INTERNSHIP REPORT

ZARAI TARAQIATI BANK LTD.

Submited to:

Sir, Fida Hussain Bukhari

Submitted by: Adnan Ijaz M08MBA071 Specialization in Finance

MBA Banking & Finance 2008-2010

Hailey College of Banking & Finance

Internship Report on Zarai Taraqiati Bank Ltd.

2010

University of Punjab

Internship Report on Zarai Taraqiati Bank Ltd. 2010

In the name of ALLAH the most benificent, the most merciful

Internship Report on Zarai Taraqiati Bank Ltd.

2010

ACKNOWLEDGEMENT
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 dua 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.

Internship Report on Zarai Taraqiati Bank Ltd. 2010

Preface
This Internship report is the compulsion put in by Hailey College of Banking and Finance 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 Zari 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.

Internship Report on Zarai Taraqiati Bank Ltd.

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Table of Contents
.................................................................................................. 8 Part One...................................................................................... 8 Ch. 1: Introduction of Zarai Tarqiati Bank Ltd.................................8 Chapter 1..................................................................................... 9
History ..............................................................................................9
Credit Rating................................................................................................................. 11 Corporate Vision............................................................................................................ 12 Corporate Mission......................................................................................................... 12

Corporate Objectives.........................................................................13
Transformation of ZTBL to R.F.I of the country and road to excellence.........................14

Branch Network................................................................................16 Management Hierarchy......................................................................17 Board of Directors.............................................................................20

A Brief Resume of President..........................................................................................21

........................................................................................................24 Kissan Support Services Ltd...............................................................24

KSS Aim......................................................................................................................... 24 KSS Operation............................................................................................................... 24 Objectives..................................................................................................................... 24 Services/Activities so far undertaken by KSS................................................................25

Chapter 2................................................................................... 27
Products and Services.......................................................................27
ZTBL Locker Facility ..................................................................................................... 27

Products offered to Meet Finance Need of Farmers.............................28

Types of Loans Advanced..............................................................................................28

Loan Schemes...................................................................................29
Supervised agriculture scheme:....................................................................................29 Zarkhaiz (one window operation)..................................................................................29 Sada Bahar Scheme...................................................................................................... 30 Tea financing scheme................................................................................................... 30 Crop maximization project............................................................................................31

PER ACRE CREDIT LIMITS...................................................................32

Major Crops................................................................................................................... 32 Minor Crops................................................................................................................... 32 Growing Agro Forest Trees............................................................................................33 Growing Orchards......................................................................................................... 33 Mature Orchard/Fruits crops.......................................................................................... 33

Internship Report on Zarai Taraqiati Bank Ltd. 2010

Types of Security...............................................................................34
Immovable Property...................................................................................................... 34 Moveable Property and Guarantees..............................................................................34 Personal Surety............................................................................................................. 35

Debt Equity Ratio..............................................................................36 Repayment Periods...........................................................................37 Recovery Procedure...........................................................................37

A) Recovery Schedule................................................................................................... 37 b) Issuance of Notices ..................................................................................................37 c) Legal Action ............................................................................................................. 38 d) Rescheduling of Loan Repayment Facility.................................................................38 d) Down Payment for Rescheduling of Loans ...............................................................39

Part Two....................................................................................67 Ch. 5: Assignments I handled during my Internship......................67 Chapter 5................................................................................... 68

Organogram of Mian Channu Branch..................................................68 Redemption of loan...........................................................................69 Opening of Current Account...............................................................73
1: Acquiring Original CNIC.............................................................................................73 2: Filling Current Account Form.....................................................................................74 3: Filling of Know Your Customer Form..........................................................................75 4: Current Account Specimen Card...............................................................................76 5: Registering name in the Current Account Register (Issuance of A/C No.)..................76 6: Filling of Deposit Slip of starting amount...................................................................77 7: Signing by AMO and Manager...................................................................................78 8: Issuance of Cheque book.......................................................................................... 78 9: Opening account in the ledger of bank.....................................................................78 ZTBL Flood Relief Fund 2010.........................................................................................82

Writing of Vouchers...........................................................................84
1. Debit Voucher........................................................................................................... 84 2. Credit Voucher.......................................................................................................... 84 3. Transfer Voucher....................................................................................................... 84

Sample of Debit/Credit Voucher.........................................................86 Sample of Transfer Voucher...............................................................92 Daily Transaction Scroll.....................................................................93 Making Entries in the Ledgers............................................................95 Disbursement and Recovery Entries...................................................95 Revolving SBS Loan...........................................................................97 Opening and Closing Cash................................................................101
Safe Register:.............................................................................................................. 101

Dispatch and Diary..........................................................................102 ......................................................................................................102

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Learning as an internee...................................................................102 Duties.............................................................................................102

Part One
Ch. 1:Introduction of Zarai Tarqiati Bank Ltd. Ch. 2:Products Offered Ch. 3:Financial Analysis Ch. 4:SWOT Analysis

Internship Report on Zarai Taraqiati Bank Ltd. 2010

Chapter 1

The 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.

History
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. 9

Internship Report on Zarai Taraqiati Bank Ltd.

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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 at ensuring 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 stakeholder. 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. Ownership Type of Institution Established President & CEO Equity Headquarters Total Deposits Government Specialized Bank 1961 Muhammad Zaka Ashraf 18.7 Billion (2009) Islamabad, Pakistan PKR 8.8 billion (as Dec.31st, 2009) 10

Internship Report on Zarai Taraqiati Bank Ltd. 2010 Total Disbursement Homepage PKR 77.7 billion (as Dec.31st, 2009) 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 account holders with the average loan size of around Rs.89,000.

Credit Rating
In August 2010, ZTBL continued to achieve AAA credit rating by JCRVIS. Yea Entity r 201 AAA/ 0 A-1+ 200 AAA/ 9 A-1+ Stand Alone B+/ B B+/ B Outl ook Stable Stable

The credit rating of the bank is due to the reason that bank enjoys 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 banks lending book is largely funded through SBPs 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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Internship Report on Zarai Taraqiati Bank Ltd.

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Corporate Vision
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.

Corporate Mission

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.

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Internship Report on Zarai Taraqiati Bank Ltd. 2010

Corporate Objectives
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.

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Internship Report on Zarai Taraqiati Bank Ltd.

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Transformation of ZTBL to R.F.I country and road to excellence.

of

the

The conversion of ADBP into ZTBL had a conditionality of the Asian Development Bank (ADB) loan framework as per which a restructuring exercise was initiated. The restructuring process entailed ADBs Rural Finance Sector Development Program (RFSDP) with the objective to transform ZTBL into a sustainable Rural Finance Institution. It also included the up-gradation of Information technology (IT) infrastructure for which funds from ADBs loan were to be utilized. Healthy and well-functioning rural finance markets are directly related to achieving the two key national policy objectives of accelerating rural/agriculture growth and reducing poverty. The realization of these objectives depends on the simultaneity of developments in rural finance and non-financial markets to foster the creation of diverse sources of rural finance to build sustainable financial institutions, and stimulate products and capital flows in the rural sector. For this, rural finance must be seen as an integral part of equitable development within a framework of macroeconomic stability. For the majority, access to affordable rural finance services is also important to enable them to compete in the post-World Trade Organization scenario. Inability to compete because of high financial costs could reduce income of the majority of farmers and rural clients, particularly the small and subsistence clients. Lack of access to affordable rural finance services will also prevent the clients from switching to non-farm activities. 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;

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 Business processes: streamline products and delivery systems so as to reduce transaction costs, simplify operations, and increase outreach; 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. The reforms shall establish ZTBL as a key R.F.I of the country. By expanding its private sector role, the bank aims to establish network of high tech rural and agri. financial services through intermediations under public private participation and whole-sale -retail lending mechanism.

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Internship Report on Zarai Taraqiati Bank Ltd.

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Branch Network
Head Office
Islamabad, Pakistan

Details of Regional Offices

Total Zones
Total Audit Zones Total Branches

27 9 352

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Internship Report on Zarai Taraqiati Bank Ltd. 2010

Management Hierarchy
The general direction and superintendence of the affairs of the bank are entrusted to a 12 members Board of Directors consisting of a chairman appointed by the Federal Government, the Federal Government officers from the Ministries of Finance and Food and Agriculture, four officers of the four Provincial Governments and one non official nominated by each province. One member on this board represents the State Bank of Pakistan also. However, at present the bank has 7 directors including chairman. The bank also has a president appointed by the federal government and a company secretary. In ZTBL, the president supervises and directs the Chief Executive Officer who supervises and directs the Head of Department, who then supervise and direct the officers under them. The management hierarchy of bank is as follows;

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Internship Report on Zarai Taraqiati Bank Ltd.

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Earlier the bank was functioning like a pure government institution and permission has to be sought on every step for moving forward. Now the bank management board will be fully empowered to run the affairs of the ZTBL. More than 2,000 employees of the bank have opted for Voluntary Golden Hand Shake Scheme, offered by the bank to its employees. Bank has established a task force for improving the operational performance of the staff and it was monitoring the disbursement, recovery operations and performance of field functionaries. The task force comprised 10-15 officers and each officer will head a desk 18

Internship Report on Zarai Taraqiati Bank Ltd. 2010 exclusively to monitor 3-4 regions. This task force will be responsible to evaluate performance of each MCO, Manager and Regional Manager on the achievement of banks policies regarding credit and recovery periodically.

