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History

Evolution of banking

It has not so far been decided as to how the word bank originated. Some authors

opined that this word is derived from the word Bancus or Banque which means a

bench. The explanation of this word is attributed to the fact that the Jews in Lombardy

transacted the business of money exchange on benches in market place and when the

business failed the Banco was destroyed by the people. Incidentally the word Bankrupt

is said to have been evolved from this practice.

Other authorities hold the opinion that the word bank is derived from the German word

Back which means joint stock fund.

It is therefore difficult to decide as to which of the opinions is correct, for no record is

available to ascertain the validity of any of the opinions.

Early Growth

Banking is infact as primitive as human society, for ever since man came to realize the

importance of money as a medium of exchange; the necessity of a controlling or

regulating agency or institution was naturally felt. Perhaps it were Babylonians who

developed banking system as early as 2000 B.C. . It is evident that the temples of the

Babylon were used as Banks because of the prevalent respect and confidence in the

clergy.

It is not certain as to who invented money but history records that Gyges, King of

Lydia, casted electrum (a natural alloy of gold and silver ) ingots of identical shape and

of uniform weight .also in Greece and Rome there were some evidences of banking

history.

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In 1401 a German Public Bank was formed comprising the operations of discounting,

deposits and transfer of money. By the 16th century, some more public banks were

formed in Venice, Milan, Amsterdam, Hamburg and Nuremburg.

At the time of independence it was decided that Reserve Bank of India will act as the

central bank of Pakistan till 30th September 1948. At that time there were 487 offices of

the scheduled banks in this area. There were 19 non-Indian foreign banks

while there were only two Pakistani Institutions i.e., Habib Bank and Australasia Bank.

State Bank As the central bank of Pakistan was inaugurated on 1 st of July 1948 and the

first Pakistani notes were issued in October 1948 in the denominations of Rs. 5,10

and100. As the central bank of the country the State Bank addressed itself with Pakistan

intends to disinvest and denationalize these banks in various phases. So far Muslim

Commercial Bank and Allied Bank of Pakistan have already privatized.

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Modern Banking

Despite its classical origin, banking in its modern form and structure started in Britain

when many of the Lombardy merchants came to England in the Fourteenth century and

settled in the parts of the city of London now called Lombard Street. They were so

resourceful that even the Kings had to depend on them for loans despite of the fact that

the church was firmly against usury.

The business of changing money was so lucrative that King Edward –III established the

office of Royal Exchanger for changing foreign money at a profit for the benefit of the

Crown. After that this business was taken over by the goldsmiths. Since these

goldsmiths required strong safes for the purpose of their own business, they introduced

necessary facilities of safe-keeping of the valuables and cash of their customers. Over

the period of time the goldsmiths discovered that large sums of money were left in their

custody for long periods, therefore they started the use of this cash to advance loans to

other persons for a fixed period of time and at a considerable high rate of return. And

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to encourage deposits they started giving a part of profit earned on the money. Some of

the enterprising goldsmiths issued cheque books to attract their customers. By the year

1700 the Bank of England was not only issuing the notes but also conducting accounts

of the customers. The number of the banks started increasing and the modern banking

flourished.

Banking in Pakistan

the equally urgent task of creating a national banking system. As a result The National

Bank of Pakistan came into being in1949.

Up to December 31st ,1973 there were 14 Pakistani Commercial banks which were

functioning all over the country and in some foreign countries. In 1974, all the

commercial banks were reorganized and merged into following five banks.

1. Habib Bank Limited

2. United Bank Limited

3. National Bank of Pakistan

4. Muslim Commercial Bank Limited

5. Allied Bank of Pakistan Limited

However keeping inline with the policy of liberalization of economy, Government of

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History of Bank Alfalah

istory of Bank Alfalah starts from Bank of Credit and Commercial

International “BCCI”. BCCI was incorporated in Luxembourg on 21st

September 1972 with the paid up capital of US $ 2.5 million. By early

1973 BCCI has established its first four branches in three countries.

H Luxembourg

UAE

UK

With the passage of time the branch network of the bank expanded rapidly bin different

regions of the world i.e. Far East, Middle East, Africa, Europe and Western and Latin

America.

Its founders were an influential and professional team possessing an intimate

knowledge of East Asian and Middle East countries, particularly those with oil

resources and expertise for sophisticated of three most important elements in the early

formation of organization, e.g.

Investors from the oil producing countries of Middle East

A business connection in expanding markets

A well developed and fully equipped management structure

Branches of BCCI in Pakistan

There were three branches of BCCI in Pakistan . These were

Karachi

Lahore

Rawalpindi

The Lahore branch was opened on 15th December 1978. This branch was

opened at that time when some other international banks like Citi Bank, Bank

Of America and American Express etc. were already working. But within a few

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years this branch crossed mostly all other banks in case of deposits, advances,

imports and exports dealing, guarantees, traveler’s cheques, sales etc.

Liquidation of BCCI This bank was going successfully but an international conspiracy compelled its

management to stop its operations. BCCI was liquidated on July 5, 1991. At that time

bank was operating in almost 69 countries of the world. Branches of BCCI in Pakistan

at that time were taken over by Ministry of Finance and SBP.

Habib Credit and Exchange Bank

Banks started its operations with HBL with the name of Habib Credit and Exchange

Bank “HCEB” after valuation of its assets for 15 million Dollars.

Habib Credit and Exchange Bank Limited was incorporated on June 21 st, 1992 as a

public limited company under the Companies Ordinance, 1984 and it’s commenced

banking operations from November 1, 1992.

HCEB was privatized on July 7, 1997. Management was taken over by Abu Dubai

based consortium. The bank was sold for Rs. 1.7 billion and government sold its 70 %

share.

Bank AlfalahFollowing the privatization in July 1997, Bank Alfalah Limited emerged as the new

identity of Habib Credit & Exchange Bank with a revived purpose and commitment on

February 25, 1998.

Charged with the strength of Abu Dhabi consortium and under the leadership of His

Highness Sheikh Nayan Mabarak Al-Nahayan, the bank has already made significant

contribution in building and strengthening both the corporate and retail banking in

Pakistan.

Present Status:

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Despite adverse economic conditions of country, the year 2000 was a milestone for the

bank, both in terms of growth and profitability. The bank’s pretax profit for the year

grew by 12.96% to Pak Rupees 20.48 billion, an increase of 29.50 %, with a balance

sheet footing of Pak Rupees 27.57 billion compared to previous year’s figure of Pak

Rupees 21.02 billion.

After doing successful business in year 2000 to 2003, Bank Alfalah is now looking

forward positively towards the future and its management is confident to build on the

gains realized during 2003. Currently bank is emphasizing on expanding its operations

to meet client’s needs and for this purpose management has plans to add more branches

to existing network in the coming years. Bank has already started its working to go

internationally and its future target markets include UAE, Bahrain, Bangladesh and Sri

Lanka.

