INTERNSHIP REPORT OF DUBAI ISLAMIC BANK SUBMITTED TO: VU of Pakistan SUBMITTED BY: MAJ MAMOOD AYUB MC080401680 MASTER

MBA SUBMISSION DATE: 12 July 2011 VIRTUAL UNIVERSTY OF PAKISTAN LAHORE [Link]

ACKNOWLEDGEMENT By the grace of God and the efforts of my collogues and Dubai Islamic Bank, I am able to complete and accomplish my objective and report well in time. At this moment I must pay special thanks to our guiders for their Cooperation and guidance that made me to complete my report. I once again grateful to the staff of the bank, who showed a keen interest and cooperated whole heartedly through out the entire course of activities.

EXECUTIVE SUMMARY 1. With the emergence of changes of new methods and techniques in all field of life, the bank also improved their notes and responsibilities the on line banking system has provided people with the feeling of security and effectiveness. It is the products and services offered by the bank that distinguish it from its other competitors. 2. A very well reputed bank in the banking sector of Pakistan is the Dubai Islamic Bank. It has very extensive branch network in the country. The first bank of Pakistan which has introduced the Islamic banking system according to Islamic laws. The objective of this study is to understand the basic function of the bank and the its working in relation to its human resource management. 3. (HRM) is the strategic and coherent approach for the management of an organization and is the most valuable asset. The people working individually and collectively contribute to the achievement of the objectives of the business. The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations. In simple sense, Human Resource Management (HRM) means employing people, developing their resources, utilizing maintaining and compensating their services in tune with the job and organizational requirement. (Armstrong, Michael, 2006) 4. The bank has a well established HR department. The functional area of HR department consists of selection, enrolment, recruitment, compensation, and staff training etc. HR department are further divided into sub departments i.e. personal and training, administration establishment public relations. 5. HRM is the part of an organization that is concerned with the people dimension. HRM can be viewed in the following two ways. First of all HR department has its role to provide assistance in HRM matters to the employers and those directly involved with the organization goals and services. Second HRM is a built-in function in the job of every manager, whether or not the organizations have a formal HR department. So its the duty of every manager to look at HR activities and these activities are, ([Link]) i.e. Training and development, employee motivation, retain the best talent in the organization for a longer period of time. 6. The analysis section consist of banks strong points, its weakness and the internal and external threats which effect the performance of the bank and also help the management team of the Dubai Islamic Bank to further improve the services and working of the bank. Till now the DIB has over thirty branches in the different cities of the country. 7. The main recommendation is the bank must make a clear specification of the number of people need through HR forecast and workforce utilization analysis and when the people needed. The bank must have extensive training program for the employees which are use for bank and also improve the quality of the services.

a. b.

TABLE OF CONTENTS Serial No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. Title Title page Latter of Undertaking Scanned Copy of Internship Certificate Acknowledgement Executive Summary Table of Contents Introduction Introduction of Dubai Islamic Bank Mission Statement vision Corporate Philosophy Objectives of DIB Organizational Structure of DIB Organizational Structure Organizational Hierarchy Organizational Chart Branch Network Departmental Chart Operations/ Functions of Different Departments of DIB Function of DIB Abbottabad Branch Department Worked During Specific/Leading Contributions Made Literature Review Human Resource Management Why HRM is needed 35 35 Internship and 14 14 15-16 17 17-18 19-24 24-27 28-34 9-10 10 10 11 12-13 Page No I 2 3 4 5-6 7-8

22. 23. 24.

25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37.

HR Department of DIB Recruitment / Selection Process Critical Analysis SWOT Analysis of Bank Internal Environment Strengths Weaknesses External Environment Opportunities Threats Conclusion Recommendations Bibliography

36 37-38

39 39 39-41 41-42 42 42-43 43 44 45-46 47-48

INTRODUCTION TO BUSSINESS SECTOR 1. There are different opinions that how the word Bank originated. Some of the authors opinion that this word is derived from the word Bancus or Banque, which means a bench. The explanation of this origin is attributed to the fact that the Jews in Lombard transacted the business of money exchange on benches in the market place; and when the business failed, the people destroyed the bench. Incidentally the word Bankrupts said to have evolved from this practice. Some of the authors are of opinion that the word Bank is derived from the German word back, which means joint stock fund. Later on when the German occupied major part of the Italy the word Back was italicized into Back. 2. In fact human felt the need of bank when it begins to realize the importance of money as a medium of exchange. Perhaps it where the Babylonian who developed banking system as early as 2000 B.C. At that time temples were used as banks because of their prevalent respect. During the rule of king Hamurabi (1788 1686 BC), the founder of Babylonians Empire, loans were started being granted for interest. The borrower has to provide guarantee or he had to pledge his goods or valuables. King Hamurabi drew up a code wherein he laid down standards rules and procedures for banking operations by temples and great landowners. 3. in Greece, the temples were also used as banks, where the people deposited their money and other valuables for safe custody and security. In Europe with the revival of civilization (Renaissance) in the middle of twelve century, trade and commerce started expanding and this development compelled the business community to borrow the money

from the Hebrew moneylenders on high rates of interest and usury. Seeing the great demand, these moneylenders started organizing themselves and bank started up at the principle seaports of southern Europe. Soon Venice and Geneva became the most important money markets of the time and banking though different from its present form, flourished. What we know as modern banking originated in the 14th century in Barcelona. 4. Definitions of Bank 5. "A financial institution, which deals with money and credit. It accepts Deposits from individuals, firms and companies at a lower rate of Interest and gives at higher rate of interest to those who need them. 6. A financial establishment which uses money deposited by customers for investment, pays it out when required, makes loan at interest, exchanges currency, etc. J.W Gilbert in his principles and practice banking defines a banker in these words: A banker is dealer in capital or more properly, a dealer in money. He is intermediate party between the borrower and the lender. He borrows of one and lends to another. 7. Sir John Paged defines banker in these terms: That no person or body, corporate or otherwise, can be a banker who does not a. b. c. customers. 8. The American defined the term banker in a very broad sense as By banking, we mean the business of dealing in credits and by a Bank we include every person, firm or Take deposits accounts. Take current accounts, Issue and pay Cheques and Collect Cheques crossed and uncrossed for his