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Internship Report on Zarai Taraqiati Bank Ltd.

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Board of Directors
Syed Qamar-Uz-Zaman Shah Chairman Board Mr. Muhammad Zaka Ashraf President/ CEO

Mrs. Nazrat Bashir Director

Mr. Shafqat Hussain Naghmi Director

Mr. Muhammad Iftikhar Khan Mohmand Director

Mr. Tauqir Ahmad Faiq Director

Dr. Khalid Ahmad Khokhar Director

Mr. Imam Sheikh Director

Bux

Mr. Muazam Ali Company Secretary

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Internship Report on Zarai Taraqiati Bank Ltd. 2010

A Brief Resume of President

Mr. Muhammad Zaka Ashraf

Present Portfolios President/Chief Executive Officer, Zarai Taraqiati Bank Ltd. Chairman & Chief Executive, Ashraf Group of Industries Chairman, Pakistan Sugar Mills Association (Punjab Zone) from October, 2006 (Second Tenure) Chairman, Sugarcane Research & Development Company, Agriculture Department, Government of Punjab President, Petarian Association, Lahore Patron-in-Chief Sindh Abadgar Welfare Association (Sindh)

Posts Held Advisor to Chief Minister Sindh from 1989 to 1990 Member Executive Committee, Lahore Chamber of Commerce & Industry from October 2002 to September 2004 Central Chairman All Pakistan Sugar Mills Association from October 2004 to October 2006

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Vice Chairman of The Federation of Pakistan Chambers of Commerce & Industrys Standing Committee on Food & Agriculture from January 2007 to December 2007

Academic Institutions Member Board of Governors of Sadiq Public School, Bahawalpur, from 1st January 1989 to 2008

Ms. Nazrat Bashir

Director Ms. Nazrat Bashir belongs to District Management Group of Civil Services of Pakistan. She is Masters in Economics from New York University, New York, USA and Master in Psychology from Peshawar University, Peshawar. She has extensively traveled abroad and has attended various international Seminars and Conferences such as on Micro Finance, Anti Money Laundering, and Instruments of Financial Markets etc. Domestically too she has attended various programmes in some of very prestigious institutions of Pakistan. She possesses 29 years of administrative experience in government service in economic & financial policy and its implementation. At present, she is working as Additional Finance Secretary, Internal Finance, Finance Division, GoP, Islamabad. She is a certified Director on the Panel of Pakistan Institute of Corporate Governance (PICG). Besides Zarai Taraqiati Bank Limited, she is on the Board of Directors of National Investment Trust (NIT) and NBP. 22

Internship Report on Zarai Taraqiati Bank Ltd. 2010

Mr. Shafqat Hussain Nagmi Director Mr. Shafqat Hussain Naghmi is a civil servant from DMG Group and currently posted as an Additional Secretary I in Federal Ministry of Commerce, Islamabad. Previously he was posted as Chief Operating Officer (COO) in Pakistan Cricket Board.

Tauqir Ahmad Faiq

Director Tauqir Ahmad Faiq represents the Ministry of Food and Agriculture, Government of Pakistan on ASFs Board of Directors. An expert in District Management, Secretariat Affairs, Development Project Management and International Cooperation with combined experience of 34 years having held the office of Secretary at Government of Punjabs Zakat and Usher, and Social Welfare Departments; he is currently Additional Secretary at the Ministry of Food and Agriculture, Government of Pakistan. Tauqir Ahmad Faiq has served as Director General Lahore Development Authority Government of Punjab and has also been member the Board of Revenue and Population Welfare Department of Government of Punjab. 23

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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 & under take its non core activities.

KSS Operation
Kissan support services operates under its Memorandum & Articles of Association.

Objectives
The main objective 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 banks 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

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 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 seem to the company capable of being conveniently carried on To liaison & establish contracts with agricultural research organizations for development of efficient, effective and appropriate technologies To carry on business of providing consultancy, advisory and other agency services and support services to Zarai Taraqiati Bank Limited To provide to the Banks clients quality products and services for efficient and improved farming

Etc.

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 25

Internship Report on Zarai Taraqiati Bank Ltd. g. Sports club h. Warehouse Management of Sports Activities Management of Sports Activities Photocopy Services

2010

Day to day minor repair and maintenance of ZTBL HQ Buildings

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Internship Report on Zarai Taraqiati Bank Ltd. 2010

Chapter 2
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 10 Shafi Court Branch 11 Main Branch Gulshan-e-Johar Following are the approved rates for rent of lockers and key deposits against which lockers will be allocated: Specificatio Rent Per Rent after grace Key Type n Annum period Deposit Small 6-1/2"x4Rs.1,200/Rs.1,500/Rs. 5,000/1/2"x23" Mediu 13-1/2"x4Rs.1,800/Rs.2,250/Rs. m 1/2"x23" 10,000/Large 13-1/2"x8Rs.2,500/Rs.3,125/Rs. 1/2"x23" 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.

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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.

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Internship Report on Zarai Taraqiati Bank Ltd. 2010

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, godowns and orchard in yearly/half yearly installments within maximum period of 8 years.

Loan Schemes
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.

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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. Schemes 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: 30

Internship Report on Zarai Taraqiati Bank Ltd. 2010 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 till 30th 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 Banks normal rate of return i.e. 9% p will be applicable.

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PER ACRE CREDIT LIMITS

Major Crops
Wheat Paddy (Rice) Sugarcane Cotton Maize 16,000 19,000 30,000 21,000 20,000

Minor Crops
Overall Credit Limit Per Borrower Rs.1.000 Million Sada Bahar Scheme under one window operation or Rs.0.500 Million otherwise Potato Tobacco Mustard Mung Tomato Mash Lentil Groundnut Sunflower Soyabean Canola Rape Seed Til(Sesame) 36000 29000 11000 19000 3000 11000 14000 15000 12000 13000 11000 12500 Bajra Jawar Gram Guara Caster Oil Barlay Berceme Janter Garloc Turmeric Ginger Lacern & Shaftal 11000 11000 12000 3000 6000 9000 4900 4000 26000 25000 30000 4500

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 Suger beet 12000

Mature Orchard/Fruits crops

Pear 24000 Loquat 24000 Plum Growing Orchards 33000 Apple 37000 Papaya 22600 S. Trees 1st Year Almond 32000 No. Coconut 21000 Lichi 1 Mango 24,000 32000 Cherry 33000 2 Citrus 21,000 Mango 37000 3 Apple 23,000 Apricot 31000 Banana 37000 4 Banana 29,000 Peach 32000 5 Jujuba 19,000 Citrus 34000 6 7 8 9 Guava Coconut Palm Oil Dated 21,000 29,000 18,000 33,000 Dates Strawberry Tea Guava Pomegrante 3rd 4th Year Palm Year Olive Oil Walnut 13,000 13,000 Persimen 11,000 13,000 Zizi Phus(Bher) 12,000 12,,000 Melon Water Melon 23,000 30,000 Musk Melon 10,000 10,000 11,000 6,000 7,000 11,000 13,000 7,000 7,000 12,000 31000 25000 60000 24000 33000 5th Year 22000 13000 23000 14,000 15000 13,000 25000 14,000 16000 16000 26,000 16000 10,000 13,000 8,000 7,000 13,000

2nd Year 13,000 12,000 12,000 20,000 9,000 12,000 6,000 6,000 12,000

Growing Agro Forest Trees

SNo. 1 Trees Bamboo 1st Year 34,000 2nd Year 8,000 3rd Year 3,000

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Types of Security
Immovable Property
Under Pass Book System 80% Outside Pass Book System 70% Under Alienability Certificate 66% Commercial/Industrial Land under Pass Book 80%

Agricultural Land

Outside Passbook System

Urban Residential/Commercial Plots in all localities outside Pass Book 75% Alienability Certificate 66% Residential/Commercial Buildings 70% Lease hold rights of a leased land of CDA/KDA with 99 years lease 70%

Moveable Property and Guarantees

1. Unconditional Bank guarantee from scheduled Banks
Up to maximum amount of an un-conditional Bank guarantee after keeping sufficient margin for un-paid mark-up, cost, charges and expenses.

2. Guarantee issued by Central or Provincial Government

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 Full amount of loan plus return and other charges.

3. Government securities
85% of face value or market value whichever is less.

4. Defense Savings & FEB Certificates

75% of value of certificates presented as security.

5. Fix Term Deposits Receipts

85% of face value of deposits receipts.

6. NIT Units
80% of the face value or market value whichever is less.

7. Life Insurance policies

85% of surrender value

8. Pledge of Potatoes/Seed Potatoes price or market value which ever is less Up to 75% of Govt. support.

Personal Surety
Against a bond with two sureties under General Credit and one surety in Special Schemes up to Rs.25,000/- or Up to 50% of appraised value of properties of sureties.