Technological developments are opening up new vistas of solutions for distributing

traditional financial products. Concurrently, rapid change in customer preferences has

resulted in a major shift from manual to automated services. Information Technology

today, is all pervading in the corporate world. Bank Alfalah made heavy investments

towards enhancing its capabilities in the area of automation and information

technology. Information Technology department of bank has successfully developed an

advanced computer program named BANK SMART.

Another success of bank is in the area of foreign trade. Bank has developed excellent

business and correspondent relations with renowned banks of the world whose support

in terms of lines of credit has enabled it to handle ever-growing trade volumes.

From above stated facts it is very clear that bank has made remarkable achievements

within a short period of time despite being in the nascent stage. With its key indicators

of progress already soaring to new heights, the bank is committed to put all its energies,

resources and time to bring higher value and satisfaction of its customers, employees

and shareholders.

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Mission & Objective

t Bank Alfalah, it's their commitment to individual service that makes the

customers more than just another customer. And it's the little things that make

them more than just another bank.

ABank Alfalah provides stability and growth of a financial institution along with the care

and attention the customers receive from a neighborhood bank.

They ensure consistent quality service with the continuous rejuvenation of their teams

through training programs.

They are committed to put all their energies, resources and time to bring higher value

and satisfaction to their customers, employees and shareholders.

The introduction and development of innovative financial instruments will be another

major objective of Bank Alfalah Limited.

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Branch Networkank Alfalah’s objective has been to expand its branch network to meet clients’

needs. They have embarked upon a rapid expansion program to make sure that

their services reach more and more people. The bank is well positioned and

geographically poised, to cater for increased business demands. During the year they

have opened many new branches, which spread all over Pakistan covering major

business centers and principal cities. They plan to add more branches to their growing

network in the ensuing years. They are headed towards an ideal network reaching all

major urban centers and will soon go international.

B

Their head office is in Karachi, but presently they are having thirteen braches working

in Lahore. They are as follows:

LDA Plaza Branch (Main Branch)

Gulberg Branch

Defence Branch

Circular Road Branch

Town ship Branch

Badami Bagh Branch

Allama Iqbal Town Branch

Shah Alam Branch

Tufail Road Branch

Baghbanpura Branch

Shadman Market Branch

Stock Exchange Branch

Ravi Road Branch

In total there are about 48 branches of Bank Alfalah countrywide.

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Products & Services

The bank’s primary objective is to provide a wide range of financial products and

services to individuals and various other entities in the country.

They are continuously formulating new products and services for the growing and

diversified needs of their ever-expanding client base.

Bank Alfalah has launched Credit Cards, ATM Cards, and plans to further expand its

online facilities.

Following are the major products of Bank Alfalah Limited, which are prime examples

of quality innovation, providing timely banking opportunities to their customers:

Deposits

i. Saving Deposits

ii. Notice Deposits

iii. Royal Profit

iv. Royal Patriot

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v. Royal Group

vi. Term Deposit

Advances

i. Funded

ii. Non-Funded

Alfalah Car Financing

RTC/TT/DD/FDD/FTT

Credit Cards

ATM

Home Financing

Agri Loan

Karobar Financing

Money Gram

Competitors

Despite notable economic uncertainties, the financial strength of Bank Alfalah Limited

has greatly enhanced during the previous years. The successful expansion program

proved their capability and commitment in comparison with the competition in the

financial sector. The Banking structure in Pakistan comprises of:

Central Bank

Commercial Banks

Investment Banks

Development finance Institutions (DFIs)

Specialized Banks

Foreign Banks

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Bank Alfalah is a private commercial bank so the major competitors of Bank Alfalah

are the following:

Muslim Commercial Bank

Union Bank Ltd

Soneri Bank Ltd

Prime Commercial bank

The bank of Punjab

Bolan Bank Ltd

Bank Al-Habib Ltd

ABL

Faysal Bank Ltd

Platinum Bank Ltd

Departments

Bank Alfalah Limited has the following departments:

Account Opening Department

Trade Finance

Credits

Accounts Department

Administration / Personnel

Special Asset Management (SAM)

MIS Department

Marketing

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Cash & Deposits

Foreign Currency Accounts

Internship Program

I did internship at Bank Alfalah Limited. There I worked in different departments. I

started up with account opening, where I learned about different types of accounts, and

how to open a new account, etc. Here I worked with Mr. Shahid Rasheed Mirza

Then I was sent to Accounts Department where I Worked under Mr.Adnan Younas

After working in Accounts I worked in Credit department. The incharge of this

department is Mr.Rana Qaisar(Alumni of BZU).

Here I learned that how loan is advanced to the clients. And different types of facilities

the bank is providing to its customers. ..

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Account Opening

Section

During my stay in this section, I learnt how to open a new account? How to give

information to a new client? What are the requirements that should be filled before

opening an account and how to issue Chequebooks?

Opening an Account

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By opening an account at a bank a person becomes a customer of the bank. There are

three different types of accounts.

1. PLS / Saving Accounts

2. Current Account

3. Royal Profit

1.PLS / Saving Accounts:

BAL provides the facility of saving account in both foreign and local currencies.

These deposits are an important source of funds for the bank. Customers earn profit

on this account. The profit rate on this type of account is 2.75% annually. Rs. 5000

can open this type of account and in foreign currency this limit is 500.

2.Current Account:

In this account one can easily withdraw the money as bank only keeps the deposit

and does not give the profit / interest on the deposits. BAL opens current account in

both foreign and local currencies.

3.Royal Profit Account:

This account is profit bearing current account. It has the characteristics of both PLS

and Current account. The minimum requirement of amount in this account is Rs

5,000 only. But the customer can get monthly profit if he maintains Rs. 50000 in

his account on average. The profit rate is 2.75% annually. This is the bank’s own

product.

Requirements of Account opening

These type of accounts can be opened.

1. Individual Accounts

2. Partnership Accounts

3. Company Accounts

The requirements of these accounts are as follows

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1.Individual Accounts

The NIC of the account holder is required. If the signatures of the

account holder are very easy then two passport size photographs are

required also. This is called picture account. In case of sole

proprietor ship the letterhead of the proprietor is also required. If

the account holder has got Passport, then the copy of his Passport is

also required.

2. Partnership Accounts

In this case the NIC of the partners, the partnership deed and

instructions to operate the accounts are required.

3. Company Accounts

In this case the following documents are required

Copies of NIC of Directors of the company

Certificate of incorporation of business

Certificate of commencement of business(in case of Public

Limited Company)

Article and Memorandum of Association

Latest copy of Form-29

List of Directors

Copy of Board Resolution

Procedure of opening the accountThe procedure of opening the account is as follows.

