ACKNOWLEDGEMENT All praises to Almighty Allah, the one and only, the Merciful, Beneficent and

Compassionate. Billions of Darood-o-Salam upon Muhammad (PBUH) Last Prophet of Allah who is savior of humanity. This report is one of the necessary elements to get the Master of Business Administration Degree from Allama Iqbal Open University . I hope that this report will give a detail and true picture of organization and what I did and learnt during my internship program. I have also tried my level best to obtain as accurate data and present all what I have learnt in the following pages. I am sure that the department of business administration will oblige me by giving its recommendation and consent for the approval of the degree and the purpose which I have gone through internship and report writing procedure will be served positively. In order to accomplish the task of completion of the degree, I choose the renowned and esteemed organization that is The Bank Alfalah . It is my good luck that, I receive full cooperation and encouragement from my loving parents for the achievements of my tasks. I am thankful to Mr. Muhammad Javed Iqbal (BAL) and Mr.Abdul Ghafoor (BAL) for their nice cooperation.

Outline of Contents 1. Executive Summary 2. Objectives of Studying the organization 3. Overview of the Organization 3.1 3.2 3.3 3.4 3.5 3.6 History of the Organization Nature of the Organization Business Volume No. Of Employees Product Lines Detail

4.

Organizational structure of the Human Resource Management (HRM)

department

4.1 4.2 4.3 4.4 4.5

Human Resource Management Process in the organization: Human Resource Planning (HRP) and Forecasting HRP process Forecasting HR requirements Methods to forecast HR needs

5.

Employee recruitment and selection 5.1 5.2 5.3 5.4 Sources of candidates: Internal sources External sources Employment selection process

6.

Training and development 6.1 6.2 Training need assessment Employee development

7.

Performance Management 7.1 Setting performance standards and expectations

7.2 8.

Performance reports writing procedure

Employee compensation and benefits 8.1 Types of compensation and benefits

9.

Organizational career management 9.1 Employee job changes

10.

Job changes within the organization 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 Promotion Transfer Demotion Separations Layoff Termination Resignation Retirement

11. 12. 13. 17. 14. 15. 16.

Labor Management Relations SWOT Analysis HRM process in the organization. Competitor Analysis Recommendations References & Sources Annexes / Appendices. 16.1 Annexes 16.1 16.2 16.3 16.4 Organization Chart of Head Office Organization Chart of Branch Organization Chart of Finance & Accounts Department Latest Five Years Income Statement

1. Executive Summary The evolution of Bank Alfalah signifies a movement from concept to reality; a reality to bring about a change in the banking industries of Pakistan; offering an alternative way of banking; providing people an opportunity to practice beliefs in their financial matters. Following privatization, Bank Alfalah emerged as new identity of Habib Credit and Exchange Bank with a revived purpose and commitment. Charged with the strength of Abu Dhabi consortium and under the leadership of His Highness Sheikh NahayanMabarak Al-Nayayan, the bank has already made significant contributions in building and strengthening both corporate and retail banking sector in Pakistan. At present the bank has expanded its operations across Pakistan in 74 cities with 189 operational branches. However, it has total 195 branches that include 23 Islamic Banking branches, five overseas branches three in Bangladesh and two in Afghanistan and one offshore banking unit in Bahrain. It is pertinent to note that all of its branches commenced their operations in Real Time Online Mode. Today Bank Alfalah is the fifth largest Banking operation in Pakistan. Since its inception, it has registered the fastest growth rate ever witnessed by any Banking operation in Pakistan. Bank Alfalah continues to grow in a robust manner amidst considerable volatility in the banking industry. The bank is striving to prosper in terns of financial returns and the value it continues to provide its shareholders especially when tighter spreads are exercised and margin are compressed due to high interest rates as a tool to curb inflationary pressures. The profit before provisions and taxation of your bank for the year 2008 stood at Rs. 3.264 billion which was 10% higher than that of last year. The deposit grew by 7.7% and stood at a figure of Rs. 239.509 billion while advance portfolio grew by 26% and showed a figure of Rs. 149.999 billion. . The most valuable asset of any financial institution is its human resource. Bank Alfalah has at present a dedicated and commendable workforce of around 6,543 staff

members other than outsourced. The training and development centre remains at the helm of imparting training and related skills, not to only fresh recruits but also to existing employees. Bank Alfalah has in place the state-of-the-art Training and Development Center both in Lahore and Karachi for equipping the personnel of Bank Alfalah with tools that help carve a brighter future. Its philosophy in this regard is that training is indispensable in not only enhancing organizational effectiveness but also individual job satisfaction. Bank Alfalah has lined up a number of innovative products. These include Alfalah credit cards, AlfalahHilal cards, Bank Alfalah Car finance and Leasing, AlfalahMilkiat finance, AlfalahKarobar finance, Bank Alfalah Home finance, AlfalahZariesahulat, Money gram, Alfalah Phone banking and online baking. Designing the product portfolio of bank in response to the customers preferences, the product like Royal Profit,Alfalahkifayat scheme, are prime examples of quality and innovation providing timely banking opportunities to the customers of bank. Being an active player in banking sector in Pakistan, they are confident that with the commitment of their team they will be able to gain the reputation of the fastest paced financial institution. To make their banking solutions become accessible to more and more people, they have embarked upon a rapid expansion program, aiming to provide a networking that makes the services available to any of their customers in all the major urban centers of Pakistan- with a view to go international in the near future. With their key indicators of progress already soaring to new heights, the bank is committed to dedicate all its energies, resources and time to bring higher value and satisfaction to their customers, employees and shareholders.

The graph of bank is going up and up every year. The ratio of profit is increasing at good percentage. The bank is serving the people at high level of standard by going according to the whishes of the customers.

2. Objective of Study the Organization The primary purpose of the internship is to fulfill the academic requirements of my study. The secondary purpose of the internship is to evaluate the banking practices, in corporate world and to compare these practices with the contemporary banking practices. The purpose of the study also is, to do practical work, in the field and apply the knowledge of classroom lectures to the real life situations, which thus enables a student to be a future banking practitioner. Besides this, some other purposes are associated, which includes: To give a comprehensive review of BAL. To analyze BAL organizational, financial and other aspects. To identify the areas of the bank where there is some room for improvement. To present some feasible solutions for the problems pertaining to BAL. To apply the knowledge gained in practical field.

Merits of the Report The study conducted will benefit the finance students in particular and banking students in general because the third chapter of this report comprehensively encompasses most of the aspects of banking, followed by SWOT analysis, conclusion and recomendations. Furthermore, BAL branch Abbottabad may also benefit from the recommendations made at the end of the report. Scope of Work/Report Banking has a very broad scope. In only six weeks of internship, it is very difficult to understand each and every aspect of bank. Due to the barriers of limited time and space, the scope of work is usually confined. However this study of BAL will help the management to identify their weaknesses and threats and over come them by using their strengths and capitalizing on the opportunities. This internship report will be source of financial data for all those who are interested in financial statement analysis of BAL.

Methodology of the Report. This study involves two types of data for report writing. Primary Sources: Interviews and discussion with staff members Personal observations

Secondary Sources Annual reports of BAL Brochures & Manuals. Websites Newspapers Previous Internship Reports.

3. Overview of the Organization 3.1 History of the Organization

Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited company, under the Companies Ordinance 1984. Its banking operations commenced from November 1st, 1997. The bank is engaged the in Islamic Banking banking, Companies

commercial banking and related

services

as defined in

Ordinance, 1962. The Bank is currently operating through 195 branches in 74 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Management of Bank Alfalah accepted the challenge to transform this bank into a highly professional, most efficient & service oriented institution. The management has been successful in fulfilling the undertaken challenge. It has been successful in making a significant contribution to both corporate and retail banking in Pakistan. Over the years, its emphasis on growth has resulted in a strong entity capable of offering high quality services to a wide spectrum of clients, in a highly challenging business environment. Its strategy is to maximize the synergies of branch network through an optimal allocation of financial resources in the face of dynamic challenges of present financial environment. Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set out by its board of management, the Bank has invested in

revolutionary technology to have an extensive range of products and services. This facilitates their commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers. The bank perceives the requirements of its customers and matches them with quality products and service solutions. During the past ten years, we have emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow today. Bank Alfalah Limited has continued its upward climb in pursuit of excellence. Strengthened by the backing of the Abu Dhabi Group and driven by strategic goals set out by its Board and management, Bank Alfalah Limited increasingly inspires trust and

confidence of all its clients. Within a short span of time the bank has carved a significant niche for itself in the banking industry. These achievements have been preceded by concerted effort to provide highest levels of service and value to our customers. The bank aims to further enhance performance standards through implementation of innovations in both products as well as customer care, by discovering newer avenues of client benefit. This customer-focused strategy has enabled Bank Alfalah Limited to evolve as a single source financial service provider of corporate and retail banking services. Bank Alfalah reputation has been built on its tradition of high quality and the expertise of its extremely motivated and qualified staff. With strategic mergers and acquisition, Bank Alfalah has become a leading player in the global banking arena. The Bank Alfalah Limited team comprises of dedicated professionals equipped with a diverse array of skills, vast experience and pro customer attitudes. The management concentrates its energies on making informed economic decisions, translating it into greater returns for our investors and customers. This prudent attitude has created a synergistic organizational structure leading to improvements in profitability and a sustainable competitive advantage for the bank. A Highly Responsive Product Portfolio isnot only comprehensive but also customizable to match the needs and preferences of the customers. These characteristics of the portfolio have helped Bank Alfalah Limited to face challenging economic conditions. The product lineup continues to fulfill and satisfy the banking requirements of not just the conventional consumer, but the demanding financial needs of the corporate sector as well. Today, as Pakistan moves into the 21st century with its ambitious expansion and development programs, Bank Alfalah is here to join the efforts to help the country meet its growth objectives. The bank offers an extensive range of financial services specifically designed to cater to the needs of its successful associations with the Government and Private Sector. Bank Alfalah Limited (BAL) is a banking company incorporated in Pakistan on June 21st, 1992 as a public limited company under the Companies Ordinance 1984. Its

banking operations commenced from November 1st 1992. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance 1962. The Bank is currently operating through 238 branches in 75 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Since its inception, the management of the bank has implemented strategies and policies to shape a distinct position for the bank in the market place. Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set out by its board of management, the Bank has invested in revolutionary technology to have an extensive range of products and services. This facilitates our commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers. We perceive the requirements of our customers and match them with quality products and service solutions. During the past seventeen years, we have emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow today. 3.2 Nature of the Organization

Bank Alfalah is a profit organization. Its profits in 2011 are as follows. Profit before provisions and taxation 9,757,522 Provisions (net) Profit before tax Tax Profit after tax Earnings per share (4, 323,804) 5,433,718 (1,930,588) 3,503,130 Rs. 2.50

10

DIVIDEND:

The directors recommend the payment of cash dividend @17.50 subject to approval of shareholders.

