BANK ALFALAH LIMITED

Submitted to:
Instructor FIN-619
Submitted by:
Abdul Moeed Abid
Mc080201273
2008-10
Dated: 4-Feb 2010

Master in Business Administration

1
Virtual University
of Pakistan

2
3
4
 ACKNOWLEDGEMENT

All praises to almighty Allah, The omnipotent, The omnipresent, the

most merciful and the most and the most compassionate and the most
beneficent and to The Holly Prophet (S.AW.), The most perfect and
exalted one among and of ever born on the surface of earth, who is
forever torch of guidance and knowledge for humanity and who
preached the Muslims “seek knowledge from cradle to grave”.

I feel great pleasure and honor to express my gratitude and

appreciation to my seniors specially Mr. Haroon Rasheed and Mr.
Naeem for their keen direction, kind attitude and enlightened
supervision. I owe a debt of immense gratitude to them for their
cooperation and valuable suggestions during the span of my internship.

I am highly indebted to my Course Instructor for guiding me on each

matter whenever I did mail and I am thankful too for providing me an
opportunity to learn about the Banking system of “Bank Al-Falah"
which is vital ingredient of MBA program.

I am also thankful to my session fellows who helped me in collecting

data and providing me useful pieces of information toward the
completion of my report.
Last but not least, my thanks are for my loving parents, sincere
brothers and sisters for their prayers, love support, patience and
guidance which brought every success in my life.

5
 Content

Sr. # Title Page

1 Acknowledgement 4
2 Executive summary 6
3 Introduction of the organization’s business sector 8
4 Introduction of bank al-Falah 13
Corporate Information 15
5 My internship plan 25
6 DDepartments at Bank Alfalah limited, circular road, Bahawalpur 27
8 Financial Analysis 62
9 Conclusion 104
10 Recommendations 106
11 Branch suggestions 111
12 Reference 112

EXECTIVE SUMMARY
Classroom education cannot teach all the elements of knowledge required for a successful
career. On-the-job experience can clearly enhance the students' learning and is a valuable
supplement to classroom instruction. The main purpose of this course is to assist students
in the learning process of reflection, analysis, and integration of experiences and insights
gained through their internships with the academic theory, principles, concepts, and social
and ethical dimensions of the discipline and subject area. Internship help students apply,
amplify and add to the theory learned in the college atmosphere. It sharpens student's
skills acquired in the classroom. Expose students to the duties, expectations and
environment of a job to better prepare them for their initial employment. It helps students

6
develop confidence in their abilities and also helps students decide on a suitable career
path.

It’s better to say this report is all about our 1st practical learning (internship program) with
Bank Alfalah LTD. In all-inclusive report I have discussed every aspect relevant to bank,
which I observed during my internship program. In this report you will find detail about
the bank right from its incorporation to current position. Along with it, the processes,
policies and procedure of the bank are also discussed in detail.
During our intership we mainly work in three departments’ credit, auto financing and
general banking. But I discussed all departments’ procedure and policies in detail here.

The main purpose of internship is to work in practical environment and apply what you
have learned ding your studies, these help us to tackle the problem in the real world
scenario using knowledge and skills which we have learned during academic progress, in
this report detailed analysis of the organization has been done and all the financial,
managerial, technical, and strategic aspects has been evaluated to analyze the current
position of organization.

At the end SWOT analysis we done from both organizational point of view as well we
also emphasis this analysis from each departmental point of view also. The conclusion
and recommendation section include the conclusion of overall report in recommendation
we give it from organization as well as branch point of view.

7
INTRODUCTION OF THE ORGANIZATION’S BUSINESS SECTOR

BANKING
Banking system is very vital for the growth of a country. The economic expansion
following every developed all mounting country orbit in the region of a well-organized
banking system. No one would disagree the fact that banking sector plays the very
important role in retaining sustained growth and development.

8
HOW THE BANKING DEVELOP
Some authors write that the word “Bank” is derived from the German word “Back” which
mean “joint stock fund”. Authors discourse that the word bank is derived from the words
“Banque” mean a bench. The clarification of their source is recognized to the fact that the
Jews in Lombardy carry out the business of money exchange on benches in the market
place, and when the business become unsuccessful, the people damaged the “Banco”.
Ref (1)
Incidentally the word “Bankrupt” is said to have been evolved from this practice.

