U MICRO FINANCE BANK LTD.

Acknowledgment
Thanks to Allah Almighty who blessed me with the Great Opportunities in the life and one of
them is to study in the institute like University of Education Lahore, Multan Campus and be able
to work as an internee in the U micro Finance. Thanks to my internship Advisor Miss Ayesha
Mudassir Whose Valuable assistance and encouraging Attitude has been a source of inspiration
for me. Without her guidance it was impossible to accomplish my task.

Special Thanks to the staff of the U micro finance Specially Branch Manager MR. Sayed Kashif
Masood ,Operation Manager MR. Ali Imam, Customer Service Officer MR. Mubashir Ali and
Credit Risk Officer MR. Muneeb Ahmad Who Taught me many things about Banking. Special
Thanks to my teachers and seniors who supported me whenever I faced difficult situation.

University of Education
U MICRO FINANCE BANK LTD.

University of Education
U MICRO FINANCE BANK LTD.

University of Education
Division of Management and Administrative Science
Multan Campus

Internship Report
<<UMICROFINANCE BANK>>
A REPORT SUBMITTED TO THE DIVISON OF MANAGEMENT AND
ADMINISTRATIVE SCIENCE, UNIVERSITY OF EDUCATION, LAHORE IN THE
PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF
BACHELOR OF BUSINESS ADMINISTRATION (HONS)

Submitted By:
<<BSF2005055>>
<<Abdul Sami>>
<< 2020-2024>>
<<09-07-2024>>

University of Education
U MICRO FINANCE BANK LTD.

University of Education
Division of Management and Administrative Science

LETTER OF UNDERTAKING
This internship report was submitted by << Abdul Sami >> S/o/D/o. << Asif

Masood >> Roll No. <<BSF2005055. >> For the partial fulfillment of the requirements for the

degree of

BBA
Session (2020-2024)

With specialization in

<< FINANCE >>

And is hereby accepted by the evaluation committee.

Internship Supervisor ________________________

HOD / Coordinator ________________________

External Examiner ________________________

Director ________________________

University of Education
U MICRO FINANCE BANK LTD.

Table of Contents

Executive summary....................................................................................................................... 1
Mission and Vision. ...................................................................................................................... 2
1.Core Values................................................................................................................................. 3
1.1 Integrity ....................................................................................................................... 3
1.2 Teamwork ................................................................................................................... 3
1.3 Accountability ............................................................................................................ 3
1.4 Service Beyond self .....................................................................................................3
2.New Knowledge Acquired. ........................................................................................................ 3
3.Problem Ecounter .................................................................................................................... 4
4.Swot Analysis ............................................................................................................................. 4
4.1 Strength.............................................................................................................................. 4
4.2 Weakness ........................................................................................................................... 5
4.3 Opportunities ..................................................................................................................... 5
4.4 Threats ............................................................................................................................... 5
5.Product of UBANK .................................................................................................................... 6
5.1 Secured product ................................................................................................................. 6
5.2 unsecured product .............................................................................................................. 7
5.3 Bullet Product .................................................................................................................... 8
6.Account opening requirement .................................................................................................. 8
6.1 FATCA .............................................................................................................................. 8
7.Disbursment of Loaning ........................................................................................................... 9
7.1 Documentation................................................................................................................. 10
7.1.1 Client payment behavior Report ................................................................................. 10
7.1.2 ECIB ............................................................................................................................. 11
7.1.3 PMN.............................................................................................................................. 11
7.1.4 MFCIB .......................................................................................................................... 11
7.2.Punching In system(software) ......................................................................................... 12
7.2.1 Loan Module................................................................................................................. 12
7.2.1.1 Initial Loan Module...........................................................................................................12

University of Education
U MICRO FINANCE BANK LTD.