1.Account Opening Form:

First of all, the customer fills the account opening form (AOF). Filling of account

opening form includes type of account, currency of account, name, address,

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signature of customer and signature of introducer and attach a photocopy of

national identity card. He also signs an undertaking that he will follow the rules and

regulations of the bank.

2.Introduction:

The signature and account number of the account holder introducing the account to

the new person is obtained on the account opening form.

3.Specimen Signature Card:

The signature of the client is obtained on a specimen signature card (S.S Card). The

card is obtained with two signatures from the customer. Every time a cheque is

received for payment from the client, the signature on the cheque is verified by

comparing it with S.S Card.

4.Requisition slip

A requisition slip for Cheque book is also given to the customer. The customer fills

it and give it to the account opener.

5.Know Your Customer Form

Every account holder fills this form. The basic purpose of this form is to get some

information about the customer.

6.Account Number:

When all the formalities are completed, an account number is allotted to the

customer and all the information is entered into the computer and register. Then that

account number is written on S.S Card and account opening form.

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7.Depositing of amount in account:

The client deposit cash in the account. For this purpose cash pay-in-slip is used. The

minimum initial deposit is fixed for each account according to the nature of

account. For example for PLS / saving account the minimum requirement is

Rs.5,000 only.

8.Issuance of a Cheque Book:

After opening an account with the bank, the account holder makes a request in the

name of the bank for the issuance of a cheque book. Such a request is known as

Requisition Slip. BAL issues cheque books of at least 25 leaves. When he used this

book completely then he can apply for another. This process takes a day because the

Cheque books comes from Karachi head office.

9.Entry of Cheque Book:

Before issuance of a cheque book the bank stamp every leaf with the account

number of the customer, enter it in the cheque book register and computer and

issues the cheque book to the customer after his signature on the register.

10. Filing of AOF:

Account opening forms are basic documents of the contract therefore these are filed

in numerical order and kept for reference.

11. Letter of Thanks:

A letter of thanks is prepared. One letter is for the customer and one for the

introducer. One copy is send to the customer and the other copy is kept in the record

along with other documents.

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Amendments in Accounts:

BAL provides the facility of amendments in accounts, whenever required by the

customers. Account holder gives an application along with necessary documents to

the bank. Then the amendments are made in the account of the depositor. These

amendments can be made by filling certain application forms. These forms are as

follows:

Change of Address Form

To change the address of the account holder

Change of signature form

To change the signatures of the customer.

Liability / Inquiry Form

This form is used if some person has acquired loan from the bank and he wants to

close his current account , then he fills this form and this form is send to credit

department. When the credit department declares him free from any debt

obligations then his account is closed.

Vernacular Form

This form is used when some person wants to sign in any language other than

English.

Mandate to the third party to operate the account

This form is used to enable any third party operate the account.

Closing of accounts

The procedure of closing of account is as follows.

First of all the customer gives the request to close the account.

His signatures are verified.

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He withdraws all his money from his account but in case of current account

Rs. 150 are deducted as a charge of closing the account.

A liability form is send to the credit department if he has taken a loan from

the bank. If he is cleared from all the liabilities then further proceeds are

taken.

Permission is granted by the authorized person (the manager).

Account is closed in the computer system.

Hic specimen signature card is attached with the account opening form and

marked closed.

Clearing

In the clearing I worked with Mr. Riasat. The basic function of the clearing

department is to facilitate the customer; it provides them the services in collection

of their cheque in other banks. CLEARING actually means the transfer of funds

from one branch of bank to the other branch of the same bank or the other bank on

which the instrument is drawn, without involving cash through State banks clearing

house.

NIFT:NIFT stands for National Institutional facilitation Technologies. Clearing House

of SBP has shifted a tiresome part of its work to a private institution named NIFT.

NIFT collects cheques, demand drafts, Pat orders, Travelers Cheques, etc. from all

the branches of different banks within city through its carriers and send them to the

branches on which these are drawn for clearing. After the branches approve the

instruments drawn on them, NIFT prepares a sheet for each branch showing the

number for instruments and amount in its favor and drawn on it and sends it to each

branch. A similar sheet for each bank is also sent to clearing house of SBP where

accounts of banks are settled in the same manner.

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The instruments are collected from the client. Following things are checked.

Cheque date (a cheque is valid for six months and it should not be post

dated).

Title

Amount in figures and words should be same

There should be no cutting and overwriting on the cheque.

Deposit should also match with the cheque.

Stamping Procedure:

In stamping procedure, the pay-in-slip counter foil the following three stamps are used.

If the cheques is for the same bank, and drawer and the payee both have the account in

the same bank, the simple bank stamp is used, and this stamp indicates the transfer of

cheques from one account to another account. This cheque is directly moves towards

posting in computer terminal where the computer operator debit one account and credit

the account of another party. This stamp is known as the Transfer stamp.

If the cheques are received from other bank and drawer’s account is not in the bank

then cheques received stamp is used. This cheque is represented in the clearing house,

date is also mentioned on the stamp.

If the cheques is from out of the city then it is send for the collection.

Stamping On Cheques:

After receiving the cheques and issuance of the counter foil to the client, stamping

process starts on the cheques, the following stamps can be used.

a) The name and branch name of the bank stamp is used on the front side of

the cheques. This stamp is used on all types of cheques. This stamp is

known as crossing stamp.

b) The second stamp used is the clearing stamp on the front side of the

cheques. It also indicates the presenting date of the cheques. If the cheques

is dishonored and deposited again for clearing, the clearing stamp is used

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again with new date of presenting. So the clearing stamp is necessary

wherever the cheques are presented for clearing.

c) The third necessary stamp which is the endorsement indicates the paying

bank to “payees account credited”. It is the confirmation of outward

clearing.

The whole clearing process requires about 2 days, after 2 days the customers’ account

is credited and the customer can make the transactions.

RemittanceIn Remittances I learnt a lot from Mr. Asif Talib Remittance is transfer of funds from

one city to another city or within the city. For this purpose, most commonly used

instruments are

1) Demand Draft

2) Pay Order

3) Telegraphic Transfer

4) Online Transaction

1.Demand Draft:

A demand draft is an instrument in writing drawn by one branch of a bank on

another branch of the same bank for a certain sum of money; payable on demand to

the order of the payee mention therein the draft.

Issuance of Demand Draft:

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The customer makes a request to the banker for a demand draft. The banker gives

him/her an application form to fill and ask him to deposit the amount for which he

needs draft. The client mentioned the name of payee in the favor of which it is to be

paid, the name of branch on which it is drawn and amount of draft on the form and

puts his signature on it. Afterwards, he deposits the amount in cash with the bank.

