Internship Report on Union Bank

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					                                     INTERNSHIP REPORT

                                     EXECUTIVE SUMMERY

                                     TABLE OF CONTENTS



Qudsia Ashraf 2003-GCUF-1581-3

                                     Specialization: Finance

                                      4      SEMESTER MBA





Praise to be Allah lord of the creation, the compassionate, the merciful, the king of the judgment

You alone, we worship, and to you alone we pray for help. Guide us to straight path, the path of
those whom you have favored, neither of those who have incurred your wrath, nor of those whom
gone astray.




In the name of thy Lord who created, created man from clot, And Thy Lord is the most bounteous
who taught man that he knew nothing.

Above all we are indebted to Almighty Allah, Lord of our life and of everything in the universe and
His Holy Prophet Muhammad (peace be upon him) whose blessings enabled us to perceive and
pursuit higher ideas of ideas of life.
The report is the result of good efforts, which I have made to, to complete this informative project.
Certainly I have been able to complete this project with the help of numerous factors, which
played a key role in it.

“I deem it a great honor and privilege to record sense for gratitude to the respected staff at Union
Bank, Kotwali Road Branch especially Mr. Jamal Anwar, (the Relationship Manager who was my
supervisor during my internship) for their corporation and help.”

                                         THE EXORDIUM



This document provided details of my achievements in terms of practical implementation and
understanding of working environment in banks. During the course of my internship at Union
Bank Kotwali Road branch, I worked in SME department specifically on making of credit approval
and customer analysis. And I also got one week experience with Credit Administration
Department (CAD) to see that how the documents are handled.

A bank is now a financial institution which offers savings and cheque accounts, makes loans and
provides other financial services, making profits mainly from the difference between interest paid
on deposits and charged for loans, plus fees for accepting bills and other services. The Union
Bank was established in 1991 but went through the change in management in August 1999 and
through constant expansion Union Bank is rapidly gaining ground in the global financial market.

The major operations of Union Bank Kotwali, Road Branch include: Accepting various types of
Deposits, Phone Banking, ATM's, Online Banking, Guarantees, Letter of Credit and Leasing.

The various departments at Union Bank operate independently. They generate their revenues
and after deducting the expenses the net income is transferred to bank by these departments.

The Small & Medium Enterprises (SME) operates to provide secured loans to the customers
while role of Credit Administration Department (CAD) is provide a supporting service for the other
departments. The department maintains records according to “Credit Bulletin” and provides
repots to top management.

Union Bank offers a wide range of products from account opening to specialized products under
the main categories like; Personal Accounts, SME Products and Personal Finance etc.

On the whole, Union Bank has given me an intern experience and an insight to practical work
environment and therefore, worthwhile learning experience. I believe, there is nothing like getting
hands-on experience because it can only prepare you for what the workforce is looking for.

                                      TABLE OF CONTENTS

Incorporation of bank

Purpose (Mission & Vision)



Departments of Union Bank

Organogram (Hierarchy of Management)

Procedure (SME & CAD)


Products of Union Bank


SOWT Analysis


Lending Policy

Customer Analysis

Introduction of customer

Financial Spread

Comments on financial position

Concluding Remarks


Incorporation of bank

Purpose (Mission & Vision)

                                    Union Bank (Pvt) Limited

                            Introduction and Historical Background

The Union Bank was established in 1991 after the start of privatization by government of Mr.
Nawz Sharif. Saigol Group incorporated the bank in the city of Faisalabad. The decision to start a
bank was due to prior experience in banking sector of Saigol Group. This group owned United
Bank Limited, which was taken into custody of government during nationalization process.

Union Bank went through the change in management in August 1999. A Middle Eastern Group (.
Abdullah Muhammad Abdullah Basodan) bought the controlling stake in the Bank from Saigol
Group. According to the new policy, while the bank will remain primarily a working capital lender,
the focus will shift towards providing a wide array of financial services and products to large and
medium size blue chip companies.

Now Mr. Shaukat Train (formerly working with City Bank) is Chief Executive Officer (CEO) and
president of the Union Bank. After Mr. Shaukat Train took the charge as CEO, the bank showed
unprecedented growth. The management at Union Bank comprises of seasoned professionals in
the field of banking and finance thereby encouraging a culture of innovation and total customer
satisfaction. Union Bank’s vision is to provide its clients with complete banking solutions.

Realizing this vision, Union Bank acquired Bank of America’s operations in Pakistan in year
2000. Keeping the same strategic run in July 2001, Union Bank signed an Independent Operator
agreement for American Express Cards in Pakistan. As a result of this agreement, Union Bank
now issues, operates and markets American Express Cards in Pakistan. The Bank is also in the
business of acquiring merchants accepting VISA, Master Card, American Express and JCB
Cards. Another milestone agreement signed in September 2002, Union Bank Acquired the local
operations of Emirates Bank International making it one of the largest private sector banking
network in Pakistan. Backed by a major Middle Eastern Group, Union Bank is today with 42
branches in 19 cities and a correspondent banking network of over 300 banks in 85 countries,
Union Bank is rapidly gaining ground in the global financial market.