OPERATING RESULTS:

During the year Banks profit before tax stood at Rs. 5,433.718 million compared to Rs. 1,368.745 million for the previous year.

11

VISION
To be the premier organizations operating locally and internationally that provided the complete range of financial services to all segments under one roof

12

MISSION
To develop and deliver the
most innovative products, manage customers experience, deliver quality service that contributes to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank

13

3.3

Business Volume
All Figures are in Rs. million 2004 2005 2006 2007 2008 2009 2010 2011

OPERATIONAL RESULTS Total Income 5,24 6 Operating Expenses 1,18 4 Profit before Income Tax and Provision Profit before Income Tax 895 948 7,42 5 1,80 3 3,59 3 3,50 6 Profit after Taxation 446 2,12 3 7,14 0 2,67 9 2,02 6 1,65 4 1,09 2 14,51 5 4,34 4 2,96 6 2,56 3 1,70 2 1,763 2,566 3,264 5,918 24,416 31,82 2 8,28 9 6,90 6 4,53 6 3,13 0 35,78 9 9,95 7 3,83 1 1,79 5 1,30 1 40,7 43 11,0 02 4,71 1 1,01 6 897

BALANCE SHEET Shareholders' Equity 1,61 6 Total Assets 65,16 7 Advances - net of provision 28,31 9 Investments - net of provision Deposits and other accounts 24,47 0 51,68 5 3,75 3 98,95 2 49,21 6 28,90 4 76,69 8 4,36 9 154,83 5 88,93 1 35,50 3 129,71 5 6,73 8 248,31 4 118,86 4 57,41 6 222,34 5 239,509 56,502 149,999 275,686 10,573 13,76 7 328,89 5 171,19 9 88,49 2 273,17 4 14,60 9 348,99 1 191,79 0 75,97 3 300,73 3 19,7 70 389,0 70 188,0 42 99,1 60 324,7 60

OTHERS Imports 33,87 9 46,80 7 78,47 2 116,21 0 119,937 184,30 5 190,28 9 197,3 04

14

Exports

33,05 7

44,27 3

57,31 7

71,84 7

70,844

79,09 0

93,40 6

100,4 93

RATIOS Capital Adequacy % 8.70 8.45 8.16 8.66 9.48 9.85 8.03 12.4 6 Profit before Tax ratio (PBT/Gross mark up income) Gross spread ratio (Net mark up income/gross mark up income) Income/Expense ratio Tim es Return on Average Equity (ROE) Return on Average Assets (ROA) Advances/Deposits Ratio Cash Dividends Stock Dividend % % % 54.7 9 25 33.3 3 Book value per share excluding revaluation of Assets
Rs.

19.6 7

86.9 2

29.4 3

20.9 3

12.11

17.5 9

5.80

2.86

31.6 2 4.43

49.7 1 4.12

56.6 9 2.67

41.1 7 3.34

28.12

35.5 4

33.8 2 3.59

30.6 7 3.70

4.13

3.84

29.9 5

79.0 8 2.59

26.8 9 0.86

30.6 5 0.84

20.37

25.7 2

9.17

5.22

0.85

0.67

1.04

0.38

0.24

64.1 7 25 100.0 0

68.5 6 25.0 0

53.4 6 12 -

62.63 33.33

62.6 7 30.0 0

63.7 7 15% 23%

57.9 0 12.5 %

16.1 6

18.7 7

17.4 8

22.4 6

21.15

21.1 8

18.2 7

14.6 5

Book value per share including revaluation of Assets

Rs.

36.5 3

23.7 9 8.49

21.0 5 3.90

24.8 8 3.92

24.48

24.9 5

21.3 2 1.41

16.4 1 0.71

Basic Earnings per share No. of Employees

Rs.

2.23

2.91

3.92

15

(other than outsourced)

N o.

1,50 4

2,13 3

3,35 2

5,21 8

6,543

7,37 1

7,58 4

7,46 2

16

17

3.4

Number of Employees

Years

2007

2008

2009

2010

2011

No. Of employees

7371

7584

7462

7571

7580

3.4 Product lines Product and services General Banking Deposit Accounts

Financial services Structured Finance Trade finance Lease finance SME AlfalahKaraobar Finance AlfalahMilkiat Finance Alfalah Quick Finance

Agri finance

18

Consumer finance Credit cards Home loans AutoVehicle loans Prepaid card Debit cards

Islamic banking Personal Banking Corporate Banking Consumer Banking

Important products Car Financing: Car Financing is one of the major renowned product of Bank Alfalah and can beutilized in terms of Financing of Used Vehicles, Loan against Car, Balance TransferFacility, Refinancing Facility (only for Alfalah Customers) and it is characterized interms of: Lowest Mark up Lower Insurance Quick Processing Lower Down Payment

19

Home Loan Major features of Bank Alfalh Home Financing are Lowest Mark-up, Quick Processing, Multiple Repayment Options and Free Valuation. It has been bifurcated in terms of Home Buyer, Home Construct, Home Improver, Home Balance Transfer Facility.

Financing Limit upto: Rs. 10,000,000/Tenure upto: 20Years Equity Participation: 30% Borrower / 70% Bank

Debit cards Bank Alfalah Limited presents AlfalahHilalCard, the first Visa ElectronInternational Debit Card which gives an unlimited access to current / savings accountwith a simple swipe, at millions of retail shops and ATMs, worldwide. The AlfalahHilalCard comes with a host of conveniences and benefits combined with the wide reach ofVisa Network enabling it to be accepted at more than 840,000 ATMs and 13 million retailoutlets around the world, making it the most acceptable Debit Card available in Pakistan

20

Credit card Bank Alfalah Credit Card is globally accepted and welcomed at locations displaying the VISA logo. It is accepted at over 29 million locations in more than 200 countries around the globe and over 27,000 Bank Alfalahs establishments in Pakistan.

No Joining / Annual / Renewal fee (except Platinum cards) Electricity, Sui Gas, PTCL and Warid bills payment through 24 hour Call Center and Auto Debit instructions

SMS for card usage, mini statement, payment receipt confirmation, etc. Cash withdrawal at all 1LINK ATMs Special offer on Waridpost paid connections It is accepted at over 29 million locations in more than 200 countries around the globe and at over 27,000 establishments in Pakistan. Platinum Card Titanium MasterCard is globally accepted and welcomed at locations displaying the MasterCard Titanium Card logo. A perfect card combination for all segments of salaried & professional individuals. Gold Card All Bank Alfalah basic credit card members can apply for supplementary cards for their sons, daughters Supplementary (Children who are above 13 years of age), house staff Card or anyone.

21

Islamic Banking A separate division is a recently initiated, which operates as separate branch. It offers Shariah Compliant products through a network of five branches. Islamic Banking has launched following products with the perception that these are in accordance with the Shariah Principles.

AlfalahMasharaka Homes Murabaha Finance Aflalah Car Ijarah

Corporate and Structured Financing The portfolio concentrates on all aspects of conventional banking as well as the financial needs of corporate sector including dynamic and high value product. Loaning against securities Letter of Credit Letter of Guarantee Demand Finance Cash Finance

Automated teller Machine The bank offers 24 hours self service banking facilities to its customers on countrywide basis through deployment of Automated Teller Machine. This system allows thebanking facilities such as cash withdrawals, cash deposits, and funds transfer, balanceinquiries, account statements.Electronic cash dispensing facilities are available in majorcities of Pakistan. All ATMs are linked through a state-of-the-art Satellite BasedCommunication System which offers 24 hours real time service.

22

Customers of Bank Alfalah Accounts for customers Minor Account Illiterate Person Account Individual Account Proprietorship Account Partnership Account Limited Companys Account Current Account PLS Savings Account Royal Profit Basic Banking Account AlfalahKifayat AlfalahMahanaAmdan Alfalah Education AlfalahKamyabKarobar

Types of accounts shows that bank Alfalah has all types of customers like businessman, individuals, salaried persons, companies, institutions, students, employees, retailers, manufacturers etc. Every type of account is specially made for nature of work a person performs. For example royal profit is made for rich persons and minimum deposit requirement is of Rs. 50,000 only. Customer receives higher returns on higher balances.

AlfalahMahanaAmdan is a 3 year TDR with expected rate of profit of 10% p.a. This term deposit will provide an opportunity to individual/joint customers to enjoy higher returns that will automatically be credited to his/her current/PLS/RP/BBA account on 1st working day of each month. This facility is not available for business and corporate customers

23

4. Organizational Structure HRM Department. 4.1 HR department hierarchy

24

4.2

Humane Resource Planning and Forecasting

The Board The list of Board of Directors of Bank Alfalah Limited is as under: H.H. Sheikh NahayanMabarak Al-Nahayan. Mr. Abdulla NaseerHawalled Al-Mansoori. Mr. Abdulla Khalil Al-Mutawa. Mr. Omar Z. Al-Askari. Mr. NaeemIqbal Sheikh. Mr. Ikram-ul-MajeedSehgal. Mr. Muhammad SaleemAkhtar.

