets are listed on a firm's balance

sheet, and are a component of a firm's total assets

Due to its sound financial policies ZTBL’s borrowing from financial institutions has
been in decreased by -34.7 % than year 2015. Bills payable increased 10.9% which is
a good sign for the bank. Deposits & other accounts increased 15% the deferred tax
liabilities increased 3.2% & other liabilities increased 6.5%The increased or decrease
in the value of every item in the balance sheet shown above is because of the increase
or decrease in the amount of that item the difference mentioned with the minus sign
shows the decrease in the current year i.e. 2016

35
Horizontal Analysis of income Statement

2016 2015 2015 vs

2016
Profit after taxation 22174145 25035112 -114%
Items not to be reclassified 780529 1719718 -54%
Comprehensive income transferred to equity 22769896 23038566 -1.16%
Items to not reflected to equity 3002653 1007737 197%
Total Comprehensive income 19767243 24046303 -17.7%

Interpretation

Horizontal analysis of the income statement is usually in a two-year format, such as the
one shown below, with a variance also shown that states the difference between the two
years for each line item. An alternative format is to simply add as many years as will fit
on the page, without showing a variance, so that you can see general changes by account
over multiple years. A third format is to include a vertical analysis of each year in the
report, so that each year shows expenses as a percentage of the total revenue in that year.

Profit after taxation For the year 2016 is -114.0% than 2015. which is not a good sign for the
organization.

Comprehensive income transferred to equity for the year 2016 decreased -1.16% than 2015
according to Horizontal analysis it increased -1.16%.Items to be reclassified are increased
197% which increased is good sign .Total Comprehensive income is has decresed -17.7%

36
Vertical Analysis of income Statement

2016 2015 2015 vs

2016
Profit after taxation 22174145 30% 25035112 20%
Items not to be reclassified 780529 10% 1719718 20%
Comprehensive income transferred 22769896 40% 23038566 50%
to equity
Items to not reflected to equity 3002653 20% 1007737 10%
Total Comprehensive income 19767243 100% 24046303 100%

Interpretation

The most common use of vertical analysis in an income statement is to show the various
expense line items as a percentage of sales, though it can also be used to show the
percentage of different revenue line items that make up total sales.   An example of
vertical analysis for an income statement is shown in the far right column of the
following condensed income statement:

Profit after taxation For the year 2016 is 30% and 2015 is 20%. which is not a good sign for
the organization.

Items not to be reclassified In 2016 is 10% in 2015 it is 20% Comprehensive income

transferred to equity is 40% in 2015 it is 50% Items to not reflected to equity in 2016 is 20%
in 2015 it is 10%

37
4.4 Ratio Analysis
Ratio analysis is the most commonly used analysis to judge the financial strength of a
company. It is a quantitative relation between two magnitudes of the same kind. This
comparison allows the firm to detect major operating differences. the main categories of
ratios are.

Acid-test ratio 

The acid-test ratio is a strong indicator of whether a firm has sufficient

short-term assets to cover its immediate liabilities. Commonly known as
the quick ratio, this metric is more robust than the current ratio, also known
as the working capital ratio, since it ignores illiquid assets such as inventory.

The basic formula for the acid-test ratio is: ATR = (Cash + Accounts

Receivable + Short-term Investments) / Current Liabilities. Short-term
investments include marketable securities that can be liquidated quickly.

Cash + Accounts Receivable + RESULT

YEARS
Short-term Investments) /
Current Liabilities.

2015 61265859+2867744+5665643 0.43

04/1463091866
2016 0.34
75732185+2809752+556770384/186135
5514

Interpretation

38
Acid test ratio is not same for both years 2015-2016 2015 it is 0.43 and 2016 0.34 due to
equal increase in the items used to calculate this ratio

4.4.1 Liquidity

The most common liquidity ratio is the current ratio, which is the ratio of current
assets to current liabilities. This ratio indicates a company's ability to pay its short-
term bills. A ratio of greater than one is usually a minimum because anything less
than one means the company has more liabilities than assets. A high ratio indicates
more of a safety cushion, which increases flexibility because some of the inventory
items and receivable balances may not be easily convertible to cash. Companies can
improve the current ratio by paying down debt, converting short-term debt into long-
term debt, collecting its receivables faster and buying inventory only when necessary.

