BAJK

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INTERNSHIP REPORT

On

BAJK Housing Scheme Branch Rawalakot 083

Submitted By
Muhammad Hassnain

2020-UPR-4506

(2020-24)

Department Of Business Administration

Faculty of Management, Humanities and Social Sciences

UNIVERSITY OF POONCH RAWALAKOT AZAD KASHMIR

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University of The Poonch Rawalakot, Azad Jammu and Kashmir

Faculty of Management Sciences, Humanities and Social Science

Internship Registration Form

Student Name:
_____________________________________________Roll.No:_____________
Department:
_________________________________________Program:___________________
Semester:___________________ Credit Hrs. Completed _________ CGPA:________
Area of
Specialization:_________________________________________________________
Internship
Organizaiton:__________________________________________________________
Deparment:_________________________________________________________________
Address:____________________________________________________________________
Phone No:__________________________________FaxNo.__________________________

Signature:_______________________ Date:_______________

To be completed by supervisor

Name:_______________________________________Designation:___________________

Number of students under your supervision: ______________________________________

Signature:
___________________________Date:____________________________________

Verified by Department

Department In-charge:

Name: _______________________________

Signature: ____________________________

Date:________________________________

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i
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Declaration

My name is Muhammad Hassnain a student of Bachelor of Business Administration (BBA)


at University of Poonch Rawalakot hereby declare that this internship report is an original
piece of work carried out during my internship at Bank of Azad Jammu and Kashmir from
1/08/2024 to 30/09/2024.

This report is submitted in partial fulfillment of the requirements for the BBA program. I
confirm that the findings, conclusions, and recommendations presented in this report are
based on my personal experiences and research conducted during my internship.

I acknowledge that this report has not been submitted for any other degree or examination,
and all sources of information have been properly cited and referenced.

I take full responsibility for the content of this report and confirm that it reflects my
understanding and perspective of the internship experience.

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Acknowledgement

In the name of Allah the most beneficent, the most merciful.

I thanks to ALLAH ALMIGHTY for his blessings that I‟m able to perform the internship
program effectively and efficiently. I would like to express my sincere gratitude to all those
who supported me throughout my internship journey at Bank of Azad Jammu & Kashmir

First and foremost, I would like to thank my supervisor, [Supervisor's Name], for their
invaluable guidance, support, and encouragement. Their insights and feedback greatly
enhanced my learning experience and helped me navigate the challenges I faced during my
internship.

I also extend my appreciation to my colleagues at ( BAJK) for their friendly assistance and
for sharing their knowledge and experiences with me. Their collaborative spirit made my
time there enjoyable and productive.

I am grateful to the faculty and staff at University of Poonch for providing me with the
foundational knowledge and skills necessary to succeed in this internship. Their commitment
to student development has been instrumental in my educational journey.

Lastly, I would like to thank my family and friends for their unwavering support and
encouragement throughout my academic and professional pursuits. Their belief in me has
always motivated me to strive for excellence.

Thank you all for making this internship a rewarding experience.

Name Muhammad Hassnain

Department BBA

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Executive Summary

This report provides an in-depth overview of my internship experience at the Bank of Azad
Jammu and Kashmir (BAJK), a leading financial institution in the Azad Jammu and
Kashmir region. My internship took place from 1-08-2024 to 30-092024 where I was able to
gain exposure to various banking functions and contribute to the bank’s operations in both
customer service and back-office support.

As a finance student, the internship allowed me to gain hands-on experience in key financial
functions, including voucher, remittance, Credit and Loan Services, Risk Management,
Treasury, Financial Analysis, account opening. My tasks included analyzing financial
statements, assisting with loan assessments, conducting market and financial research,
preparing reports on credit risk, and supporting financial modeling activities. These
responsibilities gave me an in-depth understanding of the application of financial concepts
such as asset-liability management, financial forecasting, credit risk assessment, and financial
planning in a real-world banking environment.

Key takeaways from my internship include:

 Practical Banking Knowledge: I acquired hands-on experience in financial services,


learning about BAJK's operational processes, its customer-centric approach, and how
it aligns its services with regional economic needs.
 Skill Development: The internship helped refine my analytical skills, financial
literacy, and ability to handle customer-facing tasks, such as assisting with account
openings and processing transactions.
 Exposure to Treasury Operations: I gained valuable exposure to the bank’s treasury
operations, learning about liquidity management, cash flow forecasting, and the role
of financial markets in managing the bank’s assets and liabilities.

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 Team Collaboration: Working with the various departments within the bank helped
me develop collaboration and communication skills, essential for working in a
multidisciplinary team.

Overall, my internship at BAJK has been a highly valuable and educational experience,
offering a clear understanding of the dynamics of regional banking and laying a strong
foundation for a career in the financial sector.

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Table of Contents
Contents Page No

Title Page …………………………………………………………………

Certificate………………………………………………………………… ii

Declaration………………………………………………………………. iii

Acknowledgement……………………………………………………….. iv

Executive Summary………………………………………………. v

Chapter No 01 Introduction

1 Introduction of Bank…………………………………………….. o1

1.1 Types of Bank………………………………………………. 01


1.2 Scope of Study……………………………………………… 01
1.3 Objectives………………………………………………….. 01
Chapter No 02

2. Introduction of BAJK………………………………………….. 03

2.1 History of BAJK……………………………………………………. 03

2.2 Vision ………………………………………………………………. 03

2.3 Mission Statement…………………………………………………. 03

2.4 Objectives…………………………………………………………. 03

2.5 Core value of BAJK………………………………………………. 04

2.6 Nature of Organization……………………………………………. 04

2.7 Regional offices…………………………………………………… 05

2.8 Staff strength ……………………………………………………… 05

2.9 Product & Services……………………………………………….. 05

2.9.1 Deposit Account………………………………………………… 05

a. Current Account…………………………………… 06
b. PLS Saving Account………………………………. 06
c. BMBA……………………………………………... 07
d. PPRSA…………………………………………….. 07

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2.9.2 Term Deposit……………………………………………………… 08

a. Bemisal term deposit…………………………………… 08


b. PLS Term deposit……………………………………… 08

2.10 Assets Product……………………………………………………. 09

a. Gold Loan……………………………………………….. 09
b. Advance salary scheme…………………………………. 09
c. Motorcycle Finance…………………………………….. 09
d. Micro Finance………………………………………….. 09
e. Agriculture loan………………………………………… 09

2.11 Services…………………………………………………………. 10

a. Remittance………………………………………….. 10
b. Locker Facility……………………………………… 10
c. Utility Bill collection………………………………. 10

2.12 Branches Network……………………………………………… 10

2.13Competitors……………………………………………………. 11

2.13.1Compatitors Comparison…………………………………….. 12

Chapter No 03

3 Organizational Structure……………………………………. 13

3.1 Board of Directors……………………………………………… 13

3.2 Human resource committee BoDs………………………………. 13

3.3 Audit committee BoDs…………………………………………. 13

3.4 Risk management committee ……………………………………… 13

3.6 Organization management …………………………………………. 15

Chapter No 04

Financial Operation

4.1 Financial Analysis………………………………………… 17

4.2 Financial Statement B…………………………………………. 17

4.3 Financial Ratios…………………………………………………. 17

4.4 Trend analysis…………………………………………………… 17

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4.2.1 Balance Sheet of BAJK…………………………………. 18

4.2.2 P/L or Income Statement……………………………….. 19

4.2.3 Cash flow statement……………………………………. 19

4.5 Horizontal Analysis of Balance sheet…………………………… 21

4.6 Vertical Analysis of Balance sheet ………………………………… 23


4.7 Horizontal Analysis of income Statement…………………….. 24

4.8 Vertical Analysis of Income statement………………………….. 25

4.9 Ratio Analysis…………………………………………………… 26

4.9.1 Financial Ratios……………………………………………….. 26


I. Liquidity Ratio…………………………… 26
II. Leverage Ratio…………………………… 27
III. Profitability Ratio………………………… 28
IV. Efficiency Ratio………………………….. 29

4.10 Trend Analysis………………………………………………… 31

Chapter No 05

5.1 Job description & Analysis…………………………… 32

5.2 Brief overview of Branch………………………………………. 32

5.3 No of Employee………………………………………………… 33

5.4 Job Description & Position…………………………………….. 33

5.5 My task/job……………………………………………………. 33

i. Voucher Making………………………………………… 33
ii. Account Opening……………………………………….. 34
iii. Cheque Clearing………………………………………… 34
iv. Dormant Account……………………………………….. 35
v. Credit Department……………………………………… 36
vi. Posting…………………………………………………. 36
vii. Remittace………………………………………………. 37