The core group

25

In the core group, there are 2 committees, i.e., Board Advisory Committee. Executive Committee. Board advisory committee Mr. Omar Z. Al-Askari. Mr. Abdulla K. Al Mutawa. Mr. GanpatSinghvi. Mr. Bashir A. Tahir. Executive Committee Mr. Mohammad SaleemAkhtar. Mr. Ikram-ul-MajeedSehgal. Mr. Parvez A. Shahid. Mr. Tanveer A. Khan. Mr. Mohammad Yousaf. Mr. M. WaqasMohsin. Auditors A.F. Ferguson & Co. Chartered Accountants. ORGANIZATIONAL CHARTS

26

President (CEO) Senior Executive Vice President

Executive Vice President Senior Vice President Vice President Assistant Vice President Officers Grade I, II, III

27

Clerical Staff Cashier Typist Clerks &

Non-Clerical Staff Guards Messengers

Assistants

4.2

Branches

Branch Network of Bank Alfalah Limited

28

4.3

Various Departments Details

Departments Worked During Internship With an intention of grooming the best executives of the future, the Institute of Business & Information Technology has organized a comprehensive internship-training program. All of us were placed in leading organizations of business arena to gain first hand

29

knowledge and insight into their management and working. So, when I was given the chance of selecting an organization, I opted for Bank Al-Falah. Getting a chance of working in Bank Al-Falah proved to be very beneficial for me. I think that I gained comprehensive insight into the working of a bank. But nothing could have been possible without the co-operation and guidance of the officers of BAL. I did my internship at Bank Al-Falah Limited Liberty Market Branch, for a total duration of six weeks. It is relatively a small branch with a limited number of departments. Total number of employees in this branch is sixteen.The Branch is running smoothly under the leadership of Mrs.AasmaMushtaq, who is the branch manager of Bank Al-Falah Liberty Market Branch. The departments that I worked during this time are as follows:

Departments Accounts Opening Operations Account Car Financing Accounts

Duration 1 weeks 1 weeks 1 week 1 week

Department Types of Accounts

30

There are three types of accounts and are as follows: A (Current Account Individuals Partners, companies associations, Clubs, Societies, and NGOs are eligible to open current account. Salient features are as follows: Requirements Minimum initial deposit Rs.10, 000/Minimum average balance Rs.10, 000/There is no restriction on number of transaction. There is no limitation on amount of withdrawal. Low balance penalty of Rs.50 per month is charged. Business or job must be required for opening all type of Introduction is necessary. Identity cards copy is required. Original must be seen. B) Foreign Currency Accounts Accounts.

Both resident and non-resident Pakistanis as well as foreigners can open foreign currency accounts. Foreign currency accounts can be opened either as savings accounts or current accounts. C) PLS Saving Account

Saving account are designed to mobilizing savings primarily from a large number of individuals and household. Any one or more individuals or partners can open a PLS saving account with the Bank.

31

Requirements Minimum initial deposit is Rs.5, 000/A smaller initial deposit can be accepted at the discretion of branch management if average deposit is expected to remain above RS. 5, 000/-

Profit on PLS saving account is calculated on minimum monthly balance basis. Profit rates are announced and paid biannually in January and July respectively. Profit rate for the period ending is 5% per annum. However profit rates are subject to charge in response to change in the return earned by the Bank on deployment of funds. There are four sub types of each account which are as follows: A.)Individual Account This type of account is for the customers who are interested in personal/individual account and such customers can be a salaried person, a sole proprietor who does not want to open their account on the name of company, a housewife. B.)Sole Proprietor Account This type of account is only for the customers who want to operate an account on the name of their company. C.)Joint Account This type of account is for the customers who want to operate joint account and this type of customer can be a house wife, a salaried person, a sole proprietor and a student as well. D.)Partnership Account This type of account is limited only for the partners of one business and maximum limit of partners for an account is three.

32

Required Documents Documents required under opening an account are as follows: Documents for Individual Accounts a. Original CNIC, b. One copy of any family member CNIC for next of kin, c. In case of business, business proof (letter head of company or visiting card), d. In case of job, job certificate, e. Introduction of any account holder of BAL(account holders who are operating photo account cannot introduce any one), f. Deposit.

Documents for Sole Proprietor Account a. Original CNIC, b. One copy of any family member CNIC for next of kin, c. Business proof (letter head of business and visiting card), d. Stamp, Name of company Proprietor e. Introduction of any account holder of BAL, f. Deposit, g. National Tax Number.

Documents for Joint Account a. Original CNIC of all members, b. One copy of any ones family member CNIC for next of kin,

33

c. In case of business, business proof (letter head of business and visiting card), d. In case of job, job certificate, e. In case of student, student proof, f. Introduction of any account holder of BAL, g. Deposit,

Documents for Partnership Account a. Original CNIC of all members, b. Partnership deed, c. If instructions for operating account are not given on partnership deed then instructions are required on letter head of company, d. Stamp, Name of company Proprietor e. Introduction of any account holder of BAL, f. Deposit, g. National Tax Number.

Three passport size photo graphs are also required but only in case customer is unable to signature or as well as due to shaky signatures.

D)

Royal Profit Account

It is a special product of BAL. It can be treated both as a current account and saving account. It can be treated as a current account only in case of businessmen as they cannot open saving account. But by opening royal profit account they can earn profit on the money deposited. In this account minimum average balance should be Rs.50, 000. Every

34

month profit is transferred to the account of client. The method of calculation of the profit is the Average Balance Method- (i.e. average balance of one month) and is paid monthly and calculated daily basis. High returns on higher balances.

E) Alfalah Mahana Amdan Alfalah Mahana Amdan is a 3 year TDR with expected rate of profit of 10.5% p.a. This term deposit will provide an opportunity to individual/joint customers to enjoy higher returns that will automatically be credited to his/her account on 1st working day of each month, but it depend upon customer when he want to take profit at monthly basis or yearly it is mentioned at form. Some salient features 1. Minimum placement limit is Rs. 100,000/- and maximum placement limit is Rs.15,000,000/2. Expected Rate of profit is 10.5% Per annum (as per PLS governing rules) 3. Profit will be automatically credited on the 1st working day of each month into customers account. 4. Free Personal Accident Insurance coverage up to the deposit amount or Rs. 1,500,000/- whichever is lower. 5. Customer can avail financing facility up to 90% of the deposit(as per banks policy) 6. Any Pakistani resident over the age of 18 can open this account 7. AlfalahMahanaAmdan term deposit can be maintained only at any one BAL branch with a maximum capacity of Rs 15 Million. An undertaking shall be obtained from the customer certifying that he/she is not availing AlfalahMahanaAmdan Term Deposit Receipt facility from any other BAL branch. AlfalahMahanaAmdan TDR will be issued for three years tenure with auto renewal facility of principal amount i.e. the facility will be renewed automatically on maturity.

35

AlfalahMahanaAmdan TDR will be subject to Zakat, Withholding Tax as well as any other applicable taxes. 1. Is the customer required to have a checking account with BAL? Yes. The Customer must be maintaining a Pak Rupees checking account with BAL and TDR facility shall be availed from the same branch.

2. What is the minimum & maximum placement limit for availing this facility? Minimum placement limit is Rs. 100,000 and maximum placement limit is Rs. 15,000,000. 3. What is the tenure of this TDR? The AlfalahMahanaAmdan Term Deposit Receipt will be issued for three years tenure with auto renewal facility. 4. When will the profit be credited in the account? Profit will be credited on 1st working day of each month to the customers account after deducting applicable WHT, etc. 5. Is there any detailed medical examination required before the facility can be availed? No medical examination/health declaration is required. 6. How insurance benefit will be given in case of joint account? In case of a joint account the amount of insurance cover will be proportionately divided (equally) among the joint account holders. 7. Is premature encashment allowed? Yes, premature encashment is allowed. However, in such cases system will calculate profit amount at the prevailing rate of normal TDR depending upon the nearest period bracket completed. For example, if premature encashment is made after 1 year & 11 months, the 1 year prevailing profit rate of normal TDR will be applied on number of days funds remain placed with the bank. Rate differential on already paid profit will be adjusted from the principal amount. 8. How many AlfalahMahanaAmdan TDR facilities can be availed by one customer?

36

Customer can maintain AlfalahMahanaAmdan Term Deposit only at any one BAL branch, with a maximum capacity of Rs. 15 million. An undertaking shall be obtained from the customer certifying that he/she is not availing AlfalahMahanaAmdan TDR facility at any other branch. 9. What shall be the procedure if a customer is found maintaining more than one AlfalahMahanaAmdan TDR facility at any other BAL Branch?

In case a customer is found maintaining placement at more than one branch than all subsequent AlfalahMahanaAmdan Term Deposit Receipts availed at any other branch shall be treated as normal TDR and profit shall be paid as per prevailing normal TDR rates. Rate differential on already paid profit will be adjusted from the principal amount.

Account Opening Form The first step is to fill an account opening form by the applicant. Following information is to be given:

Currency of Accounts One of the following choices is to be ticked: 1) PKR Type Of Accounts The account opened can be PLS/saving, current, royal profit account. And BBA account. Joint Account In case of joint account more than one person can operate the account. However instructions are to be concerning the operation of the account i.e.: Jointly: In this case account cannot be operated if signature of anyone of the account holder is missing. 2) US $ 3) Pound GBP 4) Euro

Either or survivor:

37

In this case if anyone of the account holder of the joint account passes away the survivor cannot operate the account without getting the succession certificate. Anyone of us: Under this instruction account can be operated with the signatures of any of the joint account holders. Following information is also given on the account opening form: Name in block letters In case of joint account the names of both account holders are to be mentioned. Fathers/husbands name Occupation: The applicant must give exact description of occupation e.g. instead of writing businessman, the nature of business is to be written. Name and address of employer Nationality Country of residence Telephone number N.I.C Number Passport number (if any) Date and place of issue Required in case of N.I.D as well as Passport.

Next Of Kin The name, address and relation are to be specified. This information is required to get information concerning account holder in case he cannot be contacted. The form is not accepted if this information is missing. Type Of Organization One of the following choices is to be ticked: Limited company

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Public Private Partnership Club/society/association Sole proprietorship Others The documents required in each case are different which have been mentioned above. In case of corporate account it is necessary to give following information: Name in block letters Brief description of business Date of incorporation Place of incorporation NTN # Telephone and Fax number

Zakat Deduction Instruction of zakat deduction is to be given. However zakat deduction is compulsory in case of PLS/SAVING ACCOUNTS. But if someone, before the Ramzan submit the Affidavit form then Zakat could not be deducted in the A/C. Details Of Other Accounts Details involve the account number, Bank, and address. However the form is acceptable without this information.

Introducer An applicant has to be introduced by someone. The introducer can only be a person who is an existing account holder of BAL or an Officer of BAL. The applicant has to provider following information concerning the introducer: Name Signature: The signatures are to be verified by an officer. Account number Branch

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Hold Mail Account In case the account holder does not want to receive any correspondence for any reason the account is marked as hold mail account

Signature Specimen Card It is card on which specimen of applicants signature are taken for future reference. Every time a cheque is presented for payment, the signature on the cheque is verified by comparing it with S.S Card. In case of joint account two applicants can sign on one SS card. In case of more than two joint account holders more than one SS card are required.