company having a place of business where credits are opened by deposits of collection of money or currency. Subjects to be paid or remitted on Cheques or order, money is advanced or loaned on stocks, bonds, bullion, bill of exchange, promissory notes are received for discount or sale. Evolution of Banking in Pakistan. 9. The first phase in evolution of banking in Pakistan sees very hard days for the whole banking sector. Starting virtually from scratch in 1947, the country today possesses a full range of banking and financial institutions to cope with various needs of the economy. The area now constituting Pakistan was, relatively speaking, fairly well provided with banking facilities in undivided India, in March 1947 there were 3496 offices of Indian scheduled banks out of which as many as 487 were situated in territories now constituting Pakistan. 10. The Reserve bank of India was the central banking authority in India. At the time of partition it was decided that in the interest of smooth transition it should continue to function in newly emerging state of Pakistan, until 30th Sep.1948. In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses. This resulted in a negative effect on baking service in Pakistan. The banks, which had their registered offices in Pakistan, transferred them to India. In an effort to bring about the collapse of the new state by pushing a deliberate policy of withdrawals the Indian bank offices closed quickly. Those banks, which stayed, operated only in name pending the winding up of their business. The number of scheduled banks thus declined form 487 branches before independence to only 195 branches by 30th June1948.

10

11. Banking Growth during (1948-1970).

In this tense situation, a committee was

immediately setup to formulate a scheme of central banking legislation for Pakistan. Many specialists were of the opinion that in view of the acute shortage of trained staff, any idea of establishing a central bank was I impractical and the best that could be attempted was the setting up of a currency board until such times as sufficient staff could be organize to operate a central bank. 12. The questions as to whether the institution should be only a currency board or a fullfledged central bank had exercised the mind of the Pakistan government since independence. Through, it was realized that the shortage of trained personal to run the central bank would present serious difficulty in view of the tangible advantages that a central bank enjoyed over currency board, the government ultimately decided to take the bold step of setting up a full fledged central banking authority. Among other factors, which led to this decision, there was the fact the banking facilities in the country had been totally disrupted and there was an urgent need for their rehabilitation, which a central bank alone could meet. As there was hardly any time to pass as Act, an order was drafted, known as the state bank of Pakistan order, which was promulgated by the government of Pakistan on 12th may 1948. The state bank declared open on July 1, 1948 by the father of the nation. 13. One of the first tasks of the state bank was to arrange for the replacement of the Reserve bank of India notes, which had continued to circulate in Pakistan during the transitional period, by Pakistan currency. The first Pakistan notes were issued in October 1948 in the denominations of Rs. 5, 10 & 100.

11

14. An equally urgent task, which the new central bank had to address itself, was the creation of a national banking system. To this end, while extending every help and encouragement to Habib Bank to expand its organization, the state bank recommended the setting up of a new banking institution to serve both as an agent to the state bank recommended the setting up of a new banking institution to serve both as an agent of the state bank as well as the spearhead of its credit polices. With a view to broadening the institutional framework of the financial system, the state bank also sponsored the establishment of specialized credit institutions in the filed of agriculture and industry. Banking companies (control) act was passed in December 1948 specifically empowering the state bank to control the operations of banking companies in Pakistan. Moreover realizing that the most serious limitation on the expansion of banking services in Pakistan was the lack of trained personal, the state bank sponsored a banking training scheme, which was repeated after year and turned out a large number of bankers. As the Commercial Banking facilities continued to expand, a new Pakistani bank, the National Commercial Bank was established and registered as a scheduled bank. In the filed of industrial finance a new institution known as the industrial credit and investment cooperation was set up. The year 1958 marked the completion of the first decade of the working of the State Bank of Pakistan. When it was established there were only 195 bank offices in

12

existence. At the end of June 1958 their number had increased to 307, of which Pakistani banks accounted for 232 against 25 in mid 1948. Moreover at the end of June 1958, Pakistani banks held 60% of the total banks deposits, and were responsible for 65 of total bank credit. When the Ayub Khan Government took over in 1958, the banking and monetary scene was significantly affected by developments such as the liberalization of imports, transfer of business in food grains to the private sector, and the firming up of commodity markets. The demand of funds picked up and there was a substantial expansion of bank credit to the private sector. The pace of expansion in the institutional frameworks of the countrys banking system quickened and a new Pakistani, bank, namely the United Bank Limited was established. Owning the five years 1960-65, the credit structure in Pakistan made rapid progress. The bank extended its network by opening six new offices located at Chitagong, Peshawar, Quetta, Khulna, Layallpur and Rawalpindi. The number of scheduled bank offices rose from 430 at the end of June 1960 to 1591 in June 1965. Several new banks were added to the list of scheduled banks. Two principal additions were the commerce bank, and the standard bank. The number of scheduled banks, which stood at 29 in June 1960 rose to 36 by June 1965. Under the impact of economic growth and dear scope of private enterprises, bank credit to the private sector rose from Rs. 1,458 millions to Rs. 5759 million. Thus the total expansion in bank credit to the private sector during this period amounted to Rs. 4300 million, which gave a annual expansion of Rs. 860 million compared to the annual 13

average increase of Rs. 144 million over the preceding five years. Banks deposits increased from Rs. 2,493 million to Rs. 6883 million during the five years period ended June 1965 compared to Rs. 231 million in the proceeding five years. Time deposits during this period increased from Rs. 946 million to Rs. 3228 million, where demand deposits rose from Rs. 1997 million to Rs 3655 million. The increase in time deposits was particularly rapid. The ratio of time deposits to total deposits in June 1965 stood at 49.6 percentage as against 32.01 percentage five years earlier. Another salient feature of banking development during this period was that since the rate of increase in bank deposits lagged behind the rate of expansion in bank credit, the banked has to depend increasingly on central bank finance. They borrowing from the state bank rose from Rs. 11 million in June 1960 to Rs. 1688 million in June 1965. Owing keen demand for bank credit, banks investments could not increase as rapidly as their advances. Their investments totaled to Rs. 1,874 million at the end of June 1965 compared to Rs. 1,231 million in June 1960. Investments, which were almost equal to their advances in June 1960, were only about one third of the advances in June [Link] third plane period witnessed a further expansion of banking facilities in the country the total number of scheduled banked offices increased from 1,591 at the end of June 1965 to 3133 at the close of June 1970. During the same bank credit to the private sector rose from Rs. 5,789 million to Rs. 9492 million. There was also a substantial growth in the bank deposits, which increased from Rs. 6883 million June 1965 to Rs. 13147 million at the end of June 1970. A remarkable change occurred during this period related to the composition of deposits. Time deposit becomes greater than demand deposits forming about 54 percent age of the total deposits. As oppose to what