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Debt Equity Ratio

For Tubewell/Tractors/Implements/Attachments/Equipments
All kinds of Tubewells/ Turbines New Tractor 25% No equity but 10% of the loan is to be needed in PLS Account -doWithin 5 years in annual/biannual installments commencing one year after first disbursement Within 8 years in monthly/quarterly or half yearly installments to be decided by Manager in consultation with borrower. Within 5 years in monthly/quarterly or half yearly installments to be decided by the Manager in consultation with borrower.

Used Tractor, Equipments/ attachments/ implements and used tractor

Except Tubewell/Tractors/Implements/ Attachments/Equipments Production Loan upto Rs.0.100 Million Land holding upto 25 acres/loan amount upto Rs.0.2 Million Land holding beyond 25 acres to 50 acres/loan amount beyond Rs.0.2 Million upto Rs.0.5 Million Land holding beyond 50 acres/loan amount beyond Rs.0.5 Million upto Rs.1 Million. NIL 15% 25% 30%

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Repayment Periods
S. No. 1 Types Loans of Recovery Period
Crop production working capital loans recoverable in lump sum commencing after the harvest/marketing of respective crops and within maximum period of 12 months. Dairy farming and livestock etc. In yearly/half yearly/monthly installments and within maximum period of 5 years. Tractor, agricultural machinery, poultry farming, godowns and orchard iIn yearly/half yearly installments within maximum period of 8 years and. above. Short Term Loans Medium Term Loans Long Term Loans

2 3

Recovery Procedure
A) Recovery Schedule
Recovery schedule in each loan case as per terms of sanction of loan is fixed and communicated to the borrowers after disbursement of loan. In case of default or failure in repayment of any installment on due date the mark-up shall continue to be charged and last installment due to this may differ from the amount of installments fixed at the time of disbursement.

b) Issuance of Notices
Demand notice is issued before the due date of every installment. A Legal Notice is issued one month after the due date informing the borrower that if the amount is not repaid within next one month, further legal action will be taken to recover the dues.

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c) Legal Action
Legal action can be initiated against the defaulter if loan is not repaid even after expiry of legal Notice period. Where the court in bank's favour has decreed a case, account is to be settled by recovery of amount from the auction of the mortgaged property. The bank may purchase the mortgaged property if considered feasible to dispose it off later on through auction or in any manner deemed fit for getting the best price. The bank may dispose off the mortgaged properties of defaulters for satisfaction of its dues with out intervention of courts under Financial Institutions (Recovery of Finances) Ordinance 2001.Rescheduling of Loan Repayment Facility .

d) Rescheduling of Loan Repayment Facility

ZTBL allows rescheduling of repayment of installments to its borrowers in order to maintain credit discipline and to mitigate their genuine problems in real hardship cases and in areas declared as calamity hit by the respective Provincial Governments The Rescheduling facility is to be considered by bank on case tocase basis and is to be allowed on borrower's request only. The relaxation in recovery period shall not be allowed beyond one year in any case. The borrowers shall have to execute a supplementary loan agreement on Non Judicial Stamp Paper of appropriate value to give legal cover to extended period.

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 The borrowers shall have to pay the return for the extended period.

d) Down Payment for Rescheduling of Loans

Rescheduling Number 1st 2nd 3rd Rate of down payment as against due installments to be rescheduled 10% 20% 30%

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SWOT analysis ZTBL

Strengths:

The total assets of the Bank stand at Rs.84 billion with authorized capital of Rs.25 billion as of 31.12.2005, with a nation-wide working strength comprises 5500 employees. The share of ZTBL in total national institutional agricultural credit remains around 35%. ZTBL has a recovery ratio of 85%. ZTBL has a social network of MCOs that work in every remote corner of country, where any other commercial bank cant dare to work. Utility bills, hajj schemes applications are being collected by ZTBL. It has introduced locker facility in some limited branches.
They have good cooperation with farmers; they meet them at least one time in a week, which produces good cooperation among them.

Weaknesses:
ZTBL has a less number of people who have technical skill of computer and information technology. Up till now many branches could not be brought to online system. As the ZTBL has to deal with the illiterate farmers that is why it has to keep itself as simple as the farmers mentality. The employees are promoted after a very long time that causes a distress among employees. Many branches still practice their daily transaction by book, which makes banking laborious and time consuming. Branches of ZTBL are ill equipped, less and poor quality furniture is provided.

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Internship Report on Zarai Taraqiati Bank Ltd. 2010

Record keeping is poorly practiced.

Opportunities:
ZTBL has a great potential to serve general banking. Deposit system introduction can generate funds for the bank.

By making investment in new areas. Senior employees compliance with coordinators can enhance their working abilities. By developing technical education, the bank can increase its progress.

Threats:
Book keeping is proven to be a greater threat for ZTBL as there is danger of record loss. There is no availability of online record which can produces confusions among loonies. Although the recovery ratio is round about 85% but it is only window dressing and not the actual one. There is no maintenance of duties by the staff. Their interest ratio is round about 9% per annum, which is very low from other commercial banks.

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ORGANIZATIONAL CHART OF OPERATIONS DIVISION

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AIM OF OPERATIONS DIVISIONS

To ensure efficient and sound operations of the field organization of the bank, dissemination of agricultural technologies, make better provision for affording efficient banking facilities, develop liability products.

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OBJECTIVES OF OPERATIONS DIVISION

1. Develop viable business products / services and achieve business targets. 2. Develop the business plans for the bank. 3. Enable farmers to enhance the agricultural productivity by mechanization. 4. Improve field operations and control system. 5. Control and monitor field activities.

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FUNCTIONS OF OPERATIONS DIVISION

1 .Develop and market new products / services, evaluate current product / services to maintain and enhance competitive edge on Bank products. 2. Allocate deposit targets to zonal offices and its monitoring. 3. Support business development. 4. Analyzing and identification of weak areas. 5. Development of field expansion program. 6. Evaluation of the performance of branches and zones. 7. Carry out test and trial, of new viable agricultural technologies. 8. Dissemination of technical agriculture knowledge.

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ZONAL OFFICE SETUP

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LARGE BRANCH SETUP

LOAN PORTFOLIO: MILLION RUPEES

47

ABOVE

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MEDIUM BRANCH SETUP

LOAN PORTFOLIO: 3OO TO 700 MILLION RUPEES

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SMALL BRANCH SET UP

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MARKETING STRATEGY OF ZTBL:

ZTBL LAUNCHES CARBON CREDIT SCHEME:
IslamabadThe Zarai Taraqiati Bank Limited (ZTBL) has launched a proactive strategy to adopt all the economically viable technologies feasible for Pakistan to mitigate the effects of climate change. According to ZTBL press release, the proactive strategy has been formulated to capitalize the great business opportunity in trading carbon credit and solution to the problems of climate change, habitat loss rural poverty. The bank has made an agreement with CDBPAK, as consultants to quantify and capitalize carbon credits for ZTBL Carbon Credit, it added. It said that in view of changing climate patterns the agriculture sector was undergoing phenomenal changes including water scarcity, temperature variations, low soil fertility, increasing population, decreasing farm sizes and require a paradigm shift in the approach towards the agriculture The target clients of the ZTBL are farmers, who need to be apprised about using cheap and renewable sources of energy as well as water conservation techniques to reduce carbon emission and at the same time enhancing the agriculture productivity at their end, it added. Realizing the challenges of the global climate changes in the 21st century ZTBL has emerged as a pioneer in the

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 sector, the press release said adding that it has assumed the role of a green bank by adopting an environment friendly approach Agencies.

GIVING LOANS ON EASY TERMS:

Bahawalpur: On the special directives of President Asif Ali Zardari, Zari
Taraqiati Bank Limited (ZTBL) is giving loans to farmers on easy terms and conditions so that enhanced production of agricultural crops could be achieved. This was stated by President ZTBL Ch. Zaka Ashraf while talking to APP here. He said under a special package, ZTBL provides 90% investment to the growers

And all out efforts are being made to make them self-reliant and bring prosperity to the country. Ch. Zaka Ashraf told that 10,000 tractors have been provided to the farmers while 20,000 more tractors will be given to growers under Benazir Tractor scheme, adding loans will also be given to the growers under the scheme. President ZTBL said that loans worth Rs. 72 billion will be given to the farmers while solid steps are also being taken for the recovery of Rs. 75 billion from the defaulters. He said, the government wanted to bring green revolution in the country. Latest methods are being introduced and utilized to achieve the target, he added.

CAREER FOR MANAGEMEN TTRAINEE OFFICERS:

ZTBL has the pride of being the largest Financial Institution in the rural sector of the country. The Bank continues to operate as premier Financial Institution catering to the credit needs of agriculturists for the development and modernization of agriculture as well as promoting Cottage Industries in rural areas. So we are looking for committed & enthusiastic individuals to fill the positions of MTOs for operations of the Bank in Finance and Accounts. Fresh MBAs or maximum one years experience may also apply.

ZTBL AND FLOW OF RURAL CREDIT:

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One of the marketing strategies of Zarai Taraqiati Bank Limited is the increasing flow of rural credit. As we know that the agriculture is the crucial contributor to the national economy: Contributes a quarter to GDP. Employs 47% labor force. Over 50% of industrial production comes from agro business. Earns (directly or indirectly) 70% of export revenue. Provides livelihood to 67% rural households.