Cheque Book Requisition Cheque book is issued to the applicant after filling the cheque book requisition. It contains the account number issued to the new account holder, serial numbers (range) of cheques in the book. Checking The Form After the applicant fills the application form it is checked for any missing information. After checking the form it is stamped. Round stamp is used in case of any mistakes. Signatures of the applicant are admitted and that of introducer are verified by using the admitted stamp and verified stamp respectively.

Getting Approval The next step is to get the form approved by at least three higher authorities. Allocating The Account Number After the form is approved the account number is allocated to the applicant and account is opened in the system. Record is maintained in the register as well. The allocated account number is written on the application form as well as SSC.

Initial Deposit

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The applicant is asked to deposit initial amount in the account. The amount is deposited after filling the pay in slip. The initial deposit amount requirement varies with the nature of account.

Filling The Cheque Book Requisition After depositing the amount the requisition slip is filled. Against this requisition slip the cheque book is issued after verifying the signature of the applicant. Every chequeof the booklet is stamped with the account holders name. The cheque book issued contains a requisition slip for future use. Record of cheque books issued is maintained in CHEQUE BOOK ISSUE REGISTER. Scanning Of SS Card The SS cards are scanned by the Cash Department and entered into the system for future reference.

Letter Of Thanks After opening the account two letters of thanks are typed on letterhead of BAL. One is mailed to the account holder and the second one is sent to the introducer.This is done to keep a check on fake introduction Records Of Application Forms All the application forms are kept in record in numerical order. Photo Account In case the signatures of applicant are shaky or in Urdu or he/she uses thumb impression a Photo Account is opened. In this case a passport size photograph is posted on the SS card as well as form. All the cheques are to be signed in the presence of a BAL official.

Form B In case of misplacement of cheque book Form B is filled. The signatures are verified. A new cheque book is issued after canceling the old one. A fee of Rs.100 per booklet is charged. In case of foreign currency account no fee is charged.

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Change Of Address Or Telephone Number If the account holder has to change the address or telephone number he can do so on giving an application on the printed form. The application is filed after making the changes.

Change Of Signatures Or Signatories The account holder gives an application. A new SS card is issued and after getting the new signatures of the account holder it is attached to the old one and kept in record. In case of partnership or company a request signed by all partners or board resolution is required.

Mandate For The Operation Of The Account In case a person wants to authorize another person to operate his account he has to sign a mandate. By signing this mandate he authorizes that person to sign cheques on his behalf. The signatures of that person are admitted in the system just like the signatures of any account holder are admitted i.e. by taking a specimen on SS CARD.

Closing Of An Account

For closing an account balance must be nil for foreign currency, saving and Royal Profit Accounts and current accounts too. An account is automatically closed by the system if it remains dormant for 6 months. Before closing an account a liability form is filled and approved by credit department. Then if the account holder is not liable to pay any sum to BAL, his account is closed in the system. Record is entered in the register as well.

Steps For Opening Accounts After receiving above mentioned documents from customers, steps for opening accounts are:

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a. Account opening form: is filled up (this form contains all the detailed information about the customer). b. Specimen signature card: is filled up and required signatures are taken. c. For issuing cheque book signatures are taken on cheque book requisition slip. d. In case of change signature from NIC, undertaking perform is assigned by customer. e. Online transaction Performa: is filled up. Maintaining minimum average balance of Rs.100, 000. No transaction is to be made for greater than Rs.25, 000. For any transaction of greater amount .02% will be charged. f. If account holder is unable to signature his/her photo account is opened, thumb impressions are taken instead of signatures in the Performa of picture account andpasted his/her two passport size photos in specimen signature card and account opening form. g. In case of partnership account filled up a Performa of partnership account. h. In case of corporate account filled up a Performa of corporate account. i. All the documents are attached with account opening form. j. All the details of customer is entered in computer (and as well as a scanned copy of specimen signature card is also saved.) k. While opening a new account a KYC (Know Your Customer) form is filled up for each customer. This is a form which contains all the detail of customer and is filled up to keep record of customer in one page. l. Account number is given.

(At the end of the week all account opening forms and documents are arranged and attached account number wise and are bind in a folder.)

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Bank Alfalah Issues The Following Chequebooks a. Saving account - 25 to 100 leaves b. Current account - 25 to 100 leaves c. Current account - 25 to 100 leaves d. Foreign currency $ - 25 to 100 leaves e. Foreign currency - 25 to 100 leaves f. If account holder does not come to receive his/her cheque book and send any one else on their own behalf, a photo copy of NIC of that receiver is taken and issued him/her cheque book and then a letter by TCS is sent to account holder that this very person have received your cheque book on your behalf. Customers have to come to receive their first cheque book by their own self, no one else can receive a first cheque book on the behalf of customer.

Indemnity In case cheque book has been replaced a Performa is filled up by customer of indemnity, which is a request for the issuance of new cheque book and as well as informed bank that You will be fully indemnified, safe and harmless from any liability, claim or loss that may arises by the misplacement of my cheque book.

ATM Cards Procedure is: a. ATM cards form and Hillal card Performa are filled up and assigned by customers, (one copy of original CNIC with clear signatures and picture is required from customers). b. Then signatures of customers are verified by officers. c. After signatures verification submission summary of ATM cards is prepared. d. ATM forms, Hillal Performa and submission summary are then sent to area office.

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e.

ATM cards are prepared and TCS to customers within a month.

Banks Statement One who make a remittance. He comes to the issuing or originating branch, ask for a remittance to be made, and deposit the money to be remitted. the bank charges him for the remittance. He may or not be the bank's customers. Remittances Department

Transferring of funds from person to person, and from place to place, constitute the concept of a remittance. Remittance is very important service provided by banks to customer as well as non-customer. It is not a free service hence is a continuous source of income for the bank.

Parties To A Remittance 1. Remitter One who make a remittance. He comes to the issuing or originating branch, ask for a remittance to be made, and deposits the money to be remitted. The bank charges him for the remittance. He may or not be the banks customer. 2. Remitee Also sometimes called the beneficiary, or the payee.The person to whom the remittance is made.The one who receives the payment. 3. Issuing Bank The bank that effect the remittances, through the Demand Drafts, Telegraphic Transfer, or Mail Transfer. 4. Paying Bank Also known as the drawee branch.The branch on which the instrument is drawn. It has to make the payment. (Usually located in a different city or country) Modes Of Transferring Funds In Remittances 1) Demand Draft

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2) Telegraphic transfer 3) Mail Transfer 4) Pay Orders 5) Pay Slip 6) Rupee Traveler Cheque

1.

Demand Draft

Demand draft is a written order, drawn by one branch of a bank upon another branch of the same bank, or upon another bank under special arrangements to pay a certain sum of money to or to the order of a specified person. Demand draft is a negotiable instrument. Demand draft is neither issued payable to bearer nor drawn on branches situated within the same city. It is to be insured that the purchaser of Demand Draft is able to at least sign his name. Thumb impression is not to be accepted on DD. A person unable to sign and not having an account may be advised to apply for DD through a literate person to sign on his behalf. To avoid complications DD are not to be issued to Minors. The followings are the parties to a Draft: Purchases: Is a person, firm, company or local authority.

Issuing or Drawing Branch:This issues a draft on another branch. Drawee Branch: Is one on which a draft is drawn.

Payee: Is a person named in the Demand Draft to whom or to whoseorder the money is directed to be paid.

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Procedure For Issuance Of Drafts

i) An application on printed form is obtain for issue of demand draft. It should be properly filled in and signed by the purchaser. Before issuing the demand draft it must be seen that the cheque is in order and sufficient amount is available in the account of the drawer. If the manager is satisfied with the creditability of the customer, he may issue a demand draft on application and subsequently must obtain a cheque. Application form should be used as a credit voucher, where as the cheque is to be as a debit voucher. The printed number of the cheque in such cases should be reported on the application form of the customer. Precautions for Issuance of Drafts

i) Scrutiny Of application Form ii) Rate of commission / charges i) Scrutiny Of application Form

There should be our banks branch at the place where payment is desired to be made. Full name of the payee should be mentioned. Amount in words and figure should not differ. Purchasers name address and telephone numbers are complete.

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ii) Rate of commission / charges Commission and other charges should be recovered at the rates mentioned in the banks schedule of charges, as advised from time to time; withholding tax will also be recovered wherever applicable.

2) Telegraphic Transfer Transfer of funds from one branch to another branch of the same bank or upon other bank under special arrangements for the payment to the beneficiary through Telegram / Telex / Fax is called a Telegraphic Transfer (TT). Telegraphic Transfer is not negotiable. Telegraphic Transfer of funds to a branch situated with in same city should not be affected. Remittance can be made for credit of the account of the payee / beneficiary if maintaining account with the drawee branch or may be paid in cash. If the customer wants to send amount through TT then he will provide information of the beneficiary like id card number, name. Then bank will make a credit advice and send it to branch on which it should be drawn .Now the beneficiary will go to that branch and show his ID card number and other information and bank will make TTR and customer will get that amount from cash department.

The followings are the parties to a TT i) Applicant: A person, firm, company, or local authority etc who desire to remit funds from one branch to another branch. ii) Remitting or drawing branch: Which remits the funds on another branch. iii) Drawee branch: On which TT is issued.

iv) Beneficiary: The person named in the TT whom the money is payable.

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Precautions for Issuance of TT

Full name of payee / beneficiary or account number should be mentioned in the application form along with his address. Instruction regarding mode of payment should be obtained i.e. whether the amount of TT is credited to the payees account or beneficiary should be advised to receive the amount of the TT from a drawee branch either in cash on proper identification. Special Request for Enhancement of cheque Because there is no real time banking so cheque is scanned and fax that the Head Office.

3) Mail Transfer Transfer of funds from one branch to another branch of the same bank within or outside the city or upon other bank under special arrangement for the payment to the beneficiary through Mail/ Courier services is called MAIL TRANSFER. Mail transfer is not negotiable. The funds remitted by Mail transfer are not payable to bearer. Like TT , funds can be remitted by MT for the credit of the payees Account Or the payee / beneficiary can be advised to receive the amount from the drawee branch either on cash on proper identification

4)

Pay Order Payment order is meant for banks own payments but in practice these are also issued to our customer for making payments.

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A pay order is written authorization for payment, made in a receipt form issued and payable by the bank, to the person named and addressed therein on his giving a proper discharge thereon. It is issued by and drawn upon and payable by the same branch of the bank. It is neither transferable nor negotiable and as such it is payable to the payee named therein. Pay order cannot be issued to a minor. Sometime bank dont want to give its deposits to customer. So in that case pay order is given to that customer and he can use it for making payments. When customer wants to cash the pay order then the amount of the pay order will be debited from the bank. If pay order submit to other bank like MCB then the process of clearing will be adopt.