Vision Statement

To be the premier financial institution in Emerging Markets.

Mission Statement

To be the premier bank, responsive to the need of our target market customers, recognized for
consistently superior service quality and innovative products, thereby delivering superior value to
our stakeholders.

Core Values…
Customer Focus:
Relentless focus on understanding and fulfilling customer needs through superior service.

Continually generate, validate and implement creative solutions to business challenges.

Ensure a fair recruitment process and closely link recognition and reward to performance against
goals, irrespective of personal relationships, gender, religion or ethnicity.

Uncompromising financial and intellectual honesty to the organization and oneself with
relationships based on mutual trust and openness.

Willingness to share the glory of achievements as well as responsibility for failure.

Display self-belief as well as modesty and be respectful to all customers, colleagues and
business partners.

Company Information:

Directors and Chairman

Mr. Mueen Afzal Chairman

Mr. Shaukat Tarin President & Group Chief Executive Officer

Mr. Muneer Kamal Chief Operating Officer International Operations

Dr. Abdullah Mohammad Abdullah Basodan
Mr. Munnawar Hamid OBE
Mr. Qazi Mazharul Haque
Mrs. Lubna Majeed

Main Office

Union Bank Limited

5 floor, New Jubilee Insurance House,

I.I. Chundrigar Road, Karachi

Registered Office
Union Bank Limited

P-69, Kotwali Road,


Operations of Union Bank:

From the Italian banca meaning 'bench', the table at which a dealer in money worked. A bank is
now a financial institution which offers savings and cheque accounts, makes loans and provides
other financial services, making profits mainly from the difference between interest paid on
deposits and charged for loans, plus fees for accepting bills and other services. In Pakistan,
banks are financial institutions authorized under the Banking Companies Ordinance 1962. The
State Bank of Pakistan (the central bank) has a wide range of powers over the banking sector.

In Pakistan the banks are providing different types of services to their customers and as the
competition is becoming stronger day by day banks are offering new and improved services to
their customers and no one to left behind in this race. So banks are offering variety of services to
attract more customers.

Union Bank is also focusing to offer variety of services to existing customers and new improved
services including complete business solutions to attract new customers. The bank is committed
to provide quality service to the customers through all its operations. It is offering all the facilities
from account opening to business loans and to latest services of Phone Banking, ATM's, Online

The major operations of Union Bank Kotwali, Road Branch are:

Accepting various types of Deposits

Phone Banking, ATM's, Online Banking


Letter of Credit

Provides medium and long term finances

Provides loans and advances


Trade Finance

Departments of Union Bank


(Hierarchy of Management)

Procedure (SME & CAD)

Departments of Union Bank:

The various departments at Union Bank are:

Branch Banking.

Cash Department

Accounts Department

Small and Medium Enterprise Department ( SME)

Corporate Banking Group Department (CBG)

Leasing Department

Credit Administration Department (CAD)

Trade Finance

Consumer Banking

Structure of the Organization:

The organizational structure of Union Bank is different from most of all other banks. The bank is
divided into six different departments that have their own sources of revenues and after deducting
the expenses the net income is transferred to bank by these departments. The Heads of these
departments are called group heads report to president of bank. These six departments are:
Central Operation Division (COD), Corporate Banking Group (CBG), Small and Medium
Enterprise (SME), Branch Banking., Consumer Banking and Credit Administration Department

                                   Hierarchy of Management


                                        Group head CAD
                                        Group head CBG

                                           Group head


                                        Branch Manager

                                Group Head Consumer Banking

                                          County Head

Group head SME

Regional Head

Unit Head

Relationship manager

Small & Medium Enterprises (SME) Group

Union Bank has a group of highly trained and professional individuals to form an exclusive Small
& Medium Enterprises (SME) Group for personalized service to companies who have diverse
needs. SME Group strives to apply a unique blend of finance, industry and technological
expertise to keep pace with dynamic markets and translating insights into solutions that meet the
diverse financial needs.

For a more focused approach to the unique needs of different markets &/or geographical areas,
SME Group have four Regional Heads who oversee customers in their region as per follows

Northern Region:
Islamabad, Rawalpindi, Mardan, Peshawar, Swat

Western Region:
Lahore, Raiwind, Gujrat, Sargodha, Mirpur, Jhelum

Eastern Region:
Lahore, Sialkot, Gujranwala

Central Region:
Faisalabad, Multan, Vehari, Sahiwal

Southern Region I:
Karachi, Hyderabad
Southern Region II:
Karachi, Quetta

Each Regional Head is supported by a team of talented and well-trained Relationship Managers
who act as financial consultants for SME customers to understand and offer them a result
oriented package to their financial needs. A typical SME customer would be a proprietorship/
partnership/company which:

Has an Annual Turnover of less than Rs. 250 Million.

Requires financial assistance for Working Capital Lines, Term Loans, Bridge Financing,
Underwriting, Export Refinance, Bank Guarantees and full menu of Import & Export related credit
and processing facilities.

Would like to place surplus liquidity, generated through its own sources, for added income.

Is interested in wealth management of savings of it Proprietor/ Partners/ Directors.


