TRADE FINANCE & BANKING An Introduction to Banking BRANCH BANKING OPERATIONS
Dec 18, 2015
TRADE FINANCE & BANKING
An Introduction to Banking
BRANCH BANKING OPERATIONS
2
Banking Operations
Zahid Husain MBA;MA;LL.B Certification in Islamic Banking Deputy General Manager -HBL
After completing the program, participants are
expected to understand:
LEARNING OBJECTIVES
Account Opening And Operations
Learning & Development
Basic Considerations in Account Opening & Its Basic Considerations in Account Opening & Its OperationsOperations
The account is opened in the name of the beneficial owner only and is operated by him or under his validly delegated authority.
The account must be operated for legal & lawful purposes. Specifically, the account must not be used for laundering money or for supporting illegal business activities.
1
The Account Opening Risk ModelThe Account Opening Risk Model
Risks Risks
Risks Risks
Documents Instructions
2
The Account Opening Process ModelThe Account Opening Process Model
Send Letter of Thanks
3
Account Opening Form – The Basic DocumentAccount Opening Form – The Basic Document Account Opening Form – The Basic DocumentAccount Opening Form – The Basic Document 4
Classifications of Accounts Classifications of Accounts5
Common Documents for Account OpeningCommon Documents for Account Opening 6
Additional Documents for Additional Documents for Account OpeningAccount Opening
7
Account Type Documents Purpose
Limited Companies
• Certificate of incorporation Establishing “Legal Entity” of the company
• Memorandum of association • Ensuring company name•Knowing purpose & scope of business
• Articles of association
Knowing Powers of the directors
Knowing internal operating rules & regulations
• List of directors with signatures and photocopy of CNIC attested by company secretary or chief executive
Establishing identity of directors
• Board Resolution regarding opening and operation of the account
Establishing legal identity of the account in the name of the company and authority to operate the account
• Certificate of Commencement of Business
Ensuring Legality of business operations
Additional Documents for Account OpeningAdditional Documents for Account Opening 8
Additional Documents for Account OpeningAdditional Documents for Account Opening 9
Payment & Settlement
Learning & Development
The Payment & Settlement Process
Beneficiary’s Bank Processes
Check
Clearing HouseBeneficiary
Beneficiary’s Bank Claims Settlement for Payment to be
made
1
PHASES IN PAYMENT & SETTLEMENT PROCESS
2
4Payment Concept Model Payment Concept Model
Pays Cash at Counter
Presents Payment Instrument
Credit Accounts
5
Payment LawsPayment Laws
Holder in due Course•Any person who for consideration becomes the possessor of an instrument before it becomes overdue and without knowledge of any defect in the previous title.
Payment in due Course• Payment in accordance with:• Apparent Tenor• In Good Faith• Without Negligence• To Holder in Due Course
Protection to paying banker available only if payment made is “Payment in due course”. Otherwise, the banker will have to bear the loss
An unconditional order in writing by one person to another person who is the banker signed by the person giving it, requiring the banker to pay on demand a certain sum of money to the specified person or the bearer.
CHECK
6
PARTIES TO A CHECK
PAYOR
Bank
UNCONDITIONAL
ORDER
PAY SUM CERTAIN
7
Adil AhmedTen Thousand Only 10,000/-
April 3, 2009
1
2
7
5
4
6
REQUISITES OF CHECK1. Instrument in writing2. Drawn on specified banker3. Pay on demand4. To specified person or bearer
5. Signed by the drawer6. Unconditional Order7. Certain sum of money8. Date
8
8
Muhammad Anwar
Kainat MirzaTen Thousand Only 10,000/-
July 23, 2011
CHECK 8
Muhammad Anwar
TYPES OF CHECKS9
CROSSED CHEQUE
Where a check bears across its face two parallel lines is classified as crossed check.
A crossed check should not be paid at the counter.
The proceeds should be disposed off as per the instructions of the crossing
10
Types of Crossings 11
GENERAL
GENERAL
GENERAL
SPECIAL
Accou
nt P
ayee
Payee
Acc
ount
Onl
y
Not N
egot
iabl
e
And C
ompa
ny& C
ompa
ny
Habib
Ban
k Lt
d
Habib
Ban
k Lt
d
HBL - K
arac
hi
HBL- N
azim
abad
Branc
h.-K
arac
hi
12
4. Restricted 3. Conditional
5. Partial
1. Blank
2. F
ull
An instruction on the back of the check through which the
holder transfers the title to the instrument
to another person
EndorsementFurther In
dorsement is
Restricted
Transferee is not mentioned. Indorsement makes the instrument bearer
Tran
sfer
ee is
men
tione
d.