Following are the parties to a pay order:

i) Purchaser:

Is a person, firm , company or local authority which issues / pays on presentation.

ii) Issuing / paying branch:

iii) Payee: is a person named therein.

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5) Pay Slip

Pay slip is for payment of branch expenses. 6) Rupee Traveler Cheque BAL always provide to its customers different type of services. Which are safe and quality services. RTC is very popular among the people of the country. The bank provides RTC in the following categories 1,000 5,000 10,000 Purchases of RTC The person who wants to purchase RTC is required to fill a form. The form contains name, address, amount or denomination and other necessary information. The purchaser deposits the amount in the bank and gets a voucher from the cashier. And then RTC is providing to the purchaser. Before handing over to the purchaser, signature is taken from him on the RTC and on the copy of form. BAL rupee travelers Cheques are acceptable in all the branches of BAL in Pakistan.

Features Following are some features of RTC. It is acceptable in all the branches of BAL in Pakistan. In case of lost the purchaser inform to BAL in 24 hours. Then there is no way of loss of purchaser and his amount is safe. Available easily in all the branches of BAL Acceptable by major businesses of Pakistan

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Clearing through State Bank of Pakistan.It is 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.The procedure of clearing is facilitated by BAL (Bank Alfalah Ltd.) on the behalf ofState Bank of Pakistan The clearing procedure requires 2 days for completion if it is outward z.

Clearing can be of two types: 1) Outward Clearing All the instruments (i.e. cheques, pay orders, travelers cheques, demand drafts), which are originated by some other banks, and are presented to the BAL are included in outward clearing. 2) Inward Clearing All the instruments, which are originated by BAL and are presented for payment to the bank by BAL, are part of inward clearing. Stamps On Cheques Meant For Clearing Crossing STAMP It is used on all types of cheques. It shows the Branch name of the Bank. Clearing Stamp It is used on the front side of the cheque and it indicates the presenting date of the cheques. If the cheques is dishonored and deposited again for clearing, the clearing stamp is used again with new date of presenting. A cheque cannot be presented without clearing stamp.

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Endorsement It shows that cheque is meant for outward clearing Payees account only is to be credited. Credit Department Advances department plays a vital role in the functions of a bank. In BAL its sharing ration in profit is high. The main source of Advances department is mark up. Their Advances department is working under the trustworthy, enthusiastic and committed a staff. The efforts of the staff are providing good services to their customers and getting a good amount for contributing the overall profit of BAL. The BAL provides loans to customers. These loans are sanctioned by the head office. There are different types of loans that are provided to customers. The types are as under.

Current Finance The bank provides Current Finance for short period less than one year. The customers Pay markup in current finance on monthly basis. On the expire date of limit he will just pay principal amount. Term Finance Customer utilized the sanction limit or not the markup will be charged on whole amount. Customer can withdraw whole amount at once. Different document required for facilities 1) Current Finance 1. Demand promissory note 2. Letter of arrangement 3. Letter of continuity 4. Markup agreement 5. Latter of authority of debit markup

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2) Term finance 1. Demand promissory note 2. Letter of disbursement 3. Letter of arrangement 4. Markup agreement 5. Letter of authority of debit markup 6. letter of installment Loans to staff members House loan The house loan is provided to its staff members up to a certain limit. And up to this limit there is no interest. Car loan This is expensive loan and interest is charged on this type of loan. Motorcycle loan Mainly this type of loan is provided to clerical staff. But the officers can also apply for this loan.

Accounts Most important department of the bank is concerned with Revenues Expenses Assets Liabilities These are the pillars of business. The accounts department is supervised by Mr. HamidSiddique and assisted by Mr.Majid Malik and Mr. Hafiz Naveed. In this department, all the vouchers are posted during one day are sent to Accounts department next day. These vouchers are already

54

posted to computer by the concerned department. The accounts department has to tell that all the vouchers are posted under the right head. Amount, date, stamps, signatures all the requirements for cheques and vouchers are fully checked. If any kind of renovation or construction or rebuilding is done, all is paid from the Accounts department. Like petrol for the car, stationary charges, medical allowances, etc are all paid by this department

Major Activates Accounts department is totally a backend department and is not linked to customers at all. All the days transactions inside, outside the branch and for other banks are handled with this department. This is one of the most sensitive departments because the customers account are credited and debited solely by this department so there is a very strict check and balance system for this department and each transaction is monitored and rechecked at least twice and supervised even by Manager Operations if amounts are high. Major activities in accounts department are Maintaining accounts of customers Monitoring & posting daily activities and transactions The major activates are to update customers account continuously and on daily basis. Because more of less each and every account is been credited or debited by some amount so the purpose of this department is to make sure that the right persons account is credited and debited. Maintaining Account Of Customers Once the account is created by the Account Opening Department it is not duty of accounts department to continuously monitor each and every account on daily basis. They monitor which account is performing well and which is not? Which account and which customer needs special care and special services? There are special accounts associated with credits and loans they are monitored specially.

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Monitoring & Posting Daily Activities & Transactions Monitoring daily activities include each and every transaction from all customers accounts including, ATM transaction, International remittance, local remittance, inward and outward transactions etc. The responsibilities in the accounts department are to debit and credit each and every transaction, monitor it, supervise it and special transactions which require supervision by higher authorities should be supervised. Functions Reports It generates reports like Statement of Account Activity (a report on the activity of all accounts at Bank Al-falah Liberty Market), Statement of Affairs (a report on the assets and liabilities of Bank Al-falah Liberty Market), Statement of Foreign Exchange (a report on the foreign exchange currencies at the bank) and Statement of Profit & Loss (a report on the income and expenditures of Bank Al-falah Liberty Market). These reports can be generated at daily, weekly, monthly, quarterly or yearly basis as required by the bank. Income And Expense The department also needs to calculate the revenues and expenses, control expenditure and forecast profits every month. Budget Formulation of yearly budgets & targets in consultation with the branch manager is also done by the accounts department. Storage Of Records Accounts Department also has the duty to store vouchers and system generated reports. Payments The accounts department is responsible to pay vendors on behalf of the bank with authorization from the branch manager. It also has to amortize large payments and calculate depreciation of branch assets.

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Activity Checking In the accounts department, I had to do daily activity checking and there are four stages in which activity checking takes place: 1. Collecting vouchers, cheques etc from all departments 2. Sorting Vouchers 3. Checking Activity 4. Packing

Collecting Voucher The first stage of activity checking is collecting all vouchers, cheques, DDs, pay order, pay slips etc from all departments of the bank. Mainly vouchers come from the operations department. After collecting these vouchers etc from the departments, we need to check if all stamps are stamped on these vouchers etc. Sorting Voucher After all vouchers are collected, they need to be sorted into eight categories: 1. Customer Debit: Includes debit vouchers and cheques 2. Customer Credit: Includes credit vouchers and credit slips 3. Income: Income vouchers 4. Expenditure: Expenses vouchers and payment vouchers 5. Others: Includes vouchers about excise duty, FED, teller, ATM, payables etc 6. Online: Contain online vouchers and online credit slips etc 7. Head Office (H.O): Includes HO vouchers and IBCA, DD advices 8. Bills Payable General (BPG): Includes vouchers and DD, Pay orders, Pay slips etc

Checking Activity After sorting takes place, daily activity is checked using the statement of account activity, which contains all daily activity of the accounts in the bank. Activity checking is done by

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seeing if the values and account numbers in the sorted vouchers match that of the activity and whether or not there is any missing activity that is not in the vouchers. Packing After the activity is checked, all sorted vouchers are counted, both debit and credit and then packed by totalling the vouchers.

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5. Description Of The Finance/Accounts Structure 5.1 Description Of The Finance/Account Structure

Structure And Functions Of The Accounts/Finance Department

CFO

Asst Finance Officer

Finance Department

Accounts Department

Finance Manager Operations & Business

Accounts Manager

Payroll Manager

Senior Business Analyst Business Analysts

Senior Accounts Payable

Senior Accounts Receivable

Accounts Asst Payable

Accounts Asst Receivable

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The department of finance and accounting is a large department and the head of this department is chief executive Finance and second major controlling authority is the assistant executive finance and all the reporting comes to the executive finance in the end. In this major department there are two major operation authorities, one is the head of finance department and the second is the head of accounts department and both the heads have separate duties and responsibilities and they report to the executive finance in the end.

Head of finance department works with the sub-ordinates like manager business operations and finance manager business and senior business analyst etc. and they perform their duties like budgeting controlling and analyzing the different activities of finance department. And the other officer is the accounts manager, who performs managing the accounts operations and reports upon them to the executive finance.

5.2 Finance and Account Operations Accounts Department Accounts Department plays a vital role in the development of banking functions. Its considering a backbone of the bank. The accounts department in BAL is functioning computerized as well as manual. It handles each and every transaction is being made into the bank, and control expenses and allocation of funds through appropriation of accounts. The work in accounts department is depending on vouchers and contra entries are passed through different heads.

This officer is working under the director finance, or in other words director finance is the higher authority for this department and its functions are as under. The functions cover the working in accounts department is as follows.

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Budgeting Controlling Analyzing Directing Coordinating business activities Reporting to director finance Admin activities

Finance Department

It is the person, which is also bond to the executive, finance and accounts because executive finance is the higher authority to this person but the functions of this department are not same in the nature to the above first department. The primary responsibility of finance department is making planning, analyzing, and valuation of financial resources and to provide consistent, reliable, and timely information to management, stakeholders, regulators, and internal business groups to help management in appropriate decisions making for improved performance of the bank. The main functions of the finance department are as follows. Analysis of accounts To maintain inventory records Finance activities Audit preparation To keep record of loans, accounts, cash, and all banking transactions according to accounting principles Funds management Preparation of cash flow, income statement, and balance sheet The use of effective budgetary techniques for budgets Preparation of reports/ cash forecast

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BAL is a most growing organization and performing a role as a treasury on behalf of SBP, the whole functions of the bank is totally depend upon the finance department. It has a core value in the promotion of banking sector. Budgets and forecasting is further assist for future planning. Different books of accounts are prepared into the bank through computerized system and manual. The accountants prepare daily, weekly, monthly, quarterly, and yearly reports.