7.2.1.2 Loan Application Detail....................................................................................................12

7.3 Legal Agreement ...................................................................................................................13

7.3.1 Important Things in legal agreement...................................................................................13

8. Clearing...................................................................................................................................14

8.1 Types of Clearing.................................................................................................................14

8.1.1 Inward Clearing..................................................................................................................15

8.1.2 Outward Clearing...............................................................................................................15

8.2 Categories of Outward Clearing.........................................................................................15

8.2.1 Normal Clearing..................................................................................................................15

8.2.2 Intercity Clearing.................................................................................................................16

8.2.3 IBC Clearing (Inward bill of collection).............................................................................16

8.2.4 OBC Clearing (Outward bill of collection).........................................................................16

8.2.5 Same day Clearing...............................................................................................................17

9. NIFT (National institution Facilitation Techonology)..........................................................17

10. Organizational Structure.....................................................................................................18

11. Financial Statement.............................................................................................................. 19

11.1: Balance Sheet........................................................................................................................19

11.2 Income Statement..................................................................................................................2 0

11.3 Financial Ratios.....................................................................................................................21

12. Competitive strategy............................................................................................................

University of Education
1

Executive Summary:
UBANK was founded in 2003 by MR. JAVED, whose pioneering village banking methodology
of micro lending used hundreds of micro finance providers around the world today. Led at the
corporate level by an acknowledged leader in the field of micro finance, president and Chief
Executive Officer Rupert Scofield, UBANK international consists of worldwide network of
micro finance subsidiaries in Africa, Eurasia, and the greater Middle East Latin America and in
Pakistan. After 25 years of leadership, UBANK’s outreach is among the broadest and most
comprehensive of today’s microfinance networks.

UBANK serves the lowest rung of the economic ladder, and focuses its services towards those
clients who earn less than $3 per day, especially women. The cornerstone of UBANK’s
corporate identity is its logo.

Kashf Micro finance Bank Ltd. (KMBL) was spun off from Kashf Foundation in 2008 with
mission of poverty alleviation through job creation. KMBL provides enterprises loans to
microfinance bank, KMBL can accept deposit saving.

After showing tremendous growth in our first five years, Kashf micro finance bank limited
decided to become a part of UBANK’s global micro finance network. UBANK has been in the
micro finance business since 2003, providing financial services to the world’s lowest income
entrepreneur so that they can create jobs. Build assets and improve their standard of living. It
operates in 22 other countries across the world, including many Muslims countries like Jordan,
Afghanistan and Tajikistan.

UBANK’s equity injection of PKR 824.7 million on May 7, 2024 provided by KMBL with the
necessary found of expand its outreach more broadly throughout Pakistan and also meet the
revised minimum m capital requirements as set by the State Bank of Pakistan. The new equity
also made UBANK majority shareholders of the bank, and on 25 November 2013, the name of

University of Education
2

the bank was formally changed to UBANK microfinance bank Ltd to reflect the new ownership
and take advantage of the world wide name recognition and reputation of the UBANK brand.

UBANK MISSION:

UBank,s mission is to provide financial services to the world’s lowest income entrepreneurs so
they can creates jobs, build assets and improve their standard of living as our finance and
personnel allow.

U BANK’S VISION:
Driven by the passion for disruptive innovation and the desire for financial inclusion,
we aim to become the problem solver and enabler to Pakistani microfinance
ecosystem.
1. UBANK core values:

Core values of UBANK micro finance bank Ltd are as under.

1.1 Integrity:

We treat all our stakeholders with honesty, fairness, and respect.

1.2 Teamwork:

We support each other in our work, celebrating both individual and group success. We encourage
open communication and solve conflicts by dealing directly with each other. We draw upon the
experience, skills and diversity of all stakeholders.

1.3 Accountability

We preserve and expand the value of funds entrusted to our stewardship, thus insuring that our
stakeholders receive the greatest benefit from those resources. We maximize the financial and
social impact of our work. We take full responsibility for our performance. We honor our
internal and external commitments.

University of Education
3

1.4 Service beyond Self:

We provide a work environment that not only enables people to achieve their personal aspiration,
but also to participate in a cause which advances a higher purpose the elimination of world
poverty.

2. New Knowledge Acquired

As per past study scheme my knowledge was limited and just bookish about banking but after
this internship I have wide knowledge about banking operations and practices of microfinance
bank and also little knowledge about general banking, credit , banking product, KYC, and
banking practices. Now I can talk about following banking topics

 Banking/ Microfinance Banking

 Banking Departments and working
 Difference between branches and departments
 Banking Operations and Operating Practices
 KYC and importance of KYC ,
 Banking Products
 Dual control and why dual control consider strong in banking
 User and working rights
 Money laundering / Anti money laundering
 KYC revised and why it used in banking
 Clearing and Kind of Clearing
 Remittance
 Difference between Pay order and demand draft

University of Education
4

3. Problems Encountered

As per my experience following problems occur during my internship

 Local language issue

 Long Banking hours
 Limitation of Knowledge delivered by bankers
 Inaccessible banking manuals
 Inaccessible bank software and Systems

4. SWOT ANALYSES:

SWOT analyses mean the strength, weakness, opportunities and threats of any organization.