Chapter No. 06
SWOT Analysis

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6.1 SWOT Analysis of BAJK…………………………………………… 37

Chapter No. 07

Critical Analysis
7.1 Major Competitors…………………………………………………… 41

7.2 Compatitive Strategies in Practices…………………………………. 42

7.3 Future Aspects………………………………………………………. 42

Chapter No. 08

Conclusion
8.1 Conclusion

8.2 Assessment and Judgment

Chapter No. 09

Recommendation
9.1 Limited Geographic Presence

9.2 Dependence on Government Funding

9.3 Inadequate Credit Management and High Non-Performing Loans (NPLs)

9.4 Technological Gaps

9.5 Limited Financial Inclusion

9.6 Political Instability

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Chapter 01

Introduction of Bank
The word ‘Bank’ is derived from the French word named ‘Banque’ or ‘Bancus ’ which
means office , institution for the keeping, lending and exchanging the money. Some
authorities have the opinion that Word ‘Bank’ has derived from the ‘Germen’ word ‘back’
which is meaning joint stock of funds.
The bank is a financial institution to borrow money from one party and lends to other
parties like (Government, individuals, and business purposes as well) and other difference
between borrowing and lending rate of profit / interest for the bank. Banks borrow or lends
based on interest.
1.1 Types of bank

The principal types of banks in the modern industrial world are commercial banks, which are
typically private-sector profit-oriented firms, and central banks, which are public-sector
institutions. Commercial banks accept deposits from the general public and make various
kinds of loans (including commercial, consumer, and real-estate loans) to individuals and
businesses and, in some instances, to governments. Central banks, in contrast, deal mainly
with their sponsoring national governments, with commercial1 banks, and with each other.

 Commercial Bank
 Central Bank
 Investment bank
 Retail Bank
1.2 Scope of Study

This report may help students in future to understand banking practices in our country such
as:

 Banking Operations: Learn daily operations, account management, and customer


service.
 Financial Products: Understand loans, mortgages, and investment options.
 Customer Relationship Management: Techniques for enhancing customer
satisfaction.

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 Financial Analysis: Basics of analyzing financial statements and KPIs.
 Risk Management: Introduction to credit, market, and operational risks.
 Regulatory Environment: Overview of banking regulations and compliance.
 Sales and Marketing: Understanding marketing strategies for banking products.
 Ethics and Professionalism: Importance of ethical behavior and confidentiality.
 Networking: Building relationships with professionals and mentors.

1.3 Objective:
My purpose to study the Bank Of Azad Jammu and Kashmir are in the following
 Understanding Operations: To gain insights into BAJK operational processes
and how they deliver banking services effectively.
 Learning Financial Products: To explore the range of financial products and
services offered by BAJK, including personal and corporate banking solutions.
 Developing Skills: To enhance my skills in customer relationship management,
financial analysis, and risk assessment within a leading banking institution.
 Exploring Career Opportunities: To investigate potential career paths within
BAJK and understand the roles that align with my interests and strengths.
 Contributing to Initiatives: To actively participate in projects that support BAJK
goals and improve customer satisfaction and operational efficiency.
 Building Professional Networks: To connect with professionals and mentors at
BAJK who can provide valuable insights and guidance for my career
development.
 Gaining Industry Knowledge: To deepen my understanding of the banking
sector in Pakistan, including regulatory frameworks, market trends, and customer
needs.

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Chapter 02

Bank of Azad Jammu and Kashmir (BAJK)


2.1 History Of BAJK:

Bank of Azad Jammu & Kashmir is the state-owned bank of Government of Azad
Kashmir which is based in Muzaffarabad, Azad Kashmir. It was founded in 2005. BAJK is a
fast growing commercial bank operating across the state of Azad Jammu & Kashmir with a
network of 84 branches.[6] The Bank is a wholly owned corporate entity of the Govt. of Azad
Jammu & Kashmir mandated to mobilize private savings and public funds for diverting them
to productive channels; promote industrial, agriculture, rural micro financing and other socio
economic activities through active participation of private and public sectors and help under-
developed areas, create employment opportunities and to assist overseas Kashmiris to
effectively and profitably invest their savings in the State. The bank has a number of liability
and assets products customised to fulfils the banking needs of people. The Bank believes that
equal access to resources in the economy is smart economics and a powerful means of
poverty reduction and a path to faster socio economic development. That is why the Bank has
launched an innovative scheme of microfinance for those who have limited or no access to
financial resources.

2.2 Vision

To act as a premier financial institution, fostering socio- economic development of the


people of AJK.

2.3 Mission Statement

To achieve market leader-ship via excellent bank services, customised product, business
practice, a merit and performance culture, and engagement in the state's developmental
process for the welfare of its people.

2.3 Objectives

 To achieve sustained growth and profitability in all areas of business.

 To build and sustain a high performance culture, with a continuous improvement focus

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.  To develop a customer-service oriented culture with special emphasis on customer care
and convenience.

 To build an enabling environment, where employees are motivated to contribute to their


full potential.

 To effectively manage all kinds of risks inherent in the banking business.

 To maximize use of technology to ensure cost-effective operations, efficient management


information system, enhanced delivery capability and high service standards.

 To manage the Bank's portfolio of businesses to achieve strong and sustainable shareholder
returns and to continuously build shareholder value.

 To deliver timely solutions that best meets the customers financial needs.

2.5 Core Values Of BAJK

 Commitment: Passionate about our customers‟ success and delighting them with
quality of our service

 Integrity: A distinctive investment, delivering outstanding performance, return


and value

 Fairness: Exemplary compliance, governess and business ethics

 Teamwork: Caring for our people and helping them to grow

 Service: Dedication towards social development and improvement in quality of


life.

2.6 Nature of organization.

The Bank is a wholly owned corporate entity of the Govt. of Azad Jammu & Kashmir
mandated to mobilize private savings and public funds for diverting them to productive
channels; promote industrial, agriculture, rural micro financing and other socio economic
activities through active participation of private and public sectors and help under-developed

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areas, create employment opportunities and to assist overseas Kashmiris to effectively and
profitably invest their savings in the State.

2.7 Regional Offices:

Regional Office Muzaffarabad

DAM Plaza 3rd Floor, Bank Road, Muzaffarabad, Azad Kashmir.

Regional Office Mirpur

Nishat Plaza, Allama Iqbal Road, Mirpur Azad Kashmir.

Regional Office Rawalakot

Bank Road, Rawalakot AJK

Regional Office Kotli

Qadri Business Centre, 1st floor Opposite GPO Kotli, AJK.

2.8 Staff Strength

There are approximately 500 to 1000 employees working in BAJK.

2.9 Products & Services:

2.9.1 Deposit Accounts

BAJK provide the following products and services

 Current Account
 PLS Saving Account
 Special deposit Account
 Bemisal Mahana Bachat Account (BMBA)
 Premium plus Remittance Saving Account(PPRSA)
a. Current Account:

Eligibility
Individuals, Business People, Business Entities (Sole Proprietors, Companies (Public,
Private, Listed, Non listed), Partnership Firms (Registered/ Un-Registered), Govt.
Departments, Local Bodies and Corporations, Trusts, Clubs, Associations, Societies, NGOs,
Public Sector Corporations/ Autonomous Bodies
Salient Features
Chequing account.
 Can be opened singly in one name or jointly in two or more names.

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 Initial/ Minimum deposit requirement is Rs. 1000/-
 No withdrawal Limit.
 No Zakat deduction.
 Free Cheque Book and other Services as per applicable schedule of charges
for account holders having average balance of Rs. 25,000/- and above.Free of
Charge Locker facility for account holders having average balance of Rs.
50,000/- and above.
b. PLS Saving Account

Individual, singly or jointly can open their saving account. Business/ Government entities can
open saving accounts.

Features:

 Profit earning cheaquing account.


 Initial deposit minimum balance requirement of Rs.500.
 Account can open singly by one name and jointly by two or more names.
 Free cheque books and other services as per applicable schedule charges for
account holders having average balance of Rs 100,000 /- abd above.
 No limit of withdrawal
 Half year profit payment
 Zakat deducted as per law.
c. Special deposit Account:

Individuals, Business People, Business Entities (Sole Proprietors, Companies (Public,


Private, Listed, Non-listed), Partnership Firms (Registered/ Un-Registered), Govt.
Departments, Local Bodies and Corporations, Trusts, Clubs, Associations, Societies, NGOs,
Public Sector Corporations.