Loans are basically of two types: secured loans and unsecured loans. A secured loan is one for
which collateral is pledge in order to reduce the risk to the lender and an unsecured loan is any
loan that is not backed by collateral (Property or assets made available by a borrower as security
against a loan).

Small & Medium Enterprises (SME) Group provides secured loans to the customers. Relationship
Manager (RM) is responsible for providing financial assistance to the customers for their entire
satisfaction. As a result of credit marketing efforts of Relationship Manager (RM) when a
customer approaches to get the loan, the first responsibility of Relationship Manager (RM) is to
make sure that customer meets the following SME Qualification Criterion:

Total No of employees

For manufacturing concern < = 250

For trading / service concern < = 50

Total assets at cost excluding land and building

For manufacturing concern < = RS. 100 Million

For trading / service concern < = RS. 50 Million

Total sales < = RS. 300 Million
Then, the Relationship Manager (RM) prepares Credit Approval (CA) proposal for that customer,
which includes following details and documents:

Credit Approval (CA)

Basic Information Report (BIR)


Directors and Management


Banking and other financing arrangements


Products and product mix

Selling and distribution terms

Affiliated companies and related business

Management Assessment Form

Financial Spread and Statements

Credit Memorandum


Relationship Background

Relationship Profitability

Relationship Strategy

Management Assessment

Financial Analysis

Industry Outlook

Risk Analysis
Conclusion / Recommendations

Site Visit Report

Latest Valuation Report

This credit Approval (CA) is sent to Lahore for the approval. As soon as the Relationship
Manager (RM) receives the approval (CA), it is sent to CAD and customer is also intimated about
approval and is asked to fulfill the remaining formalities and documents required. An account is
opened in the name of customer and a Cheque Book is issued to him.

Relationship Manager (RM) is also responsible for monitoring of customer accounts to ensure the
interest payments to bank. In the case the customer is not paying his liabilities he is asked to pay
his obligations. Even after repeated calls .the customer fails to pay, the Relationship Manager
(RM) has authority to send his case to Special Asset Management Group for further proceedings.

The major portion of customers of SME Department Kotwali Road Branch relate from:

Textile Industry

Chemical Industry

Tourism Industry

Job Description Relationship Manager:

The major responsibilities of relationship Manager are as follows:

Develop new business by contacting prospects and customers

Develop relationship plans for these prospects and customers.

Interview customers and prospects describing all relevant loan products, and explaining loan
options, rates, terms, and collateral requirements.

Analyze financial and related data to determine the needs of the customer for proper structuring
of the products and services.

Evaluate and structures loan requests, determining appropriate documentation for approved

Negotiate terms including costs, repayment method, and collateral requirements.

Ensure that extension of credit and delivery of services is in accordance with corporate policies,
pricing guidelines and portfolio considerations.
Ensure adequate documentation

Ensure that proper and accurate disclosures are provided to all applicants within required

Follow-up after closing to ensure all documents are completed and in file. Assure compliance with
all regulations.

Monitor loan repayment activities and takes necessary action to collect from past due accounts.
Advise customers, where possible, on business management and other financial matters.

Credit Administration Department (CAD)

Basically Credit Administration Department (CAD) works as a supporting department for Small &
Medium Enterprise (SME) and Corporate Banking Group (CBG). The functions of Credit
Administration Department (CAD) include holding credit documents of customers both from SME
and CBG and keep the files according to “Credit Bulletin”(policies) releasing credit line for the
customers, in case of pledge Credit Administration Department (CAD) is also responsible for the
administration and release of pledged asset.


When a Credit Approval (CA) proposal is approved for SME and CBG by their respective
authorities the CA is sent to Credit Administration Department (CAD ), which fulfill the formalities
for the purpose of mortgage (a mortgage is a legal instrument in which property serves as
security for the repayment of a loan) and then afterwards releases the credit line (a credit limit is
the maximum amount of money that a bank or other lender will lend to a particular individual or
company) for that particular customer.

In case of pledge when Credit Administration Department (CAD) receives an application for the
release of the asset for example cotton, CAD reviews the request and stock records and the rates
at which they are held. Where the customer does not specifies the rate to be charged the highest
rate is applied and stock is deducted from stock and documents are approved by CAD’s head.
And intimation sent to “Muqudam” (a person appointed by the bank to hold the pledged stocks) of
the bank to release the said quantity of stock in favor of that customer. The customer is also
informed to about approval of his request.


Products of Union Bank


SOWT Analysis

The strong competition in the banking sector led banks to offer specialized products in consumer
finance and business customers. Union Bank also offers a wide range of products from account
opening, credit card and other personal and business loans, Visa Debit Card, American Express
Credit Cards and VISA Credit Cards and other specialized products. The specialized products
provide an easy solution to customers.