SWOT analyses of U Micro Finance Bank Ltd. are as under

 Strength
 Weakness
 Opportunities
 Threats

4.1 Strength:

 This bank has established a good reputation in the banking sector

 Better focus on customer services and customization
 Flexibility with the changing environment
 Branches are working in all big and small cities of Pakistan.
 Providing the loan to all clients like businessman and villagers
 Customer focused products
 Turnaround time of loans disbursement.
 Providing financial services to un-banked.
 Hardworking and motivated staff.

University of Education
5

 Focus on customer experience and satisfaction.

4.2 Weakness:

 Slow improvement and acceptance of technological changes

 Shortage of employees in some branches.
 More emphasis on deposit accumulation and less on their mobilization
 No loans to salaried persons
 No car facilities to staff
 No annual bonus
 The bank official time of closing is 5:00pm but due mismanaging of time allocation and
work the staff is normally on their seats till 6:00pm or 6:30pm clock.

4.3 Opportunities:

 Adoption of information technology will improve the customer services.

 Loaning to farmers
 Loaning to small businessman
 UBANK has more opportunity because almost mare than 80% population of Pakistan is
un-banked.
 New branches in most of cities required.

4.4 Threats:

 Competition in the banking market is so tough

 The purchasing power of consumer is decreasing in current economic situation of the
country affecting the business too much and low investing in different projects by the
investors.
 Low interest rates of other banks
 Staff housing loans is offered by other banks

University of Education
6

5. Lending Products of U Bank

In UBANK micro finance bank ltd has two basic types of lending products. These two types
are as under.

1- Secured
2- Un-Secured
5.1 Secured Lending Products:

A secured lending product depends on Gold lending products. Gold lending products has also
two main types of products

I. EMI Products (Equal Monthly Installments)

II. Bullet Products
III. Running Finance Gold (Evergreen)

EMI Products:

EMI stands for equal monthly installments means principle amount of loan plus interest client
must have to pay on monthly base.

EMI Products:

a. UBANK Sunehra Sarmaya Loan

Bullet:

Bullets product is a product in which clients must pay the all loan after completion of maturity
date. A bullet depends on maturity of loan. There are two main types of bullets in secured
lending products. These two types are as following.

University of Education
7

Bullet Products

a. Zarai Karza

Zarai Karza:

In Zarai Karza client also pay all loans after completion of maturity date of loan.

Running Finance Gold (Evergreen):

Running finance gold mean interest on running finance means your loans will be same till
the end of maturity but only monthly interest you will pay on monthly basis.
5.2 Un-Secured Lending Product:

A un-secured lending product depends on Clean loans. Clean Loans products has also two
main types of products

I. EMI Products (Equal Monthly Installments)

II. Bullet Products

EMI Products:

EMI stands for equal monthly installments means principle amount of loan plus interest
client must have to pay on monthly base

EMI Products:

 Livestock & Dairy Loan (EMI)

 Livestock & Dairy Loan Plus (EMI)
 Enterprise Livestock & Dairy Development Loan (EMI)
 Karsaz Gold Loan- (EMI)
 MSME GOLD LOAN
 MSME Plus Gold Loan

University of Education
8

Bullet:

Bullets product is a product in which clients must pay the all loan after completion of maturity
date. A bullet depends on maturity of loan. There are two main types of bullet in un-secured
lending products.

5.3 Bullet Products:

 Livestock & Dairy Loan
 Karsaz Gold Loan
 MSME Gold Loan
 MSME Plus Gold Loan

6. Account Opening Requirement:

For account opening some requirements are most important. These important requirements are as
under.