System as it early as 2000 Bait is clear that the temples of Babylon were used as banks
because of the common respect and assurance in the clergy.
Emperor Hammurabi 1728 – 1686 B.C., the creator of the Babylonian empire, drew up a
code wherein he laid down standard rules of process for banking operations by temples
and great landowners. He got his, code emblazoned on a block of diorite about 8 feet tall,
containing about 150 paragraphs which deal with nearly all aspects of loans, interest,
promise, guarantees, natural accidents, loss, robbery etc. Later on, the Sumerians
Babylonians, Hittites and Assyrians consistent the values of the goods in silver, copper,
bronze or electrum.

In 1401 a German Public Bank was created contain the operations of money off, deposit
and shift of money. By the 16th century, some more public banks were created in Venice,
Milan and Amsterdam. In the past Gold Smith in England started banking system. People
use to deposit their valuables and goods money with Gold Smiths. So Gold Smiths can be
said the people who initially started formal banking people use to deposits their valuables
with the gold smiths for the reason of protection. Then when after some time these
valuables were drawn from Gold smiths, Gold Smith used to charge some service fee. So
in their system the deposits were backed up with hundred present reserves with Gold
Smith.

No doubt the idea of banking system is realized by Gold smith that gave birth to modern
banking system by maintaining fractional reserves with them Gold Smith initiated lending

9
money to the needy people and thus raising their profits. From these profits, Gold Smith
started giving other services to the common public.

Once, English banking faced great disaster when Charles-11 borrowed huge sums of
money from the Gold Smiths and later refused to pay them back. it was done in 1672.
Therefore, a number of Gold Smith bankers formed themselves into a corporation in
1695, known as the Bank of England. Their bank lent pound sterling 12, 00,000 at 9 %
interest to William-111, who in return, allowed a number of rights to the bank, specially
the right to issue Notes payable to bearer on demand up to the amount of their loan. That
Ref (2)
was known as fiduciary issue, not covered by the gold.

HOW TO DEFINE A “BANK”

A bank is a financial institution that contract with money and credit by accepting deposits
at a lesser rate and then give somebody the use of it at higher rate to borrowers.
G Crowther said that “A bank is a firm which collects money from those who have spare.
It lends money to those who require it.”
According to the dictionary definition ; “An establishment which trades in money, an
establishment for the deposit, custody and issue of money and also for granting loans,
discounting bills, and facilitating the transactions of remittances from one place to
another.”

VARIETY OF BANKING IN PAKISTAN

When the Pakistan came into being, there were only two Pakistani organization Habib
Bank and Australasia Bank in Pakistan. In July 1st, 1948 Govt. of Pakistan decided to set
up a full-fledge central bank. Governor General of Pakistan Quaid-e-Azam Muhammad
Ali Jinnah inaugurated state bank of Pakistan. The first important task, which the state
bank of Pakistan had to do, was the issue of currency noted and removal reserve bank of

10
India notes with over Printing their of Government of Pakistan, which had been in
circulation in Pakistan.

Today number of banks is operating in Pakistan.

Some types of banks are discussed under

CENTRAL BANKS
Central bank is essential for each and every country to maintain and development of the
economy. These banks do not deal with public directly. This means that it neither receive
cash deposit from the people.
Ref (3)
State bank is the central bank of Pakistan. It was set up on July 1st, 1948.
They give loans to different business and thereby create credit money.

AGRICULTURAL BANKS
The bank is accountable for growth of agricultural division in the country. The public
connected with farming and agro-based industries can get monetary help from agricultural
bank. These banks are providing long term and short term credit services to the farmers
for the purpose of seeds, fertilizers and agriculture tools.

COMMERCIAL BANKS
If we look into the history, the first commercial was set up in 1171 in Italy. These banks
are made on commercial bases so their Main objective is to make profit and exploit it is
far as possible. To fulfill this purpose they received cash deposits from the people in
different accounts.

EXCHANGE BANKS
These banks have foreign head offices. They contract in foreign exchange due to foreign
trade. The importer makes and exporter receives foreign currency.

SAVING BANKS

11
The saving bank offers accountable rate of profit on saving account. The banks get unused
money from people having small income. The people save money for future needs. The
government employees and house hold can open such account.

Summary of Financial Sector of Pakistan

There are commercial banks in the financial sector of Pakistan it also include the private
banks, there are some non banking financial institution also exist in Pakistan.