Vast Majority of poor live in rural areas (nearly 80% of all poor live in rural areas). Poor are mainly dependent on agriculture for their food and livelihood security Livestock is an important of livelihood for the poor. Agricultural growth contributes most to poverty reduction. Through forward and backward linkages, agriculture. Contributes to rural economy (farm and non farm) and creates livelihood for poor in the nonfarm sector. The main source of agricultural growth includes: Dates, Mangoes, Citrus and Potatoes are high value potential horticultural crops. Floriculture is fast growing sub sector, influencing domestic as well as export markets. Remunerative opportunities exist for entrepreneurs in agri-business identified high return agri-businesses include:

Livestock fattening.
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Internship Report on Zarai Taraqiati Bank Ltd. 2010

Milk collection and chilling. Cut flowers. Fruit processing.

Accelerated growth of agriculture, especially of high value agricultural activities, will continue to be cornerstone of Government overall strategy to reduce poverty. ZTBL and micro-finance institutions; need to increase flow of rural credit. During 2005-06 ZTBL disbursed Rs48 billion credits and total credit 137 billion, meeting less than one third of the total demand for Credit.

Cumbersome legal process and lack of political will creates problem for loan recovery. Access to credit remains limited and restrictive by lengthy processes and smallholders are generally left out. But in ZTBL the process is too shortened and easily accessible that all the smallholders are entertained.

MARKETING STRATEGIES OF ZTBL:

There are a number of marketing strategies of Zarai Taraqiati Bank Limited some of these strategies are listed below;

Crop Insurance:
The Benazir Credit Card Schemes and Crop Loan Insurance Schemes have also been introduced for the benefit of cotton, rice and other crops growers. Crop insurance Schemes have been considered an impractical dream by the insurance sector for quite long, but innovative solutions designed by National Insurance have made it a practical option. NICL and National Bank of Pakistan have prepared an Agri Loan Insurance Policy properly supported and backed by the re-insurance arrangements at a reasonable competitive cost. Through this collaboration, agri loans of more 53

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than Rs.30 billion have been provided insurance cover. Similarly, ZTBL has also been provided the facility of Agri Insurance Cover.

Tractor Scheme:
The Tractor Scheme was launched to provide tractors to the farmers at a subsidized price. A large number of tractors are to be distributed amongst the farmers on very low interest rates. The ZTBL is supplying high efficiency irrigation system to farmers to improve agricultural activity in areas of scarce water. ZTBL provides tractor to farmers that have 10 acres agricultural land. The recovery of loan is on easy terms. The farmers have to pay back the loan in 8 years. The installment is semiannually

Which is round about 50,000 rupees? In this way the farmers can easily pay back the amount.

Availability of Quality Seeds:

ZTBL decided to ensure the supply of quality seed, one of the most important inputs in crop production, to have maximum yields in all crops. As a result, production of almost all major crops, including wheat, rice, maize, gram, moong and pearl millet, rose significantly. A special project of improving vegetables seeds at local level has also been initiated.

Agricultural Loans:
During 2008-2009, the Government earmarked Rs.250 billion, higher by 20% over the preceding year, for banks to finance the farming community. This amount for the current fiscal is Rs.260 billion for major and minor crops, orchards and forestry. Credit limit was increased because of rising prices of all inputs including electricity. Crop loan insurance scheme was also introduced to enhance the access of farmers to agricultural loans. Provision of agricultural credit to farmers facilitated them to procure the costly inputs in order to ensure the target planting and production of various crops. A new Agriculture Mode Village Program has been initiated in 26 villages under the auspices of Zarai Taraqiati Bank Limited 54

Internship Report on Zarai Taraqiati Bank Ltd. 2010 (ZTBL). The objective is to organize the farming community at the village level ensuring farmers easy access to agri credit.

ZTBL and Field Work:

One of the main marketing strategies of Zarai Taraqiati Bank Limited is the field work. Through which the ZTBL officers visit the agricultural land and meet the people, in this way they are able to know about the forming land and also about the people. And the people too became conversant with the officers and in this way they are able to know about the lending schemes. ZTBL is also promoting hajj and umrah schemes.

BUSINESS PROCESS ANALYSIS:

ZTBL AND ENHANCEMENT OF CROP PRODUCTIVITY:
The economy of Pakistan is predominately agrarian in character. Despite progress in other sectors the agriculture sector is contributing about 25% towards the GDP. About 67.5% of the total population lives in rural areas and the agriculture is main source for their livelihood. About 44% of the labor force is engaged in agriculture sector and about 70% of the direct and indirect income is generated from this sector. The agriculture sector is multi-segmental. Majority of our farm community comprised of subsistence farmers who are not in a position to use high quality seeds, sufficient fertilizers and improved farm implements due To the lack of finances available to them. Lack of finance is one of the main reasons for low per acre productivity in our agriculture. The matter of enhancing agricultural productivity therefore largely depends on the availability of finance and credit facility available to the farmers in their respective areas (ADBL, 1996). Every modern business is operated on capital or borrowed capital. Similarly, farming also requires capital. The need for farm credit in increasing production and effective utilization of farm resources is quite clear. Farming not only require credit in the form of improved seeds, fertilizer and modern implements but also 55

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requires liquid capital for financing harvesting, haulage of produce and other similar farm operation (ADBP, 1996). In Pakistan there are two major sources of agricultural credit, non-institutional and institutional sources. The non-institutional credit suppliers include friends; neighbors and professional moneylenders are the main source of credit in the country. Institutional sources comprise of cooperative banks, Zarai Taraqiati Bank Ltd. (ZTBL), nationalized and privatized commercial banks and Taccavi credits (ADBP, 1996). Zarai Taraqiati Bank Ltd. (ZTBL) consolidated and intensified its operation to play an effective role in financing of farm investments to modernize agriculture, increase farm production and raise farm income. The bank continued to push forward the on-going programmes and projects relating to provision of credit and technology to targets groups covering landless, subsistence, small farmers and rural women through its credit programmed (Government of Pakistan, 2001).

The objectives of the study were as under: Analyze the utilization of credit by small farmers in the study area, Compare the effects of utilization of credit on crop production and income of beneficiaries without credit and with credit. Suggest measures as to how the present credit scheme can further be improved. The present study was conducted to examine the utilization and effects of short-term credit from Zarai Taraqiati Bank Ltd. (ZTBL) at Tehsil Kabul area of district Swat in August 2003. Eighty respondents were selected in which forty were the beneficiaries of ZTBL and the remaining forty were the nonbeneficiaries selected from the same area. Paired sample t-test was used to compare the production and income of the beneficiaries without credit and with credit. Independent sample t-test was used to compare the production and income of beneficiaries with non-beneficiaries. On overall basis beneficiaries farmer utilized 78.84% of the amount of credit for the purpose it was received. While the remaining amount i.e. 21.15% was mis-utilized. Per acre production of beneficiaries with credit for tomato, wheat, maize and onion 56

Internship Report on Zarai Taraqiati Bank Ltd. 2010 were 170.4 maunds (1 maund equal to 50kg), 24.6 maunds, 39.4 maunds and 152.4 maunds, respectively. In case of beneficiaries without credit it was 139.6 maunds, 18.93 maunds, 30.3 maunds and 130.7 maunds, respectively on per acre basis. While in case of non-beneficiaries it was 144.5 mounds, 19.25 maunds, 32.2 maunds and 135.3 maunds, respectively on per acre basis. Net return of beneficiaries with credit for tomato, wheat, maize and onion was Rs.17410.9, Rs. 3908.67, Rs. 7695.75, and Rs. 16450.5, respectively on per acre basis. While beneficiaries without credit it was Rs. 11863.21, Rs. 2195.54, Rs. 5981.17, and Rs. 10968.9, respectively on per acre basis. In case of non-beneficiaries it was Rs. 13616.85, Rs. 2830.15, Rs. 6600.88, and Rs. 13465, respectively on per acre basis.

ZTBL AND BUSINESS SCHEMES:

ZTBL (Zarai Taraqiati Bank Ltd) formely known as Agriculture Development Bank of Pakistan has been struggling since the last couple of decades to optimize its operational efficiency. There has been tremendous pressure both by the State

Bank of Pakistan and BOD to design and implement an effective Enterprise Resource Planning (ERP) system using Information Communication Technology to enhance Regulatory Compliance, offer better KPI monitoring and improved real time Management Information System enabling the Bank to launch new ICT based schemes/products for farmers and HR Performance Management System.. After a considerable lapse of time; ZTBL has experienced in the last two years a most productive growth. The executive management has managed to successfully convert the highly demoralized non-productive HR workforce into productivity mode. Through the newly revamped productive HR workforce the Bank has posted an overall 1.6 billion rupees in profits.. The Information Systems Division has been reorganized and revamped through the induction of highly skilled and seasoned human resource and has enabled the bank to do on-line loan processing using the banks own newly established Wide Area Network (WAN). The efforts of the ISD development team towards the successful modification of the architecture of the legacy loan processing system