Features:

 Suitable for Business


 Profit payment on Half year basis on daily product basis.
 No restriction on withdrawal
 Daily balance of Rs 50000 required for profit

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 Free services as per applicable achedule of charges for all customer having average
balance of Rs 100,000 or above.
d. Bemisal mahana bachat Account (BMBA):

Individuals, Business People, Business Entities (Sole Proprietors, Companies (Public,


Private, Listed, Non-listed), Partnership Firms (Registered/ Un-Registered), Govt.
Departments, Local Bodies and Corporations, Trusts, Clubs, Associations, Societies, NGOs,
Public Sector Corporations/ Autonomous Bodies.

Feature:

 Minimum deposit limit for profit Rs 25000/- however the account can be opened
with Rs 1000/-
 Maximum two withdrawal allowed between 6th and last day of month for profit
qualification. No restriction on withdrawal before 6th of the month
 Profit on monthly basis
 Free locker facility for customer having average balance of Rs 50000/-
 Profit on monthly basis
 Up to 95% of quick financing facility on low markup.
e. Premium plus Remittance Saving account (PPRSA)

Any individual customer who sends/receives the foreign remittances through Money Gram,
IME (International Money Exchange), IC (Instant Cash), Western Union, Ria can open
single/joint account under this scheme. Remittances received under the above channels with
documentary proof would be eligible for opening the account under the product. Print out of
Remittances extracted at the time of payment will be kept with the Credit Voucher as
evidence of Home Remittances. NO OTHER DEPOSIT will be accepted in the account
except the remittance amount received through the aforementioned modes of Home
Remittances.

Features :

 Deposits received under the above sources of remittance will only be eligible for
extra profit.
 Profit will be paid on monthly basis resulting in enhanced annualized rate as well.

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 Cheque book will be provided free of charge to all accounts opened under the
product.
 Minimum Deposit required for retention under this scheme will be Rs. 1,000/
 Zakat & Withholding Tax to be recovered as per rules.

2.7.2 Term Deposit

a. Bemisal Term deposit:

Individuals, Business People, Business Entities (Sole Proprietors, Companies (Public,


Private, Listed, Non-listed), Partnership Firms (Registered/ Un-Registered), Govt.
Departments, Local Bodies and Corporations, Trusts, Clubs, Associations, Societies, NGOs,
Public Sector Corporations/ Autonomous Bodies.

Features

 Customer has to open linked account (Current/ PLS/ BMBA/ SDA) for payment of
profit.
 Minimum deposit requirement Rs. 100,000/- for Individuals & Rs.1,000,000/- for
Corporate Customers
 Profit payment on quarterly basis.
 Short term financing facility available on nominal rate of markup
 Deduction of Zakat and Withholding tax applicable as per law.

b. PLS Term Deposit

Individuals, Business People, Business Entities (Sole Proprietors, Companies (Public,


Private, Listed, non-listed), Partnership Firms (Registered/ Un-Registered), Govt.
Departments, Local Bodies and Corporations, Trusts, Clubs, Associations, Societies, NGOs,
Public Sector Corporations/ Autonomous Bodies

Features:

 tenure 03 Months to 05 Years.


 Zakat applicable as per rules
 Profit payment on maturity.
 Compatible rates of profit

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2.10. Assets Product

Consumer Finance

a. Gold Loan

Purpose : save gold spend money. Keep your gold in safe hand and enjoy consumption of
money there against on your urgent need on lowest rate.

Eligibility to all account holder of BAJK.

Loan limit: two million

Margin: 15%

b. Advance Salary Scheme:

BAJK offer advance salary scheme to those individual who are the permanent employee of
Government / semi government department corporation with at least one year service.

c. Motor cycle finance.

Who can eligible:

 AJK/Pakistani resident
 Permanent employee of Govt/semi government
 BAJK account holder
d. Micro Finance

Purpose: To encourage small scale enterprise, create self employment


oppoertunities, generate economic entity and reduce poverty.

e. Agriculture Finance:

Agriculture production loan: for provision of agri input and working capital i-e short tern
loan for purchase of seeds, pesticide and fertilizer etc. to boost agriculture growth and
employment generation in the state of AJK.

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Agriculture development loan: For purchase of assets (farm equipment/machinery), dairy,
poultry, sheep and fish farm development and as well as other agriculture activities.

2.11Services:
a. Remittance :

The bank has made adequate arrangements with major scheduled banks for the purpose of
inter bank settlements and outward remittances. Under an arrangement with HBL all Banker
Cheques issued by BAJK branches are payable on all branches of HBL.

The customer withdrawal their money through money Gram, Ria, and western union.

b. Locker Facility:

Lockers’ facility is available in Main Branch Muzaffarabad, Main Branch Mirpur, Ladies
Branch Mirpur,

and CMH Road Branch Rawalakot in three different sizes Small, Medium and Large on
annually fee with one time Security Deposit respectively to the size of locker. Locker holders
need to have an account in the Bank.

c. Utility Bills Collection:

All branches of the Bank are authorized to collect Electricity Bills

2.12 Branches Network:

The BAJK has a network of 87 branches, which are located in different areas of Azad
Kashmir. In order to strengthen the operation network in the country, the management is
planning to open new branches at important cities and locations.

Table no 2.1

Sr.NO Name Of Districts No. of Branches

1 Muzaffarabad 14

02 Mirpur 14

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03 Poonch

04 Kotli 14

05 Neelum

06 Sudhnuti

07 Bhimber

08 Haveli

09 Bagh

10 Bhimber

2.13Competitors:

Bank of Azad Jammu and Kashmir (now known as BAJK) has several competitors in the
region. Some of the main competitors include:

 National Bank of Pakistan


 HBL
 MCB
 UBL
 Meezan Bank

2.10.1Competitor Comparison

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NBP HBL MCB UBL Meezan bank

I Market Presence I Retail Banking I Market presence I Allied solar I Market presence
finance
ii Retail banking ii credit cards ii Retail banking ii Women
ii allied bike banking
iii youth iii Islamic banking finance
iii Corporate
accounts iii SME banking
Banking iii women
banking iv Digital banking
iv Digital banking
iv Agricultural
iv Digital iv youth banking v Consumer
Banking bankingplatform finance
iv Business v Digital
v Government v Trade finance banking vi Pensioner
account account
bank vi HBL personal
loan v Students personal vi Allied home vii Sharia system
vi Wide range of loan finance

services vii HBL vii extensive


pensioner branches across
vii Extensive account vi Personal Pakistan.
branches across
Vii allied Debit
Pakistan card

12
Chapter 03

Organizational Structure

3.1 Board of Directors

Mr. Abdul Majid Khan (Chairman)

Mr. Shahid Shahzad Mir (President/CEO)

Mr. Islam Zaib (Director)

Mr. Muhammad Sajjad (Director)

Mr. Khalid Mehmood Mirza, (Director)

Mr. Mubashar Nabi (Director)

Mr. Zulfiqar Abbasi (Director)

Ms. Bushra Naz Malik (Director)

3.2 Human Resource Committee of BoD

 Mr. Zulfiqar Abbasi, Director/Chairman


 Secretary Finance, Director/Member
 Mr. Mubashar Nabi, Director/Member
 President/CEO, BAJK / Member
 Divisional Head Human Resource Management Division (HRMD)/Secretary

3.3 Audit Committee of BoD,

 Ms. Bushra Naz Malik, Director/Chairperson


 Secretary Finance, Director/Member
 Secretary Law, Director/Member
 Mr. Zulfiqar Abbasi, Director/Member
 Divisional Head, Audit and Inspection/Secretary
3.4 Risk Management Committee of BoD,

 Mr. Mubashar Nabi, Director/Chairman


 Secretary Law, Director/Member
 Ms. Bushra Naz Malik, Director/Member
 President/CEO, BAJK/Member
 Divisional Head, Risk Management Division/Secretary

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Management Team

PRESIDENT/CEO

Divisional Head Divisional Head Divisional Head

HRMD Operation CAD

Divisional Head Divisional Head Divisional Head

CRBD RMD TMD

CCO Divisional Head


Divisional Head
A&ID
CMD

Divisional Head Divisional Head Divisional Head

ITD IBD SAMD

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3.1 Organization Management:

President HRM Divisions Credit Administration


Division
Mr Shahid Shahzad Mir Ms Rahila Javed
Ahtasham Malik
( President/CEO) (Divisional head)
(Divisional head)
Financial Control Division Treasury Management
Division Compliance Division
Mr Liaqat Ali khan
Syed Tashfeen Gilani Muhammad Javed Iqbal
Senior manager
(Divisional head) (chief compliance officer)
Commercial & Retail
banking division Credit Management Audit & Inspection
Division Division
Rajab Ghulam Mustafa
(Divisional head) Muhammad Imtiaz Shaheen Tariq Mehmood Khan

Raja Israr Qayyum (Divisonal head) (Divisional Head)


(senior manager)
Adil Bilal Waqas Chaudhary
Operations Division
(senior Manager) (Senior manager)
Zamurrad Hussain
(Divisional head) Risk Management Division Information Technology
Division
Masood Ilyas khan (senior Akhtar Hussaim
manager establishment) Gulzar Rao (Divisional
(Divisional head) head)
Raja Mumtaz Khan
Amber Waheed Qureshi Awais Ahmed (senior
(Senior manager
(senior Manager) manager)
operations)
Muhammad Abid Islamic Banking Division

(Senior manager credit Muhammad Aslam Awan


risk management) (Divisional Head)

15
Organization Chart
Board of Director/President

Audit committe

Divisional head Audit Company’s Secretary

Audit and inspection

Managing Director

Divisional Head

Treasury
HR Division Credit Finance Operation
Division IT
Division Division Division Division

Figure 2.3

16
Chapter 04

Financial Operation
4.1 Financial Analysis:

Financial analysis involves evaluating a company’s financial information to assess its


performance, stability, and profitability. Here are key components and steps involved in
conducting a financial analysis.

Key Components of Financial Analysis

4.2. Financial Statements

 Income Statement
 Balance sheet
 Cash flow statement

4.3. Key Financial Ratios:

 Liquidity Ratio
 Profitability ratio
 Leverage Ratio
 Efficiency Ratio

4.4. Trend Analysis:

 Compare financial data over multiple periods to identify trends in revenues, expenses,
profits, and key ratios

I have used different tools of financial analysis in this section. Financial statements of BAJK
are analyzed in following ways:

 Horizontal Analysis.
 Vertical Analysis.
 Ratio Analysis.
 Trend Analysis

4.3 Balance Sheet Analysis:

The balance sheet (also known as the statement of financial position) is a financial statement
that shows the assets, liabilities, and owner’s equity of a business at a particular date. The
main purpose of preparing a balance sheet is to disclose the financial position of a business
enterprise at a given date. While the balance sheet can be prepared at any time, it is mostly
prepared at the end of the accounting period.

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4.2.1 The Bank of Azad Jammu and Kashmir Statement of Financial
Position As At December 31- 2023.
2023 2022

ASSETS …….Rupees in 000…….

Cash and balances with treasury banks 8,218,340 6,271,417


Balances with other banks 16,532,540 16,088,667
Lendings to financial institutions - -
Investments 56,771 163,197
Advances 3,874,147 3,290,230
Fixed assets 422,748 365,478
Intangible assets - -
Deferred tax assets 31,984 49,601
Other assets 3,423,366 2,232,866
32,559,896 28,461,456

LIABILITIES

Bills payable 93,259 82,751


Borrowings - -
Deposits and other accounts 24,144,665 21,004,229
Lease liabilities against right of use assets 167,028 161,246
Subordinated debt - -
Deferred tax liabilities - -
Other liabilities 1723814 1,344,311

26,128,766 22,592,537

NET ASSETS 6,431,130 58,68,919

REPRESENTED BY

Share capital 5,528,621 5,142,901

Reserves 568,146 360,650

Surplus on revaluation of assets 930 (23,828)

Unappropriated profit 433,460 389,194

6,431,130 5,868,919

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4.2.2 THE BANK OF AZAD JAMMU AND KASHMIR PROFIT AND
LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2023

2023 2022

….Rupees in 000……

Mark-up / return / interest earned 4,809,494 3,222,394


Mark-up / return / interest expensed 2,585,433 1,451,441

Net mark-up / interest income 2,224,061 1,770,953

NON MARK-UP/INTEREST INCOME


Fee and commission income 32,165 27,630
Dividend income 12,340 10,575
Other income 12,094 13,587
Total non-markup / interest income 56,599 51,792
Total income 2,280,660 1,822,745

NON MARK-UP/INTEREST EXPENSES


1,168,917 914,018
Operating expenses
- -
Workers welfare fund
- -
Other charges

Total non-markup / interest expenses 1,168,917 914,018

Profit before provisions 1,111,743 908,727

Provisions and write offs - net 505 29,085

Extra ordinary / unusual items - -

PROFIT BEFORE TAXATION 1,111,238 879,642

Taxation (573,758) (421,578)

PROFIT AFTER TAXATION 537,480 458,064

Basic and diluted earnings per share 0.97 0.89

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4.2.3 Cash Flow Statement

THE BANK OF AZAD JAMMU AND KASHMIR STATEMENT OF CHANGES IN


EQUITY FOR THE YEAR ENDED DECEMBER 31, 2023

2023 2022

…….Rupees in 000……

CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation 1,111,238 879,642

Less: Dividend income (12,340) ( 10,575)

1,098,898 869,067

Adjustments:
66,660
83,021
Depreciation
29,085
505
Provision and write-offs
22,049
33,650
Interest expense on lease liability
25,160
26,630
Provision for gratuity
46,457
109,434
Provision for leave encashment
48,009
63,927
Provision for bonus
15,534
-
Other provisions Loss on sale of security
(6)
1,949

318,116 252,948

1,417,014 1.122.015

(Increase)/decrease in operating assets


Advances (584,422) (504,002)
Others assets (excluding advance taxation) (1,190,500) (1,186,255)
Increase/(decrease) in operating liabilities (1,774,922) (1,690,257)
Bills payable 10,508 (75,429)
Deposits 3,140,436 3,733,606
Other liabilities (excluding current taxation) 170,174 446,356
3,321,118 4,104,533
2,963,210 3,536,291
Interest paid on lease liability (32,212) (22,049)

20
Income tax paid (564,276) (230,936)
Net cash generated from operating activities 2,366,722 3,283,306

CASH FLOW FROM INVESTING ACTIVITIES


Net proceeds from placements with banks (622,150) (8,403,807)
Dividend income received 12,340 10,575
Investments in operating fixed assets (106,554)
(115,629)
Proceeds from sale of securities 148,051)
-

Net cash used in investing activities (568,313) (8,508,861)

CASH FLOW FROM FINANCING ACTIVITIES


Issue of share capital - -
Principal paid against lease liability (29,763) (39,890)

Net cash generated from financing activities (29,763) (39,890)


Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year 1,768,646 (5,265,445)
Cash and cash equivalents at end of the year 5,934,908 11,200,353
7,703,554 6,934,908

4.5 Horizontal Analysis:

Horizontal analysis is used in financial statement analysis to compare historical data such as
ratio, or line item, over a number of accounting period. Horizontal analysis can either use
absolute comparison or percentage comparison where number in each succeeding period are
expressed as a percentage of amount in the baseline year with the baseline amount being
listed as 100% . this is also kown as base year analysis.

21
BAJK

Horizontal Analysis of Summarized Balance sheet

From The Year 2022-2023

22
BAJK

Vertical Analysis of Summarized Balance sheet

From The Year 2022-2023

23
BAJK

4.7 Horizontal Analysis of Summarized Income Statement

From The Year 2022-2023


2023 2022 Increase/Decrease

….Rupees in 000…… Amount Percentage

Mark-up / return / interest earned 4,809,494 3,222,394


Mark-up / return / interest expensed 2,585,433 1,451,441

Net mark-up / interest income 2,224,061 1,770,953

NON MARK-UP/INTEREST INCOME


Fee and commission income 32,165 27,630
Dividend income 12,340 10,575
Other income 12,094 13,587
Total non-markup / interest income 56,599 51,792
Total income 2,280,660 1,822,745

NON MARK-UP/INTEREST EXPENSES

Operating expenses 1,168,917 914,018

Workers welfare fund - -

Other charges - -

Total non-markup / interest expenses 1,168,917 914,018

Profit before provisions 1,111,743 908,727

Provisions and write offs - net 505 29,085

Extra ordinary / unusual - -

PROFIT BEFORE TAXATION 1,111,238 879,642

Taxation (573,758) (421,578)