1. NADRA Verisys
2. Two Passport Pictures (if shaky signature)
3. Original CNIC ( If CNIC expire than NADRA token )
4. Physical Verification of clients
5. Address verification
6. FATCA ( Foreign Account Tax Compliance Act )

6.1 FATCA

FATCA means “Foreign Account Tax Compliance Act”. FATCA is a KYC questionnaire
and self-certificate form that must be use for verification of client that shows the
information that is your client Pakistani or not? This form must be completed and signed
by any individual (including joint account holders) sole proprietor who wishes to
establish a customer relationship with U micro finance bank ltd.

University of Education
9

At this form you must mention

 Your client is not an American Citizen, and also has no green card or not a US tax
payer.
 Birthday place of your client is Pakistan.
 Have any residential address in US or any telephonic number in his use? Etc.
 Your client none a US person.

FATCA is most important because U MICRO FINANCE Bank Ltd never give
debt to any US person. These facilities for clients are available only in Pakistan.
You must take signature and thumb impression by your client on FATCA form.

7. Disbursement On Loaning

Disbursement:

Disbursement means facilitate your client for giving the debt.

Disbursement Requirements:

Disbursement requirements are as under with complete information. For disbursement

documentation is first and most important requirement.

7.1- Documentations:

 Client Payment Behavior Report ( After first loan)

 Ensure turnaround time not exceeds from seven to ten days.
 Loan Application Form, Personal information form.
 Guarantor information form.
 Cash flow.
 Location Map.
 CNIC Copies (client and guarantor both of them).
 Two utility bills
 Appraisal form verisys.

University of Education
10

 Ensure CNIC is not expired.

 Photographs. (Client & Guarantor).
 Client’s ECIB & PMN Report as per policy.
 MFCIB. (Micro Finance Credit Information Bureau.

7.1.1 Client Payment behavior Report

If any client wants to gain credit from U MICROFINANCE BANK then you must have to
check client payment behavior report of first loan. If client’s last payment behavior report would
be clear then U MICROFINANCE BANK provide loan as per policy.

 You must have to ensure turnaround time never exceeds from

seven to ten days during last payments of loan.

7.1.2 ECIB (electronically credit information bureau)

ECIB means electronically credit information bureau. This is an electronic system that links the
UBANK to State Bank of Pakistan for clear information about client. Through ECIB, UBANK
confirms that their client has not received loan from any other bank in Pakistan.

If their client had already taken loan from any other bank then State Bank of Pakistan give all
information about him.

ECIB shows all information including payment behavior, loan maturity, and also clearance in the
loaning of any bank than UBANK complete disbursement of client otherwise bank can reject
client’s file.

ECIB show information of banks like Khushhali bank, etc.

7.1.3 PMN (Pakistan Micro Finance Network.)

PMN means Pakistan Micro Finance Network. PMN also type of appraisal the clients like ECIB.
PMN also source of confirmation the clients by the State Bank of Pakistan.

University of Education
11

But PMN shows the information of Micro finance loaning, loans from NGOs, and any other
small firms that also provide the loans to the clients for business like NRSP (National rural
Support program) , PRSP (Punjab rural support program), etc.

PMN shows information of small firms that also provide loans on interest like NGOs NRSP
etc.

7.1.4 MFCIB (micro finance credit information bureau)

MFCIB stand for micro finance credit information bureau. MFCIB is a format on that UBANK
team ensures the all information of client for loan and then it send to the head office of U
MICRO Finance Bank and they have confirmation of client for loan.

7.2 - PUNCHING IN SYSTEM (SOFTWARE)

Punching in system means putting the all information of client in the software that provide by
the head office. After putting the information file would be forward to CRO (Credit Risk
Officer).CRO must have to visit the client’s business and residential area for confirmation the
loan.

7.2.1 Loan Module

In loan module we must have to put information in two application form.

I. Initial Loan Application.

II. Loan Application Detail.

7.2.1.1 Initial Loan Application

In initial loan application we must have to put the initial information of client like name,
address, and family background etc.

University of Education
12

7.2.1.2 Loan Application Detail

In application detail we must have to put all information of client for completion of disbursement
process.

In detail application we have to fill name, address, business information, guarantor name,
address, and CNIC number both of them.

7.3 -To fill Legal Agreement for Disbursement

To legal agreement is most important for completion the disbursement process. In legal
agreement we must have to fill all that information of client and also shares the all legal
information that is necessary for client.