14

happened in the previous period, banks were able to finance a mush higher level of credit expansion without having to increase their borrowings from the central bank. 2.5 Banking Reforms 1972

After the assumption of office by a new government in 1971, may 1972 different reforms were introduced to make the banks more responsive to the requirements of economics growth with social justice. The reforms aimed at bringing about a more purposeful and equitable distribution of bank credit, improving the soundness and efficiency of the banks, and securing greater social accountability of the banking system as a whole. The role of the banking system had been truly spectacular in mobilizing savings of the community and meeting the credit needs of the economy. But at the same time, the banks had generally neglected their role in promoting social justice and had failed to play an effective role in ensuring a wider and more equitable dispersal of the benefits of economic growth. In particular the inter locking of ownership with commercial and industrial interests had led to the misuse of bank resources. There was a heavy concentration of credit in big accounts and in urban area. Credit facilities for agriculture, small business, newly emerging exports and housing had remained obviously inadequate while the banks indulged in capital financing in few selected business sectors and issued guarantees on behalf of favored clients, term clients, term financing facilities for industry were wholly absent. Under the banking reforms introduced in May 1972 the state bank of Pakistan was accorded wider powers. It was authorized to remove directors or managerial personnel,

15

if necessary and supersede the board of directors of a banking company and appoint administrators during the period of such super session. It was also empowered to nominate directors on the board of every bank. As regard bank directors, it was provided that anyone defaulting in meeting his obligations to bank would forfeit his directorship. Moreover, it was laid down that no person could serve as director of a bank for more than six years continuously. Each bank was required to have a paid up capital of not less than 5 percent age of its deposits to be progressively build up to 10 percent age over a period of time. The banks were also required to transfer 10 percentage of their profit their reserves every years after the reserve became equal to the paid up capital. With a view to diversity the ownership of the banks, the banks were required to raise new capital from the market. Unsecured loans to directors, their families or firms and companies, were totally prohibited. The bank reforms also brought about the establishment of new institutions to achieve new objectives.A national credit consultative was setup under the supervision of the state bank with representation form the government and the private sector. It was assigned the task of determining of economys annual credit needs within the safe limits of monetary and credit expansion with reference to the annual development plan. Such a credit plan was to cover the public and private sectors. Alongside the National credit council and Agricultural Advisory Committee was formed to allocate agriculture credit for various purposes, to coordinate the operation or the agriculture credit agencies and to oversee the flow of credit to the designated targets. A standing committee on exports in general and the new emerging exports in particular, was also established. With a view to encourage the banks to extend credit to small borrowers, a credit guarantee scheme

16

was introduced under which the state bank under took to share any bonfire losses incurred by the commercial banks in case of small loans of advances to agriculture. At the same time two financing institutions were established. The peoples Finance Corporation was designed to provide finance to people of small means while the National Development Finance Corporation was set up of finance public sector owned and managed industries and enterprises.

17

OVERVIEW OF THE ORGANIZIATION BACKGROUND / HISTORY 1. Dubai Islamic Bank brings with it a legacy of outstanding innovation and a solid commitment to practice Islamic financing in the world. Islamic Bank of Pakistan is a wholly owned subsidiary of Dubai Islamic Bank UAE. As the worlds first Islamic Bank, Dubai Islamic Bank has maintain the undisputed market leader in Islamic financing since its inception in leading arranger of Sukuk issuance globally and has led the single large bank of world. DIBs Shaira expertise is respected globally. DIB is proud to have prestigious award for its innovative Islamic Finance deals. 2. Having set standard of excellence in the UAE, The Bank offer state banking solutions and create a centre of excellence in Pakistan. DIB is providing common Sharia complaint salutations to major local and international companies and individuals. 3. State Bank of Pakistan (BP) awarded the license to Dubai Islamic Bank for of its operations in Pakistan on Saturday, November 26, 2005 at the State Bank. Dubai Islamic bank commenced its operations in Pakistan, with the opening in the commercial city of Karachi in March 2006 at Avari Towers. DIB aggressive expansion plan and already has 18 branches in nine major cities Lahore, Rawalpindi, Islamabad, Faisalabad, Peshawar, Multan, Gujranwala. 4. Dubai Islamic Bank Pakistan offer services in consumer, Business and investment banking, at par with the international banking scenario. 5. Gateway to Pakistan. Aside from providing regular banking services, Dubai Islamic Bank Pakistan plays the role of both an investor and a facilitator to serve as a catalyst for the future of the country. During the Banks launch phase alone, Pakistan received flow of millions of money in the country. It was only recent that Dubai Islamic Bank role in developing the market of Islamic commercial paper in Pakistan participated as a co-manager of the Sovereign Islamic Sukuk issue. 6. Dubai Islamic Bank Pakistan has also been very active in attracting foreign investments. In fact, Dubai Islamic Bank is already working closely with a number of business corporations such as Dubai Ports, Nekheel LLC and Emaar and channeling hard flows money into the country. Mission Statement 7. To be the leading private sector bank in Pakistan with an international presence, delivering quality service through innovative technology and effective human resource management in a modern and progressive organizational culture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to our stakeholders and contributing to society The Vision 8. Members of the organization often have some image in their minds about how the organization should be working, how it should appear when things are going well. (Carter McNamara, 1997-2007) 9. The Vision of DIBL is To be the Bank of First Choice in the Region and Gradual conversion into ISLAMIC BANKING to develop and promote a true Islamic economic system.