Current ratio
The current ratio is a liquidity and efficiency ratio that measures a firm's ability to pay
off its short-term liabilities with its current assets. The current ratio is an important
measure of liquidity because short-term liabilities are due within the next year.
This means that a company has a limited amount of time in order to raise the funds to
pay for these liabilities. Current assets like cash, cash equivalents, and marketable
securities can easily be converted into cash in the short term. This means that
companies with larger amounts of current assets will more easily be able to pay off
current liabilities when they become due without having to sell off long-term, revenue
generating assets.

Formula

The current ratio is calculated by dividing current assets by current liabilities. This
ratio is stated in numeric format rather than in decimal format. Here is the calculation:

Current Ratio

Current Assets 2015=

61265859+10058662+2867744+566564304+316771355=957527924

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Current Libalities 2015= 11975237+118615031+706239715=836829983

Current Assets 2016= 75732185+7201459+2809752+556770384+364333516

=1006847296

Current Libalities 2016= 13291328+77438993+795689546=886419867

CURRENT ASSET/CURRENT RESULT

YEARS LIABILITIES

2015 957527924/836829983 1.14

2016 1006847296/886419867 1.13

Interpretation

Current ratio showed a decrease in the year 2016 to 1.13% from the last year’s 1.14% which
is not good sign for the organization

Net Working Capital

Net working capital is a liquidity calculation that measures a company’s ability to pay
off its current liabilities with current assets. This measurement is important to
management, vendors, and general creditors because it shows the firm’s short-term
liquidity as well as management’s ability to use its assets efficiently.

Much like the working capital ratio, the net working capital formula focuses on
current liabilities like trade debts, accounts payable, and vendor notes that must be
repaid in the current year. It only makes sense the vendors and creditors would like to
see how much current assets, assets that are expected to be converted into cash in the
current year, are available to pay for the liabilities that will become due in the coming
12 months.
If a company can’t meet its current obligations with current assets, it will be forced to
use it’s long-term assets, or income producing assets, to pay off its current

40
obligations. This can lead decreased operations, sales, and may even be an indicator
of more severe organizational and financial problems.

Formula

The net working capital formula is calculated by subtracting the current liabilities
from the current assets. Here is what the basic equation looks like.

Current Assets 2015=

61265859+10058662+2867744+566564304+316771355=957527924

Current Libalities 2015= 11975237+118615031+706239715=836829983

Current Assets 2016= 75732185+7201459+2809752+556770384+364333516

=1006847296

Current Libalities 2016= 13291328+77438993+795689546=886419867

YEARS CURRENT ASSETS –CURRENT RESULT

LIABILITIES
2015 957527924-836829983 1206979941
2016 1006847296-886419867 120427429

Interpretation

The calculation of this ratio show that net working capital in 2015 was Rs. 1206979941 while
in 2016 it is Rs. 120427429 which decreased

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Debt to Equity Ratio

The debt to equity ratio is a financial, liquidity ratio that compares a company's total
debt to total equity. The debt to equity ratio shows the percentage of company
financing that comes from creditors and investors. A higher debt to equity ratio
indicates that more creditor financing (bank loans) is used than investor financing
(shareholders).

Formula

The debt to equity ratio is calculated by dividing total liabilities by total equity. The
debt to equity ratio is considered a balance sheet ratio because all of the elements are
reported on the balance sheet.

YEARS TOTAL LIABITIES/TOTAL RESULT

EQUITY
2015 878803401/142176620 6.18
2016 930730166/145960070 6.37
Interpretation

Debt to equity ratio for the year 2015 is 6.18% while it increased in the current year 2016 to
6.37%, due to constant increase in the liabilities

4.4.2 Solvency Ratios

Solvency ratios indicate financial stability because they measure a company's debt
relative to its assets and equity. A company with too much debt may not have the
flexibility to manage its cash flow if interest rates rise or if business conditions
deteriorate. The common solvency ratios are debt-to-asset and debt-to-equity. The
debt-to-asset ratio is the ratio of total debt to total assets. The debt-to-equity ratio is
the ratio of total debt to shareholders' equity, which is the difference between total
assets and total liabilities.