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has resulted in effectively conserving more than twenty years of continuous business processes improvements of investment. Through the successful modification in the architecture of the existing legacy system; ISD has enabled the field offices to run real-time online processing jobs centrally running on the servers at Head Office Data center. This improvement now offers the entire portfolio of products and services to the branch offices. The Branch staff can now entertain loan processing application, recovery and/or release of installments under products like regular loan, Sada Bahar, White revolution etc on the terminals in the branches. This radical new development in the Banks ICT infrastructure has offered tremendous operational efficiency. For example in the past the Branch office staff conducted business manually and then hardcopies of the transaction data was manually fed into the system on a weekly basis at the zonal offices. Upon completion of the data entry of all branch offices within a zone was completed, the Zonal office would then dispatch the consolidated data on tape cartridges through courier services to the head office. Due to this process; at

Times considerable delays were experienced by the Bank for the compilation of consolidated nationwide bank position. There had been numerous monitoring, reporting and performance management issues just because of the fact that HO was not able to have complete digitized record of business transactions. The newly revamped Centralized loan processing system would now enable the bank to improve the operational efficiency tenfold with an overall reduction of operational expenses. The Bank has selected ORACLE ERP in order to revamp the entire BackOffice operations. In this regard, ORACLE University is currently conducting a two and half months long rigorous training program for more than 120 bankers. In order to fulfill State Bank regulatory compliance with reference to the maintenance of NADRA verified client records; ISD has successfully conceived, 58

Internship Report on Zarai Taraqiati Bank Ltd. 2010 designed and developed an integrated end to end loan processing system by mapping the ZTBL loan processing system to NADRA data base with a further integration to the State Bank of Pakistans eCIB database. Also the Loan processing system, Deposit Management system, NADRA verification and Customer Credit worthiness are all seamlessly integrated together. Since a few months ago, Data Cleansing in conformity to SBP and ZTBL business procedure was conceived as difficult, if not impossible as the entire physical record was available in the branches and there was no interface even at Zonal offices to verify physical record with computerized loan processing system, NADRA and SBP-CIB system. ISD has also designed, developed and implemented Deposit Management System at Branches as an extension of loan processing system. Most modern database management system is being used to digitize the existing semi manual deposit management system. DMS has been designed to allow the bankers to post transaction themselves by using most modern concepts like photo and signature verification on the screen. With the deployment of the new system; all records would now be verified by NADRA, checked for credit worthiness from the State Bank.

It has been planned that by the end of June, 2008, more than 250 branches would be equipped with necessary hardware with preinstall DMS and NADRA verified clients from on-line processing system.

EUROPEAN UNION AND ZTBL:

ZTBL was poised to serve the technical needs of the entire community. The Bank took lead in serving over 0.5 million farmers and hoped to extend its outreach to strengthen the agriculture sector. It was said by president ZTBL, MUHAMMAD ZAKA ASHRAF on the meeting held at head office before European Union delegates. He said that ZTBL was poised to play more proactive role for the 59

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development of agriculture sector and alleviate rural poverty. This would have lasting impact in modernizing and boosting agriculture sector for the country. The president said that through its countrywide network the ZTBL being the largest financial institution has achieved the highest landmarks of performance during the last two years as it increased its disbursements from Rs.56 Billion to Rs.77 Billion, recovered Rs.73.8, and earned Rs4.6 Billion profit before tax. This has given financial strength and viability to the bank. He further appraised that code of corporate governance and control system has also been implemented.

CHINESE FIRM AND ZTBL:

China would introduce alternate energy technology for agriculture development in Pakistan that would facilitate the farmers to meet their energy needs through alternate resources in cost effective manner. Most recently ATBL has inked an agreement with Chinese firm Ms Xi` an Hong Yuan equipment in Islamabad. Under the agreement, the company will bring equipments for demonstration at their own cost and expanse. They will make demonstration of their own

Equipment to introduce new technologies and make available for the forming sector. On successful demonstration the product will be marketed through kissan support services. Speaking on the occasion, the president ZTBL Ch Muhammad Zaka Ashraf expressed the hope that the agreements would a long way in promoting the agriculture in the country besides benefiting the farmers.

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COMPETETIVE STRATEGY OF ZTBL

COMPETETIVE STRATEGY:
The strategy by which the organizations producing same or substitute products compete with each other. The fourth specialized government-owned bank, Zarai Taraqiati Bank Ltd. (ZTBL), needs financial and operational restructuring. This bank is highly strategic, as it provides about one third (31.7%) of all credit to the agriculture sector. Different public sector approaches have failed in the past to 61

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transform ZTBL. The most important unresolved issue is its excessive debt liabilities as well as shareholding pattern. SBP has proposed that the Government should pave the way for its eventual privatization, considered to be critical for augmenting its scale and efficiency.

Agricultural Credit:
Credit requirements of the farming sector have been increasing over the years mainly due to the rise in the use of fertilizer, pesticides and mechanization. In order to cope with the Agriculture increasing demand for agricultural credit, institutional credit to farmers is being provided through Zarai Taraqiati Bank Limited (ZTBL), Commercial Banks, Punjab Provincial Cooperative Bank Ltd (PPCBL) and Domestic Private Banks. The Government has allocated Rs 160 billion for agriculture credit disbursements for the year 2006-07 which is 23.1 percent higher than the allocation of the preceding year i.e. Rs 130 billion. The allocations, however, are totally voluntary and indicative in nature as the mandatory allocations policy has been totally phased out and the allocations for commercial banks have also been made indicative. The elimination of mandatory credit allocations coupled with active involvement of commercial banks in agricultural finance is major milestone achieved towards mainstreaming of Agricultural finance in the countrys financial system. The flow of necessary funding to the sector will now be ensured through conducive policy and regulatory environment, policy advocacy and promotional initiatives and monitoring of agri-disbursements and portfolio build-up plans. Out of the total

Credit target of Rs 160 billion, Rs 80 billion were allocated to commercial banks, Rs 48 billion to ZTBL, Rs 9 billion to Punjab Provincial Cooperative Bank Ltd., and Rs 23 billion to Domestic Private Commercial Banks. The agricultural loans extended to the farming community during July-March, 2006-07 are discussed below:

a) Production and Development Loans:

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 Agricultural loans amounting to Rs. 104.8 billion were disbursed during (JulyMarch, 2006-07) as against Rs.91.2 billion during the corresponding period last year, thereby registering an increase of 15 percent. The share of ZTBL in supply of total agricultural credit by institutions increased and was 32.9 percent during (JulyMarch, 2006-07) while it was 31.8 percent during the same period last year. However, the share of Commercial Banks has surpassed the share of ZTBL; it was 46.8 percent of the total agricultural credit disbursed during July March 2006-07. While the share of PPCBL has also slightly increased as it stood at 5 percent in supply of total agricultural credit by institutions. The share of domestic private bank has increased; it was 15.3 percent as compared with 12 percent in the corresponding period of last year. Supply of agricultural credit by various

b) Loan under One Window Operation:

ZTBL has launched a one-window operation to enhance credit facilities particularly to small farmers. This will facilitate to cater for purchase for inputs during peak sowing season of both Rabi and Kharif Crops with the collaboration of Provincial Governments, Revenue Officials and Postal Authorities. Agriculture Pass books are issued at the spot to intending new borrowers. Their land record is entered and loans are sanctioned at focal points whereas payments are released on the very next day from the concerned branch. During July-March, 2006-07, an amount of Rs 9.069 billion has been disbursed under this scheme.

c) Revolving

Scheme:

Finance

Scheme/Sada

Bahar

For providing timely input loans for crops and working capital for dairy, poultry and fisheries, the ZTBL launched Sada Bahar Scheme (SBS). Under this scheme credit requirements for inputs for the whole year is assessed and made available to the borrower. The Managers are authorized to sanction loan up to Rs. 0.5 million. During (JulyMarch, 2006-07), ZTBL has disbursed loans of Rs. 30.912 billion under Revolving Finance Scheme (RFS) and Sada Bahar Scheme 63

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(SBS) as against Rs. 24.149 billion disbursed during corresponding period of last year, indicating an increase of 28 percent.

d) Credit to Women Program:

The major objective of this programme of ZTBL is to make credit more accessible to rural women through Female Mobile Credit Officers (FMCOs). Under Credit to Women Program, women can meet their credit needs through both Micro Credit & General Credit Scheme. Presently, 17 FMCOs are exclusively looking after credit needs of women in 17 branches of the Bank, whereas female borrowers may also obtain loan through male MCOs throughout the country. During (July March, 2006-07) loans of Rs. 99.572 million have been disbursed under this programme.

e) Micro Credit Scheme:

Under the Micro Credit Scheme of the ZTBL, all the Mobile Credit Officer working in the branches process micro credit cases both for men and women to engage rural poor in income generating activities/cottages industries. Financing under this program is provided for 136 loanable items. All loans are recovered within 18 months of their advancement.

f) Crop Maximization Project:

In order to augment the efforts of the Government to enhance productivity on sustainable basis, Ministry of Food, Agriculture and Livestock (MINFAL) and Zarai Taraqiati Bank Limited (ZTBL) have launched, Crop Maximization Project. The project aims at assisting the farmers to increase agriculture production. A total of 109 villages are being covered under this project. In the project villages, Village Organization (VOs) have been established which organize the farmers and assist them with the collaboration of Agricultural (extension) Staff in 64

Internship Report on Zarai Taraqiati Bank Ltd. 2010 achieving the maximum productivity through proper use of inputs, water saving devices and modern agricultural technology. Farmers owning up to 25 acres land are entitled to receive loan from project credit line through Mobile Credit Officers. Under this project Rs 371.403 million has been disbursed during JulyMarch, 2006-07.