It contains Housing Finance Companies, Investment Banks, leasing companies,

modarabas etc. Modaraba and leasing companies are being regulated by the Securities and
Exchange Commission of Pakistan (formerly Corporate Law Authority). Ref (4)

Scheduled Banks and non banking financial are keeping up by the State Bank of
Pakistan’s defined rule and Regulations. Evaluate to commercial banks which provide
mostly to short term working capital requirements, non banking financial institution
provide to average and long term financing needs and, thus, are banned from engaging in
any commercial banking actions counting trade business and issuing cheques.
Generally speaking, State Bank of Pakistan takes action as chief regulator for banking
sector in country.

Major purpose of central bank is to run the monetary system of country along with only
right to issue notes. SBP control and manage the commercial banks and is involved with
foreign exchange management. It acts as a banker to the federal and provincial
governments.

12
 INTRODUCTION OF BANK AL-FALAH
HISTORY
Bank Alfalah Limited (BAL) 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 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.Ref(5)

Since its inception, as the new identity of H.C.E.B after the privatization in 1997, the

13
management of the bank has implemented strategies and policies to carve a distinct
position for the bank in the market place.

It perceives the requirements of their customers and matches them with quality products
and service solutions. During the past five years, It has emerged as one of the foremost
financial institution in the region endeavoring to meet the needs of tomorrow today.

The year 2002 has seen BAL achieving significant success both in terms of port folio and
customer service. The unfortunate “September 11” incident caused economic doubt and
political troubleness, however by the grace of almighty ALLAH it has seen a sizeable
increase in the banks client base reflecting the favorable reputation that bank enjoys in the
market place.

DATE OF ESTABLISHMENT
June 21, 1997

REGISTERED HEAD OFFICE

Karachi Pakistan

CHAIRMAN
H.E. Sheikh Hamdan Bin Mubarak Al Nahayan (Chairman)

NATURE OF ORGANIZATION
Banking and Capital Markets

BRANCHES
294 branches in Pakistan

ASSOCIATED COMPANIES
UBL, Alfalah insurance company, Alfalah Securities Ltd, Warid telecom, Wateen and
Taavun.

14
WEBSITE
www.bankalfalah.com

SPONSORS
BAL was acquired by The Abu Dhabi Consortium, which is headed by His Excellency
Sheikh Nahyan Bin Mabarak Al-Nahyan, a prominent business professional of the
ruling family Abu Dhabi and The Minister of Higher Education and Scientific Resort,
(Govt. of UAE). Other members of the Consortium include prominent Royal Family
members and leading businessman of UAE. The Consortium owns 70% of the shares
while the Govt. of Pakistan has retained the remaining 30% of the Bank’s shares. The
financial and managerial strength of Abu Dhabi Consortium has greatly enhanced the
credibility of the bank in Pakistan and is reflected in the bank’s improved performance in
all spheres of banking.

CORPORATE INFORMATION
BOARD OF DIRECTOR

• H.E. Sheikh Hamdan Bin Mubarak Al Nahayan

• Mr. Abdullah Khalil Al Mutawa
• Mr. Abdullah Naseer Hawaileel
• Mr. Khalid Mana Saeed Al Otaiba
• Mr. Ikram Ul Majeed Sehgal

15
 • Mr. Nadeem Iqbal Sheikh
• Mr. Sirajuddin Aziz ______ 4_ ______ __7__

CHIEF OPERATING OFFICER

• Mr. Shakil Sadiq

COMPANY SECRETARY
• Mr. Hamid Ashraf

AUDITORS
• A.F. Ferguson & Co
• Charted Accountants

COUNTRY WIDE HIERARCHY CHART

President

Chief Operating Officer

Operation Head Risk Manager Executive VC Charter Accountant

16
Information department Corporate Head Branch Manager
 Organizational Structure of Bank Alfalah Bahawalpur Branch

Executive VC

A. E. V. P

Operation Manager Foreign Exchange Credit & Advance Accounts

Remittance

Clearing

Cash

A/C Opening

17
MISSION

To develop and deliver the most innovative products, mange

customer 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.

18
VISION STATEMENT

To be the premier organizations operating locally and

internationally that provides complete range of financial

services to all segments under one roof.