In case he is Account Holder of the same bank, he can give cheques instead of cash

upon which the banker transfers the amount from his account. When all these

formalities are fulfilled, banker issues him a demand draft. Bank takes charges for

demand draft that are different in different banks according to their schedules of

charges. In bank Alfalah, these charges vary with amount and are as follows:

Internal Process:

After issuing demand draft, bank sends a credit advice to the bank on which it is drawn.

Drawee bank after receiving credit advice gives credit to DD payable Account. When

DD is presented on the cash counter, bank pays cash against it after checking N.I.C of

payee and debits DD payable account. If DD is crossed amount is transferred into

payees account. Posting is also made in the computer terminals for the purpose of

record of the bank.

Issuance of Duplicate DD:

Bank can issue duplicate of demand draft on clients request after taking charges. The

charges are Rs 100.

Cancellation of DD:

Upto Rs 10,000 0.25% Minimum Rs 25

From Rs 10,001 to 100,000 0.20% Minimum Rs 40

From Rs 100,001 to 1,000,000 0.10% Minimum Rs 200

From Rs 1,000,001 to 2,000,000 0.075% Minimum Rs 1,000

Over Rs 2,000,000 0.60% Minimum Rs 2,000

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In case, client wants to cancel the draft he has to make an application with his

signature. Banker checks the signature. Amount of draft is returned to client after

deducting cancellation charges. The cancellation charges are Rs 100.

2.Pay Order:

A pay order is an instrument in writing issued by bank for a certain sum of money

payable on demand to the order of the payee mention within the city, where as pay

slip is used for bank’s internal use.

Issuance of Pay Order:

The client makes a request to the banker for issuance of a pay order. The banker gives

him an application form to fill and ask him to deposit the amount for which he requires

the pay order. The client deposits the amount in cash with bank. If he is account holder

of the same bank, he can give cheque upon which amount is transferred from his

account. After the fulfillment of all these requirements banker issue the pay order to the

customer. Bank takes charges for issuance of pay order which varies from bank to

bank. Bank Alfalah takes the following flat charges.

Pay Order (Account debit) Rs 10 (Flat)

Pay Order (Against Cash) Rs 10 (Flat)

Internal procedure:

After issuing Pay order, banker gives credit Sundry creditors account. Posting is made

in the computer terminal. When Pay order is presented on cash counter bank makes

payment against it after checking N.I.C of payee and Sundry creditors account is

debited. If it is crossed, the amount is transferred into the payees account.

Cancellation and Duplicate issue:

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The procedure for cancellation and duplicate issue of pay order is same as that of

demand draft and the charges are also same. The charges for both the services are

Rs.100.

Tax:

Government of Pakistan has levied 0.3% advance tax on the issue of Pay orders and

demand drafts. If the customer submits tax exemption form to the bank, he is not

charges tax. But if customer does not submit form, he has to pay 0.3% tax on the

amount of pay order or demand draft.

3.Telegraphic Transfer:

Telegraphic Transfer is bank to bank, and branch to branch. The bank has

settlement with other banks according to which the banks can make the payments to

the customer’s account mentioned by the other bank in the TELEX. In this case

proper authentication is must for this purpose.

Process:

Customer obtain a requisition slip and fills it properly

After filling the application from the concerning officer fills the TT form.

This Telegram is send to he required bank.

After receiving the telegram bank immediately makes the payment to the

customer and the vouchers sent to the issuing bank by ordinary mail.

Bank debits the account of the customer or receives cash including charges of

the bank.

TT is made through codes. Bank sent telegrams with codes and in banking

language using the words test.

4.Online Transaction:

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For branch-to-branch transfer of funds on the same day, previously TT was used.

But now banks have adopted a new system known as Online Transfer.

In online transactions cheques of different branches can be paid, fro instance if a

client has taken Online Transaction facility and presents Multan’s cheque to Bank

Alfalah Lahore, he/she can have payment from Lahore. If the cheque has been

cleared from Multan Bank Alfalah, a copy of cheque is made and is faxed to

appropriate branch; the branch then checks the client’s balance, date of cheque and

signature of client. If the cheque is given clearance from the respective branch then

payment is made to client, the branch is then debited and the branch that has made

payment is credited.

Accounts Department

In any Bank the accounts department plays a major role. In Bank Alfalah the burden of

the accounts department is largely reduced because of computerization. The use of the

computer system increases the efficiency and pace of the bank’s work.

Following activities are carried out in the accounts department:

Budgeting

Reports

Funds management

Activity checking

Reconciliation

Foreign exchange, old Account Contracts

Maintenance of fixed assets and calculation of their depreciation

Test Keys

Budgeting

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The main task performed by the accounting department is the preparation of the budget.

Budget is based on forecasting and their own inspiration for future, whereas forecasting

is based on past performance. This is one important task on the basis of which funds are

allocated to various branches and also the targets are determined. The targets

determined Deposits, Advances, and revenues. Every branch prepares its own budget

for the fiscal year and then budgets of all the branches across the country are

consolidated at the head office in Karachi. In this way a consolidated budget is also

prepared.

Fiscal year of the bank starts from January to December. Accounting department starts

preparing the budget from October for the next year.

Before the preparation of budget the bank reviews its sources and funds it has and the

uses of those sources.

The main sources of the bank are the follows:

Deposits, Capital, Borrowing from other banks, etc

The main uses of a bank are the follows:

Advances, Investment in securities, placement in interbank markets,

Other things which are undertaken into account while formulating the budget are:

Income, Expenses, etc.

The revenue target is fixed keeping in view the past performance. The cost of

generating these revenues is also estimated. Then budget of each branch is submitted to

head office for modifications and for approval. After the modification and approval the

budget for a specific branch is being set by the head office. Monthly budget meeting is

held to analyze the monthly performance by all the branch mangers with head office.

The actual performance is compared with the estimated and variance is calculated.

Variance can be negative as well as positive. If there is a negative variance, this shows

management’s inefficiency in controlling its expenses or incompetence in achieving the

desired revenue targets. Proper adjustments are made in the next month’s target

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according to the previous month’s performance because sometimes the goals which are

set by the head office are unrealistic and unachievable.

ReportsIn Bank Alfalah many types of reports are being prepared. These are daily, weekly,

monthly, semiannual and annual reports. These are generated from the main frame and

are used for proper analysis. The following reports are generated daily from the main

frame which are being used by the accounts department for the preparation of their own

reports:

Statement of affairs:

It includes information about assets, liabilities and their balance. Daily position of

deposit and advances are also calculated in this report.

Subsidiary Statement:

This is a detailed report which includes all the information regarding the statement

of affairs.

Income and Expenditure report:

It includes all the details regarding to both the heads of income and expenditure in

detail.

Royal Profit Report:

It includes the details of the deposit of royal profit account.

Currency wise report (ccy):

It provides the details of all the deposits currency wise.

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New Fcy report:

This report includes the information regarding only the new foreign currency

accounts. The old foreign currency accounts are those, which were at the time of

nuclear explosions in Pakistan and were being freezed by the Nawaz Sharif

government.