18

Corporate Philosophy 10. Inspiring Relationships. From knowing its customers requirements to understanding employee needs, from utilizing modern technology to making responsible social contributions, form enhancing stakeholders value to practicing corporate ethics, bank is striving consistently and continuously to address newer challenges with a single motivation, which is The power to inspire and be inspired Inspiring Ethic and Core Values of Dubai Islamic Bank 11. According to the DIB management Integrity is the most valued standard in whatever we do. We understand that our commitment to satisfy customers' needs must be fulfilled within a professional and ethical framework. We subscribe to a culture of high ethical standards, based upon development of right attitudes. The intrinsic values, which are the corner stones of our corporate behavior, are:a. Commitment b. Integrity c. Fairness d. Teamwork e. Service

19

Objectives of Dubai Islamic Bank 12. The main objectives of the bank are as under:a. To achieve sustained growth and profitability in all areas of business. b. To build and sustain a high performance culture, with a continuous improvement focus. c. To develop a customer-service oriented culture with special emphasis on customer care and convenience. d. To build an enabling environment, where employees are motivated to contribute to their full potential. e. To effectively manage and mitigate all kinds of risks inherent in the banking business. f. To maximize use of technology to ensure cost-effective operations, efficient management information system, enhanced delivery capability and high service standards. g. To manage the Banks portfolio of businesses to achieve strong and sustainable shareholder returns and to continuously build shareholder value. h. To deliver timely solutions that best meets the customers financial needs. i. To explore new avenues for growth and profitability. j. To mobilize private saving and public funds for supporting productive investments. k. To earn an adequate and sustainable profit for its shareholders and for the sack of own smooth operations. l. To promote industrial, agricultural and other socio economic process through the active participation of private as well as public sectors. (Siddiqi Asrar H, 1998) Major Competitors 13. These days there is cutthroat competition amongst the banks to get a biggest market share possible. Specially, in the banking industry each bank is a competitor of every other bank whether it operating on a large scale or a small scale. DIBL has many competitors but the following banks are its major competitors:a. Bank Alfalah. b. MCB Bank. c. Bank Al Habib Limited. d. Askari Bank Limited. 14. As far as multinational banks such as Citibank, ABN Amro and Standard Charted Bank are concerned, DIBL has competition in only one or two products but they are not major competitors. The target market of the above mentioned banks are different where as target market of DIBL is different. That is why DIBL is not in direct competition with them.

20

Organizational Structure 15. An organizational structure is hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim. (Burns, T. and G. Stalker, 1961) 16. Organization is a formalized intentional structure of roles or positions. The essence is that the people who are structured and coordinated will definitely be working in a proper system. This system includes both organizational hierarchy and organizational chart. Organization Hierarchy 17. To avoid the conflicts in the organization, all organization positions are detailed described and the duties, goals, functions, responsibility and authority at each position are made crystal clear. The channels which delegates these activities are called organization hierarchy and this must be set in such a manner to best accomplish the organizational goals. 18. The Dubai Islamic Banks ultimate governing body is the board of directors while the day to day affairs of the bank are managed by a managing director appointed by the board of directors. Under the supervision of MD there are Executive Vice Presidents (EVP) the senior most officials in the bank hierarchy each heading a bank unit. After EVP there are Senior vice Presents and Vice Presidents heading their respective Sections and departments. At the branch network of DIBL there are branch managers and assistant branch managers and also there are branch departmental heads responsible for their respective branch department.

21

Organization Structure Org chart 19. The Dubai Islamic Bank has an organizational structure prescribed by the management committee/BOD and modified time by time to adjust the changes in the bank occurring due to growth, environment, competition and technology. A structure that shows that organization wide distribution of work, with title of each position and interconnecting titles that show, which report to and communicated with whom. 20. Organizational structure is to be developed in order to show the position of managers and how the departments are tied to each other along with the principal lines of authority. The organizational chart divides the bank into units, and each unit is headed by an EVP. The units are further divided into divisions. Management committee /Board of Directors 21. The main power is in the hands of the Management committee / Board of Directors. The management committee consists of five members and one president/CEO. All the members of the committee is selected and approved by the owner or the overall president of Dubai Islamic bank at Dubai, UAE. The details of Management committee consist the following members and their designation is shown in the table:-

22

MANAGEMENT COMMITTEE OF DIB OF PAKISTAN Name Junaid Ahmed Tahir Nazir Chaudhary Dr Muhammad Asseem Zahid Mansoor Ammar Bin Mujeeb Wamiq Rizvi Disignation CEO & President Head of Risk Management Head of Sharia Director Treasurery Head of Technology Information

Head of Human Resources

23

Branch Network 22. The DIBL consist of total 59 branches in the country in different places, 19 branches are in Sindh, 4 branches are substituted in KPK, 3 branches is located in Baluchistan and 1 in Azad Kashmir region and 31 branches are in Punjab. Departmentalization of DIBL at Branch Level 23. Manner or practice in which related individual tasks and their allocation to work groups is combined, to form a specialized functional area that is distinct from other functional areas in an organization. OR Departmentalization refers to the process of grouping activities into departments. The departmentalization of one of the Dubai Islamic Bank is graphically shown as under:-

24

DEPARTMENTALIZATION OF DUBAI ISLAMIC BANK

Bills Department Consumer Finance Department

&

Remittances Accounts & Deposits Department

Foreign Exchange Department

Branch Manager

Clearing Department

Advances Department Micro Finance Department

Cash Department

Functions / Operations 24. The departments in DIB are divided into large groups and each group has other small departments to handle and those small departments are called divisions. Each division is then divided into units. Following are different

25

a.

groups along with their responsibilities and overview of their divisions and units: Operations and Credit Group. The operations and credit group is responsible for all operational as well as credit and risk management activities of the Bank. This includes development and implementation of systems, operational policies and procedures and procedures, process reengineering, automation, branch expansion and acquisition of premises, regulatory reporting, compliance management and legal affairs. The Group comprises of the following : Credit Division Electronic Technology Division Systems and Operations Division Compliance and Data Division Legal Affairs Department

(1) (2) (3) (4) (5) b.

c.

d.