Preparation Of Repots

The basic purpose of accounts and finance department is to prepare financial reports for decision-making and future planning. Different reports are prepared in BAL due to getting information and time period requirements. Reports are prepared by using general ledger. The following reports in accounts and finance department are prepared. Daily reports: It summarizes the daily position of all the main heads of the bank i.e. cash, loans, deposits, accounts and ATMs. Other daily reports are Balance Sheet Reconciliation reports Trial balance Financial statement Daily expense vouchers

Monthly Statement: These reports are monthly basis in order to know the position of the bank and pay rewards on monthly basis, etc. Balance sheet Profit and loss statement Monthly analysis of expenses Actual budget analysis Cost of funds statement Variance analysis Trial balance

Quarterly Statement: It includes tax statement, reconciliations, others reports and interest statements etc.

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5.3 Cash Management

Role Of Financial Managers

Cash includes physical cash comprising of currency notes and coins held in the office, at the factory, branch or company. There are three major reasons for holding cash: Transactional motive Precautionary (Emergency) motives Speculative (Investment) motive

As a financial manager, it is the responsibility of a manager to hold cash up to the point where current ratio should never be decrease in by one. The focus of manager to holds the optimum, amount of cash in hand at the right time. Cash management shows that how an organization needs, how much it as, and where to be collected. The objectives of financial manager to invest excessive amount for a return while retaining sufficient liquidity to satisfy future needs and plan where money to be collected or borrowed. The amount of cash to be held depends upon the following factors. 1. The Manager develops a complete cash management policy. 2. Idle cash should be minimized. 3. The bank should be able to payment obligations on due dates so as not to lose any goodwill. 4. The bank completely maintains a current liquidity position. 5. Forecast short and long-term cash flow. 6. The maintenance of cash flow due to deterioration in economy. 7. The Manager follows a speed up cash receipts methods. Concentration Banking Offer cash Discount to the customers Selling of Account Receivables Prompt follow up debtors/Reminder

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2nd Reminder Contact to court or recovery department

Credit Management It is management of account receivables or the people to whom a company sells goods or services. Advances and Deposits are the major sources of the bank. The volume of banking sector is depending upon these factors. Financial experts are desired to extend credit due to the limitations of the customers and capability to pay back. In BAL, Block2, branch advance salary and subordinated loans are basic and big credits issued to customers. BALextend credit in order to. To attract new customers By encouraging existing customers to get more deposits and credit By producing loyalty among customers, leading to client retention

1. The role of Manager to draw up a complete credit policy to ensure 2. The manager analyzes Credit Information Bureau Report (CIBR) before issuance of credit to any customers. The basic needs to be discussed and study by the Manager are to see. Overall parameters for credit volume Vetting process of new clients Classifying clients Procedure for processing orders from clients Credit records Follow up procedure Incentives for prompt settlement Recovery process Provision for Bad and Doubtful debts Periodic review of credit situation

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5.4

Use Of Information Technology In Decision Making

Today banking is becoming more and more complex with the introduction of new products, services and enhancing regulatory compliance requirements. It is the use of information technology that can improve the customers services and reduce the cost at the same time. BAL adopted IBM Software for service providing motives, the IBM Software categories into two sections. BBO (Branch Banking Office) EBS (Electronic Banking System)

EBS is used for any kind of transaction within the bank .i.e. Receipts and payments, Bills Collection, Tax receipts, etc. BBO is use for remittances. The use of IBM Software is one of the main purposes of collection electronic data for the bank that further helpful in future in decision making. Now a day, the bank plans for transformation of the entire I.T. architecture by implementing a core Banking Solutions. The bank prepares financial statements, agricultural reports, customers management, risk management and other reports for decision-making purposes. The I.T. system of the bank not only increases distribution capabilities but also simplify internal procedures thereby reducing the cost and lead-time for services. BAL has started a number of projects in relation to I.T. infrastructure up gradation. The bank is expanding its ATM (Automatic Teller Machine) network and connectivity to reach to the customers in every corner. In future, BAL is looking I.T. products for salary and pension disbursements and E-banking for better services.

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5.5 Bank Sources And Uses Of Funds

Source Of Funds

Major Sources Of Funds

1.

Deposit Accounts Transaction Deposits

Savings Deposits

Time Deposits

Money Market Deposits

2.

Borrowed Funds Fed Funds

Federal Reserve Borrowing

Repos

Eurodollar Borrowing

3.

Long-Term Capital Bonds

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Bank Capital Major Uses Of Funds

1.

Cash

2.

Loans - Main Use Working Capital Loans

Term Loans

Line Of Credit

Revolving Credit Loan

Consumer Loans

Highly Leveraged Transact.

Real Estate Loans

Direct Lease Loans

Loan Participations

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3.

Securities Investments

Treasuries

Agencies

Tax Exempts

4.

Corporate Bonds

Fed Funds Sold

5.

Repos

6.

Eurodollar Loans

7.

Fixed Assets

Off Balance-Sheet Activities

Generate Fee Income Without Investing Funds

1.

Loan Commitments

2.

Standby Letters Of Credit

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3.

Forward Contracts

4.

Swaps

5.6

Generation Of Funds

BAL offers different products and services to generate funds. Deposits are the main heads of generation of funds. The banks receive from public and invest it for the sake of return. Banks receive fees, commission on services offering; get interest of investments, and dividend etc.

Descriptions/Years Interest income Total income Net profit

2005 12,716 17,345 4,198

2006

2007

2008 30,153 39,945 17,023

2009 33,629 42,451 19,033

14,387 23,312 20,944 30,512 6,242 12,709

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5.7

Allocation Of Funds

The most important functions of banks are to allocate funds and make a portfolio of funds to profitability. BAL allocate resources from different ways i.e. reserves, and fixed asset sales. Reserves It is the amount set aside to meet statutory requirements of SBP and maintain liquidity position. The reserves of BAL are Rs.8, 133/- in million in financial year 2003 and then constant increase with 26.8% in 2004, 17.86% in 2005, 2.54% in 2006 and 12.01% in year 2007. It also determines the position of the bank during a period of time. Fixed Assets Fixed assets are immoveable assets of the organization. Financial year ended December 31, 2007 shows property and equipment of BAL are Rs.29, 792/= in million before depreciation and after depreciation amount is Rs.25, 454/= in million, it is also a comparative figure to show a bright future of the bank.

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5.8 Rupees Millions Year Lendings Institutions Investments Advances Operating Fixed Assets Other Assets Lendings Institutions Investments Advances Operating Fixed Assets Other Assets to Financial 100 100 100 100 100 to Financial 2005 in

Mobilization Of Fund

2006

2007

2008

2009

10,511,322

16,282,942

23,012,732

21,464,600

17,128,032

149,350,096 156,985,686 139,946,995 210,787,868 170,822,491 220,794,075 268,838,779 316,110,406 340,677,100 412,986,865 9,202,969 19,141,569 9,454,365 23,941,056 9,681,974 37,113,698 25,922,979 30,994,965 24,217,655 44,550,347

Horizontal Analysis (%)

155 105 122 103 125

219 94 143 105 194

204 141 154 282 162

163 114 187 263 233

71

6. Criticational Analysis Of The Organiz

During Internship it was my prime objective to furnish my knowledge (Theory) to various practical situations. The practical work presents an analytical problem while relating theory with practice. As a result, analysis of practical versus theory requires a distinct approach. This part of report is the essence of the internship, as this will help to better understand the working environment of the bank by finding the relationship between what is written in the books and what is actually going on in fields. The theory written in the books in cases is not implemented as it is. In some cases theory isimplemented with a little modification but in other cases theory has nothing to do with practice. In accounting, banks dont prepare worksheet, but part of worksheet is prepared like trial balance. The securities for the loans are handled in the same way as theory says like mortgage, pledge, hypothecation, advances against insurance policies or liquidation procedure is the same. There is some difference lies in types of loans in bank that is theory talks about four or five types of loans that is cash finance, overdraft, loans etc., but in practice there are some more types used by bank like running finance, demand finance etc. All other concepts of remittances, bills, foreign exchange deposits, letters of credit are in accordance with theory almost. A bank's balance sheet is different from that of a typical company. You won't find inventory, accounts receivable, or accounts payable. Instead, under assets, you'll see mostly loans and investments, and on the liabilities side, you'll see deposits and borrowings.

72

7. Financial Analysis of the Organization

1. Total Assets Turnover:

This ratio measures that how much turnover is generated by the total assets of the organization. This is calculated by the given formula,

Total Assets Turnover = Annual Sales or Total Income/Average Total Assets

Year

2009

2008

2007

2006

2005

TAT

3.88%

3.46%

4.24%

3.23%

3.42%

73

Interpretation: This ratio should be high which is better for the business but, Bank Alfalahs total assets turnover showing a mixed trend of increase and decrease in past five years. In 2009 it is high at 3.88% as compare to 2008 at 3.46% but is even less of the highest value of 4.24% in 2007.

2. Return on Investment:

This ratio is calculated by dividing Op profit by the average of operating assets as shown by the formula,

Return on Investment = Op Profit/Average Operating Assets

Year

2009

2008

2007

2006

2005

ROI

0.324%

0.623%

1.75%

1.14%

1.48%

74

Interpretation:

The answer of this ratio should be high or should be shown a positive increasing trend for better and favorable results. Bank Alfalahs ROI showing a decreasing trend over the past five years with lowest in 2009 that is 0.324% and highest as 1.75% in 2007 which is not favourable for the bank.

3. Return on Deposits:

This ratio measures the return on deposits by the total deposits of the organization obtained by dividing net income after taxes to total deposits as shown by the formula,

Return on Deposits = Net Income After Tax/Total Deposits

Year

2009

2008

2007

2006

2005

ROD

0.276%

0.432%

1.14%

0.735%

0.765%

75

Interpretation:

As this ratio shows the total return which business gains from the total deposits, so it should be high which will be better for the business but it is showing a continuous decreasing trend from 2005 to 2009 except a highest value in 2007 which is 1.14% with lowest value as 0.276% in 2009 which is not good for the Bank Alfalah.

4. Fixed Assets Turnover:

This ratio measures the efficiency of using fixed assets in generating income or sales. It is the ratio of annual sales to total fixed assets as given by the formula,

Fixed Assets Turnover = Annual Sales or Total Income/Total Fixed Assets

Year

2009

2008

2007

2006

2005

FAT

82.92%

85.32%

107.56%

24.43%

38.72%

76

Interpretation:

The result of this ratio should always be high for favorable business environment because high ratio shows that business is investing more efficiently and effectively in fixed assets for generating sales. It is showing a very ambiguous trend, as it was high in 2005 then decreased in 2006 then increases in 2007 to a very high level and onward there is a continuous decreasing trend which is not good for the bank.