ENHANCING THE COMPETETIVENESS:

To enhance the competitiveness, ZTBL is focusing on continuing to broaden and deepen the financial system further. To prevail in the industry Zarai Taraqiati Bank is Reviewing the actual behavior and conduct of banks related to its structure and than taking the required actions. Resisting contestability. Development of non-bank financial intermediaries is promoting competitiveness Increase demand for advances results in a need for higher deposit mobilization which increases competition. Interest rates in Pakistan are usually non-transparent. Ninety percent of deposits are remunerated through profit and loss sharing arrangements rather than at explicit interest known to the depositor in advance. But in ZTBL the interest rates are known to the depositor in advance. That is a good competitive strategy and due to this strategy, the bank is on the way to success. To improve transparency in the pricing and documentation of loans, ZTBL has been barred from including any clause in the loan documents that could allow them to change lending rates unilaterally and make

Explicit all service charges so that the borrower will not incur hidden charges during the term of the loan. Growth in agricultural credit recovered in financial year 2008, after a relative slowdown in the preceding two years. The agricultural credit disbursements rose to Rs. 211 billion in financial year 2008, up by 25.4 percent. The domestic private banks fared well both in disbursements and in the recoveries while specialized banks could not maintain their market share. A strong resurge in the number of borrowers is also a welcome 65

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development during financial year 2008. The number of borrowers increased to 1.28 million during financial year 2008 as against a declining trend in the previous three years. Despite, rise in interest rates amid monetary tightening, a significant increase in agricultural credit and number of borrowers during financial year 2008 is principally attributed to 5 Agricultural credit disbursement target for financial year 2009 is set at Rs. 250 billion. The main thing to say is that about 25% of this agricultural credit is taken from Zarai Taraqiati Bank Limited. The structural changes in agricultural credit are shown below which manifests that the major share of agricultural credit is received from specialized banks and ZTBL is the leading one.

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Part Two
Ch. 5:Assignments I handled during my Internship.

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Chapter 5
Organogram of Mian Channu Branch

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Redemption of loan
On the payment of all the dues by the loanee (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 loanee 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. These entries usually made on the page 28 and 30. The example of entries is given below. The following entries are made on page 28. See page number 16 and block number 3 The entire loan for detail. including interest has been paid by the (Here page number 16 loanee. shows the number and date of last charge created against the land of loanee in the favor of bank) The following entries are made on page 30. See page number 18 and block number 8 for detail. 69

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(Page number 18 is usually the page where the detail of land mortgaged has been given, it include the area of land, khatoni number etc)

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 with in 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 loanee is given the date of next week to collect his Passbook. During this period AMO checks the record of the loanee 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 loanee. The AMD (Assistant Manager) and Manger both also sign the notice issued in the name of Patwari and Tehsildar that the land can be transferred to the loanee 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 loanee in the Dispatched Register. On the issuance of Passbook to the loanee, 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 loanee 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 70

Internship Report on Zarai Taraqiati Bank Ltd. 2010 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 loanee with notice to Tehsildar to transfer land back to his name After the land is transferred to the loanee name, if he wishes he can withdraw the amount from his current account and can close his account. Usually the loanees 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 71

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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.

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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, (Issuance of 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.

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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 Name Father Name CNIC Number Address Occupation Nationality Contact number Date of birth Marital status Mother name Name, CNIC, Contact of MCO who knows the person personally Next of Kin (The person who will have right to operate the account in the event of the account holders death or any other mishap) Starting amount

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3: Filling of Know Your Customer Form

The Know Your Customer form is also attached with the current account opening form and contains the following information: Name Account number CNIC number Address Purpose of opening of account Monthly income Source of income Type of customer (i.e. Walk in) Public figure Usual mode of transaction (i.e. in cash, cheque) Etc.

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4: Current Account Specimen Card

Name: Adress: Name of Account Holder Account No. Type of Account: Name of Account Holder

This side is used to write the name This side is used to obtain the of account holder both in Urdu and signatures of the account holder English. 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 Date Number: It is Opening account number Account issued to holder. It is a serial number, so I used to write the next of Opening of Balance Account Name: of Father name: Address:

Adnan Ijaz 76

Internship Report on Zarai Taraqiati Bank Ltd. 2010 number when I have to open an account. 15-09-2010 Example: 1567 When the account number is issued, it is also written in the Account Opening Form and Know Your Customer Form. S/O Ijaz Naseem Mian Channu

1000

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 dont 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:

Depositors Copy Branch Name: Branch Code: Date:

Zarai Taraqiati Bank Ltd.

Zarai Taraqiati Bank Ltd.

Bank Copy Branch Date: Branch Code: Name: Number: Particulars Name:

Name: Account Number: Particulars Amou nt

Account Amount

Total Amount Rupees in words: Depositors Signatures:

Total Amount Rupees in words: Depositors Signatures: Signing Authority: 77

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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 Mian Channu branch where I have completed my internship has 52 ledgers at that time with the current account holder of 11595 at the date of 15 September 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 Tarqiati Bank Ltd.

Page no. 177 Branch name: Branch Code: 20226 Name: Signature: 78 Mian Channu

Internship Report on Zarai Taraqiati Bank Ltd. 2010 Father: Address: Account no: Cheque book: Date Particulars 15-09-2010 15-09-2010 16-09-2010 By cash Loan Paid To Cheque. (no.)

Debi t

Credit 1000 50000

Balance 1000 51000 1000

Signing authorit y

5000 0

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. As I have written before that in ZTBL current account is usually opened only when the bank has to disburse any loan to the customer. When I have joined the bank that was the slack time for the bank because all the customers of bank are farmers that is why they come to bank to 79

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get or give loan when they have to plant or harvest any crop. That is why a number of bank customers are seasonal. They are usually a great rush from April to June and then from November to December. Awami Zari Scheme was the only scheme available to new borrower at the time I was there. In this scheme a part of sanctioned amount is given to borrower to meet the wage and water expenses and the rest amount is paid by supply order of fertilizer and pesticides. The amount which has to pay in the form of cash is credited to the current account of customer from where he can withdraw it. The 2 nd entry in the sketch of ledger above shows the disbursement of any of such loan, which has increased the balance to 51000. When the customer draws a cheque on the bank the entry in the ledger will be like I have shown above with the date of 16-09-2010. The account of the customer will be debited and the balance will be reduced with the same amount. A large number of ZTBL customers are illiterate so they can not fill their cheque by themselves and due to this reason almost all the cheques are filled in the accounts by a clerk. Before filling the cheque of anyone he assures the balance in the account and in the same time he records entries so he will not have to reopen the ledger to make entry after the deposit or withdrawal of amount by the customer. So there are some things which I have learned from the seniors which they have developed to facilitate themselves when the customer will come again in the future, these guidelines are following: Write the ledger name and its page number on the front of new cheque book Write the account number on every cheque of new cheque book Take the Thumb Impression of every customer on the cheque For the man take left thumb impression and for women take right or both No cheque will be paid to anyone else than account holder if it is a loan account

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 Fill the cheque in Urdu if the customer signs in Urdu or gives Thumb Impression only Also fill the memorandum attached with in cheque book with each cheque to record all the transaction for future reference of client and to the bank also. All the cheques are required to be signed by respected authority before payment of cash, like AMO (Assistant Manager Operation). Before his sign no cheques can be passed, he also cheques the entries made by clerk in the ledgers before passing cheques. In this way the entries originated by any person is double checked which reduce the chances of any mistake. Whenever a cheque of more than 25000 is come to cash it is required to write a voucher of With Holding Tax with it so that the amount of tax can be deducted from the payment. The vouching will be discussed later on.

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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 final estimates 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 persons 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 500,000 the rupee of 500 should be deducted to charge to flood relief fund keeping in view the double deduction.

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 From any payment of more than 500,000 the amount of 1000 should be deducted. The amount is deducted by filling a deposit slip with the name of the contributor to deposit in the account of flood relief fund (A/C No.3043). For this purpose every MCO (Mobile Credit Officer) is given a deposit slip book so that he can collect fund from the people during his visit to the villages. And inside the bank, the accounts department makes it sure to fill this deposit slip with every payment. The weekly report of these funds collection is required to send to Regional Office. According to the weekly report of last week of Ramdan, the Mian Channu branch where I did internship was in the first position in the collection of fund in the whole zone of Vehari.

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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 loanee etc.

2. Credit Voucher
It is used for the payment of any amount by the bank to anyone. Like the cheque drawn on bank, the expenses of bank itself etc.