The major specialized products of Union Bank are:

Personal Accounts

Business Account

Mahana Izaafa

Saving Account

Munafa Max

Personal Finance

Ready Cash


SME Products

Business Power

My Home

Tana Bana

Rang hi Rang

Agri Deal

Business Account (Current Account)

Business Account is a flexible current account. It is a secure way of transferring fund anywhere in
Pakistan without the hassles of carrying Cash or Travelers Cheques. Through Business Account
customers can deposit and withdraw funds from any of 53 branches across 20 cities. Through
Business Account customers can;
Get Pay Orders/ Demand Drafts anywhere in Pakistan

Immediate access to account information

Faster Cheque Clearing

Mahana Izaafa (Saving Account)

Mahana Izaafa is a rupee saving account which combines a high rate of monthly profit, flexibility
of withdrawal and convenience, all in one. The special tiering structure ensures a higher profit on
higher deposits.

The profit is credited to Mahana Izaafa account every month. The customers can get extra cash
at their disposal. The profit is calculated on a daily product basis.

The customers have the privilege of having account in any single Union Bank branch and still are
able to withdraw from and deposit money (with some conditions) in Union Bank branches all over
Pakistan as Union Bank Limited is online with all its 53 branches across 20 cities.

Union Bank's Saving Account

Union Bank's Saving Account is the latest addition to Union Bank's ever-increasing portfolio of
products. This product combines a good rate of return, profit paid out on a six-monthly basis, and
outstanding services offered by Union Bank all-in-one with Inter-branch Transaction Facility.

Profit on Saving Account is on a minimum balance basis and is credited to the account every
January and July.

The minimum average balance required is Rs. 50,000.

Munafa Max

Munafa Max is a branded long-term savings deposit, with profit payment at maturity. Additional
value added features give customers the flexibility to meet their interim liquidity needs. It is a
product suited to corporate as well as individual clients who want a good return on their money.

Munafa Max is a fixed deposit account with profit paid at maturity. The available tenures are 3
months, 6 months and 1 year. It has a specially designed tiered structure. This means the higher
the investment, the higher the return.

After three months from the date of opening the account, customers can withdraw as per need, in
multiples of Rs. 25,000 while continuing to earn the rate of profit (applicable on the tier customers
are in), on the remaining portion.
The customers can obtain a loan against their deposit up to 75% of the total invested amount, or
even up to 95% with additional collateral.

                                       PERSONAL FINANCE

Ready Cash

Union Bank's Ready Cash is an evergreen personal line of credit that gives financial power with
unmatched freedom and flexibility. The customers can withdraw cash from your credit line using a
Cheque or your VISA Debit / ATM card.

Customers meeting the eligibility criteria, and can receive an instant credit line of Rs. 75,000 to
500,000. Credit will be automatically transferred into Ready Cash account. And customer will
receive VISA Debit / ATM card and Cheque book – giving him the freedom to use it as and when

Ready Cash gives instant access to cash from any of our 42 branches in Pakistan. In addition,
Union Bank VISA Debit cards are issued to all customers, which can be used at all 1-Link and M-

Union Bank's Ready Cash offers the freedom of revolving credit on a daily utilization basis. This
means that payment markup only on the amount utilized and for the number of days in use. There
are no penalties on early repayment

Ready Cash gives the flexibility to revolve credit line by only repaying 3% principal in addition to
the 1.58% mark up payment every month. The repaid principal will be available in credit line for
use again.

Union Bank's Ready Cash is available to Pakistani nationals residing in Karachi, Lahore,
Rawalpindi, Islamabad, Hyderabad, Sialkot, Faisalabad and Peshawar, having a gross monthly
income of Rs. 15,000.


UNICAR offers a leasing facility to buy Brand New car , With the greatest flexibility, to choose
from anywhere between 1 - 5 years leasing / financing period, with and additional option for an
extended 6 - 7 years lease / finance period.

The Down Payment is as low as 10% of the value of the vehicle With the UNICAR.

A large variety of cars are offered under Unicar, so customers can choose the car according to
their choice.
A completely filled in Application form, NIC Copy, 2 recent Photographs, Salary slip with complete
break up and last 6 months Bank Statement are required documents

The minimum eligibility criteria for UniCar is a Pakistani national between the age of 21 - 65 years
of age, A salaried individual, a businessman or a self employed professional and continuously
employed for at least 6 months (salaried) or self employed for at least a year

                              Small & Medium Enterprise Products

Business Power (Business Loan)

Business Power is a 'Running Finance Facility' offered against residential property to
businessmen and self-employed professionals. The product provides a flexible source of funds to
businesspersons to meet day to day working capital requirements.

Business Power is a 'Running Finance Facility' and the collateral required is a residential

Business Power gives the freedom to pay mark-up only on the amount utilized and for the
number of days the funds is used , and not on the entire credit line.

Customers only need to pay the Mark-up at the month end. And Payback the principal amount
utilized whenever it suits to customers.

The credit line offered ranges from Rs. 1 million to Rs. 20 million depending on the market value
of the property. Residential property is assessed on the market value and up to a maximum of
60% of its value can be released as the financing line.

A resident Pakistani living in Karachi, Lahore, Islamabad, Rawalpindi, Peshawar, Gujranwala,
Gujrat, Sialkot, Faisalabad or Multan., Age limit 25 -55 years, Running his present business for
the last 3 years, Earning a net monthly income of at least Rs. 36,000 and willing to provide his
own or co borrower’s residential property as a security is eligible to apply for this loan.