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Debt Ratio

Debt ratio is a solvency ratio that measures a firm's total liabilities as a percentage of

its total assets. In a sense, the debt ratio shows a company's ability to pay off its
liabilities with its assets. In other words, this shows how many assets the company
must sell in order to pay off all of its liabilities.
This ratio measures the financial leverage of a company. Companies with higher
levels of liabilities compared with assets are considered highly leveraged and more
risky for lenders.
This helps investors and creditors analysis the overall debt burden on the company as
well as the firm's ability to pay off the debt in future, uncertain economic times.

Formula

The debt ratio is calculated by dividing total liabilities by total assets. Both of these
numbers can easily be found the balance sheet. Here is the calculation:

YEARS TOTAL LIABILITIES/ TOTAL RESULT

ASSETS

2015 878803401/1020980021 0.86

2016 930730166/1076690236 0.86

Interpretation

Debt ratio is almost same for both years i.e0.86 which should be increased but it is same.

Equity Ratio

The equity ratio is an investment leverage or solvency ratio that measures the amount

of assets that are financed by owners' investments by comparing the total equity in the
company to the total assets.
The equity ratio highlights two important financial concepts of a solvent and
sustainable business. The first component shows how much of the total company

43
assets are owned outright by the investors. In other words, after all of the liabilities
are paid off, the investors will end up with the remaining assets.

The second component inversely shows how leveraged the company is with debt. The
equity ratio measures how much of a firm's assets were financed by investors. In other
words, this is the investors' stake in the company. This is what they are on the hook
for. The inverse of this calculation shows the amount of assets that were financed by
debt. Companies with higher equity ratios show new investors and creditors that
investors believe in the company and are willing to finance it with their investments.

Formula

The equity ratio is calculated by dividing total equity by total assets. Both of these
numbers truly include all of the accounts in that category. In other words, all of the
assets and equity reported on the balance sheet are included in the equity ratio
calculation.

YEARS TOTAL EQUITY/TOTAL RESULT

ASSETS
2015 142176620/1020980021 0.13
2016 145960070/1076690236 0.13

Interpretation

Equity ratio for the year 2015 is 0.13% and in 2016 it is 13% which means it is same the year
2015 in current year which is a good sign.

4.4.3 Profitability Ratios

Profitability ratios indicate management's ability to convert sales dollars into profits
and cash flow. The common ratios are gross margin, operating margin and net income
margin. The gross margin is the ratio of gross profits to sales. The gross profit is equal
to sales minus cost of goods sold. The operating margin is the ratio of operating

44
profits to sales and net income margin is the ratio of net income to sales. The
operating profit is equal to the gross profit minus operating expenses, while the net
income is equal to the operating profit minus interest and taxes. The return-on-asset
ratio, which is the ratio of net income to total assets, measures a company's
effectiveness in deploying its assets to generate profits. The return-on-investment
ratio, which is the ratio of net income to shareholders' equity, indicates a company's
ability to generate a return for its owners.

Gross spread Ratio

The difference between the underwriting price received by the issuing company and

the actual price offered to the investing public. The gross spread is the compensation
that the underwriters of an initial public offering (IPO) make to cover
expenses, management fees, commission (or takedown) and risk. The majority of
profits that the underwriting firm earns through the deal are often achieved through
the gross spread. In addition to the gross spread, an initial public offering typically
involves "fixed costs," such as legal and accounting consultants, and registration fees.

Net Interest Margin:

Net interest margin (NIM) is a measure of the difference between the interest income
generated by banks or other financial institutions and the amount of interest paid out to their
lenders, relative to the amount of their assets. It is similar to the gross margin of non-financial
companies

Interest Expenses / Interest Income

Years

2015 31077225/49316160 0.63

2016 23655124/43766900 0.54

Interpretation.