3. Transfer Voucher
As the name shows it is used when the amount is required to transfer from one head to another. The example is the transfer of utilities bills accepted by the bank to the respected utilities provided company (Mepco, PTCL etc.). The transfer of return to the income account of bank, it is also used when the loan is sanctioned so it is required to transfer amount of loan to the loanee account. Another use of transfer account is to correct mistakes in the ledger, for example if an account is mistakenly debited in place of another account. So the transfer voucher can be written to credit the first account and debit the second one to correct the mistake. In the end of day all the vouchers written during the day is required to be write down in the daily Scroll (which will be discussed later on) and then all the vouchers of day is sewed and then sealed so that no new 84

Internship Report on Zarai Taraqiati Bank Ltd. 2010 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 one for the bank record. For easy recognition the vouchers are made of different colors. Debit Voucher (Have three copies and in white color) Credit Voucher (Have two copies and in blue color) Transfer Voucher (Have two copies and in yellow color)

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Sample of Debit/Credit Voucher

Zarai Tarqiati Bank Ltd.
Branch----------------Branch Code Date Serial No. Name-----------------Parentage-----------Village---------------Tehsil----------------Debit Cash Voucher (Cash Receipt) 154700

No.

Particulars

Loan Case no./ A/c no./ Advice no.

G.L Hea d

TR Code

RO Code

Effecti ve Date

Amou nt

Contra Voucher/Co ntra Branch no.

Recor d no./CA Code

Total

Amounts in words:--------------------------------------------Enclose:----------------------------------------------------------Prepared by:----------------------------------------------------Checked by:-----------------------------------------------------Authorized Signature:---------------------------------------

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The debit voucher for the deduction of With Holding Tax from the cash withdrawal of more than 25,000 will be filled in the following way. First the name or branch, its code and the date is required to write. Than the information from whom this tax is collected, his name, father name, his village and city name will be written. After that in the particulars it will be written A/O of With Holding Tax and in the GL Head (General Ledger Head) the head number of With Holding Tax (which is 3056 in the ZTBL) will be written. The amount will be written after calculating .3% of withdrawal amount. In the total the same amount will be written again and then this amount will be written down in words. In the last the signing authority will sign in. In this voucher of W.H Tax only a few columns of the voucher is used, the other columns can be used for other types of transactions. The explanation of each column is given below:

1: Particular:
In particulars the reason of the transaction is written down. For example, Amount of Recovery etc.

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

If the voucher is of recovery than in this column the loan case number of the loanee who has come to pay loan will be written. This column has 6 blocks to write, due to shortage of space these block cant be shown in the above sample of voucher. Loan Case no./ Account no./ Advice no. 3 9 6 7 0 0

3: G.L Head (General Ledger Head)

It is the General Ledger Head which is required to debit. These are standard heads used in the entire branches of ZTBL. Like 3056 is the G.L Head for W.H Tax, it will be same when any branch of ZTBL will collect this tax from his customer.

4: T.R Code
This code is rarely used for debit and that is why I dont have complete information about it. In the recovery voucher this column is used, when MCO collects the cash than I used to write 14 and when loanee himself 87

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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, on 13 September an MCO is on a tour to the villages which are under his circle; during his visit he collects recovery of 100,000 from someone. He will issue receipt to the loanee as evidence that MCO has collected cash from him and on the next day (14 September) when he will come to the bank that MCO will deposit cash as a recovery in the name of that loanee. Because the cash has been collected by him a day before the voucher of recovery is written down so the effective date on voucher will be 13 September while the date of Voucher in right upper side column will be the date of 14 when the voucher is written. Why the effective date required? The answer of this question can be understood from the above example. The loanee has paid the MCO on 13 September, while the amount is deposited by the MCO on 14 September. So, no interest is required to be charged for the day of 14 September because the amount has been already collected a day before. If the effective date will not be written than there will be discrepancy between the amount collected by MCO and the amount calculated in the accounts in the time of writing voucher because the

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 amount calculated in the accounts department will include the interest of one more day than collected by MCO.

7. Amount

This column used to write the amount, it is also divided into many blocks so that when write any amount it will be easily readable later on. Like the first block in Rs. Column from right side is for figure of hundred and the next block is of thousands.

Amount Rs. Ps. 1 00 1 0 2 0 00 9 0

Total

2 0

00 0

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 customers 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 customers account so that in future when any one need to find out 89

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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. Sundry/Suspense & Central A/c only
Contra Voucher/Contra Branch No. Record Code no./CA

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 stationary he has bought from the shop with the voucher and I will write (1) in the enclose so whenever anyone will see the voucher he will know that there is a receipt attached with the voucher.

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12. Signatures

There are three spaces available to sign in the voucher. These spaces are for the person: One who has prepared it One who has checked it And signing authority who passes this transaction But I have not seen anyone signing the first two places, the only signature place is used is of signing authority because it is compulsory. Both Debit and Credit vouchers have same columns and lines to write on. But the transfer voucher is different from these two, it has the same columns and lines but it is divided into two parts. Upper side is for the debiting an account and in the down side is for crediting an account. Because when we use to transfer amount from one account to another account than there should be one account which is required to debit and the other account should be credited to complete the whole entry. The sample of Transfer Voucher has been given in the next page.

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Sample of Transfer Voucher

Zarai Tarqiati Bank Ltd.
Branch----------------Branch Code Date Serial No. Name-----------------Parentage-----------Village---------------Tehsil----------------Transfer Voucher 154700

No.

Particulars

Loan Case no./ A/c no./ Advice no.

G.L Hea d

TR Code

RO Code

Effecti ve Date

Amou nt

Contra Voucher/Co ntra Branch no.

Recor d no./CA Code

Total
No. Particulars Loan Case no./ A/c no./ Advice no. G.L Hea d TR Code RO Code Effecti ve Date Amou nt Contra Voucher/Co ntra Branch no. Recor d no./CA Code

Total

Amounts in words:--------------------------------------------Enclose:----------------------------------------------------------92 Prepared by:----------------------------------------------------Checked by:-----------------------------------------------------Authorized Signature:---------------------------------------

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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. Both cashier and operation officer writes his own scroll at the end of day when they have to close the cash. The closing balance in both these scrolls must be same otherwise there are some transactions which have not been recorded correctly either by the cashier or the operation officer. If I will divide the page of scroll than the following are the important columns and part of it:

Zarai Tarqiati Bank Ltd.

Daily Transaction Scroll Name of Branch---------------------------

Date Sheet Number

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. S Vouch G.L r. er No. Hea d 1 15470 0 2 701 3 4 56890 0 76820 0 Total 1 1 50 0 93 Debit 1 1 00 0 50 0 5 00 0 4 00 0 5 00 0 4 00 0 4 00 0 4 00 0 Credit Debit Credit

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The above view is of the rest of the page where all the vouchers are recorded. The sheet is divided into two sections the left side part is used to write the debit and credit vouchers and their amounts, while the right side is used to write the debit and credit of transfer vouchers. The above is the example of writing of different vouchers. The first two vouchers are debit vouchers that are why I have written the amount (11,000 and 500) in the debit column. The 2 nd voucher name is not written completely which is an ease which can be used if the same serial is going on and only the last number is changing. The third voucher is a credit voucher and its amount (5,000) is written in the credit side in front of it. The fourth voucher is representing a transfer voucher so its effect will be shown in the right side of the sheet. In both Debit and Credit column of the right side of sheet is filled with the same amount because in transfer voucher one account will be going to be debit and the other will be credit so the net effect will be zero. In the end all the amounts of all the vouchers are totaled in their respective columns. Like in this example the debit vouchers total amount is 11,500 and the total of credit vouchers is 5,000. The debit and credit side of transfer vouchers side will always be the same, which are 4,000 in the example. After getting this total the next step is to calculate and write the closing balance. 1. Opening Balance 2. Debit Balance 3. Total Balance (1 + 2) 4. Credit Balance 5. Closing Balance (3 4) 400,000 11,500 411,500 5,000 406,500

To calculate the closing balance first step is to write the Opening Balance which is absolutely the Closing Balance of last day. Here in the example I have assumed it 400,000. After it the debit balance will be written in the 2nd row and in the 4th row both 1st and 2nd row will be added to get the total balance. Now the credit balance will be written and to get the closing balance the credit balance is required to deduct from the total balance of 3rd row. To close the cash, this closing balance should match the closing balance in the books of cashier. When comparing with the cash scroll of cashier the Total Balance, Credit Balance and then Closing Balance

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 all should be similar otherwise there will be something which is skipped during writing even by the Officer or by the cashier. When closing cash, in the end of this scroll sheet the number of total debit, credit and transfer vouchers is required to be written so that nothing can be added or erased from the above scroll by any one. Number of Vouchers Debit 2 Credit 1 Transfer 1 Total 4

As you can find that in the above given example of scroll, there are two debits, one credit and one transfer vouchers have been written so the same number is written in the ending column of scroll sheet.