5. Current Ratio:

Current ratio indicates the liquidity position of the business that whether business can fulfill its obligation or not. It is the ratio of current assets to current liabilities as,

Current Ratio = Current Assets/ Current Liabilities

Year

2009

2008

2007

2006

2005

CR

2.97

3.35

2.02

4.61

6.42

77

Interpretation:

The current ratio should be in reasonable range. It should not be too high or too low, both conditions are not favorable. In this case of Bank Alfalah, it is showing a decreasing trend which is not favorable for the business because it may pose difficulty for the bank to fulfill its current obligations.

6. Dividend Payout Ratio:

This ratio tells about the relationship between earnings and dividend that whether earnings are supporting dividend payments or not. It is calculated by dividing dividend per share to earnings per share (EPS) as shown by the given formula,

Dividend Payout Ratio = Dividend per share/EPS

Year

2009

2008

2007

2006

2005

DPR

112.67%

86.52%

Nil

Nil

Nil

78

Interpretation:

Usually higher dividend payout ratio is favorable and it is high for Bank Alfalah in 2009 which is favorable.

7. Debt Equity Ratio:

This ratio tells about the financial leverage of the organization that what proportion of debt and what proportion of equity is being used by the organization for financing its available assets. It is calculated by dividing long term debt to total capitalization as shown by the given formula,

Debt Equity Ratio = Long Term Debt/ Total Capitalization

Year

2009

2008

2007

2006

2005

DER

25.93%

14.02%

22.09%

29.58%

33.18%

79

Interpretation:

A higher value of debt equity ratio is much favorable for the business as its high value tells about the efficiency of the business to using its available debt for financing. Bank Alfalahs debt equity ratio is showing a decreasing trend over the past five years but as compare to 2008 it is increased in 2009 from 14.02% in 2008 to 25.93% in 2009 but it is still lower as compare to highest level of 33.18% in 2005.

Profitability Ratios:

These ratios tells about the profitability of the business and is consists of the following ratios from which we can assess the profitability of the business.

8. Net Profit Margin: This ratio is mostly used for the internal comparison. This ratio shows the percentage of net profit after tax to the total income/revenue. A higher profit margin ratio indicates a higher margin safety and lower risk for the organization and vice versa. It is calculated by the formula,

Year

2009

2008

2007

2006

2005

Net Margin

Profit 7.46%

11.07%

24.40%

20.77%

24.64%

80

Interpretation:

It is showing a mixed trend from 2005 to 2007 but onward showing a decreasing trend which is not better for the business. It is indicating a greater risk and low margin safety for the business.

9. Operating Profit Margin:

This ratio tells us about the percentage of operating profit to total income. It is calculated by the following formula

Year

2009

2008

2007

2006

2005

Op-margin

8.45%

15.27%

35.36%

30.24%

37.10%

81

Interpretation:

Its high value is favorable for the business. It is overall showing a decreasing trend from 2005 to 2009 except an increase in 2007 as compare to 2006 which is even then low as compare to 2005 results. It is not favorable for the business. 10. Return on Total Assets (ROTA):

This ratio tells about the percentage of net profit/earnings which business is attaining by using its total available assets. It is calculated by dividing net profit to total assets as shown by the given formula,

Return on Total Assets =

Net Profit/Total Assets

Year

2009

2008

2007

2006

2005

ROTA

0.230%

0.372%

0.951%

0.639%

0.685%

82

Interpretation: Higher ROTA is favorable for the business which shows better use of asstes by the business for generating profits. Bank Afalahs ROTA is showing a decreasing trend over past five years except in 2007 with a highest value of 0.951% 11. Return on Equity: This ratio shows a relationship between net income after taxes and shareholders equity, and measures the efficiency of the organization of generating profits by using shareholders equity. It is calculated by dividing net income after taxes to shareholders equity as shown by the given formula,

Year

2009

2008

2007

2006

2005

ROE

4.05%

7.63%

19.30%

14.40%

22.80%

83

Interpretation:

It should be high for favorable results. This ratio of Bank Alfalah is showing a decreasing trend except in 2005 and 2007 over past five years.

Efficiency Ratios:

These ratios tells about the efficient use of the assets and liabilities of the business which is calculated by the following ratios,

12. Investment to Total Assets Ratio (ITA):

This ratio tells about the percentage of investment to assets calculated by dividing investment to assets as shown by the following formula,

Investment to Total Assets Ratio = Investment/Assets

Year

2009

2008

2007

2006

2005

ITA

25.48%

21.76%

26.90%

20.5%

23.12%

84

Interpretation: This ratio should be in high figures for favorable results of the business. Bank Alfalahs ITA is showing a mixed trend of increasing and decreasing over the past five years. In 2009 it is high at 25.48% as compare to 2008 at 21.76% which is favorable. But bank should try to keep it high by making better policies. 13. Earning Assets to Total Assets Earning Assets to Total Assets= Earning Assets/ Total Assets *100 For Year 2003: For Year 2004: For Year 2005: For Year 2006: For Year 2007: 81% 78% 82% 82% 80%

The ratio shows improvement in 2003, 2005 and 2006 from the previous year

85

82 81 80 79 78 77 76 2003 2004 2005 2006 2007

Earning Assets to Total Assets

14. Advances to Deposit Credit Advances to Deposit Ratio= Advance/ Deposits and other Assets *100 For Year 2003: For Year 2004: For Year 2005: For Year 2006:
For Year 2007:

70.84% 83.58% 81.54% 87.25%

83.44%

100 80 60 40 20 0 2003 2004 2005 2006 2007

Credit Advances to Deposit

86

15. Return on Assets Return on Assets= Net Profit/ Average Total Assets *100 For Year 2004: For Year 2005: For Year 2006: For Year 2007: 1.2% 2.2% 2.8% 2.7%

3 2.5 2 1.5 1 0.5 0 2004 2005 2006 2007

Return on Assets

16. Net Interest Margin Net Interest Margin=Interest Income-Interest Income/Average earning Assets *100 For Year 2004: For Year 2005: For Year 2006: For Year 2007: 3.05% 5.1% 6.07% 5.9%

7 6 5 4 3 2 1 0 2004 2005 2006 2007

Net Interest Margin

87

17. Operating Profit Margin Operating Profit Margin=net interest income-Operating Profit/Total interest income *100 For Year 2003: For Year 2004: For Year 2005: For Year 2006: For Year 2007:
40 35 30 25 20 15 10 5 0 2003 2004 2005 2006 2007
Operating Profit Margin

22.8% 26.2% 36.0% 37.8% 38.4%

18. Cost to income Ratio Cost to income Ratio=Operating Profit/Net Interest Income +Non Interest Income *100 For Year 2003: For Year 2004: For Year 2005: For Year 2006: For Year 2007: 41.4% 38.0% 20.8% 19.1% 18.6%

45 40 35 30 25 20 15 10 5 0 2003 2004 2005 2006 2007

Cost to Income Ratio

88

19. Net Non Performing Assets Net Performing Assets= Net Performing Assets/loans given *100 For Year 2003: For Year 2004: For Year 2005: For Year 2006: For Year 2007:
1.4 1.2 1 0.8 0.6 0.4 0.2 0 2003 2004 2005 2006 2007
Net Performing Assets

1.04% 0.7% 0.9% 0.97% 1.38%

89

7.2

Horizontal Analysis of balance Sheet For the last Five Years

Horizontal Analysis of Balance Sheet (%) ASSETS Cash Balances with other banks Lendings to fin. institutions Investments Advances Operating fixed assets Other assets Total Assets LIABILITIES Bills Payable Borrowing Deposit& other Account Sub ordinate loans Liability assets Differed tax Liab Other Liability NET ASSETS 100 100 100 397 140 164 71 131 132 151 118 105 86 88 130 against 2005 100 100 100 100 100 2006 83 144 107 999 2007 134 253 114 999 2008 183 64 110 80 2009 109 150 108 294 2005 100 100 100 100 100 100 100 100 2006 112 131 46 98 126 158 146 111 2007 105 144 27 156 114 113 107 119 2008 111 117 96 86 112 115 164 105 2009 107 105 45 130 98 105 148 111

Share Capital Reserves Unappropriated Profit Surplus on

100 100 100

166 148 149

130 88 172

123 131 71

169 113 78

100

230

147

99

97

90

Reveluation Asses

of

100

164

133

105

130

7.3

Veritical

Analysis

of Balance Sheet (%)

ASSETS Cash Balances with other banks Lendings to fin. institutions Investments Advances Operating fixed assets Other assets Total Assets LIABILITIES Bills Payable Borrowing Deposit& other Account Sub ordinate loans Liability against assets Differed tax Liab Other Liability NET ASSETS

2005 0.9986586 3.9117316 10.893673 23.122459 47.868469 2.6660086 100 2005 1.549981

2006 1.01034 4.6182288 4.518428 20.49517 54.409573 3.8097718 2.0432885 100 2006 1.8912549

2007

2008

2009

0.895008 9.366246 10.044968 0.558863 6.183844 6.5109571 0.104959 0.950025 4.283046 2.690571 21.76941 28.413347 5.205276 54.95589 53.881781 0.362493 0.393504 4.152601 1.182827 2.827974 4.1976412 100 2007 100 2008 100 2009

1.323495 1.039937 1.026647 6.790014 4.124231 5.6287432 8.736661 90.59691 88.505677 1.030097 0.774574 2.0630758 -

2.46265713 5.1357962 92.31695 1.3383265 0.2009826 2.1671884 100 146.53948 1.9713871 1.1755358 4.4697352 7.490012

0.441291 0.062801 0.0490142 3.48485 5.18744 0.135518 2.7271155 5.134792 6.0319461

91

Share Capital Reserves Unappropriated Profit Surplus on Reveluation of Asses

4.192248 24.801537 25.278847 9.7273679 100

3.0591593 1.6822519 1.7272454 1.0213554 100

40.07437 44.96989 60.955618 14.88814 18.57497 16.21064 29.91299 20.22599 12.156856 15.1245 100 14.29307 10.676886 100 100

92

93

94

95

96

8.