This ratio examines how successful a firm's investment decisions are compared to its debt
situations. The interest margin ratio in 2016 is decreased as compared to 2015 not favourable
for the bank, because investment decisions are not well planed.

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Earning Asset to total assets
An asset that produces money for a company without any work needing to be
done. Earning assets include such things as loan, Lease, stocks, bonds, certificates of deposit,
and generally anything that earns interest or dividends.
Earning assets include loan, Lease, investment securities and money market assets. This ratio
show that the contribution of these assets to total assets.
Interest Earned/Total
Years Assets
2015 80393385/1020980021 0.07
2016 67422024/1076690236 0.06

Interpretation

The ratio of earning to total assets in 2016 is 0.06 and in 2015 it is 0.07which is almost same,
but the increase could be favorable.

Return on Earning Assets.

An indicator of how profitable a company is relative to its earning assets. ROEA gives an

idea as to how efficient management is at using its assets to generate earnings.

Years Net income/interest income

2015 24046303/49316160 0.48

2016 19767243/43766900 0.45

Interpretation

Return on earning assets is decreases in 2016 as compared to previous year, due to inefficient
management of ZTBL, showing unfavorable trend.

46
4.4.4 Efficiency

Two common efficiency ratios are inventory turnover and receivables turnover.
Inventory turnover is the ratio of cost of goods sold to inventory. A high inventory
turnover ratio means that the company is successful in converting its inventory into
sales. The receivables turnover ratio is the ratio of credit sales to accounts receivable,
which tracks outstanding credit sales. A high accounts receivable turnover means that
the company is successful in collecting its outstanding credit balances.

Equity to Total Assets.

The equity to debt ratio show how much ZTBL have equity out of total assets.

YEARS EQUITY/TOTAL ASSETS

2015 142176620/1020980021 0.13
2016 145960070/1076690236 0.13

Interpretation.

This ratio shows the ownership of the bank. In both 2015 and 2016 it is same i.e 0.13%

Non Performing Loan to Total Loan

NPL, are loans that are no longer producing income for the bank that owns them. Loans
become nonperforming when borrowers stop making payments and the loans enter default.
The exact classification can vary from institution to institution, but a loan is usually
considered to be nonperforming after it has been in default for three consecutive months.

Credit to Deposit ratio(CD ratio)

YEARS ADVANCES/ DEPOSITS

2015 316771355/706239715 0.44
2016 364333516/795689546 0.45

Interpretation.

Credit to deposit ratio shows how much bank uses deposit to advances. In 2015 bank use 0.44
% deposit for advances but in 2016 bank use 0.45% deposit for advances.

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4.5 Horizontal Analysis of Profit & Loss

Particulars 2016 % 2015%

Mark-up/return/interest earned -15.825 0.000
Mark-up/return/interest expensed -87.507 0.000

Net mark-up/interest income 29.405 0.000

Provision against non-performing loans and

advances 38.920 0.000
Provision/(reversal) for diminution in the value of
investment -158.617 0.000
Write offs under Government relief packages 0.000 0.000
Bad debts written off directly

105.258 0.000

Net mark-up/interest income after provisions -36.551 0.000

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 30.996 0.000

Dividend income 7.133 0.000
Other income -11.859 0.000
Total non mark-up/interest income -12.217 0.000

-30.120 0.000

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 7.184 0.000

Provision against other assets 379.466 0.000
Provision for stolen fixed assets
Other charges
Total non mark-up/interest expenses 6.965 0.000

-107.828 0.000

PROFIT BEFORE TAXATION -107.828 0.000

48
 Taxation - Current -92.363 0.000
- Prior years
- Deferred -12240.000 0.000

-92.483 0.000

PROFIT AFTER TAXATION -119.457 0.000

Unappropriated profit brought forward 160.791 0.000

Profit available for appropriation -26.348 0.000

Transfer to statutory reserve - -

Transfer to contingency reserve - -

Profit caried forward -26.348 0.000

Basic earnings per share (Rupees) -117.742 0.000

49
4.6 Vertical Analysis of Profit & Loss

Particulars 2005 % 2004 %

Mark-up/return/interest earned 106.091 163.098
Mark-up/return/interest expensed 6.091 63.098