The Credit Division (CRD). The credit division is responsible for ensuring identification, control and management of credit risk through its policies. It concentrates on evaluation and appraisal of the credit proposals through a team of experienced bankers, at all levels. The Credit Administration Unit of the CRD constantly monitors the existing credit portfolio and ensures timely action and constant follow-up to regularize and mitigate any weak areas, which may emerge with the passage of time. A Special Asset Management Unit, operating as a part of the CRD, closely monitors the problem loans of the Bank. To ensure low ratio of Bad Debts, it takes necessary remedial measures for timely recoveries. Electronic Technology Division (ETD). The Electronic Technology Division is responsible for managing the Banks technology needs. This includes not just establishing and maintaining technology infrastructure for providing operational support to all units of the Bank, but also introduces latest state-of-art technology-driven products and service delivery systems. This division has made significant contributions towards successfully expanding and managing the customer base of the bank. This division has provided the entire Bank with a countrywide communications network including Satellite, Radio, Leased Line Links, LAN, and WAN, on-line countrywide ATM and inter-branch transaction capability. Many other future technological projects are under processes, which include Call Centers, Data Mining and Warehousing, enhancement of ATM networks to international standards. Systems and Operations Division (SOD). This division is responsible for ensuring smooth and effective systems and operations of the bank. It focuses on disseminating and facilitating implementation of the Managements policies and decisions for various operational activities of the Bank. It also develops manuals for various departments and operating activities of the Bank. It is also responsible for procurement of equipment for branches and coordinates the development of new branch premises.

26

e. f.

g.

h.

i.

j. k.

l.

m.

The responsibility for the Banks Annual Branch Expansion Plan and all aspects from planning to implementation rests with this division. It includes cost-cutting measures by improving procedures and providing capital and operating expenses budgets. Compliance And Data Division (CDD). The compliance and Data Division is responsible for ensuring effective compliance with regulatory and data reporting requirements. Legal Affairs Department. This department is responsible for ensuring effectively managing all legal matters pertaining to the Bank and to protect its interests in this regard. It provides counseling on all legal matters, complicated corporate affairs and other similar legal affairs. Corporate Banking and Financial Institutions Group . This group is responsible for serving the banking needs of large corporate clients in the public and private sector, managing correspondent banking relationships, overseas operations and undertaking money market/capital market transactions. Corporate and Investment Banking Division (CBD & IBD). The Corporate and Investment Divisions (CBD & IBD) are strongly positioned across priority markets with a distinct strategy for developing corporate business. The strategic framework generates sustainable returns based on strong market presence and financial solutions ranging from debt and equity market transactions to syndicate finance, and from transaction banking to finance advisory services. International Division (IND). This division plays a key role in extending support to the branches undertaking foreign trade and exchange business. While managing business relationships with correspondent banks, IND remains on the look-out for opportunities of extending its operations and presence in the international market. Treasury Division (TRD). The Treasury Division is responsible for managing money market and foreign exchange activities for the Bank. Credit Cards Division (CCD). The Credit Cards Division is responsible for managing the Credit Card business of the Bank. It is headquartered in Karachi as a separate Strategic Business Unit (SBU) of the Bank, with all internal functions including credit, operations, marketing, sales, finance and audit; performed independently. Planning and Corporate Affairs Division (PCD). This division provides strategic direction to the Bank and developing a futuristic outlook. It remains in touch with market and assimilates both formal and informal information in order to identify new opportunities for growth and increased profitability and counter any emerging threats. The aim remains to constantly move towards a learning organization and a dynamic culture. Human Resource Division (HRD). This division is responsible for managing and facilitating the most important and strategic resource of not only DIB but also any organization, which is the human resource. Its focus is on harnessing the potential and energy of workforce to ensure effective attainment of goals set by the Bank. Recruiting the best, creating an

27

n.

o.

environment that values merit across the entire organization, improving human resource policies, enhancing monetary benefits, organizing social events, providing training and development opportunities, and initiating human resource planning, including carrier and succession planning, are the major objectives of HRD. Finance Division (FND. This division is the hub of all financial information for maintaining different accounts and measuring the performance of the Bank. While ensuring overall financial management, financial control, financial reporting and accounting function, FND is responsible for maintaining the accounting records and systems in accordance with internal policies, regulatory requirements, corporate governance and international accounting standards. It also establishes policies and procedures relating to finance function, monitors returns/spreads and reports on various performance indicators. FND watches for external factors and economic indicators to protect and enhance shareholders value. The Division directs control of the budgeting process in accordance with annual plans, policies, management directives and strategy. It ensures quality budgets and forecasts for approval. FND exercises budgetary control on all income and expense items, continually reviews accounting and control systems, monitors capital adequacy. Many similar financial tasks lie with this division. Internal Audit Division (IAD). The Internal Division (IAD) reports to the audit committee of the Board of Directors as a part of good governance practice, primarily performs its functions independent of the management. It focuses on monitoring and promoting internal controls, risk management and governance. IAD serves as a front line when it comes to monitoring and promoting internal controls, risk management and governance. It also arranges workshops on anti-money laundering. It maintains an appropriate internal audit infrastructure. IAD ensures that it is abreast with the knowledge to meet challenges of modern-day banking.

Functions of DIB Abbottabad 25. Since DIB is a commercial bank, it performs a variety of functions. Like other commercial banks, it is engaged in financing international trade. Its other major functions include receiving deposits, advancing loans and discounting of exchange. The functions are: a. Accepting Deposits. This function is important because banks largely depend on the funds deposited with them by its customers. Deposits are of many types:(1) Current deposits. Current deposits are also called demand liability on current deposits. DIB pays practically no interest on current deposits. Businessmen usually open current accounts. In DIB current account can be opened with a minimum amount.

28

(2)

(3)

PLS saving deposit. Profit and loss sharing deposits (PLS) are also called checking accounts. One can deposit and draw money easily. Profit on PLS is calculated every month but paid after six months. PLS term deposits. Fixed term deposits are deposits with the bank for certain fixed period before the expiry of which they cannot be withdrawn unless giving due notice. In this case the rates of profit will be different depending upon the time period.

b.

c.

Discounting bills of exchange. Discounting of bill is practically speaking lending for exchange at their market rate i.e. it pays to holder of the bill an amount equal to the face value after deducting interest at the current market rate for the period. This bill has to be mature. This is the common way used for keeping a part of assets of the bank in a liquid form. Agency service. DIB also provides best and unique service to its valued customers. It also provide the following agency services to the customers:(1) (2) Collection of dividends Collection of Cheques

d. e.

Acting as an agent. DIB also acts as an agent correspondent or representative for its customer at home or abroad. General utility services. Utilities provided by DIB are as follows:(1) Clearance of utility bills. DIB provides the service of clearing the utility bills i.e. electricity, gas and telephone bills of its customers. For this purpose it also provides evening banking services. Lockers facility. DIB also provides locker facilities to its customers to keep their valuable assets in it. The charges of different size of lockers are different. Acts as a referee. Dubai Islamic Bank provides useful services to its customers by acting as a referee to their credit worthiness. Supply of information.