Sub 66 Report:

It contains income, expenditure, general ledger accounts and their balances.

Now following are the reports, which are being prepared with the help of the above

reports:

Daily position of advances and deposits:

This report is being sent to the head office daily in which the detail is given

regarding the new accounts of deposits and advances.

Statement of affairs:

This report includes assets and liabilities. Two copies of this report are made daily,

one is sent to the area office and one to the head office for analysis but the format is

different for both of them. Statement of Affairs also prepared at the weekend for the

whole week as well as at the end of a month.

Monthly Budget Review Report:

This report is made to review the performance of the month by calculating the

variance. And then if the variance is in negative, positive actions are taken and

reasons will also be mentioned in the report.

Funds ManagementEvery bank in Pakistan has an account with State bank of Pakistan and has to

maintain 5% of the total deposit in the account with the State bank. Funds

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management is done only through the main branch. If the bank has so many

branches in a single city then only the main branch is responsible for the funds

management. Daily a report was prepared and reported to State bank.

The important factors that affect the report are as follows:

Total Deposit (of all branches in a single city)

Opening Balance (closing balance of the previous day)

Inward Clearing

Outward clearing

Cheques issued by State Bank

Cheques Deposited

After all the calculations, a result is obtained which signifies the cash in hand of the

respective day. If the cash in hand is sufficient to fulfill the needs of the State Bank,

well and good other wise if the cash is not sufficient then the other options are

considered.

In case of shortage of funds, the main branch has the following options, which it

can adopt.

1. TT from Head Office:

2. Cover from Head Office

3. Funds from Other banks

1.TT from Head Office:

One solution of the problem is to contact and inform head office about our

respective position and demand for funds. However the most frequent reason, why

this practice is not followed is that State bank has allowed only one TT free of cost

for all the branches in Pakistan.

Therefore we first have to confirm head office that whether or not it is sending TT

to another branch of bank Alfalah. If the head office sends us the TT then it cannot

send any other TT to another branch of Bank Alfalah without charges. The charges

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are also not negligible for example the charges of TT for an amount of one hundred

million is above 60,000. For this specific reason the TT is not encouraged.

2.Cover from Head Office:

The most frequent option used is to inform Head office about the shortage and ask

for cover. The head office then maintains extra amount in its account with State

bank. The extra amount will be the shortage of main branch reported. The main

branch will then pay interest to the head office on a rate of 11.5% per day. The head

office is paid on monthly basis.

3.Funds from Other banks:

In case of funds shortage another bank is contacted with whom the bank has

settlement for instance Emirates bank. If this option is taken the head office is

informed and the head office then pays to the Karachi branch of the respective bank

from which funds are taken.

Activity CheckingActivity checking is the process of the entire banking, which has taken place. A

report known as activity report is prepared on daily basis. The report specifies every

vouchering, which has taken place. Sorting is made according to the mainframe-

generated report. All the vouchers are checked that whether they are properly

posted or is there any transaction left to be posted. This checking makes the

working of the bank more efficient and avoids any loopholes.

ReconciliationBAL prepares its reconciliation statements with

Head Office

State Bank of Pakistan

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Head Office Reconciliation:

All the debit and credit entries of the main office account are recorded in the

statement. Then it is checked with physical vouchers and if there is any problem,

they reconcile it. Head office extract are statements sent by branches to the head

office. They check the outstanding entries, if there is any entry posted by branch but

not by head office they will send their query to the branch and branch will respond

to that query by sending the required document. Head office reconciliation is

carried out in the head office; accounts department handles inquiries.

State Bank of Pakistan:

SBP maintains the account of every scheduled bank including bank Alfalah. The

statement of account reconciliation shows the entries that are passed during the

month in both banks. Bank Alfalah compares the statement with the ledger card of

State bank of Pakistan in which all entries are recorded done with SBP. If any

amount debited by SBP and Bank Alfalah does not credit that amount, it is added in

the balance of the reconcile statement provided by the SBP to BAL.

Maintenance of Fixed Assets and Calculation

of their Depreciation

Account department maintains the record of fixed assets. The accounts department

calculates the depreciation the assets by using straight line method. Depreciation is

the allocation of cost of the asset over the useful life. Depreciation is accrued on

monthly basis and charged at year-end. Department prepares Asset purchase report

and Asset sale report after every six months.

Depreciation is charged at the following rates:

Building 2.5%

Furniture 10%

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Carpets & curtains 25%

Equipment 20%

Vehicles 25%

Test KeysTest is a coding system used to authenticate money transactions between banks.

Whenever money is transferred through TT, the concerned officer requests the

accounting department to apply test to the message. The test is applied to the

message; three copies of this message are prepared. One goes to the test key

department, one to the Telex/fax operator and the third one goes to the department

record. When the TT is received at the other end, this test is verified. The

transaction will be carried out if and only if the test matches with their own test.

Banks have arrangement with other banks with which they have quite a large

volume of business and it is beneficial to have a direct arrangement with these

banks. This test arrangement can be with banks within country and outside country.

For example BAL has test arrangements with ABN Amro N.Y, American express

N.Y, Citibank N.Y, etc. When this arrangement is carried out a test key is provided

to the concerned bank, which contains codes. This test key is different for every

bank. This test key is also different for inward and outward TT.

In local transfer double coding is used and in foreign transfer single coding is used.

Test key tables are to arrive at the code. Separate key table are used for different

banks. Twelve branches of BAL have arrangement for local transfer and three

branches are authorized for foreign transfer. Four things should be carefully

checked because code is based on four things:

Branch name

Currency

Date

Amount

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Test can be applied on nil amounts. The purpose is to just secure the transaction.

Another important significance of test is agency arrangement, which bank built with

other banks. Inquiries originated by any bank regarding the delay of any message are

also solved by the bank. They will check the message and will respond to the query.

CREDITS

The basic function of a bank is to receive deposits (at low rate of return) and to lend

money (at a high rate of return). So, the lending operations of a bank constitute a vital

part of its business. This department is the source of income and earnings for the bank.

Bank’s funds comprises mainly of money borrowed from numerous customers on

various accounts such as saving accounts, current accounts, fixed deposits etc. Whereas

the major part of total income of a bank is generated through the utilization of these

funds.

The credit department is further divided into two departments, which are as follows:

Credit Marketing

Credit Administration

Credit facilities in BAL

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Bank provides two types of credit facilities to its customers. Following are those credit

facilities:

1. Funded

2. Non-Funded

1.Funded:

Funded facility is that facility in which the bank funds are physically involved. It is

further divided into following types:

Current Finance (OD)

Cash Finance (Pledge)

Term Finance

FAPC I

FAPC II

FAFB

LBP

FIM

FATR

Cash Finance (pledge):

This is also a very common form of borrowing by commercial and industrial

concerns, and is made available either against pledge or hypothecation of goods.