PROFIT AFTER TAXATION 537,480 458,064

Basic and diluted earnings per share 0.97 0.89

24
BAJK

4.8 Vertical Analysis of Summarized Income Statement

From The Year 2022-2023


2023 2022 Increase/Decrease

….Rupees in 000…… Amount Percentage

Mark-up / return / interest earned 4,809,494 3,222,394


Mark-up / return / interest expensed 2,585,433 1,451,441

Net mark-up / interest income 2,224,061 1,770,953

NON MARK-UP/INTEREST INCOME


Fee and commission income 32,165 27,630
Dividend income 12,340 10,575
Other income 12,094 13,587
Total non-markup / interest income 56,599 51,792
Total income 2,280,660 1,822,745
NON MARK-UP/INTEREST EXPENSES

Operating expenses 1,168,917 914,018

Workers welfare fund - -

Other charges - -

Total non-markup / interest expenses 1,168,917 914,018

Profit before provisions 1,111,743 908,727

Provisions and write offs - net 505 29,085

Extra ordinary / unusual - -

PROFIT BEFORE TAXATION 1,111,238 879,642

Taxation (573,758) (421,578)

25
PROFIT AFTER TAXATION 537,480 458,064

Basic and diluted earnings per share 0.97 0.89

4.9 Ratio Analysis:

A ratio is a comparison of two or more quantities which indicates their relative size. It can be
considered as a way of comparing numbers by divisions. A ratio analysis is a quantitative
analysis of information contain in a company financial statement. A ratio analysis is used to
evaluate various aspect of operating and financial performance of a company by using data
from the current and historical financial statement.

Financial Ratios:

a. Liquidity Ratios

 Current Ratio: Measures a company’s ability to cover short-term liabilities with


short-term assets.
Current Ratio= Current Assets/Current Liabilities

2023 2022
Total Current Asset 28,625,027 25,650,314
Total Current Liability 24,404,952 21248226
Current Ratio

 Quick Ratio: A stricter measure that excludes inventory from current assets.

Quick Ratio=Current Assets−Inventory/Current Liabilities

2023 2022
Total current Asset – inventory
Current liability
Quick Ratio

Interpretation:

Current ratio of the bank is satisfactory. This ratio which is subject to seasonal fluctuations is
used to measure the ability of an enterprise to meet its current liability out of its current asset.

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ii. Leverage Ratios

Leverage ratio used to calculate the financial leverage of a company to get an idea of the
company's methods of financing or to measure its ability to meet financial obligations. There
are several different ratios, but the main factors looked at include debt, equity, assets and
interest expenses.

 Debt to Equity Ratio: Compares a company’s total liabilities to its shareholders'


equity.

Debt to Equity= Total Liabilities/Shareholders’ Equity

2023 2022
Total Liability
Shareholder equity
Debt to Equity

 Interest Coverage Ratio: Measures how easily a company can pay interest on
outstanding debt.

Interest Coverage= EBIT/Interest Expense

2023 2022
EBIT
Interest Expense
Interest Coverage

 Deposit to Equity Ratio:


The Deposit to Equity Ratio is a financial metric used primarily in the banking and
financial services industry. It measures the proportion of a bank’s total deposits
relative to its shareholders' equity. This ratio provides insight into the bank’s
leverage and financial stability.
Deposit to Equity Ratio = Total Deposit/Shareholder Equity
2023 2022
Total Deposit
Shareholder Equity
Deposit to Equity

27
Interpretation

 A high ratio may indicate that the bank is heavily reliant on customer deposits to
finance its operations, which can suggest higher risk, especially if the bank has low
equity to buffer against potential losses.
 A low ratio indicates a greater reliance on equity financing or other sources of
funding, which can imply a more stable financial structure.

iii. Profitability Ratio:

Profitability ratios are financial metrics used to assess a company's ability to generate profit
relative to its revenue, assets, or equity. These ratios provide insight into how efficiently a
company is operating and how well it is utilizing its resources. Here are some key
profitability ratios:

a.Gross Profit Margin

Formula: Gross Profit Margin=Gross Profit/Revenue×100

2023 2022
Gross Profit
Revenue
Gross profit margin

Interpretation:

This ratio measures the percentage of revenue that exceeds the cost of goods sold (COGS). A
higher margin indicates better efficiency in producing goods.

c. Operating Profit Margin

Formula: Operating Profit Margin=Operating Income/Revenue×100

Interpretation: This ratio assesses the efficiency of a company in managing its operating
expenses. It reflects earnings before interest and taxes (EBIT) as a percentage of revenue.

2023 2022
Operating Income

28
Revenue
Operating Profit Margin

c. Net Profit Margin

 Formula: Net Profit Margin=Net Income/Revenue×100

2023 2022
Net Income
Revenue
Net Profit Margin

 Interpretation: This ratio indicates how much profit a company makes for every
dollar of revenue after all expenses, taxes, and costs are deducted. A higher net profit
margin suggests greater overall profitability.

d. Return on Assets (ROA)

 Formula: ROA=Net Income/Total Assets×100

2023 2022
Net Income
Total Asset
ROA

 Interpretation: This ratio measures how effectively a company is using its assets to
generate profit. A higher ROA indicates more efficient asset utilization.

e. Return on Equity (ROE)

 Formula: ROE=Net Income/Shareholders’ Equity×100

2023 2022
Net Income
Shareholder equity
ROE

Interpretation: ROE indicates how well a company is generating returns for its
shareholders. A higher ROE suggests effective management and profitable use of equity.

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iv. Efficiency Ratios

The efficiency ratio is a key financial metric used primarily in the banking and financial
services industry to measure a company's ability to manage its expenses relative to its
revenue. It provides insight into how effectively a company is operating and can be a useful
tool for assessing operational efficiency.

 Asset Turnover Ratio: Indicates how efficiently a company uses its assets to
generate sales.

Asset Turnover=Revenue/Total Assets

2023 2022
Revenue
Total Asset
Asset Turnover

 Inventory Turnover Ratio: Shows how often inventory is sold and replaced over a
period.

Inventory Turnover=Cost of Goods Sold/Average Inventory

2023 2022
COGS
Average inventory
Inventory Turnover

Interpretation

 A lower efficiency ratio indicates better efficiency, meaning the company is


spending less to generate each dollar of revenue. For banks, an efficiency ratio below
60% is often considered good, though this can vary by institution and market
conditions.

30
 A higher efficiency ratio suggests that a larger proportion of revenue is consumed by
operating expenses, which can be a red flag regarding profitability and operational
management.

4.8 Trend Analysis:

Trend analysis is a financial and statistical technique used to evaluate and interpret changes in
financial data over a specific period. By analyzing trends, businesses, investors, and analysts
can make informed decisions based on historical patterns and forecast future performance.

Importance of Trend Analysis

 Forecasting: Helps in predicting future performance based on historical data,


allowing for more accurate budgeting and financial planning.
 Performance Evaluation: Identifies whether a company is improving or declining in
specific areas, which can guide strategic decisions.
 Investment Decisions: Investors use trend analysis to assess the viability of
investments and to understand market conditions.
 Competitive Analysis: By comparing trends with competitors, companies can gauge
their performance relative to the industry.

4.8.1 Trend analysis BAJK Balance Sheet for the year 2022-2023

Asset 2023 2022 Trend


Analysis
Cash and balances with treasury banks 8,218,340 6,271,417 121%
Balances with other banks 16,532,540 16,088,667 2.7%
Lending to financial institution - - -

Investment 56,771 163,197 (65.2)%

Advances 3,874,147 3,290,230

Fixed asset 422,748 365,478

Intangible Assets - -

Deferred tax Assets 31,984 49,601

31
Other asset 3,423,366 2,232,866

32,559,896 28,461,456

Liabilities

Bill Payable 93,259 82,751

Borrowing - -

Deposit and other bank 24,144,665 21004,229

Lease liabilities against right of use asset 167,028 161,246

Subordinated debt - -

Deferred tax liabilities - -

Other liabilities 1,723,814 1,344,311

Total Liability 26,128,766 22,592,537

Net asset 6,431,130 5,868,919

Shareholder Equity

Share capital 5,528,621 5,142,903

Reserves 468,146 360,650

Surplus on revaluation of asset 903 (23,828)

Unappropriate profit 433,460 389,194

6,431,130 5,868,919

Chapter 05

Job Description and Analysis

It was very good experience of internship at BAJK. I was introduced to difference aspects of
banking and finance and found this field very interesting. This report comprises my two
month internship at BAJK

5.1 A Brief Overview of the Branch

I have done my two month internship at Bank of Azad Jammu and Kashmir Housing Scheme
branch Bank road Rawalakot Aj&K. It is located in the main city of Rawalakot.

32
Starting and ending date:

I worked in the BAJK Housing scheme branch for two month from august 2024 to Oct 2024.