(2) (3) (4)

29

GENERAL FUNCTIONS OF BANK

Bills Department Consumer Finance Department

&

Remittances Accounts & Deposits Department

Foreign Exchange Department

Branch Manager

Clearing Department

Advances Department Micro Finance Department

Cash Department

30

a. b. c.

Department Worked During Internship and Specific/Leading Contributions Made 26. I got the internship opportunities in DIB Abbottabad branch. The duration of my internship is of six weeks stated from 1 st April 20011 to 15 May 2011. During the internship period I was rotated detailed on different desks and almost all the departments but the important departments in which I stay more are as under:Operation department (General Banking) from 1st Apr to 16 Apr 2011. Customer of Services department from 8 Apr to 25 Apr 2011. Sales Department from 26 Apr to 16 May 2011. 27. Duties Performed a. General Banking. The different departments in General banking are:(1) Account Opening (including cheque book issuance) (2) Cash department. (3) Clearing. (4) On line banking. (5) ATM Pins issuance. b. In General banking I was rotated in Account opening and Clearing department. I also issued ATM pins willingly during my period in General banking. I spent three days in each department. c. Clearing. The clearing department consists of OBC, LBC and IBC. My job was to prepare Inter Branch Credit Advices (IBCAs) and inter cities and for areas outside them, I do/prepared Outward Bills for Collection (OBC), Inward Bills for Collection (IBC), LBC entries in their respective registers, and stamp the cheques. (1) Inward Bills for Collection (IBC) means when an account holder of DIB Branch makes a cheque payment to a person who has an account in other bank, that bank presents the cheque to DIBL for payment. The cheque then becomes IBC for DIBL as other bank presents it for payment. It is called IBC because the bill (cheque) comes in the bank premises for clearing/payment. (2) OBC means outward bills for collection. When an account holder of DIBL presents a cheque of other bank along with the deposit slip, DIBL presents it in that bank for payment. This cheque is OBC for DIBL because it presents the cheque to other bank. If the cheque is OK, that bank credits DIBL Head Office account, on realization DIBL branch debits Head Office Branch and credits account holders account. (3) The cheques presented in OBC/IBC for collection can be of other bank and can be of any other branch of DIBL. LBC stands for local bills for collection. It is same as OBC. The only difference is that OBC is for presentation of cheques outside Abbottabad area. LBC is for cheque clearing within Abbottabad. It is free of charge. OBC is for presentation and payment of cheques outside

31

d.

e.

f.

Abbottabad. The bank debits courier charges from customers account. Before the entries of IBC, OBC and LBC are made in their respective journals, the cheques representing them are stamped. IBC cheques are stamped with DIBL crossing and clearing stamp at the front. At the back, it is stamped with a stamp showing that payees account will be payees account will be credited on realization. The crossing stamp shows that the cheque is property of DIBL Branch. Clearing stamp shows that the cheque has been presented for clearing. OBC and LBC cheques are stamped with a crossing and a stamp having a blank space for OBC/LBC number (which is seen from register) at the front and at the back there is a stamp showing that payees account will be payees account will be credited on realization. (4) After stamping the cheques their entries are made in their respective journals. OBC and LBC numbers, name of bank, the amount of collection, cheque number (if it is a pay order then Pay order is written, date on which the cheque was received and the date when payees account is credited, name of payee account number of payer and payee are entered in OBC and LBC journals respectively. In IBC register, name of payer and payee, cheque number, account number of payer, name of bank that ACBL in this case, IBCA number and date of payment are entered. (5) Inter Branch Credit Advices (IBCA) are white and blue colored slips which are sent to DIBL branches telling that cheque of respective branch is paid and the amount is listed both in figures and words. . Another job that I did in clearing but not mentioned above was to attach dishonored cheques with a special white colored slip, which had a blank space for dishonored cheque number, and various reasons why cheque was dishonored in MCQ form. I was supposed to write the dishonored cheque number on that slip, attach original cheque and get the cheque along with the slip photocopied. I was also supposed to cheque amount in words and figures. Account Opening. In account opening, I was supposed to help the customers in filling account-opening forms. Besides the table of person dealing in account opening, first I was supposed to make sets of account opening forms. Sets are made by attaching the account opening form, cheque books requisition and specimen signature card then arrange these forms on side table along with application forms for Debit card, give the form to customers when they ask and help them fill the form. Specimen signature card is a yellow colored card that verifies signatures when a cheque is cashed or when a cheque books requisition is given. I also took customer calls. Different people come and call us and ask for their account statements. I used to give printing command on computer and then bring the printed statements and handed over it to the customer. For an important client it was supposed to be in an envelope. The

32

g.

h.

i.

reason for my bringing the statement and handing over to the customer was to observe the difference between customer handling of ordinary and important clients. In a day there used to be at least fifty statements. I was also supposed to get the heavy amount cheques verified by Manager Operations. ATM PINS Issuance. ATM cards have a pin number given by the Head Office, which is entered in ATM. The ATM then asks for a new pin number. Customer enters pin number of his/her own choice twice, which becomes his/her new pin number and he/she has access to ATM usage. The pin given by Head Office is enclosed in green and black colored envelope that I was supposed to issue to customers. The envelopes have a series of numbers. These numbers are card numbers that are arranged in series. The customer shows his/her ATM card that has the account number, title of account and ATM card number. The envelope corresponding to that card number is given. At the same time, their entry is made in a register and the customer signs it. Date on which ATM pin was issued, account number, card number and name of person are entered followed by the signature. Before customer timings, I used to arrange the pins according their series and kept them back after customer timings. I did this job simultaneously with account opening as well as cheque book issuance. Cheque Book Issuance. Cheque-book issuance was done during fifth week only. Customers give their chequebook requisition to operational manager. He verifies the signature from computer signs it and gives the requisition to Sir Aqeel. Minimum number of leaves in a chequebook is 10 and maximum is 100. On the requisition account number, title of account and numbers of leaves required in a chequebook are specified. Chequebooks normally have 10, 25 .50 and 100 leaves. Each type of cheque has its own register. Chequebooks also have their own series that have starting and ending numbers. Those series numbers along with account number, title of account and number of leaves are entered in their respective registers. Account number and title of account are written on cover of chequebook. Numbers of account number stamp are adjusted according to mentioned account number and bottom of each cheque is stamped. In General banking, this is the most sensitive job. A single mistake can cause a person to lose its job. Duties of Telephone Exchange Operator. In the last week of my internship I was detail and deputed at telephone exchange for taking of customers calls, sending faxes to other branches through computer with a program called i-fax (short name for Internet Fax), scanning specimen signature cards, entering outgoing calls, incoming and outgoing faxes in their respective registers and printing faxes and rate sheets. I used to take customer calls when operator used to be busy or not on seat. My operational manager used to send faxes through fax machine where as I used to send them through i-fax. Sending faxes through i-fax first needed scanning of message then specification of e-mail address of destination branch, which consists of branch code with alphabetical letter b in

