BRANCH BANKING IN PAKISTAN:Remittances, Online Fund Transfer

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Management of Financial Institutions - MGT 604

Lecture # 20

BRANCH BANKING IN PAKISTAN

A branch, banking centre or financial centre is a retail location where a bank or financial

institution offers a wide array of face to face service to its customers.

Remittances:

Demand Draft

It's a written order, drawn by one branch of a bank upon another branch of the same bank,

upon other bank under special arrangement to pay a certain sum of money to or to the order

of a specified person."

Parties Involved

Purchaser

Issuing Branch

Drawee Branch

Payee/ Beneficiary

Pay Order

A Pay Order is a written authorization for Pmt, Made in a receipt from issued & Payable by

the bank, to the person named & addressed therein on his giving a proper discharge thereon.

Parties Involved

Purchaser

Issuing / Paying Branch

Payee

Telegraphic Transfer

"T.T instructions regarding PMT are sent to Drawee branch in a coded language and under

confidential number known as TEST Number."

Parties Involved

Applicant

Remitting or Drawing Branch

Drawee Branch

Beneficiary /Payee

Mail Transfer

Like T.T funds can be remitted by MT for the Cr of the payee a/c or the Beneficiary can be

advised to receive the PMT from Drawee branch either in cash on proper identification or

through his banker."

Parties Mail Transfer

Applicant

Drawing Branch

Management of Financial Institutions - MGT 604

Drawee Branch

Beneficiary

Online Fund Transfer

It's also a fund transfer but only by Online within the Branches.

Parties Involved

Applicant (a/c in Bank)

Beneficiary (a/c in Bank)

2 Branches of Bank (online)

Account Opening Department

Types of Account

Individual

Joint Account

Sole Proprietorship

Club & Societies

Joint Stock Companies

Agents

Operations & Status of Accounts

Nature of Accounts

Current Account

Profit & Loss Sharing

Current foreign currency

Saving Foreign Currency

Term Deposits

BBA "Basic Banking Account"

Deposit

Commercial Bank deposit products offer you an array of privileges and services. Designed

with your banking needs and comfort in mind, these convenient accounts prove that, at

Commercial Banks, banking is about a shared long-term relationship between bank and you.

Current Account

The Current Account allows you the facility of unlimited withdrawals up to the extent of the

balance in your account. Sometimes there will be no tax deducted on the funds that you

choose to keep in these accounts.

Savings or PLS Account

The Savings Account allows you the facility of unlimited withdrawals (up to the extent of

the balance in your account), while accruing profit on your deposit everyday. You can have

the profit paid to you monthly, quarterly, annually or as per your requirement. The passbook

is the traditional document to keep track of earnings in a savings account.

Management of Financial Institutions - MGT 604

Term Deposit

The Term Deposit offers you the dual benefit of attractive returns with high liquidity, with

options to take your profit monthly, quarterly, annually or at maturity. A time deposit (also

known as a term deposit, particularly in Canada, Australia and New Zealand) is a money

deposit at a banking institution that cannot be withdrawn for a certain "term" or period of

time. When the term is over it can be withdrawn or it can be held for another term.

Generally speaking, the longer the term the better the yield on the money. A certificate of

deposit is a time-deposit product. A deposit of funds in a savings institution under an

agreement stipulating that

(a) The funds must be kept on deposit for a stated period of time,

(b) The institution may require a minimum period of notification before a withdrawal is

made .

Foreign Currency

You have the option of opening Current, Savings and Term Deposit accounts in different

foreign currencies Like US Dollar, Pound Sterling, Japanese Yen, and Euros. This entitles

you to avail all the convenience of local currency accounts including:

Unlimited cash withdrawals up to the balance in your account

Deposits facility

Profit accrued on a daily basis

Automatic rollover of deposits

As per State Bank of Pakistan circulars/regulations

Demand account

The cheque is the traditional mode of payment for a demand account.

A demand account or demand deposit (North America: checking account, UK

and Commonwealth: current account) is a deposit account held at a bank or other financial

institution,

For the purpose of securely and quickly providing frequent access to funds on

demand, through a variety of different channels.

Commercial Banks Loan Facilities:

A loan is a type of debt. All material things can be lent but this article focuses exclusively

on monetary loans. Like all debt instruments, a loan entails the redistribution of financial

assets over time, between the lender and the borrower.

The borrower initially receives an amount of money from the lender, which they pay back,

usually but not always in regular installments, to the lender. This service is generally

provided at a cost, referred to as interest on the debt.

A borrower may be subject to certain restrictions known as loan covenants under the terms

of the loan. Legally, a loan is a contractual promise of a debtor to repay a sum of money in

exchange for the promise of a creditor to give another sum of money.

Secured Loan

A mortgage loan is a very common type of debt instrument, used by many individuals to

purchase housing. In this arrangement, the money is used to purchase the property. The

financial institution, however, is given security - a lien on the title to the house - until the

Management of Financial Institutions - MGT 604

mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the

legal right to repossess the house and sell it, to recover sums owing to it. In some instances,

a loan taken out to purchase a new or used car may be secured by the car; in much the same

way as a mortgage is secured by housing. The duration of the loan period is considerably

shorter often corresponding to the useful life of the car.

There are two types of auto loans, direct and indirect.

A direct auto loan is where a bank gives the loan directly to a consumer.

An indirect auto loan is where a car dealership acts as an intermediary between

the bank or financial institution and the consumer

Other Types of Loans

Credit card debt

Personal loans

Bank overdrafts

Corporate bonds

Personal finance

Personal finance is the application of the principles of finance to the monetary decisions of

an individual or family unit. It addresses the ways in which individuals or families obtain,

budget, save and spend monetary resources over time, taking into account various financial

risks and future life events. Components of personal finance might include checking and

savings accounts, credit cards and consumer loans, investments in the stock market,

retirement plans, social security benefits, insurance policies, and income tax management.

Personal Finance is a parameter driven product for catering to the needs of the general

public belonging to different segments. One can avail unlimited opportunities through

Bank's Personal Finance. With unmatched finance features in terms of loan amount,

payback period and most affordable monthly installments, Bank's Personal Finance makes

sure that one gets the most out of his/her loan. Once a good credit history is established, the

door to opportunity opens much wider.

Mortgage Finance

Offers the convenience of owning a house of choice, while living in it at its rental value.

The installment plan has carefully designed to suit both the budget & accommodation

requirements. It has been designed for enhancing financing facility initially for employees

of corporate companies for purchase/ construction/ renovation of house.

Business Finance

In pursuance of the National objectives to revive the economy of the country, Bank is

providing loans to small and medium size business enterprises under Bank's Business

Finance Scheme. Goal is to offer a loan, which enables business community to receive the

financing required by them based on their cash flows. Valued customers can enjoy the

convenience of getting financing on attractive terms with the minimum processing

turnaround time.

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