My Home

At an unbelievably low rate of interest and with the most flexible terms of payment, "My Home" is
yet another product from Union Bank, which turns dreams of “My Home” into reality.

The salaried, self employed professional or a businessman residing in Pakistan, between 23-65
years of age and meeting the minimum monthly income requirement can qualify for "My Home".

With tailor made installments and the facility to make partial repayments twice a year.

Customers can stretch installments over a leisurely 20 years, or pay back in just 3 years, its all up
to customers
Build, buy or renovate, it is all up to customers.

Customers can use the "loan transfer facility" to transfer existing home loan of any other bank or
financial institution to Union Bank's "My Home" to avail its lowest mark-up and flexibility.

Tana Bana

Tana Bana is a loan facility for the weavers to purchase yarn.

To apply for Tana Bana a person should be a Pakistani with age limit between 22 to 60 years
having a unit of minimum 24 loams (auto/ power) and loams width of at least 72 inches. He
should be in business form at least 3 years and owner of residential/ industrial property in

The businesses meeting these Qualifications can get the credit line of 5, 00,000 to 70,000,000.

The markup is calculated on the daily basis on the amount withdrawn from the account and for
the number of days the funds are used, and not on the entire credit line.

The documents required are: an application form for Tana Bana filled with a photocopy of
National Identity Card, Passport Size Photos (only in case of proprietorship or unregistered
partnership), Electricity Bills of last six months and other documents as per the regulations of
State Bank of Pakistan.

Rang Hi Rang

Rang Hi Rang is a loan facility offered to dying and processing units.

To apply for Rang Hi Rang a person should be a Pakistani with age limit between 22 to 60 years
with 5 years work experience have monthly expenses (Gas and Electricity) are at least RS.250,
000 and willing to mortgage your property.

The credit line is up to 2,000,000.

It gives the freedom to pay mark-up only on the amount utilized and for the number of days the
funds are used, and not on the entire credit line. The markup is calculated on daily basis.

The documents required are: an application form for Rang Hi Rang filled with a photocopy of
National Identity Card, Three Passport Size Photos Of principal (only in case of proprietorship or
unregistered partnership), Basic fact sheet (as per regulations of State Bank of Pakistan)
Electricity and Gas Bills of last one year and other documents as per the regulations of State
Bank of Pakistan.

Seed, Fertilizer and Pesticide dealers are the target market for AgriDeal:

The eligibility criteria for the customers to get loan under AgriDeal is: a Pakistani with age limit
between 22 to 65 years with 5 years work experience as a Seed, Fertilizer or Pesticide dealer,
purchases of Seed, Fertilizer or Pesticide are at least 30, 00, 000 and willing to mortgage your

Mark-up will be only on the amount utilized and for the number of days the funds are used, and
not on the entire credit line.

Free on-line transaction and demand draft/pay order facility up to a specified limit is as an
additional facility for AgriDeal account holders

Credit card Business:

Union Bank’s shopping card

American Express Charge Card

American Express Credit Card

Union Bank Online:

Union Bank Online is a state-of-the-art customer contact center which offers the real time
advantage. With Union Bank Online customers no longer have to take time out to visit the branch
for your routine banking needs. On single phone call customers have access to a wide range of
Tele-banking solutions and personalized banking services.

Key benefits:

Simple and Convenient banking solutions over phone

Instant access to banking services from anywhere at anytime

Saves time and money

Toll-Free Access 0800-66-666 (For prospective customers)

0800-44-444 (For all existing customers)

The official website of Union Bank is

SME Business:
Union Bank has handpicked a group of highly trained and professional individuals to form an
exclusive Small & Medium Enterprises (SME) Group for personalized service to companies who
have diverse needs. SME Group strives to apply a unique blend of finance, industry and
technological expertise to keep pace with dynamic markets and translating insights into solutions
that meet the diverse financial needs.

The Corporate Banking Group at Union Bank is dedicated to providing its clients the highest level
of service possible. Through committed Relationship Managers, Union Bank is dedicated towards
developing relationships with corporate clients to service their financial needs worldwide.

The Corporate Banking Group manages a high quality asset portfolio being an active player in
many sectors including textile, sugar, leather, pharmaceutical, fertilizer, petrochemical, power,
automotive, telecommunications, oil and gas distribution, marketing and refining and fast moving
consumer goods industries. Union Bank has one of the largest correspondent banking networks
which combined with our advanced technological systems makes us the premier correspondent

Products Offered

Working Capital/Term Loan

Loan Structure & Syndication

Trade Services


Cash Management

Comparison of Products:

(Between Union Bank’s Business power and United Bank’s Business line)

Features of Businessline

It is a ‘Credit Line/ OD Facility’ against Residential Property. It is an evergreen credit line that the
customer can use for his/her business expansion

The customer can utilize up to Rs.10 million

UBL Businessline offers the facility of availing a financing of up to 70 % of property value.

Businessline gives you the facility to pay mark up only on the amount that you utilize.
The more customer spends the less he pays because the interest rates decreases.