33

j.

k.

beginning, then clicking the Send command. I also scanned specimen signature card (mentioned in account opening) and save them in computer system. There used to be about hundred cards for scanning each day. I used to enter all outgoing calls with the telephone number, incoming and outgoing faxes with their subjects, and destination and source branches in their respective registers. Photocopy. This is the only job that I did regardless of the department worked. The photocopied items included national identity cards, student identity cards, cheques, letters, defense saving certificates and profit coupons. Major Functions Of Accounts Department. Following are the major functions of Accounts Department, which is carried out, in the daily course of business:(1) Daily position reporting. (2) Daily Activity Checking. (3) Reporting. (4) Purchasing Function

34

Human Resource Management 28. (HRM) is the strategic and coherent approach for the management of an organization and is the most valuable asset. The people working individually and collectively contribute to the achievement of the objectives of the business. The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations. In simple sense, Human Resource Management (HRM) means employing people, developing their resources, utilizing maintaining and compensating their services in tune with the job and organizational requirement. (Armstrong, Michael, 2006) Why HRM is needed 29. Now a day the world has become a global village. So the competition is growing in manufacturing as well as in service industry, in short companies attract and retain best qualified employee for the performance of their business. HRM is the part of an organization that is concerned with the people dimension. HRM can be viewed in the following two ways. a. First of all HR department has its role to provide assistance in HRM matters to the employers and those directly involved with the organization goals and services. b. Second HRM is a built-in function in the job of every manager, whether or not the organizations have a formal HR department. So its the duty of every manager to look at HR activities and these activities are, ([Link]) i.e. Training and development, employee motivation, retain the best talent in the organization for a longer period of time. HR Department in Dubai Islamic Bank 30. HR department plays a vital role in carving the present and future image of an organization by managing the employees in most beneficial and effective manner. The functional arena of HR department consists of recruitment, training, performance appraisals, planning and career development and above all grooming of staff to adhere to office ethics and social norms. 31. DIB believes that manpower is the most important and precious asset. The HR department tries to create an environment of mutual trust and dignity and trying hard to pursuit the expression. HR department provides on the job as well as off the job training to the staff in diverse areas of banking and management. The training relies on both external courses at institute of repute in the country and internally arranged courses. The management is very cautious about the training needs of the staff and every year handsome budget is allocated for this purpose. 32. DIBL acknowledges professional acumen, experienced and expertise of its staff through regular financial benefits in the shape of competitive salaries, cash awards, promotions, academics, sponsorship and other incentives so as to boost their morale for greater input towards betterment of the bank. The HR department of DIB is divided into further departments:a. Administration and Establishment.

35

b. c.

Public relations. Personnel and Training.

Recruitment and Selection Process 33. Methods of Recruitment. Small organizations often do their recruitment process very informally. Job opening or new positions may be communicated by word of mouth or by allowing the direct supervisor to find some one of his or her own choosing. But in large organizations recruitment of employees are done through formal means i.e. through job posting. This process involves informing the employees about available job positions through physical and online bulletin board. 34. Selection Process. Once the potential applicants are identified, the next step is to evaluate their qualification, qualities, experiences, capabilities etc and make the selection. It is the process of offering jobs to the desired applicants. Selection means choosing a few from those who apply, It is picking up of applicants or candidates with requisite qualifications and qualities to fill jobs in the organization. 35. Recruitment process means searching of suitable candidates for vacant posts, however for this purpose organization may adopt different sources regarding fulfillment of Recruitment Process. This process may be through Publishment of advertisement in newspaper. Visit College/Universities and encourage fresh qualified graduates/post graduates to apply for job. Can use help from different recruitment agencies. Website source for jobs. 36. As a result of recruitment process, many candidates apply for job; send their educational documents/ CVs along with covering letter to HR department of an organization. Herein HR department scrutiny is made regarding candidates age, qualification, professional careers as well as experience. After scrutiny and short listing of candidates, then in next step written test and interviews are conducted by competent Authority. Selection process may be different among organizations; however some important steps are common. Initial interview. Written test. Interview conducted by selection committee/competent authority. Medical examination. Antecedent of ex-employer (organization) record regarding designation, experience etc. Training regarding post. Placement ( right job for right person ) 37. Policy and Procedure. Appointment is made for both internal and external recruitment for both lower and upper rank employees. Selection

a. b. c. d.

a. b. c. d. e. f. g.

36

a. b. c. d.

committee of bank is responsible for the selection of candidates at all levels at the bank, Authorities to appoint officers are given below:Board of directors Committee members Assistant vice president and below Vice president and above managing director

37

CRITICAL ANALYSIS

SWOT ANALYSIS OF DUBAI ISLAMIC BANK LTD

Internal Environment 38. Internal Strengths and Weaknesses. Strengths are positive internal characteristics that the organization can exploit to achieve its strategic performance goals. Weaknesses are internal characteristics that might inhibit or restrict the organizations performance. a. b. c. d. STRENGTHS: In Askari Bank I observe that there is a great co operation among all the employees. 39. Working Environment of all of the departments is very friendly. 40. There is sharing of responsibility regarding work. 41. Employee works as a team and coordination among the employees is excellent. 42. Employees are fully devoted towards their work. 43. Employees of all of the departments are highly qualified and fulfill all the job requirements. 44. They maintain proper files, which helps them in case of different sort of inquiries, regarding any document. a. b. c. d. e. Strengths. Strength is present within an organization and when utilized, become a means of distinction from competitors. The strong points of the DIB are as under:-

38

(1)

The policies and procedures that are developed by the Bank are acceptable in the market and also approved by the Board of Directors and committee members. The Committee Members also accomplish the vision and provide Islamic banking facilities like other banks have operating in the country. The DIB has a qualified and target oriented individuals to perform their respective jobs more effective and efficient to achieve organizational objectives. The bank also give an advancement opportunities and also for career growth through training programs .i.e. on the job training. Being an international bank it is considered more secure. One of the major strength of the Bank is Micro Finance Unit (MFU) whose ultimate goal is to finance the project in rural areas and approve small loans MFUs. Working Environment of all of the departments is very friendly. There is sharing of responsibility regarding work. Employees of all of the departments are highly qualified and fulfill all the job requirements. Dubai Islamic Banks brand name is itself strength. Dubai Islamic Bank provides online as well as physical training for its employees all over world.