Net mark-up/interest income 100.000 100.000

Provision against non-performing loans and

advances 99.740 147.368
Provision/(reversal) for diminution in the value of
investment -0.012 0.043
Write offs under Government relief packages 0.273 0.000
Bad debts written off directly 0.000 0.000

100.000 100.000

Net mark-up/interest income after provisions 66.804 73.574

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 0.377 0.252

Dividend income 0.771 0.631
Other income 98.853 98.451
Total non mark-up/interest income 100.000 100.000

NON MARK-UP/INTEREST EXPENSES 100.000 100.000

Administrative expenses 99.855 99.651

Provision against other assets 0.494 0.110
Provision for stolen fixed assets 0.000 0.000
Other charges 0.145 0.000
Total non mark-up/interest expenses 100.000 100.000

-3.619 32.306

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PROFIT BEFORE TAXATION 100.000 100.000

Taxation - Current 101.605 99.999

- Prior years 0.000 0.000
- Deferred -1.605 0.001

101.605 99.999

PROFIT AFTER TAXATION -17.641 66.776

Unappropriated profit brought forward 117.641 33.224

Profit available for appropriation 100.000 100.000

Transfer to statutory reserve 0.000 13.355

Transfer to contingency reserve 4.096 0.000

Profit caried forward 100.000 100.000

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4.7 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 ZTBL.

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.
 Net revenue from funds increased by 18% for the current period.
 Provisions decreased by 14%.
 Total income increased by 16%.
 ZTBL 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.
 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.

52
  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 ZTBL.
 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.
 Lenglosses the main reason was that of piling up of large amount of
unrecoverable loans and debts which has adversely affected the image of the
ZTBL.
 Order to reduce expenses for last few years.
 In bank business and selection of employee at each level and thus adversely
affected the bank’s efficiency and effectiveness.
 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.
 Leng
 thy credit processing and documentation procedures.
 Unsatisfactory working conditions.

53
Opportunities
 Growing policies of the GOP on business and economic sectors provide ZTBL
an opportunity to efficiently meet with the business people 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 worldwide control systems
over transfer of currencies through illegal channels has facilitated the area for
the banks.
 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
conditions, religious factor, lack of consistency in policies due to political
instability are some of the other major threats.

54
 Chapter 5

Conclusion & Recommendations

5.1 Conclusion

5.2 Recommendations
These are some recommendations, which are considered that will be helpful in
increasing the picture and performance of ZTBL.

*As ZTBL has its separate department of R&D but it is based at the head office, so it
is immense important to enhance and run it at the grass root level which may help the
branches which are located in the backward areas of the country.

*The Islamic banking system should be adopted, because it is a pure public sector
bank.

*Every branch should be considered as a separate unit and should be evaluated

individually, through this way ZTBL can easily know all the complex activities of the
branch of that areas or localities, and then they can easily solve the problems.

*There is an immediate need to make a new recruitment policy so that the bank can
get properly trained employees who are best suited for the vacant positions. Political
interference especially in recruiting should not be tolerated, and for existing
employees the job description must be clearly defined by this way that the efficiency
of employees should be increased, which is in the favor of the bank.

*ZTBL should minimize the rate of risk on their advances by issuing secure loans to
people/industry, so that they can improve their credit rating as well.

*ZTBL should emphasize on low cost debt financing.

to its customers as compare to other banks and financial institutions.

*It is an opportunity for the bank to launch a loan especially for the students. It will
help the bank to promote and motivate the young blood to participate in the

55
development of economy. Banks which are in highly liquidity problem can utilize this
money by giving to young talent to use their skills.

*ZTBL needs to give special attention to its non-performing loans. Because this
amount has to be written off from profit and loss account. Banks normally introduce
new defaulter schemes to get back at least their principal amount. The ZTBL
authorities need to formulate attractive remission policies in order to induce the
defaulters to pay back their dues.

56
 References

1. Annual Report 2016

2. Annual Report 2016

3. http://ZTBL.com.pk
4. http://ZTBL.com.pk/reports
5. http://www.mainsuit.edu.pk

57