Eligibility Criteria:

Minimum monthly income is Rs. 25,000 and above

Age limit is between 25 to 65 years

A Pakistani resident

Self Employed Professional / Self Employed Businessman

Features of Business Power

Business Power is a 'Running Finance Facility'.

Business Power can extend the customer a credit line from Rs. 1 million to Rs. 20 million.

Business Power is a stand-alone, one of its kind product where the only collateral required is a
residential property.

Pay only when customer wants to. He only needs to pay the Mark-up at the month end.

The customers can payback the principal amount utilized whenever it suits him.

Business Power offers a credit line between Rs. 1 million and Rs. 20 million. The financing
amount can be up to a maximum of 60% of the market value of your residential property

No matter where the customer is, he can access his account and deposit or withdraw cash from
any of the Union Bank branches across Pakistan.

Business Power gives the freedom to pay mark-up only on the amount utilized and for the
number of day the funds are used and not on the entire credit line.

Eligibility Criteria

The customer can avail this powerful facility if he is:

A resident Pakistani living in Karachi, Lahore, Islamabad, Rawalpindi, Peshawar, Gujranwala,
Gujrat, Sialkot, Faisalabad or Multan.

Between 25-55 years old.

Running his present business for the last 3 years.
Earning a net monthly income of at least Rs. 36,000.

Willing to provide his own or co borrower’s residential property as a security

Both products are quite similar with each other; these products provide loan facility against
residential property. As noted above credit limit for Business Power is10 million higher than
Business line. Business line is offering 10% more of market value property than business power.
The minimum earning requirement for a customer to become eligible for the loan facility is quiet
low for Businessline as compared to business power and also the maximum age limit for
businessline is 65 years so, it is offered to a wider customer range (larger target market) than
business power. One other major strength in the case of business power is the on-line access
from no of branches of union bank. But the selection depends upon the customer needs, and the
market efforts made by both banks and quality of service especially if current customers are
making a consideration to get the loan facility. Obviously the customer that requires higher credit
limit would prefer Business Power and it would also depend upon the mark up rates offered by
the banks.

                                         SWOT Analysis

STEP 1: Factor Listing


Seasoned professionals in top Management

Phone Banking, ATM's and Online Banking

Continuous expansion by acquiring other banks

Making easiest ways of loan disbursement

Good financial position


Low motivation and morale in employees

On-line banking service is not in all branches

No initiative towards Islamic Banking


Internet Banking
Global Financial Markets can be explored.

On-line banking service in all branches

Islamic Baking is in demand

Consumer finance is an emerging market\


Large and increasing competition in banking sector through better customer service and more
focus on consumer productsIslamic Banks and foreign banks Privatization of Nationalized banks
thereby increasing the no of private banks

Step 2: SWOT Matrix

Strengths - Opportunities (SO)

Union bank has its strength in expansion as it has acquired Emirates Bank International American
Express Cards and Bank of America in last few years. Bank is in position to expand its operation
towards to widen customer base by providing the facilities of on-line banking in all branches as no
of branches are already working on-line. The internet banking is yet a big opportunity for bank by
providing 24 hours banking service to the customers. This service is very important for business
sector customers especially for the exporters as they can get the advantage to make their
transactions at any time and will not suffer from time differences. The bank which will enter at first
in this service will definitely get “first mover advantage’. Union Bank in good financial position can
make the expenses and capitalize this opportunity.

Strengths - Threats (ST)

Major threat is already strong competition in the banking industry as banks are offering new and
innovative products and better customer service to capture customers but Union Bank can meet
he challenge by its On-line banking services as in today’s business world “Time is Money” so a
bank with on-line services will be the first choice by the businessmen.

Weaknesses – opportunities (WO)

The high turnover of employees during the last year is major threat for the bank. There seems the
lack of motivation and morale among employees and due high turnover team building and work
has also suffered. As the adjustment with new employees require time cost and slow down the
speed of as well. The bank needs to focus on the intrinsic motivation of employees to capture the

Weaknesses – Threats (WT)
Relatively higher turnover of employees is a weak point for Union Bank. Due this problem the
experienced people in lower levels are lacking and enhancing the threat by other banks in the
industry with experienced employees.

Step 3: Critical Region

The critical region in this case is Weakness- Opportunities (WO). The bank needs to focus on its
weaknesses to improve the employee motivation as by using motivation tools, the most important
is to utilize intrinsic motivation. If employees will be motivated they will perform best for the
organization and it would be easier for the bank to utilize its strengths to say welcome to
forthcoming opportunities and threats as well. Bank can utilize its strengths to capture the
opportunity for Internet banking.

Step 4: Managerial Decision

The managerial decision is to first focus the efforts to motivate employees as reduce turnover of
employees and to enter in the field of Internet banking to provide better service to its customers
and build closer relationship with the customers whish is in line with core value
(Customer Focus) of bank that requires the relentless focus on understanding and fulfilling
customer needs through superior service.

Lending Policy

Lending Policy for SME department:

The main guidelines for the lending policy of Union Bank are as following;

Solicitation from Relationship Manger.