This is also known as running finance. It is utilized for the creation of current assets

and to meet the permanent working capital requirements. In this facility, the

borrower is allowed to borrow money from the bank up to a certain limit, either at

once or as required. The borrower prefers this form of lending due to the facility of

paying mark-up charges only on the amount he actually utilizes not the whole limit

amount.

Term Finance:

Term finance is for a fixed period of time, all the amount is transferred to the

borrowers account right in the beginning and interest is charged. The mark-up is

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received in the end on semi annually basis. Term finance has to be paid within a

limit and once it is paid it cannot be taken back by the client.

FAPC I(Finance against packing credit):

Bank provides this facility against LC or sale contract (in favor of exporter). Bank

takes 100% security against this type of financing. This facility is also called Pre

shipment finance. Afterwards bank receives the payment of exports and adjusts the

exporters account. This loan is disbursed by the bank for the preparation of goods

once the L/C is received.

FAPC II (Finance against Packing credit):

This loan is also known as performance-based financing. This type of financing is

against last performance of the exporter. According to SBP exporter can have

finance up to the half of amount of previous year export but then the exporter

should ensure that the exports he makes are equal to double amount of the loan for

one year. The mark-up is charged for the period the exporter has used the facility

and not for the whole limit.

FAFB (Finance against foreign bills):

This facility is also known as post shipment finance. This facility is availed by the

exporter after he has shipped the goods and sent his documents for collection. The

bank purchases the documents form the exporter and give him this facility. He will

take loan against these documents and pays fixed mark-up rate on this facility.

LBP (Local bills purchase):

Local bill purchase documentary is used for inland import export transaction. Other

wise it is same as finance against foreign bill purchased. This is also availed by the

exporter after the shipment of goods and the bank purchases the documents.

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FIM (Finance against imported

merchandise):

Finance against Imported Merchandise (FIM) is a credit facility provided to the

customer, in L/C transaction. In FIM, bank itself makes the payment to the exporter

and the goods are kept in the possession of bank. Delivery order (DO) is issued by

the bank for every time, when the importer makes the payment, goods are

transferred in the possession of importer.

FATR (Finance against Trust Receipt):

The bank also offer credit facility FATR, against sight L/C’s, like FIM. Contrary to

FIM, goods are given in the possession of importer. This facility is provided to the

customer having a credit rating A+.

2.Non-Funded:

Non-funded facility is that facility in which the bank’s funds are not physically

involved. A non-funded facility can any time become a funded one. It can further

divided into the following:

L/C

LG

However in Burewala Branch only L/G is issued

L/C (Letter of Credit):

Letter of Credit, whether sight or usance is a non-fund based facility provided to the

customer. L/C can further divided into sight L/C and Usance L/C.

L/G (Letter of guarantee):

Letter of Guarantee is also a non-fund based facility. Letter of guarantee involves

three parties namely buyer, the seller and the guarantor. The letter of guarantee is

basically bank’s guarantee that the respective person will perform his/her

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duties/services within the appropriate time other wise the bank will pay the loan

amount. When the bank takes the guarantee of the client, a commission is charged

from the customer.

Types of L/G:

Bid Bond

Performance Bond

Security Deposit

Repayment Guarantee

Mobilization Advance

Back to Back Guarantee

Securities for Advances

The advancing of credit involves a great risk for the bank. Therefore, to cover risk, the

bank keeps different tangible and non-tangible securities, before sanctioning the credit

facility to a customer. The bankers prefer those securities that carry less risk of

depreciation due to market fluctuations and are easily saleable, even under changing

market conditions.

The securities used in advances are as follows:

1. Pledge

2. Mortgage

3. Hypothecation

4. Charge

5. Lien on Documents

6. Guarantees

1.Pledge:

Pledge is the actual delivery of the movable and tangible property to the lender, as a

security for a credit. In pledge, the possession of movable assets is with bank but

the ownership remains with the client. Pledge is considered to be the best security

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for the bank. The commodities which are being pledged are normally raw material,

consumables, finished goods and in certain cases work in process (WIP).

Margin:

For every credit, the bank needs security with margin or cushion. The margin

requirements are different for every case. IF, there is 25% margin requirement then to

obtain loan of Rs 1 million, the security that is to be pledged should be have worth of

Rs. 1.25 million.

The possession of the goods is with the bank, so bank keeps these goods in godowns

under the custody of Mucaddams.

People who look after the pledged goods are called Mucaddams. If rice is to be pledged

with the bank, it doesn’t mean that this cotton will be kept in bank, such type of goods

is kept in the godowns of the company. So to make these goods secure bank appoints its

own men called Mucaddams to take care of the stock and also bank has a board of its

own name on the godown.

Precautions:

1. Nature of Commodity:

The banker must be aware of the nature of the property i.e. whether the

commodity is a perishable item. Also the commodity being pledged should be

easily saleable, so that in case of default of client, bank can easily sell it in the

market.

2. Client:

In case of pledge, godowns are in the premises of the clients under the custody

of Mucaddams, whose honesty can be brought at any time. Therefore greater

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risk is imposed by the client. So the bank must be satisfied with the honesty and

credibility of the client.

3. Market Awareness:

A banker must have market awareness e.g. fluctuation in prices. Such

commodities should not be pledged that might have low demand in market and

have many risks attached to it.

4. Suitability of Godown:

Suitability of godown depends upon the nature of the commodity. Banker must

be fully satisfied with the appropriation of the Godown.

5. Proper Valuation:

Whenever goods are pledged, the banker should be aware of the true cost of the

product as the client always overvalues his product. Sales taxes, excise duties

are also paid on the finished goods.

6. Insurance:

The goods offered for security must be properly insured. Banker must analyze

all the associated risks of the goods. So, to cover these risks banker should

decide about the insurance of the commodity.

2.Mortgage:

In mortgage, immovable assets are offered as security. Mortgage means, to

surrender the proprietary rights of the property. The transferor of property is called

a mortgagor and the transferee (bank) is called a mortgagee.

Usually two types of Mortgages are being created in the bank for the purpose of

collateral.

1. Equitable Mortgage

2. Registered Mortgage

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1. Equitable Mortgage (E/M):

When a mortgage deed is attached with the title documents only and is

deposited in the bank, it is known as “Equitable Mortgage” or “Mortgage by

deposit of title deed”. It is the most common form of the mortgage created in

bank.

2. Registered Mortgage (R/M):

When the mortgage deed is between the bank and the client is registered, it

becomes a registered mortgage. Mortgage deed is registered with the Registrar

of the Companies. It is an expensive mortgage and is created when the title

documents are weak or the client is not much trustworthy.