5.3 Number of Employee:

The number of employee in BAJK Housing scheme branch are 05 these are

 Manager
 Operation manager
 Cashier
 Security guard
 Peon

5.4 Detail of Job Description and Position:

During the time period of 8 week internship at BAJK I have worked in the following
department.

i. Voucher making
ii. Account opening
iii. Cheque clearing
iv. Dormant account activation
v. Credit department
vi. Posting

I started my first day of internship with the introduction of bank employees and with
introduction of bank departments. In This week just know how work done in the various
departments in the bank Like: Finance/ credit department, Operation Management, Cash
department, Account opening department I knew about the purpose of the bank and the
functions of the bank and judge the practical performance of the departments.

5.4 My job

During my in internship at BAJK I did the following activities as an internee.

33
i. Voucher making:
Ms Shamaila was my instructor during my internship in BAJK. This
was initial experience for me as an internee at the bank which gives me a lot of
confidence and courage for further proceeds. She told me about the voucher and
taught me the different types of voulcher and also taught me how to fill the
voucher such as expense voucher, credit and debit voucher etc.

ii. Account opening:


Bank account opening is the main step toward the relationship between customer
and bank. Since a person opening of a bank account make him a bank customer,
the account opening should not be considered merely a formaly.
The basic document obtained at the time of account opening are:
 Account opening form
 National id card
 SS Card
 Additional documents depend on the nature of account

For a salaried Person:

 Name of employer
 Designation of customer
 Approximate salary
 Residence status
 KYC
 Etc

For a self employed

 Nature of transaction
 Field of operation
 Source of fund
 Name of concern
 Area of residence etc
iii. Cheque Clearing

34
Cheque clearing is the process of moving a cheque between banks which result the
movement of money. There are two type of cheque clearing.

 Inward clearing
 Outward clearing

Inward clearing:

 Inward clearing mean cheque received by the bank from another bank.
 Inward clearing the bank deposit is reduced
 The amount is going from the bank customer account to another part account.
 The customer account is debited and the other party account is credited.
 After posting the cheque are supervised by the incharge of clearing deparment

Outward clearing:

 The cheque of other banks, which the account holder deposit in their account
 Outward clearing the bank deposit is increase
 In outward clearing the amount is going from the other party account to bank
customer account.
 The customer account is credited and other party account is debited.
iv. Dormant account activation:

The account of customer get inactive who have not withdrawn money or have not used
their account for six month or more.

 For activation the account holder fill the account activation form which contain
 Account title
 Account number
 CNIC
 Reason for non- operation of account
 Signature of applicant
 After filling the form CNIC is attached, biometric verification is done from nadra.

35
 After all these process is done the officer supervise the account and once the
account is supervise the customer withdrawn or deposit money to get activate.

v. Credit Department:

During my internship Madam Shamaila told me BAJK offers a variety of credit


products to cater to the financial needs of its customers, both for personal and business
purposes. During my internship I was prepared the different cases of loan. Here’s an
overview of the types of credit products typically offered by BAJK.

 Gold loan
BAJK offer Gold loan on low mark up rate to facilitate their customer . Save
Gold spend money. Keep your Gold in safe hand and enjoy consumption of
money there against of your urgent need on lowest need.
 Business loan

BAJK also offer business loan for their customer on low markup rate to run their business or
to start a new business.

 Car loan

Enjoy a comfortable travelling with your family. Facilitate pick and drop of your
kids. BAJK offer purchase of new brand car for domestic and personal use.

 Personal loan

To facilitate your urgent domestic and urgent need, BAJK make it possible by
providing financial facility in shape of personal loan so that you can easily take care
of your children, marriage education and house renovation etc.

vi. Posting
There are two types of posting
 Voucher disk
 Teller disk

36
Voucher Disk:

She taught me the difference between these two disk in voucher disk posting vouchers like
expense, credit and debit voucher and inter bank transactions.

Teller Disk

In teller posting cash transaction such as depost withdrawal money, school, colledge and
electricity bills.

vii. Remitance

Remittance refers to the transfer of money, typically by a foreign worker to their home
country. It’s often used to support family members, pay for education, healthcare, or other
expenses. Remittances are usually sent via banks, money transfer services (like Western
Union), or mobile money systems.

In a broader sense, a remittance can also refer to any payment made in exchange for goods or
services, such as a bill payment, but it is most commonly associated with cross-border
financial transfers.

The customers withdrawal money through Money Gram, western union and Ria.

Critical Analysis:

Chapter 06

SWOT Analysis of BAJK

A SWOT Analysis helps assess a company’s internal strengths and weaknesses, as well as
external opportunities and threats. For BAJK, this analysis can provide insights into how the
bank performs in Pakistan's competitive banking sector, both in the traditional and digital
banking spaces.

6.1 SWOT Analysis of Bank of Azad Jammu and Kashmir (BAJK)

Bank of Azad Jammu and Kashmir (BAJK) is a regional bank operating in the Azad Jammu
and Kashmir (AJK) region, Pakistan. It serves a variety of financial needs, including personal
banking, corporate banking, and government-related services. Here's a SWOT analysis to
provide an overview of its strengths, weaknesses, opportunities, and threats:

37
Strengths

 Strong Regional Presence


BAJK has a significant market share in the AJK region, which gives it a solid
customer base and brand recognition locally. It is one of the few regional banks that
cater specifically to the AJK populace, providing it with a competitive edge in this
region.

 Government Support and Relationship


As a government-owned bank, BAJK enjoys strong backing from the Azad Jammu
and Kashmir government. This support can facilitate access to state-sponsored
programs and incentives, and BAJK can often offer services tailored to the
government and its employees.

 Diversified Services
BAJK offers a range of products, from personal banking (savings accounts, loans,
etc.) to corporate banking services (business accounts, trade finance, etc.). This
diversification helps mitigate risks and appeal to a broader customer base.
 Long Track Record
The bank has been operating for several decades, which gives it experience and
credibility in the local financial market. Its long-standing presence in the region
makes it a trusted entity among customers.
 Local Knowledge
Being a regional bank, BAJK has a deep understanding of the local economic
environment, customer preferences, and needs. This local insight gives the bank a
competitive advantage when compared to larger, national banks.
 Highly Experienced and Motivated Management

The people working at high level posts are very experienced and motivated. They are
showing keen interest in development of this new born institute and want to see it on
the top, in near future. All the decisions are made through mutual understanding of all
the members of board of directors.

Weaknesses

38
 Limited Geographic Presence
While BAJK is a dominant player in the AJK region, its operations are limited to this
area. It does not have a nationwide presence, which means it has a smaller market to
tap into compared to larger banks in Pakistan.
 Dependence on Local Economy
The bank's performance is heavily dependent on the economic conditions of the AJK
region. Any local political instability, natural disasters, or economic downturns in the
region could severely impact the bank’s profitability.
 Technological Advancements
Compared to larger banks, BAJK may lag behind in terms of digital banking and
technological infrastructure. The lack of cutting-edge banking technologies can affect
customer experience and limit the bank's ability to compete with modern banking
trends such as mobile banking and online services.
 Limited Brand Recognition Outside AJK
The bank is less known outside the AJK region, which makes it harder for the bank to
expand its reach or attract customers from other parts of Pakistan. Its regional focus
can limit its growth potential in a broader market.
 Capital Constraints
As a smaller, government-run entity, BAJK may face limitations in terms of access to
large-scale capital compared to bigger national banks. This could restrict its ability to
invest in new initiatives, branch expansion, or technological upgrades.
 Un-Scheduled Bank

To be scheduled its paid up capital must be up to 10 billion but unfortunately due to a


new born institute it is still far behind this limit. 5.3.2 Unlisted It is not still listed in stock
exchange. As a result, the confidence level of investor is very low. 5.3.3 Limited Branch
Network Although the bank is trying to establish new branches in every area of this
region, still the branch network is limited to some specific areas.

 Manual Banking

Bank has manual system that is insecure and time taking. It is difficult to find and rectify
errors in time. There is huge dump of manual records, it is difficult to maintain and keep
it up to the date.

39
 No Online Banking System

Today is the world of information technology. To keep pace with the modern world usage of
computer based technology is essential. While talking to finance manager about this problem,
he revealed the fact that due to Lack of adequate capital and slow implementation of
management decision, The BOAJK bank is still unable to provide online banking facility to
its customers. This is one of the greatest disadvantages for this bank and a hurdle to compete
with other banks working in this region.