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 Bahar Scheme) which is a revolving finance scheme. Every loanee has a unique Loan Case Number which is the base of all the record of his loan. When a loan of SBS is sanctioned its amount is not transferred to the current account of the loanee like it is used to transfer in the AZS (Awami Zari Scheme). In SBS the Loan Case Number is used for all types of transactions, when a loan is sanctioned it is recorded in the SBS ledger with the name of loanee and Loan Case Number is used as an account number from which he can operate. The information which is required to write in the ledger sheet when a new loan has been passed and ready to disburse are following: 95

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Loan Case Number Name Parentage Address CNIC Maximum limit Date of maturity Cheque book number After entering the above information the loan can be disbursed to the loanee when he desires. Because almost all the customers of ZTBL are low earning farmers and they require immediate cash to meet their expenses so they draw a cheque on the bank on the same time when their loan is entered in the ledger book. In SBS farmer can withdraw the amount till he has reached maximum limit and the return will only be paid on the amount which he has taken out as a loan. The entries of disbursement can be easily explained by taking an example that the loan has be sanctioned and it is recorded in the ledger now loanee want to withdraw the total sanctioned amount of 50,000. The entry of this transaction will be in the following way at 0101-2010: Date 01-110 31-410 01-5Particul ars To Cheque No. To Return Recovery Principal Return Total Debi Credi Balan Debi Cred Balan Outst andin t t ce t it ce g 50,00 50,00 50,000 0 0 1,48 0 18,52 31,48 96 1,48 1,480 Nil 51,480 31,480

Internship Report on Zarai Taraqiati Bank Ltd. 2010 10 0 0 0

After four month a computerized outstanding balance report of all the loans is given to each branch, it is called OBL (Outstanding Balance Ledger). The bank also adds return to the principal amount of each loan case, like it is shown in the date of 31-04-10. (The interest rate on SBS is 9%) Now suppose that loanee has reached bank on 01-05-10 and he wants to pay 20,000. The entry is shown in the date of 01-05-10. It is rule in the bank that when the bank recovers any amount from the loanee than first return amount will be reduced and then the principal will reduced. Here in this example, the loanee wants to pay 20,000, so first interest will be deducted which is 1480. To pay return we will credit it with 1480 and then the principal will be credited with the remaining amount (20,000-1480=18,520) as shown in the above diagram. Due to this payment the principal is also reduced to 31,480 and because the total return has been deducted that is why the total outstanding amount is also 31,480. (It is routine in the bank to check the total outstanding amount in the ledger with OBL before receiving any recovery. This is a precaution because the handwritten and manually calculated ledgers can have mistakes so checking it with OBL make it sure that they are not receiving less amount from the customer.)

Revolving SBS Loan

Now suppose a situation where loanee 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 loanee has withdrawn the amount. It is compulsion for every loanee 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 loanee 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 loanee has paid 20,000 and his remaining outstanding balance is now 31.480. Now suppose he comes again on 97

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01-06-10 and wants to revolve his loan, on that day the following entries will be made in his loan account: Date 01-110 31-410 01-510 01-610 01-610 01-610
Particula rs

To Cheque No. To Return Recover y To Return Recover y To Cheque No.

Principal Return Total Debi Credi Balan Debi Cred Balan Outst andin t t ce t it ce g 50,00 50,00 50,000 0 0 1,48 0 18,52 31,48 0 0 31840 241 31,84 Nil 0 50,00 0 50,00 0 1,48 0 241 1,480 Nil 241 Nil 51,480 31,480 31,720 Nil (A/C Closed ) 50,000

Because the loanee wants to pay the total outstanding amount, the first thing to do is to calculate return on the last outstanding principal balance. Because the loanee has already paid some part of principal on 01-05-10 due to which the principal has been reduced from 50,000 to 31,480. Now the return will be calculated from 01-05-10 to 01-06-10 (31 days) at last outstanding principal balance of 31,840 . (31,480 * 9/100 * 31/365) = 241 I have debited this return calculated and it has increased the total outstanding to 31,720. Now the next step is to obtain all the outstanding amount of principal and interest so that the account can be closed and again revolved on that day. In the 2 nd entry on the date 01-06-10 I have credited all the principal amount and the balance of principal became Nil and the same I did with the return, I have credited the total balance of return and its balance also became Nil. Because both principal and return balance is now Nil that is why the total 98

Internship Report on Zarai Taraqiati Bank Ltd. 2010 outstanding amount of loan is also Nil now and the Account is closed on that situation. Now the loanee wants to revolve his account so he will again draw a cheque on the bank of any amount with in his sanctioned limit, in this example I have assumed he again wants to get the total amount out of it. So, I have again debited the amount which has increased the principal balance and then total outstanding balance to 50,000. These are just entries in the ledgers absolutely the loanee will have to follow some procedures to revolve his account. Usually MCO of the loanee asks to revolve the account and then vouchers are written and entries are made in the ledgers and then these vouchers and entries is passed by the AMO otherwise no payment or recovery is made. The vouchers need to written when revolving an SBS loan accounts are following: A debit recovery voucher of full outstanding amount including Principal and Return. Whenever an account is fully paid it is practice in the bank that write the return collected on this account on the upper right corner of the voucher, it helps the other employees in the end to transfer it to the Income Account of bank and also to prepare weekly report on recovery. Another debit voucher of With Holding Tax will also be filled if the amount loanee wants to again withdraw is more than 25,000 A debit voucher of revolving fee (100 rupee for SBS) A credit voucher will be written in the end of the day against the cheque drawn by the loanee A transfer voucher which is used to transfer the Return recovered on the loan to the Income Account of the bank. Actually in revolving an account the loanee pays only the interest amount, revolving fee and W.H Tax if any. The principal is adjusted against the new disbursement of loan. 99

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For example: If 51,000 is total outstanding balance (50,000 principal + 1,000 returns) and loanee wants to revolve the account, he will have to pay the total outstanding amount first and then he can withdraw again the principal of 50,000. Amount the loanee will pay Revolving fee Again disbursement of loan W.H Tax on 50,000 Balance -51,000 -100 50,000 -150 -1,250

1250 is the amount which loanee will pay only and his loan will again be revolved to a new maturity of one year. In this way revolve benefits the two parties, one is loanee who has to pay a nominal amount and he obtains a new maturity date. The second one is MCO who can show that he has recovered the loan which helps him in achieving his recovery target.

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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.

Key Register:
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 cant remain closed. If there is any mishap the person who has keys according to key register will be held responsible. Thus the key register has significance matter; no one gives the key to someone else without entering it in this register. When a key is given to someone else the time of giving keys is also written in the register, it is precaution to make it clear that on which time of day the key was with which person.

Safe Register:
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. The cash is also written in denomination in which it is exist. Like if bank has 1 million than this information is not enough the denomination in which this one million exist in bank is also written. Like the bank may have this amount of 1 million in the following denominations. 100 notes of 5,000 500,00 0 300 notes of 1,000 300,00 0 101

Internship Report on Zarai Taraqiati Bank Ltd. 300 notes of 500 400 notes of 100 200 notes of 50 Total

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150,00 0 40,000 10,000 1,000,0 00

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.

Learning as an internee
Duties

Reconciliation of bank statements. Reconciliation of customers ledgers. Preparing payment vouchers. How the loan given to the employees. Company uses both system of manual and computerized so account manager give me the opening and closing balances of last month inventories to check the posting that manual entries into the system. I

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 check them and point out some missing entries and give my report to account manager that which entries are missing. I calculate the working days of employees and last year and the prepare bonuses for the employees and allowance to employees to have full attendance last year.

. New Knowledge Acquired

Discussion with management. Knowledge of organizational culture. Accounts management. This is the core part of my fresh knowledge that I gained while working in the Bank.

Accomplishment
The overall working environment was very good in which I learned a lot. Got an opportunity to work in a well known organization. Completed all of my duties on time. Improved my confidence and communication skills by talking to advisor and other managers. Learn about effective information dissemination within office environment.

Impact of Experience on my Career

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As I am a student of Finance, so my experience as an internee in this company will help me in future when I get the full time job as a professional. I have learned about, How to let people know about your product/ services. Analyzing competitors and markets that any one doesnt copy your product. Through this internship experiences of working into an organization help me to understand rules and regulations, duties during my career.

Conclusion, Suggestions and recommendations

Zarai Taraqiati Bank Limited is a well known well reputed and well established organization in Pakistan; every thing in the organization is outstanding. All the departments are working properly; working environment is very good after spending 6 weeks in Finance department of the Zarai Taraqiati Bank Limited

Interacting with the employees, getting their views, observing the organizational structure and design, some of the following recommendations have been given.

Conclusion
I will conclude my report by saying that my training program at Zarai Taraqiati Bank Limited was a mighty experience, in terms of learning, dealing with people, getting the how know of the working of organizations and the intricacies of practical life. Such an experience is a necessity for every business student as it

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Internship Report on Zarai Taraqiati Bank Ltd. 2010 helps one in choosing the area of work to adopt in professional life. This training program sets a strong basis for students about to enter professional life to do the correct career counseling for themselves in accordance with their ability to integrate work with knowledge, their learning capacity and the ability to sustain pressures. Training and awareness of personnel in all sectors and at all levels is

required to face the future challenges. Adaptation of globalization, spectacular developments in information technology, internet, e-commerce etc is required.

Suggestions
Zarai Taraqiati Bank Limited is a huge name in the agricultural sector and a large number of loans are provided to the agricultural sector by the Zarai Taraqiati Bank Limited but I experienced some problems that should be encountered. These problems are:
Transportation facility is not provided to the whole employees, it should be provided to them. Proper training of I. T should be given to all the employees, as it is necessary to

the company benefits.

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Recommendations
Top managerial personnel should be trained both at company premises and at the international level. Managers are required to get training in the modern scientific management control methods.

BIBLOGRAPHY WWW.ZTBL.COM.PK
WWW. GOOGLE .COM.PK AUDIT REPORT 2008-2009 ANNUAL REPORT 2008-2009

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