Precautions:

1. Nature and value of the property:

The banker satisfy themselves that whether the property is suitable for security

purposes and in case of sale the bank will not suffer any loss. For this purpose,

the bankers inspect the property and properly visit report is prepared. Also the

bankers hire the services of different valuators to assess the right value of the

property.

2. Investigation of Title:

The banker must be satisfied that his borrower has a good title to the property.

The bankers, therefore, conduct a proper investigation into the borrower’s title

to the property, through their own legal advisors.

3. Search for Prior Charges:

A search is made (with registrar of companies), to ensure that there exists no

prior charge on the property. If the title deeds of the property are in the name of

more than one person, search should be directed against the name of each

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person through whom the title is made. For this purpose, the bank also gets

fresh NEC i.e. Non-Encumbrance Certificate, issued by the registrar indicating

that no lien or charge has been created on property being mortgaged, upto a

specific date.

After a banker is satisfied with the property offered for security, mortgage

against his property is created through “Mortgage Deed”. For this purpose, the

original title documents are deposited in the bank with the mortgage deed.

Along with the title documents of property, the bank requires:

Memorandum of Deposit of the Title Deed

Agreement to create Mortgage

General Power of Attorney (Registered)

3. Hypothecation:

When an immovable property is offered for security against credit but both the

ownership and possession is left with the borrower, the goods are said to be

“Hypothecated”. Securities like machinery, stock etc. are offered for hypothecation.

Lending against hypothecation of goods is very risky. The control of bank is weak

so greater risk is involved in hypothecation.

In case of hypothecation

a) The banker reserves the right to inspect the goods hypothecated to him and

can ask for periodic stock reports, where necessary.

b) The banker, for his protection, may ask the borrower to insure. The banker

may himself do so and recover the expenses from the borrower.

c) The banker may ask the borrower to maintain a balance of goods sufficient

to fulfill the margin requirements.

For the creation of hypothecation, the bank gets the letter of hypothecation signed by

the client. This deed is got registered in case of both public and private limited

companies, with the Registrar of Companies (SECP).

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4.Charge:

Charge means the legal right on the assets of the person (company). In case of

limited companies, banks generally create their charge on the assets of the

company, as security. The charge is registered with the Registrar of the companies

(SECP).

Charge is of many types:

a. First Charge

b. Second Charge

c. Pari Passu Charge

a)First Charge:

The bank who has the first charge means that it has the first right on the assets

of the company in case of liquidation. If other banks also have charge against

that asset then they have second charge after the first one.

b)Second Charge:

Second charge means that the bank has the second right on the assets of the

company, and then afterwards third charge, fourth charge and so on have the

right.

c) Pari Passu Charge

Pari Passu charge means that all the banks who have involved in the Pari Passu

charge have the equal rights. Pari Passu charge can be created for the first

charge, or for the second or so.

5.Lien on Documents:

Like charge, bank creates its lien on the documents in its possession, as security.

For example, in case of import transaction under L/C, bank creates lien on import

documents.

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6.Guarantees:

Along with other securities, bank may rely on other guarantees like other bank

guarantees, to protect himself against the advances.

Processing of LoanThe banker must be very careful and ensure that his depositor’s money is advanced

to safe hands where risk of loss does not exist. When a customer requests his banker

to facilitate him with different credit facilities, the banker first assess the credibility

of customer and the market conditions.

The elements of credibility, integrity, repayment, and market conditions help a

banker in arriving at a conclusion regarding the safety of advances.

Credibility:

It is the most important factor in determining the safety of advances, for there is no

substitute for integrity, honesty and trustworthiness. A borrower’s character can

indicate his intention to repay the advance, since his honesty and integrity is of

primary importance. If the past record of the borrower shows that his integrity has

been questionable then the banker usually tries to avoid such a customer.

Repayment:

This is the management ability factor, which tells how successful a business has

been in the past, and what are the future possibilities are. Before advancing loan a

banker must be satisfied with the sources of the repayment of the funds.

Capital:

The bankers also check the capital of the borrower. This can be kept as a security of

a loan. In other words, if the businessman financial Position is sound, only then he

can be lended.

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CIB Report:

Bank cannot sanction any loan to a customer, until and unless it gets credit report

form CIB (Credit Information Bureau, SBP). Before making any decision about the

client, bank needs a CIB report. Therefore, first of all the bankers requests CIB to

provide the credit report of the client. This report indicates all the credit facilities

outstanding (availed) by the client.

Credit Line Proposal (CLP):

After being satisfied with the credibility and integrity of the applicant, the

processing of loan application starts with the preparation of Credit Line Proposal

(CLP). It has the vital and most important task assigned to the credit officers in

BAL.

In a CLP, every information regarding the client and his business is stipulated as

follows:

Total existing facilities (limit), their outstanding value and the securities that

were provided against these facilities.

Total proposed limit of credit and the securities provided against it. The credit

officer does the analysis and verification of these securities.

Regular Credit Limit:

But if the client wants to route a regular business with the bank, then he requests for

regular credit limit of credit facilities for a specific period. Following things should be

undertaken while preparing a CLP and also being mentioned in the CLP.

Customer’s background, his relationship with the bank (if he is an existing

customer), his relationships with other banks.

Purpose of facility and terms and conditions regarding the client.

Nature of his business and what are the market conditions and opportunities fro

the business.

46

Reciprocal business is also stipulated on the proposal, which means expected

business that would be routed through the bank for these facilities. Bank

calculates his profitability on the basis of this business.

Financial Analysis:

Financial Analysis of the business of the customer constitutes the most important

part of a proposal. Banker makes an analysis on liquidity, leverage and profitability

of his business.

Finally along with other information banker must himself gives his comments and

recommendations for the proposal.

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Ratio Analysis

Ratio means “one number expressed in terms of another “. Ratio is a statistical

yardstick by means of which relationship between two or more various figures can be

compared and measured. The ratio analysis can be done under

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LIQUIDITY RATIOS

COVERAGE RATIOS

ACTIVITY RATIS

PROFITABILITY RATIOS

SPECIAL BANK RATIOS

LIQUIDITY RATIOS

CURRENT RATIO

=Current Assets/Current Liabilities

2001 2002 1.02:1 1.03:1

This ratio tells us about short term solvency of the organization. This shows an increasing trend. So it is good for the bank.

CURRENT ASSETS TO TOTAL DEPOSITS RATIO=current Assets /Total Deposits 2001 2002

49

1.28 1.23

This ratio shows the availability of liquidity to meet its obligations i.e. deposits in case of any contingency. This ratio has a slight decrease.

COVERAGE RATIO

DEBT RATIO= total Liabilities /Total Assets

2001 2002

95.7% 94.3%

The debt ratio measures the proportion of total assets financed by the company’s credit. The higher this ratio the greater is the amount of other people money being used in an attempt to generate profits. So bank is using a great deal of people money to generate profits.