Opportunities

 Expansion into New Markets


There is a potential opportunity for BAJK to expand its operations into other regions
of Pakistan. This would allow the bank to diversify its risk and tap into a larger
customer base.
 Digital Transformation
As the banking industry shifts towards digital platforms, BAJK has the opportunity to
invest in mobile banking, internet banking, and other technological innovations to
attract younger, tech-savvy customers. Offering online services could improve
customer satisfaction and increase market share.
 Government-Backed Schemes and Financial Inclusion
The bank could expand its participation in government-backed microfinance, social
welfare, and financial inclusion programs. This could help boost its customer base
among low-income individuals and small businesses in underserved areas.
 Corporate Banking & Trade Finance
With the rise in trade and commerce in the region, particularly in cross-border trade
with neighboring regions, BAJK can expand its corporate banking services, including
trade finance, working capital solutions, and financing for small and medium-sized
enterprises (SMEs).
 Tourism and Development Initiatives
Given the tourism potential in AJK and surrounding areas, BAJK could create
specialized financial products for the hospitality and tourism industry, tapping into the
region's growth potential.

40
Threats

 Competition from Larger Banks


National banks with more resources and a broader geographic footprint could pose
significant competition, especially as these banks increasingly reach into regional
markets with the help of technology and larger branch networks.
 Political Instability in the Region
The region of Azad Jammu and Kashmir has political and territorial sensitivities due
to its proximity to the Kashmir dispute. Political instability or conflict could
negatively impact the bank's operations, and any disruption in the local governance
could affect its growth prospects.
 Economic Challenges in AJK
The economic conditions of the AJK region are sometimes volatile, with issues such
as unemployment, inflation, and economic dependency on government transfers. A
downturn in the local economy could affect the bank’s asset quality and profitability.
 Regulatory Pressure
Like all financial institutions, BAJK is subject to banking regulations from the State
Bank of Pakistan and other regulatory authorities. Any changes in financial
regulations or compliance standards could impose additional costs or operational
challenges.
 Cybersecurity Risks
As the banking sector becomes more digital, cybersecurity remains a major threat. If
BAJK does not invest sufficiently in cybersecurity measures, it could be vulnerable to
cyberattacks or data breaches, which could damage its reputation and customer trust.

Chapter 07

Critical Analysis

7.1 Major Competitors


Internship Experience:

 Major Competitors (In the Context of Bank of Azad Jammu and Kashmir - BAJK):
During my internship, I observed that BAJK's major competitors are larger

41
commercial banks such as National Bank of Pakistan (NBP), United Bank Limited
(UBL), HBL,MCB and regional banks that have been expanding into the AJK region.
These banks leverage their larger capital bases, broader branch networks, and
advanced technology platforms, creating significant competitive pressures on BAJK.

Applying Porter’s Five Forces:

 Threat of New Entrants:

Limited due to the high capital requirements to set up banks in the region and the
regulatory barriers. However, digital banks or fintech startups might pose a future threat.

 Bargaining Power of Suppliers:

In the banking industry, suppliers include technology providers and capital markets. BAJK
relies heavily on government bonds and grants, which could limit its bargaining power in
some cases.

 Bargaining Power of Buyers:

Customers, particularly in the retail segment, have high bargaining power as they can
easily switch between banks. However, corporate and government clients are more loyal
due to long-standing relationships with BAJK.

 Threat of Substitutes:

The rise of digital wallets, mobile banking apps, and fintech services like Easypaisa
and JazzCash could act as substitutes to traditional banking services.

 Industry Rivalry:

The rivalry is moderate in the AJK region. While BAJK holds a strong local position, it
faces intense competition from other national banks that are expanding their presence and
services.

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Competitive Strategies in Practice:
During my internship, I noted that BAJK follows a Focus Strategy, targeting the specific
needs of customers in the AJK region. The bank focuses on personalized customer service
and offers specialized financial products for local businesses and government employees.
However, the bank’s ability to compete with national banks' technological infrastructure and
extensive branch networks is limited. The competition between BAJK and its larger
counterparts lies in differentiation (tailored services) and local focus.

7.3. Future Prospects of the Organization


Internship Experience:

 Future Prospects (For BAJK):


Through my internship, I gathered insights into the bank's strategic direction and its
efforts to expand its customer base and enhance its digital offerings. BAJK has
started to focus on digital banking services and expanding mobile banking
applications to cater to a younger, more tech-savvy demographic. This is aligned with
the trend of banking digitization in Pakistan, where more customers are relying on
smartphones for their banking needs.

Applying the Ansoff Matrix:

 Market Penetration:

BAJK is increasing its penetration in the AJK market by offering competitive interest
rates and credit facilities. They are also expanding services to local small businesses and
government employees.

 Market Development:

The bank is slowly looking to expand beyond AJK into other regions of Pakistan, though
this could be a long-term goal due to resource constraints.

 Product Development:

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BAJK is rolling out new products, particularly digital services like mobile banking apps
and e-wallet solutions, catering to a tech-savvy customer base. They are also exploring
microfinance solutions to serve lower-income segments.

 Diversification:

There are potential opportunities for diversification into areas like insurance, investment
banking, and microcredit to strengthen its product portfolio.

PESTLE Analysis for Future Prospects:

 Political: The political stability of the AJK region and Pakistan will heavily influence
BAJK's future. The ongoing geopolitical situation in the region and its effects on
economic stability remain a risk.
 Economic: The region’s economy is gradually growing, with opportunities in
tourism, trade, and remittances. However, inflation and exchange rate fluctuations
could create challenges.
 Technological: The growing trend of digital transformation presents a huge
opportunity for BAJK to modernize and offer services like mobile payments, online
account management, and digital loans.
 Legal: Regulatory changes in the banking sector, particularly around anti-money
laundering (AML) and Know Your Customer (KYC) laws, could impact the bank's
operations.

 SWOT Analysis for Future Prospects:


Based on BAJK’s current strategies and environment:

 Strengths: Strong local brand, government backing, and customer loyalty.


 Weaknesses: Limited technological infrastructure and capital constraints.
 Opportunities: Expanding digital services, government programs, and diversification
into other financial services.
 Threats: Competition from larger national banks, geopolitical instability, and
evolving regulatory pressures.

Chapter No 08

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8.1 Conclusion: Assessment of the Company Based on SWOT Analysis

In conducting a SWOT analysis for the company, I have gained valuable insights into its
internal strengths and weaknesses, as well as the external opportunities and threats that may
influence its future trajectory. Based on my judgment and the information gathered through
this analysis, here’s a comprehensive conclusion and assessment of the company’s position:

Strengths (Internal Positive Factors)

1. Core Competencies and Expertise:


The company’s strong internal capabilities, whether in terms of specialized
knowledge, skilled employees, or technical resources, create a solid foundation for
success. This expertise gives the company a competitive advantage in the industry and
enables it to deliver high-quality products/services. A highly skilled workforce and
solid leadership ensure that the company is adaptable and capable of overcoming
challenges.
2. Brand Reputation and Customer Loyalty:
If the company has been in the market for a number of years, it likely enjoys a strong
reputation among its customers. Brand recognition and customer loyalty are
invaluable assets in the marketplace, allowing the company to command premium
prices, attract repeat customers, and generate consistent revenue.
3. Financial Stability and Resources:
From the perspective of financial management, if the company maintains a healthy
balance sheet, with access to capital, solid cash flow, and effective cost management,
it is in a good position to weather economic downturns or invest in growth
opportunities. Strong financial health enables long-term sustainability and flexibility
to innovate.

Weaknesses (Internal Negative Factors)

1. Operational Inefficiencies or Limited Technological Infrastructure:


The company may face operational bottlenecks or inefficiencies due to outdated
systems or processes. This could include slow decision-making, delays in product
development, or reliance on manual processes, all of which hamper overall
productivity. Inadequate technological infrastructure, especially in the modern digital

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age, can prevent the company from scaling effectively or staying competitive in an
increasingly tech-driven market.
2. Limited Market Presence or Brand Awareness:
If the company has a limited geographic reach or operates in a niche market, it may
struggle to expand beyond its core base. Additionally, if the company’s brand isn’t
well known or differentiated from competitors, it may face challenges in attracting
new customers or expanding its market share.
3. Talent Gaps or Dependency on Key Personnel:
The company might be overly dependent on a few key employees or leaders who hold
critical knowledge or skills. This creates a risk, as the loss of key talent could disrupt
operations. Similarly, the company may have challenges in recruiting or retaining
talent in certain areas of expertise, such as IT, data analytics, or marketing.