He
can
furth
er e
ndor
se
Transfer of title is
Contingent to an Event
Title is transferred to tw
o
or more Indorsees.
Negotiation not P
ossible
13Who Can Endorse ?
Payee Indorser
Individual- Payee- Endorsee- Holder
Joint Individuals - All Payees (Individually)
- One of them under authority from rest
Sole proprietorship - Sole proprietor as the owner
Partnership- Authorized partner on behalf of the
Partnership
Joint Stock Company- Individual authorized under a resolution
of the Board
NIFT Clearing Process
NIFTCLEARING
AND SETTLEMENT
HBLBranch A
Check Cleared
Check Cleared
Cleared check to Paying Branch
Check for Collection
HBL Branch
B
Other Bank
Cleared check to Paying Branch
Check for Collection
18
19NIFT Settlement of Accounting and Cash Positions
NIFTClearing and Settlement
HBL CENTRAL
PROCESSING UNIT
STATE BANK
1
2
3
4
HBL REGIONSSETTLEMENT
CASH & ACCOUNTINGPOSITIONS
1 2 3 4
HBL REGIONSSETTLEMENT OF CASH
POSITION
Advise Position
Advise Position
Disburse Cash
Settles Cash Position
Settles Cash &
Accounting Position
1
What was called “Remittance” in the past, is now called “Money Transfer”. It may be defined as the process which enables a “Remitter” to transfer money to a “Beneficiary” at another destination.
Money Transfer Concept Money Transfer Concept
2
The Basic Considerations
3Money Transfer Risk Model Money Transfer Risk Model
Money Laundering
Errors
Frau
d
Technology &
Process Failure
Wrong P
ayment
Exc
hang
e R
ates
• Financial
• Reputational
• Regulatory
RISKS
4Money Transfer Risk Model Money Transfer Risk Model
Money Changers
Non Government Organisations (NGOs)
Non - R
esidents
Trusts-Collection
Accounts
Non
- C
usto
mer
High Risk Transactions
5
Beneficiary
Money Transfer Involves a Series of Independent
Relationships
Paying Bank
Remitter Remitting
Bank
Money Transfer Process 6
7
General InformationIdentity of Applicant
& Beneficiary
Applicants’ Request Terms & Conditions Cash / Debit to Account Charge Account (If Different) Currency Amount (Words & Figures) HBL – Branch
Name Address Telephone No CNIC / Passport No Account Type / No / Bank * Business / Occupation Purpose of Remittance Relationship to Beneficiary *
Modes of Money Transfer Payment Instruction
Bankers Check
Local Funds Transfer
Foreign Demand Draft
SWIFT – Foreign Funds Transfer
*Advise & Pay
Advise & Credit
Remittance Application must be signed by the Applicant(s) or Authrised person in presence of Banks representative
Finally it should be signed by Bank’s authorised persons after processing
Remittance Application – The Basic Document
General Purpose
* Banker’s Check
A check issued by a bank in favour of a beneficiary. This can be payable locally or in a foreign jurisdiction. Payorders, Demand Drafts &Travelers Check are various forms of Bankers' Check.
Local / Foreign Funds Transfer
A device used by HBL online branches to transfer funds from one account to other account within Pakistan.
SWIFT Transfer
A computerised, coded & safe device used by banks to transfer money internationally to a beneficiary having a banking relationship.
Secured e-mail
Transfer of funds to a beneficiary through an e-mail, electronically authorized.
Fast Draft
A Payment Instrument drawn on HBL bank’s branch within country issued by Centralised Inward Remittance Department of the Bank in favour of a Beneficiary having account with other bank to pay amount of a remittance received from UAE & Gulf regions.
Fast Cash
An instrument used by HBL UAE & Gulf for remitting a sum of money to a beneficiary who is a non–HBL customer to be paid in cash by HBL-MISYS Branches coupled with SMS Advice facility.
Fast Direct Credit
A device used by HBL-UAE to instantly credit any account at an HBL-branch in Pakistan with SMS & Centralised Advice facilities to the beneficiary.
UAE Specific
8Money Transfer Products Money Transfer Products