50

ACTIVITY RATIOS

FIXED ASSET TURNOVER RATIO=Markup interest/ Fixed Asset

2001 2002

1.97 2.63

fixed asset turnover indicates the efficiency with which the company uses its Assets to generate sales. Generally the higher the company’s fixed asset turnover the more efficiently its assets have been used. This ratio for the bank is favorable.

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TOTAL ASSET TURNOVER RATIO=Markup Interest/ Total assets

2001 2002

.08 .07

This ratio indicates the efficiency with which the company uses its total assets to generate sales. The higher ratio is favorable for the company. This ratio is satisfactory for the bank.

PROFITABILITY RATIOS

NET PROFIT MARGIN

=Net Profit after Tax/ Total Revenue*100

2001 2002

9.16% 9.62%

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The net profit margin is a profitability ratio which shows the combined effects of

liquidity, asset management, and debt on operating results. For the year 2001 and 2002,

the net profit margin of the bank shows an increasing effect which is encouraging for

the bank , so the bank has enough caution to meet its obligations.

RETURN ON EQUITY

=Net Income/ Shareholders Equity*100

2001 2002

22.82% 27.58%

the return on equity indicates the equity utilization of the company to produce profits.

This ratio tells the shareholders about their expected profits on their equity in business.

The ratio indicates the sharply increasing trend of net profit. This is very favorable for

the shareholders.

RETURN ON TOTAL ASSETS

=Net Profit after Tax/ Total Assets*100

2001 2002

.9% .85%

This ratio measures the total efficiency in generating profits with its available assets.

The higher the return on total assets, the better. The return on total assets of BAL is

showing a slight decrease, which is not favorable.

RETURN ON FIXED ASSETS

53

=Net Profit after Tax/ Fixed Assets*100

2001 2002

15.20% 25.31%

This ratio is also favorable for the bank.

EARNING PER SHARE

=Net Income/No. of Shares Outstanding

2001 2002

3.65 4.46

earnings per share are generally of interest to present or prospective stockholders and to

management. This ratio is favorable for the bank.

BANK RATIOS

TOTAL ADVANCES TO TOTAL DEPOSITS RATIO

=Total Advances/ Total Deposits*100

2001 2002

63.33% 54.79%

This ratio tells us how much of the bank has advanced. This ratio is not very much

favorable for the bank.

TOTAL ADVANCES TO TOTAL ASSETS

54

=Total Advances/ Total Assets*100

2001 2002

48% 43%

this ratio shows the advances which the bank makes as the percentage of its total assets.

If the advances are increasing then the total assets then it is favorable for the bank.

Because there are ore advances, there is more income of the bank and respectively more

profit. This ratio is showing decreasing trend.

FIXE ASSETS TO TOTAL ASSETS

=Fixed Assets /Total Assets*100

2001 2002

4.23% 3.72%

in the bank fixed assts are comprised of equipment, furniture and buildings. These

assets have great importance or the bank in order to maintain the working conditions up

to the mark. This ratio is satisfactory for the bank.

55

56

SWOT ANALYSISBAL is one of the fastest growing banks in Pakistan. In the light of these situations we

can make an analysis.

Strengths:

Bank is in its growing stages so there is good financial position.

Professional and Committed workforce

Low cost than other major banks

Increasing the number of branches in the country

Successfully launching new Product Lines

Well experienced and quality staff

Efficient internal communication system

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Each department in the bank is fully allowed to take adequate decisions of its

own, saving the time and help in achieving the objectives

Weaknesses:

Although the bank is growing fastly but it has some weaknesses which it should

remove to make itself further strong.

Less Advertisement

Slow in introducing new products

The staff is not satisfied with the salary structure

Gives its staff less benefits

Opportunities:

Extension of International network of the branches

Introduction of innovative products

Growing market

ATM facility for all customers

Threats:

Uncertain economic conditions

Action taken by competitors

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Findings and Analysis

The findings and analysis of Bank Alfalah Limited is as follows:

Good Image:

Bank Alfalah has the benefit of having better reputation and image because of

having the strength of Abu Dhabi consortium and under the leadership of His

Highness Sheikh Nayan Mabarak Al-Nahayan. People feel lesser risk for investing

their money with the bank.

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World Class Services:

The bank is providing its customers world class and excellent services. This is the

main reason for the growth of the bank.

Coordination:

Meetings are held very frequently which keeps the head-office well informed about

the performance of its branches and also provides officials with the opportunity to

communicate, discuss and deals with different situations as they arise.

Employee Behavior:

The employees of Bank Alfalah Limited are very committed to their work. They are

very hard working and punctual but some of them have problems with he

environment of the bank and they feel that the branch environment is not very

encouraging.

Recommendations

After doing internship of two months in Bank Alfalah Limited, I have analyzed some

problem in the Bank. Following are my recommendations:

Web Site:

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Bank Alfalah limited has the web site, which has not been updated. The web site is very

less informative and it won’t leave a good impression on the visitor. So I suggest that it

should be updated to meet the requirements of the visitors.

ATM Cards:

At the moment the bank has not introduced its ATM cards for all the customers. The

bank should start its credit card and ATM facility in order to highlight the value added

features offered along with the basic product. As the bank has the good image, they can

use that image as a benefit in this regard. To stay in the competition the bank should

introduce its credit and ATM cards soon.

Marketing:

Bank Alfalah is not very prompt in its marketing like its competitors. Most of the

people in Pakistan know nothing about the bank or its products so the bank should

spend and concentrate more on its marketing through various communication channels.

Misdistribution of work:

In Bank Alfalah, there is misdistribution of work; some people are over burdened with

the work. So I suggest that there should be fair distribution of work in all the

departments.

Participative management:

Participative management concept should be adopted, where ideas from the employees

should also be taken, not only for developing products but also on service, efficiency,

employee morale etc. in order to improve them.

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Split Units:

Bank Alfalah is a very well established bank, but the number of air conditioners they

have in the whole bank is very less. Bank should increase the number of its Split units,

because summer stays longer in Lahore.

Fax Machines and Photocopying Machine:

The number of Fax machines and photocopying machine in the bank are also less than

they are needed. For photocopying one has to go downstairs. So there should be more

machines and also their placement should be at the right place.

Training programs

BAL should introduce more training programs for their employees. It will help less

educated and less experienced staff to grow and be a valuable part of the bank.

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Conclusion

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At present there is no such organization in the world that is free from problem and

challenges. Every concern has to strive and struggle a lot to be more profitable and to

get more competitive edge.

The management of BAL is taking strategic steps to enable the bank to emerge as a

strong and progressive institution. It is continuing to make efforts to refine its products

and operations to make them more compatible. New deposit schemes have been

introduced and an action plan to maintain revenue growth in future.

As the business and economic conditions remain uncertain, BAL continues to develop

the new products like it has been doing in past.

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