(2)

(3)

(4)

(5) (6)

(7) (8) (9) (10) (11) f. g. h. . i.

39

j.

Weaknesses. Weaknesses are the shortcoming in the structure or functioning of the organization and need to be taken care immediately. It is usually because of these weaknesses that the competitors leave us behind in the race. Some of the weaknesses of the Dubai Islamic bank of Pakistan are as under:(1) (2) Spacing Problem is very crucial here in DIB. There is lake of space in Accounts department according to the Employees. Designation of the employees is not properly mentioned which creates a lot of confusion for customers as well as for the other employees of the bank. There is lack of equipment according to the requirements of the department like there are only four PCs in Foreign Trade, but the number of the employees in this department is seven. So they have to wait for a long time for postings. Beside the System of UNI BANK, they have to maintain proper files and records which involve a lot of time consumption Name of the department is not mentioned any where which create problems for the new customers and ultimately frustrate the customer. A lot of documentation creates overburden on employees which sometimes irritate them. There is not any proper procedure for the Job Rotation for the MTOs (Management Training Officers). There is not any specific Job Description of employees which ultimately confused the employees regarding their Job responsibilities. Too much noise that makes the employees irritates and they lost their concentration in the work. There should be separate washrooms for Ladies and Gents. (11) Some employees think of internees as servants

(3)

(4) (5)

(6) (7) (8)

(9) (10)

External Environment 40

45.

Opportunities and Threats. Threats are characteristics that may prevent the organization from achieving its strategic goals. Opportunities are characteristics of the external environment that have the potential to help the organization achieve or exceed its strategic goals. (Richard L. Draft). a. Opportunities. Opportunities are always present in the external market whoever grabs it first, is the market leader. Some of the opportunities are as under:(1) The Bank has the opportunity to open new branches in new cities to cover a large market share and to enhance the branch network. The bank also has the opportunity of [Link]. Strong promotional strategies can attract huge deposits for the bank.

(2) (3) b.

Threats. Threats are also part of our external environment and pose a constant danger to an organizations operations. (1) (2) (3) Changing trends in the banking sector, like trend of leasing suddenly changed to equity generation. Introduction of new schemes by other banks, which the DIB lacks. Introduction of multinational/new banks into the local market offering good salaries and good working environment in such environment retention of employees for difficult for DIB. Due to rapidly changing environment and consistent technological growth in banking sector and changing methods of Recruitments and Selection, that is serious threat to the bank.

(4)

Conclusion 46. The DIB is one the leading bank which used modern techniques for the improvements of the bank and the training of the staff and employees. The management of the bank used modern recruitment and selection techniques for the selection of best possible person for the bank. The overall package and welfare means adopt by the bank management is very good and encouraging.

41

Recommendations 47. The following are the recommendations that I analyze and suggest for the Dubai Islamic Bank of Pakistan:a. b. c. d. e. f. There should be proper spacing according to the number of employees. Proper designation of the employees should be rightly mentioned on each employees desk. There should be a separate place for the department. Name of the department should also be mentioned on a proper board. Number of the PCs should also be increased. So that employees can perform their duties properly. Filling of documents should be reduced and it can be reduced due to proper reporting on the UNIBANK System. It is not an easy job to maintain a lot of documents on file. Employees should show a positive attitude towards internees. And they should guide them properly and should deliver as much knowledge as they can.

g.

42

BIBILOGRAPHY
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Burns, T. and G. Stalker. (1961), the Management of Innovation. London: Tavistock Siddiqi Asrar H (1998) practice and law of banking in Pakistan, 6th Edition Karachi, Royal Book Company Carter McNamara, Copyright (1997-2007) MBA, PhD, Authenticity Consulting, LLC. BOK Act, 1991 Armstrong, Michael (2006). A Handbook of Human Resource Management Practice 10th Ed London: Kogan Page. [Link] Applied psychology on HRM 5th Edi, page no 174. [Link] Wright, HRM, 5th edition. Newton RM (1998), teacher reaction to school council member job description, Doctorate Dissertation University of council. Stevens. C.K and you will do. Sign here Canadian business 72, 49-52. Timotly Clark, Jan (1993), research fellow open buss school the open Univ walten hall, Milton Keynes UK, selection methods of executive search consultancies Vol 1 Richard D. Arvey and Gary L. Renz (May, 1992), Fairness in the Selection of Employees, Source: Journal of Business Ethics, Vol. 11, No. 5/6, Behavioral Aspects of Business Ethics), pp. 331-340 William Chan Source (Oct., 1996), External Recruitment versus Internal Promotion, Journal of Labor Economics, Vol. 14, No. 4, pp. 555-570, the University of Chicago. Charan D. Wadhva (Nov. 26, 1977): Economic and Political Weekly, Vol. 12, No. 48. David A Jones. University of Vermont (June, 2006), Jones [Link] and Dereks Chapman University of Calgary, International Journal selection and assessment, Vol 14, No 2. David E. Bowen, Gerald E. Ledford, Jr., and Barry R Nathan (Nov, 1991), Hiring for the Organization, Job: Source, the Executive, and Vol. 5, No. 4 pp. 3551 Published by: Academy of Management. By Raymond A. Noe: Employee Training and Development 3rd Edition: page No 441. Richard L. Draft, Management 6th edition 8th chapter, Strategy Formulation and Implementation, page No 249. [Link] [Link] [Link]

43