Opportunities (External Positive Factors)

Market Expansion and Diversification:


The company could seize opportunities for growth by entering new markets or
expanding its product/service offerings. This could involve geographic expansion,
targeting new customer segments, or diversifying into new product categories. In
particular, expanding into emerging markets or high-growth industries presents a
significant opportunity for increased revenue.

1. Technological Advancements and Digital Transformation:


With advancements in automation, artificial intelligence, and data analytics, the
company has an opportunity to leverage new technologies to enhance efficiency,
improve customer experience, and innovate in product/service offerings. Adopting a
digital-first approach could significantly reduce operational costs and drive long-term
value.
2. Strategic Partnerships or Mergers and Acquisitions:
Strategic alliances, joint ventures, or even mergers and acquisitions (M&A) could
help the company gain access to new markets, technologies, or customer bases.
Collaborating with key industry players can unlock synergies and create a stronger,
more competitive position.

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Threats (External Negative Factors)

Political and Economic Instability: The political climate in AJK and the broader Kashmir
region poses a constant risk to BAJK operations. Political unrest, changing government
policies, or economic downturns could negatively impact the bank’s business and financial
position.

Increased Competition: BAJK faces growing competition from both national commercial
banks and emerging fintech startups. These competitors often offer more innovative financial
products, better customer service, and greater technological capabilities.

Regulatory Changes: Frequent changes in banking regulations at both the regional and
national levels could present challenges for BAJK in terms of compliance and operational
flexibility. The bank must stay agile and ensure that it meets evolving regulatory
requirements to avoid penalties or reputational damage

8.2 Assessment and Judgment

Based on the SWOT analysis, the company appears to be in a relatively strong position
overall, with a solid foundation in terms of expertise, brand reputation, and financial
stability. However, several challenges must be addressed to ensure continued growth and
competitive advantage in the face of external threats.

The opportunities for expansion, technological advancement, and strategic partnerships are
significant and could be leveraged to propel the company forward. Embracing digital
transformation and market diversification would enable the company to not only mitigate
competitive pressures but also capture new revenue streams. Moreover, by improving
operational efficiencies and addressing talent gaps, the company can further enhance its
capabilities and agility.

On the other hand, external threats—particularly from competition, economic fluctuations,


and technological disruption—need to be carefully monitored. The company must stay agile,
continuously innovate, and invest in cybersecurity, technology adoption, and supply chain
resilience to navigate these risks effectively.

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Ultimately, the company has a solid foundation but must focus on adapting to changing
market conditions, embracing innovation, and enhancing its operational efficiency. By
doing so, it will be well-positioned to capitalize on opportunities, minimize threats, and
achieve sustainable growth in the long run.

Recommendations No.09

Recommendations for the Bank of Azad Jammu and Kashmir (BAJK)

Based on the SWOT analysis, the following recommendations aim to address the problematic
areas and enhance the overall performance and sustainability of the Bank of Azad Jammu and
Kashmir (BAJK). These solutions focus on strengthening the bank’s weaknesses and
mitigating external threats

9.1 Limited Geographic Presence

Solution: Expansion of Branch Network & Digital Banking:

 Branch Expansion: The bank should consider opening new branches in key cities
and towns across Pakistan and explore opportunities in underserved regions where
banking services are scarce. This will allow BAJK to reach a larger customer base.
 Enhanced Digital Banking: Expanding the bank's online services, including mobile
banking apps, internet banking, and online loan applications, will enable customers
from remote areas to access services without the need to visit physical branches. By
focusing on digital banking, BAJK can reach a national audience while reducing the
costs associated with branch expansion.

9.2 Dependence on Government Funding

Solution: Diversifying Funding Sources:

 Private and Corporate Partnerships: BAJK should diversify its funding sources by
attracting private sector investment, forming partnerships with other financial
institutions, or issuing corporate bonds to reduce dependency on government funding.
 Development of New Financial Products: BAJK could introduce innovative
products or term deposits aimed at attracting retail and corporate customers. This

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would broaden the bank’s financial base and make it more resilient to changes in
government support.
 Financial Sustainability Planning: The bank should develop long-term financial
strategies to manage its liquidity and ensure that it does not rely too heavily on
government support. This could include boosting retained earnings and creating a
more balanced mix of short-term and long-term funding sources.

9.3 Inadequate Credit Management and High Non-Performing Loans (NPLs)

Solution: Strengthening Credit Risk Management:

 Implement Advanced Credit Scoring Models: BAJK can adopt advanced credit
scoring models that use data analytics and machine learning to better assess credit
risk. This would improve the accuracy of loan approval and reduce the risk of
defaults.
 Loan Recovery Mechanisms: The bank should establish dedicated loan recovery
teams that specialize in managing overdue accounts and NPLs. Structured repayment
plans, as well as external collections agencies, could be employed to reduce the
volume of NPLs.
 Customer Education on Credit Management: Providing financial literacy programs
and workshops for borrowers can help customers understand how to manage debt and
improve their creditworthiness, reducing the likelihood of loan defaults.

9.4 Technological Gaps

Solution: Investment in Technology and Innovation:

 Upgrade IT Infrastructure: BAJK should invest in modernizing its IT


infrastructure, focusing on building scalable systems to support digital banking,
mobile apps, and secure transactions. This would improve efficiency and enhance the
customer experience.
 Cybersecurity Enhancements: As digital banking expands, the bank must prioritize
cybersecurity. Implementing robust firewalls, encryption, multi-factor authentication,
and regular security audits can help protect both customer data and the bank's
reputation.

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 Collaborations with Fintech Startups: BAJK should explore partnerships with
fintech companies to introduce innovative solutions such as blockchain-based
payments, AI-driven customer service (e.g., chatbots), and automated lending
platforms, which can streamline operations and attract a younger, tech-savvy
customer base.

9.5 Limited Financial Inclusion

Solution: Focus on Financial Literacy and Rural Outreach:

 Financial Literacy Campaigns: BAJK should launch financial literacy programs in


rural and underserved areas. These programs could educate people about basic
banking, savings, credit, and investments, helping them understand the benefits of
formal banking and how to access the bank’s services.
 Mobile Banking Solutions: The bank can further enhance its mobile banking
offerings to include features like mobile wallets, low-cost money transfers, and micro-
lending services, making banking more accessible to rural populations with limited
access to physical branches.
 Agent Banking Model: Bajk could develop an agent banking model where local
entrepreneurs or business owners act as banking agents, offering basic banking
services like cash deposits, withdrawals, and money transfers. This would make the
bank’s services more accessible to rural areas without requiring a physical branch.

9.6 Political Instability

Solution: Risk Management and Contingency Planning:

 Political Risk Insurance: BAJK should explore political risk insurance to protect
itself against losses caused by political unrest, natural disasters, or other unforeseen
events that could impact its operations in AJK.
 Diversification of Operations: BAJK should consider expanding its operations
outside of AJK, either through partnerships or new branches, in regions with more
political stability. This diversification would reduce the bank's vulnerability to
regional instability.

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 Contingency Planning: The bank should establish a strong contingency plan to
handle disruptions caused by political instability. This includes developing disaster
recovery protocols, ensuring business continuity, and maintaining liquidity to weather
short-term disruptions.

9.7 Economic Downturn and Loan Defaults

Solution: Strengthening Financial Products & Economic Resilience:

 Diversify Loan Products: To mitigate the risks associated with an economic


downturn, BAJK can diversify its loan products by offering flexible repayment terms,
low-interest loans for essential sectors (agriculture, SMEs), and emergency credit
lines for customers in distress.
 Focus on the Agriculture Sector: Given the prominence of agriculture in AJK, Bajk
should offer specialized loans for farmers, such as crop loans, agri-equipment
financing, and insurance products, which could help stabilize incomes during
economic fluctuations and improve loan repayment rates.
 Loan Insurance Products: Bajk can offer loan insurance to its customers to protect
against economic shocks that could impact their ability to repay loans, ensuring that
both the customer and the bank are financially protected.

c. Strategic Partnerships or Mergers and Acquisitions

Recommendation: Explore M&A and Joint Ventures

 Targeted Mergers and Acquisitions: Identify companies that align with the
company’s strategic goals, either in terms of expanding its customer base, enhancing
technology, or entering new markets. M&A can be a fast track to growth by acquiring
assets, expertise, and market share. Conduct due diligence to ensure the target
company aligns with the overall business strategy.
 Joint Ventures: Explore forming joint ventures with companies that have
complementary strengths, such as access to local markets, technology, or supply
chains. This would allow the company to access new resources and capabilities
without fully acquiring another firm.

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