When banker fills the legal documents he must share the all information to the client that will be
mentioned in the legal agreement.

7.3.1 Important Things in Legal Agreement;

 Overdue charges will be 116 per day.

 How many amount client will pay back to bank?
 Service charges on credit fix rate are 33% for agriculture.
 On repeat credit fix rate will be 32% for agriculture.
 Maturity of credit in months.
 If creditor cannot pay the installments to the bank than guarantor
will be responsible of loan return.
 Signature and thumb impression of client and guarantor.

University of Education
13

8. Clearing:

i. Clearing is a process that occurs during exchange the cheques between different banks
for financial statement.
ii. Exchange of cheques between collecting and paying bank for financial settlement is also
called clearing.

Collecting Bank:

Collecting bank is a bank that has collected the cheques.

For example:

“If you have an account in U Micro Finance Bank ltd. And you are an account holder of
that UBANK and you have a cheque of UBL and you submit that cheque in U bank than
U bank will be collecting bank”.

Paying Bank:

Paying bank is a bank that pays the cheque.

For example:

“If UBL bank will pay cheque to UBANK after clearing that than we can say UBL is
Paying Bank”.
8.1 Types of Clearing:

There are two main types of clearing that are as under

1- Inward Clearing
2- Outward Clearing

University of Education
14

8.1.1 Inward Clearing:

UBANK s Client issues a cheque in the favors of other bank’s client that will be inward clearing.

“If any client of UBANK issues a cheque in the favors of UBL, s client than this is

Called Inward clearing”.

8.1.2 Outward Clearing:

Other bank client issues a cheque in the favors of UBANK’s client it would be outward clearing.

“If UBL, s client issue a cheque in the favors of UBANK’s client than this is called
outward clearing”.

8.2 Categories of Outward Clearing:

There are some different five categories of outward clearing. These all five categories are as
following

I. Normal Clearing
II. Intercity Clearing
III. IBC
IV. OBC
V. Same Day Clearing

8.2.1 Normal Clearing:

Normal clearing is a category in which clearing have to complete within 24 hours of working
days. This is called normal clearing because it is a normal clearing process that have complete in
two working days.

This category must have to use in nearly cities that have distance within 50 k.m.

 Like Multan and Muzaffargarh.

University of Education
15

Normal clearing has to accurse in NIFT areas. NIFT areas are those that are called nearly cities
and they have less distance like Muzaffargarh and Multan these cities has 35 K.m distance only.

8.2.2 Intercity Clearing:

Intercity clearing is a category in which clearing have to complete within 72 hours of working
days. Intercity clearing has accurse between different cities that has more than 50 k.m distance.

 Like distance between Muzaffargarh and D.G khan.

 Like distance between Muzaffargarh and Ali Pur.

“Intercity clearing also completed by NIFT (National Institution Facilitation Technology)”.

8.2.3 IBC (Inward Bill of Collection):

IBC is also category of outward clearing this clearing accurse where NIFT not working.

For example:

In Muzaffargarh branch of UBANK has received a cheque from his client that cheque is UBL
branch of Sindh. Than this cheque must have to clearing in IBC category of outward because it
has no NIFT facilities so U Bank branch of Muzaffargarh will send this cheque to the UBANK
branch of sindh in same area than this clearing process will complete with in 7 to 15 days.

 An IBC category has no NIFT facilitations.

8.2.4 OBC (Outward Bill of Collection):

OBC also category of outward clearing it has same situations and condition of IBC.

This also completed within 7 to15 days. This accurse where NIFT facilitation are not working.

University of Education
16

8.2.5 Same Day Clearing:

Same day clearing is a category in which clearing have to complete within 12 hours of working
days.

9. NIFT (National Institution Facilitation Technology):

NIFT is a private institute that helps to all banks in clearing of cheque and then it takes must
have to charges from all banks.

 NIFT works only for clearing of cheque in three categories of outward clearing.
 NIFT help in normal clearing, Intercity clearing and same day clearing because they are
including in NIFT areas.

University of Education
17

10. ORGANIZATIONAL STRUCTURE

University of Education
18

11. Financial Statement

U MICRO FINANCE BANK LTD.