Information often requested by bank includes: History of business.2-3 years historical financial
statements (preferably audited), Information/background on key individuals, Key supply
arrangements. Key customer arrangements. Details of trade terms. Security (and valuations).
Business plans/strategy. Industry analysis. Credit arrangements with other banks/ and financial

Relationship managers complete an assessment: the assessments cover the factors including:
General remarks/narrative. Business plans. Financial statements, Industry analysis, Management
assessment and make credit analysis of the customer including cash flows and quality of assets

Make a Site Visit.

Check Collateral offered and prepare a valuation report.

Documents should be properly signed.
Credit Approval made by Relationship managers is sent to the Regional Head for approval

Loan Committee Approves/Disapproves: the minimum requirement that three members including
the chairman should approve the credit facility for a given customer.

Relationship managers have the responsibility for communicating the decisions which bank's
make in response to applications from borrowers. The relationship manager will typically work
with the customer to explain why the application was declined and to explore options, where
appropriate, for modifying the application.

Loan monitoring will be on continuous basis while the annual review will focus on: movements in
balance sheet items; cash flow; analysis of financials (preferably audited); and discussions with
the borrower

The Bank offers refinancing privileges on the terms that are consistent with State Bank of
Pakistan Policies.

The Bank ordinarily sets loan rates at the time funds are disbursed.

Industry Specific Requirements;

Textile Industry including Ginning Mills, Spinning Mills over 17,000 spindles and export oriented
products, dyeing, Printing and Finishing Mills, Composite Knitwear Units, Apparel and Stitching,
Garments Manufacturers and Weaving Mills.

Current Ratio > = 1.1times

Leverage < = 2.5 times

Cash Conversion Cycle < = 180 days

Interest coverage Ratio >= 1.5 times

Introduction of customer

Financial Spread

Comments on financial position

                                    CUSTOMER ANALYSIS

                                   COTTON ARTS (PVT) LTD

Cotton Arts (Pvt) LTD was incorporated on May 05, 1986 with joint stock companies, Lahore. Mr.
Ateeq Ahmed was nominated as Chief Executive of the company. Since its incorporation,
company is involved in export business and exporting its products to U.K., Holland, and America.

Their main products are embroidered quilts and Bed sheet sets. Initially, this was a small unit
consists of few embroidery and stitching machines. However, during the business operational
period of last two decades, they have registered smooth growth in terms of sales, profits, and
business expansion.

Considering their improved business needs in year 2001, they imported power looms for weaving
unit from Japan and Korea. To erect this unit, they acquired land on lease, which is situated at
Razaabad, Faisalabad. This is an industrial area where many units are operating. Last year they
had imported Shuttle less Sulzer looms. These looms have been installed at company’s
Khurraianwala Jarranwala Road, unit. This unit is spread over an area of more than 160 kanals.
Company’s weaving unit is working on two shift basis, each of 12 hours. Besides weaving unit,
company holds stitching and embroidery machines. Stitching and embroidery unit is situated at
Maqbool Road, Sumundiry Road, Faisalabad. This unit is working on two shifts basis, each of 8
hours. Last year management of the company purchased 5 embroidery machines from Japan to
cater increased business needs. These machines were imported against LC of 180 days, which
was opened by Union Bank. Presently, new embroidery machines are working at company’s
Maqbool Road unit, where no of machines have increased from three to eight. .They buy yarn
different agency holders of spinning mills as well as from different brokers of Yarn market,
Faisalabad. They get yarn from local sizing units. Moreover, printing and processing of their own
woven cloth are done from different local processing and printing units.

Comments on financial position

Balance Sheet

There is continuous improvement in the company’s fixed assets. The company has acquired new
assets in 2004, which increased its production capacity. In 2004, there is 99.28%increase in the
fixed assets in shape of machinery and construction of additional building. There is also an
increase in freehold plant and machinery. The company improved its assets in view of expected
international competition after the application of WTO. With addition in fixed assets their exports
in 2004 increased by 31%as compared to previous year. Their aim is to continue its growth in
exports in future scenario also.

The capital wok in progress which consists of building and civil work has decreased from PKR8,
407,433 in 2003 to PKR 2,517,307 in 2004 showing that 75% work has been completed and
remaining 25%work in process will hopefully be completed in 2004.

There is an increase of 291% in advances and prepayments from PKR 5,522,513 in 2003 to
PKR21, 584,879 in 2004. Major increase ids due to advances paid to suppliers which are Rs.
20.561 M.
There is a significant increase of Rs. 2.595 M in long term deposits from PKR 850,000 in 2003 to
PKR 3,445,000 in 2004. This shows its increase in fixed investment.

Receivable turnover ratio is 14 days in 2004, which has decreased from the previous year at the
same time the company’s sales are increasing. This is a healthy sign for the company because it
means that the company started managing its cash cycle more effectively.

The inventory turnover is 66 days, which also decreased from 92 days in 2003. This means that
the company is not locking extra investment in form of inventory. It is maintaining its level of
inventory to support its sales.

If we look towards the liquidity position of the company , there is minor increase in current ratio
from 0.9 in 203 to 1.0 in 2004 and this is due to increase in current assets, quick ratio has
increased from 0.5 to 0.7 in 2004 which is a healthy sign of financial activities.