Organizational Analysis Financial Position of Commercial Banks Registered in Pakistan

Name of Commercial Paid up Reserves Assets (Rs. Bank Capital (Rs. Bn) Habib Bank NBP Allied Bank MCB United Bank First Women Bank of Punjab Soneri Bank Askari Bank Bank Al- Habib Bank of Khyber Bank Al- Falah Saudi Pak Faysal Bank KASB Bank Meezan Bank NIB Bank Mybank Atlas Bank Standard 7.59 8.97 6.46 6.28 10.12 0.28 5.29 4.11 4.06 4.79 4 8 5 5.3 4.02 4.54 28.44 4.24 5.01 38.72 23.6 18.54 5.48 35.88 12.82 0.22 7.43 1.88 7.59 2.8 1.34 2.95 0.22 3.57 0.17 0.81 8.46 0.41 0.52 1.95 735.71 584.85 788.12 621.53 344.7 293.97 411.36 173.42 168.45 228.98 328.55 3.09 142.85 45.83 114.04 93.25 11.14 180.02 27.62 87.61 32.65 38.3 85.43 23.03 17.5 126.27 (Rs. Bn) Bn) (Rs. Bn) (Rs. Bn) As of June 2009 Deposits Advances Profit After Tax (Rs. Bn) 7.5 8.1 2.51 7.68 5.59 0.05 -2.63 0.47 0.05 1.25 0.11 1.69 -0.81 0.75 0.08 0.44 -0.73 0.43 -0.2 1.31 (Rs) 9.75 9.03 3.88 12.22 5.53 1.67 -4.97 1.13 1.01 2.61 0.27 2.12 -1.54 1.41 0.39 0.98 0.23 1.02 -0.39 0.34 (Nos) 1400 1249 757 1038 1100 38 272 90 155 203 34 231 55 111 41 111 240 69 31 176 AA+ AAA AA AA+ AA+ BBB+ AAAAAA AA BBB+ AA AAA A A+ AAA AAA+ Earnings Branch Per share Network Rating Credit

450.34 350.72 576.02 465.54 8.04 6.4

217.85 180.82 81.61 64.73

194.21 153.32 167.36 136.75 34.43 24.4

333.02 287.77 50.83 42.35

137.31 99.61 53.66 71.74 44.33 57.84

177.98 112.12 45.47 30.7 31.96 22.18

276.38 173.81

97

Chartered JS Bank Habib Metropolitan 6.02 6.7 192.45 128.97 101.22 1.57 2.6 100 AA+ 5.11 0.01 24.16 14.08 9.57 0.16 -0.31 11 A-

A stock exchange is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. In Pakistan securities are traded on three stock exchanges which are Karachi stock exchange, Lahore stock exchange and Islamabad stock exchange. The financial position of commercial banks registered on stock exchanges in Pakistan, are shown in preceding page in terms of their: Paid-up Capital Reserves Assets Deposits Advances Profit after tax Earnings per share Credit rating

The best way to analyze these commercial banks is to analyze their credit ratings. The National Bank of Pakistan enjoys the highest credit rating amongst Pakistani banks; JCRVIS Credit rating Co. Limited awarded highest standalone credit rating of AAA to BAL. The JCRVIS Credit rating Co. comments about BAL say a lot about the bank:i The organization has been able to strategically manage and build on its competitive advantages which has translated into the strong and well managed improvement in

98

profitability trend observed over the last few years, a substantial balance sheet of sound asset quality, and strong liquidity and capitalization levels BALs key strength remains its extensive outreach and a low cost, stable deposit base. Deposits are also guaranteed by the Government of Pakistan under the Banking Nationalization Act, 1974. There have also been significant improvements in the management practices of the bank and a focus on enhancement of systems and controls. In this regard the management has entered into an agreement for the acquisition of a core banking software which is likely to be implemented over the next few years. JCR-VIS believes that the current economic situation puts certain leading industrial sectors and the general consumer under financial stress. Therefore, the second half of 2008 and 2009 are likely to be challenging for the banking sector as a whole, in terms of maintaining growth, asset quality and profitability.ii The JCR-VIS Rating Process include following steps:iii 1. Signs agreement for an initial rating 2. Submits preliminary information materials 3. Conducts a preliminary study 4. Submits a detailed questionnaire to the issuer/client 5. Provides detailed information in response to detailed questionnaire 6. Conducts pre due diligence meeting analysis 7. Conducts due diligence meetings 8. Conducts post due diligence analysis 9. Brief for internal rating committee meetings is prepared 10. Sub Committee recommends preliminary/initial rating 11. Rating Committee decides the preliminary/initial rating 12. Discusses the rating rationales and rating issues with client 13. Notifies issuer of the preliminary/initial rating, deliberates on appeals by client, if any 14. Consents to release of preliminary/initial rating to the public in case of nonmandatory ratings 15. Releases the preliminary/initial rating to the press 16.

99

9.

Future Prospects

Future prospects of National Bank of Pakistan Bank AlfalahLtc is gearing up to the challenges faced by the domestic banking industry due to innovations and advances in the international banking world, which is the consequence of globalization. The bank wishes to effectively utilize the financial assistance being extended by the Government of Pakistan for banking sector reforms aimed at reducing operating costs and improving profitability. These services do not contribute towards the earnings of the bank; rather they put pressure on banks resources. Nevertheless, the bank is committed to serving small savers and the general public of the country. Bank Alfalah is everyones bank and does not only serve corporate customers. To extending and targeting research to improve bank earnings, through customer focus of banks commercial and corporate branches, and by enhanced efforts towards the development of human capital, the bank shall very soon transform from a bureaucratic organization to a fast paced, modern, and competitive bank. In conclusion, the National Bank of Pakistan have the vision, which will enable it to achieve even better results, safeguard the interest of their customers and to assist them in their march towards progress and prosperity in future. The Bank Alfalah Ltd is confidence that tomorrow we will be Leaders in our industry An organization maintaining the trust of stakeholders. An innovative, creative and dynamic institution responding to the changing needs of the internal and external environment Reorganizing efforts going on in the BAL has open many opportunities for BAL to grow. For instance to achieve objectives BAL have taken following measures. Setting of target for of making at least 500 branches country wide on line. Closing of all those branches, which are burden on BAL. Management to offer specialized services to major corporate including advisory and debt syndication introduces the concept of relationship manager.

100

Comprehensive training programs has been develop to up grade the core banking skills of the existing staff as well as integrate high quality hiring. To improve the motivation of staff a merit-based culture is being promoted. Through overhauling the mamanpower recruitment preservation and performance appraisal system.

101

10.

Weakness of the Organization The chief weaknesses are Small Size Less Efficient Computer And I. T. System Disproportionate Presence Of Old Staff In The Upper Management Hierarchy Skill Set Of Employees Is Not Up to The Mark As There Is No Job Rotation Foreign Banks Still Are A Little More Prestigious Bank Alfalah Limited Does Not Possess Foreign Network No Advertising In Electronic Media It is a step behind in using new technology as compared to other banks Most of the employees are overloaded with work. There is uneven distribution of work and promotions are not very timely It is slow in the introduction of new services

102

11.

Conclusion

I observed the bank Alfalah a financially sound bank. Its profits are increasingly year by year. Its staff is very good and sincere with the bank. Bank Alfalah under the leadership of Sheik NahayanMabarak Al-Nahayan has made significant progress in building and strengthening both the corporate and retail banking sectors in Pakistan. The bank attained number 2 positions in terms of its balance sheet size amongst the private banks.

Bank Alfalah views specialization and service excellence as the cornerstone of its strategy. The people at bank realize that innovation, creativity, reliability, customized, services and their execution are they key ingredients for their future growth. Revenues from these activities have started yielding dividends and they expect significant growth.

They are aware that they have stepped into the 21st century and they must meet its challenges by acquiring the highest level of the technology. They will thus be accelerating their technological advance to enable them to distribute their products and services through most efficient and high tech means. They say that they will continue to invest in the modern tools and substantial allocation to resources will be made to achieve this objective during the current year. Phone Banking and credit card have been introduced in many cities.

103

12.

Recommendations

Finally, I am going to gives few recommendations on the basis of my personal experience of eight weeks of internship in Main Branch, Multan.

The main and biggest problem which I found that main branch is always overcrowded. In rushing hours, there is shortage of seating facility not only for customers but also for the employees of the managers. Number of seats should be increased on priority basis for employees and customers. Reception desk should be worked properly with the help of skilled person for the purpose of guidance for customers. Number of counters should be increased specially in rush hours to reduce the size of waiting line in rushing hours. Account opening forms should be filled properly and try to filled it in client handwriting and sure that terms and conditions are read by clients. Online service charges should be reduced if that is not possible to omit it. In the branch, there is proper one section for the TT, DD and ATM card application, which not only save the time of cash department but also helps the IT department people to concentrate their original task. All customers dealing desk should be at front door. Customer should not be approached to each corner of the bank for the purpose of security.Proper customer feedback should be taken on continues basis through feedback desk.

104

13.

References Annual Report BAL; 2005 to 2009 Aslam, S (1999); Banking & Finance. Adnan, Credit Officer , Bank AlfalahJauharabad. Bilal Maqbool, Manager Operations, Bank AlfalahJauharabad Hussain, S; Rana,K&Shabbir, A (1991); Banking Currency and Finance. , Lahore: Ilmi Iffland, Charles &Langueton, Pierre ; International Banking. New York: Irwin Book Co. Siddiqui, A.H; Practice and Law of Banking in Pakistan. www.bankalfalah.com http://www.bankalfalah.com/about/financial_performance.asp (last time Accessed on January 15, 2009) http://www.lahorestock.com/ListedCompanies/ Black's Law Dictionary page 471 (5th ed) Kotler, P., Armstrong, G., Brown, L., and Adam, S. (2006) Marketing, 7th Ed. Principles of marketing 8 ED by Kotler& Armstrong G7 Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7thed page no 87 Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7thed page no 91 Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7thed page no 88 Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7thed Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7thed page no 221 Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7thed page no 228 SBP Prudential Regulations http://www.jcrvis.com.pk http://www.jcrvis.com.pk/ratingscale/rating_process.htm

14.

Annexes

105

14.1

Structure of Accounts and Finance department

Chief Financial Officer

Senior Accountan

Revenue Officer

Expenditure Officer

Budgeting and reporting officer

SMC Practitioner

Cashier

Finance Interns

14.2

STRUCTURE OF HEAD OFFICE

106

107

14.3

STRUCTURE OF BRANCH

108