11.1 Balance Sheet

AS AT DECEMBER 31, 2024.

ASSETS Rupees

Cash and balance in SBP and NBP 356,638,478

409,990,696
Balance in other banks MFBs
1,039,196,250
Investment- net of provisions
5,418,675,734
Advance-net of provisions
776,652,189
Fixed assets in the operation
283,848386

Other Assets 166,917,194

Deferred Tax Assets

Total Assets 8,451,918,927

LIABILITIES

Deposits and other accounts 6,057,364,103

115,000,880
Borrowings
346,019,502
Other Liabilities

Total Liabilities
6,518,384,485
1,933,534,442
University of Education
19

NET ASSETS

Capital

Share Capital 6,348,887,110

Discount on Share (4,089,040,293)

68,843,467
Statutory reserve
17,928,449
Depositor protection fund
(431,381,215)
Accumulated loss

1,915,237,518

Deferred Grants 18,296,924

Total Capital 1,933,534,442

University of Education
20

U MICRO FINANCE BANK LTD.

11.2 INCOM STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2024

Rupees.

Profit after Tax 166,694,520

Remeasurement of the post defined benefit Obligation (1,871,839)

655,144
Impact of deferred tax

(1,216,695)

Total Comprehensive income for the year 165,477,825

University of Education
21

11.3 Financial Ratios:

Liquidity Ratios:
Current assets
Current Ratio = ____________________________________________

Current liabilities

335308216

= _____________________________

50611493

Current Ration = 6.625:1

Current assets- Inventory

Quick Ratio = ____________________________

Current liabilities

(335308216- 3225635) 332082581

= __________________________________

50611493

Quick Ratio = 6.561:1

Assets Turnover Ratios:

Account Receivable* 365

Average collection period = __________________________

University of Education
22

Annual Credit Sales

134705259* 365

= _________________________

1131975000

49167419535

= ______________________

1131975000

Avg. Collection Period = Approx. 44 days

Financial leverage Ratio:

Total Debt

Debt Ratio = _____________________

Total Assets

50000000

= ________________

453619159

Debt Ratio = 0.110:1

University of Education
23

12. Competitive Strategy

Competitive strategies of U MICRO FINANCE BANK LTD are as under

Customer Services

Customer services are the important part of the competitive strategy in U micro finance bank. It
has value as a back bone of UBANK. They are providing best services to their customers as
compared to competitors, they take regular follow up from their customers and resolved their
quarries on priority basis.

Loyalty Discount:

U bank also provide loyalty discount to their customers who came back to the institution for
getting again loan for their business. They gave 1% discount on interest rate to their older
customers just due to their loyalty to the institution.

Simple Terms and Conditions:

To enhance customers interest U Micro finance bank have simple and easy terms and condition
for their customers, So that they can get loan on simple terms which are easily meet able for
customers.

Transparency in Pricing:

Transparency in terms and pricing is very important for any institution because if the pricing is
transparent then customers get all information about the product on real basis rather then he got
disappoint from the bank after some time, that’s why U bank provide transparency in pricing.

Perspective from the field:

U Micro finance has a team which takes on the field to the customers about the problems which
they facing. They take in depth interviews. The core focuses areas of the structured interviews
included in the client perception and financial products. The team of UBANK has done work

University of Education
24

hard for solving the problems of their clients. Through this they enhanced their clients for long
period.

Easy Contact of Clients to UBANK Team

UBANK Team makes sure contact with their contact at every support. The clients of UBANK
can contact to the service provider of the UBANK. Than through this support they can easily
share their problems with the Team of UBANK

Promoting the Social Mission at Grassroots.

U Micro finance bank specially focused on the small businessman whose wants to increase their
businesses. So they create they make strategy on the base of promoting the social mission at
grassroots for encourage their clients.

University of Education
25

Abbreviations.
1- EMI Equal monthly installments
2- KYC Know Your Customer.
3- FATCA “Foreign Account Tax Compliance Act”.
4- ECIB Electronically credit information bureau.
5- PMN Pakistan Micro Finance Network.
6- MFCIB Micro finance credit information bureau
7- IBC Inward Bill of Collection.
8- OBC Outward Bill of Collection.
9- NIFT National Institution Facilitation Technology.

University of Education