Creditors, accrued and other liabilities reduced by 16.73% from 10.809 M to 9.000M in 2004.
Major change occurred in LC, creditors, accrued charges, Director’s current account and
advances from customers. The LC amounting RS. 7.736 M as on 30.06.2003 stands adjusted
during 2004. Account payable increased almost 3 times. Accrued charges increased by 9 times.
Director’s current accounts swell by 77% as compared to last year. Days of account payable
increased from 3 days in 2003 to 10 days in 2004. Accrued and other liabilities have also
increased because of advances from customers overdue lease installments. Current portions of
long term liabilities have increased by 4.68 times with induction of lease finance of Rs. 6.873M.
Long term finance of Rs. 10.510M and addition of Lease Finance of Rs. 11.926 M was made in
the year 2004.

The company has acquired long term loans in shape of Demand Finance repayable in 4 years
period from HBL and liabilities against assts subject to finance lease have also shown increase
because company has purchased more machinery during the year under lease finance.

Paid up capital has increased by 18.900M from PKR 9,450,000 in 2003 to PKR 28,350,000 in
2004 because company issued 189,000 ordinary share of Rs. 100 each fully paid as bonus
shares. These bonus shares are issued from general reserve of Rs. 10 M and unappropriated
profit of Rs. 8.900M that is why the balance of general reserve is zero in 2004. The company also
inducted Share Deposit Money to the extent of Rs. 10M.

Net worth of the company has also increased to 47.67% this has increased because new assts
are acquired. The capital lease to expand their manufacturing unit.

Income Statement

The company’s sales have shown 30.9% boost in 2004 because of their good quality products
and timely delivery.

Cost of goods sold decreased by 5.05% due to economies of scale.
There is 25% rise in admin expenses as compared to the previous year from PKR 4,186,537 in
2003 to 5,245,003 in 204. this rise is occurred in Director’s remuneration and Lease rentals as the
company has started paying Director’s remuneration and Lease rentals has gone double because
the company ‘s Lease Finance has enhanced.

Profitability ratios show a steady increase from 2003 to 2004. Net profit margin has increased
from 1.1% in 2003 to 4.6% in 2004. Operating profit margin has also increased due to reduction
in CGS with respect to sales.

Interest paying capability of the company has increased as interest coverage ratio rose from 1.4
times to 1.9 times. Debt service coverage ratio of the company is constant at 1.9 times.

Cash Flow Statement

The cash flow of operations is showing fluctuations from 2004 to 2004. in 2004 cash generated
and total operating needs have increased but net operating cash generated has become negative
in 2004. The reason for this is that its interest payment and other current assets have increased.

Investment has increased from PKR 24,840,000 to PZKR 91,695,000 in 2004; this is due to the
increase in capital expenditures and long term deposits. This is good sign for the company as it
shows company’s investment activities are increasing. This also means that in future the
management of the company believes that its sales will further increase. So, the company is
expending its production capacity and improving its quality.

Cash flow from financing has increased in 2004 which occurred in both long term and short term

The net cash balance is negative in 2004 and as discussed above it is due to decrease in cash
flow form operations and increasing investment and financing activities. But the management is
quite hopeful that its net cash flow will be improved during 2005.


My experience as an internee at union Bank has been a wonderful and unique learning
experience. What I found at Union Bank was cooperative staff that allowed me to have hands-on
experience. I was given my own office space with a computer. The bank has a pretty good
working environment. The typical concept of boss and subordinates was not there; instead the
subordinates have opportunity to convey their view point to their super ordinates.

Because the staff here at Union Bank, I was able to work one-on-one with the supervisor, and
was willing to answer of my questions about the field. During my Eight-week internship at Union
Bank, and under the guidance of my supervisor, I made analysis of various clients that improved
my analytical ability and I also had to opportunity to learn through observation the client relations
and dealings. In Credit Administration Department (CAD) I had an opportunity to closely observe
the documents handling procedure and administration and release of pledged assets.
The unique organizational structure is an other feature of Union Bank. The organizational
structure is very different form the one that is prevailing in the banking industry that is branch
management. The Union Bank is divided into six different departments that earn their revenues
and after deducting the expenses the net income is transferred to bank by the departments. The
group heads report to president of bank. This unique structure is helpful to improve the efficiency
of organization and the open work environment.

It is said that the need and room for improvement is always there. Union Bank enjoys many
strengths but a few weaknesses are also there which serve as hurdle to exploit the opportunities.
The foremost is boost employee morale thorough intrinsic and extrinsic motivation for them so
that they become committed and loyal to their organization. There is need to improve Online
banking service in order to be competitive in this ever expanding and full of competition banking

On the whole, Union Bank has given me an intern experience and an insight to practical work
environment. It was an interesting, valid and worthwhile learning experience. The experience that
I have gained at the conclusion of my internship exceeded what I believe one could learn in the
classroom. There is nothing like getting hands-on experience because it can only prepare you for
what the workforce is looking for.

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Description: Internship Reports on various projects