BUSINESS VOLUME

SERVICES OF BANK AL-FALAH

19
 Services of Bank Alfalah are as under:
 Demand drafts
 Mail transfers
 Pay order
 Traveler's cheques
 International banking
 Letter of credit
 Commercial finance
 Foreign Remittance
 Swift System
 AGRI finance
 Corporate finance

COMPETITORS OF BANK AL-FALAH

Bank Alfalah’s competitors are as under:

 Muslim Commercial Bank

 CITI Bank
 Royal Bank of Scotland
 Habib Bank Limited
 United Bank Limited
 Allied Bank Limited

BRANCH NETWORK
An efficient branch network is essential for achieving its target. Its plan to open 25 more
branches in the year 2008, at different location in the country increasing its network to
20
215 branches covering over 22 cities. Bank follows a strategy of optimum financial and
quality human resource location in order to enhance the performance potential of all its
branches.
 Conventional Branches
 Islamic Banking Branches
 Overseas Branches

THE POLITICAL AND ECONOMIC LANDSCAPE

President Musharraf’s govt. fulfilled its promise and democratic government was
instituted in the country. The new govt. has presented a very favorable agenda for the
country, both in terms of economic and social reforms. State bank of Pakistan revised
down the interest rates. This could with impressive increase in foreign exchange reserves
to $10 billion. The govt. is also committed to the concept of deregulation and
privatization, which is a positive sign for the economy. Ref (6)

CREDIT PORTFOLIO

To capture good quality risk assets there is intense competition with in the financial
industry, given the declining interest rate regime. Despite that BAL still follows a policy
of prudent lending being mindful of the facts, that it is not only a custodian of its
customers and well-wishers money, but also their trust.
It is a matter of great pleasure for BAF that non-performing portfolio has decreased
considerably since July 1997. While risk can’t be mitigated entirely, formal credit
approval process along with in built system of checks and balances has been put in place
to achieve highest quality in our loan and advances portfolio.

CONSUMER BANKING
They continually strive to improve and add to their consumer banking services.

21
 They provide best return to their clients, an impressive product portfolio has been
designed to provide reasonable returns to them, coupled with security of their capital.

The BAL VISA Credit card was lunched for staff members and the later half of the year
2002 and was offered to the public in the first quarter of the year 2003.
The market place is dynamic as are their customer needs. Consequently, their product
portfolio is continually modified in order to service these needs better.

AUTOMATION AND TECHNOLOGY

Information and technology and its optimum use greatly facilitate work and increase
performance. Bank is the forefront of providing customer on line and timely services. For
this automated and technologically sophisticated workflow and system are a prerequisite.

Bank continually invests in upgrading these systems and similarly training our human
resource. Their ultimate aim is to achieve both services and cost optimization.

It has in-house developed software Banksmart has been successfully installed in all
branches and has been well received. Plans are under way for the installation of ATMs
and joining a switch group of other prominent banks.

FOREIGN TRADE AND CORRESPONDING BANKING

BAL is a trade-focused bank. They place special emphasis on maintaining a synergistic
correspondent-banking network, with a view to give their customer, greater global access.
It works closely with all their correspondents in the areas of mutual interest and benefit.
Today they enjoy mutually beneficial relationships with over 245 correspondents
reflecting favorably not only their reputation domestically but also globally. This network
has facilitated them in handling a trade volume of Rs. 66.93 billion in year 2002 and after
that showing continuously increasing trend.

CREDIT RATING

22
Pakistan credit rating agency-the leading credit agency in the country-has rated BAL very
favorably. The bank has been awarded and AA- (double A minus) and an A1+(A one
plus) in the long and short term respectively. These rating denote very high credit quality
and very low expectation of credit risk.

The bank also issued TFCs in the year 2002 after that issuing frequently. These were very
well received in the market and were oversubscribed by 6 times. PACRA awarded an A+
rating to these certificates.

TRAINING AND DEVELOPMENT

BAL is committed to the personal welfare and professional development at all their team
members.

They realize that proper training of human resource is essential, not only for a more
productive and satisfied workforce but also for a homogeneous corporate culture.

The bank continues to follow its strategy of hiring batches of young and energetic
management trainees who are send to their training and development centers for training
in all areas of banking. Their training and development center is a state of the art facility
with an impressive faculty.

FUTURE OUTLOOK

The economic future for the country seems brighter with many key indicators moving in a
favorable direction. Investor’s confidence is recovering and entrepreneurial activity has
gained momentum. They will continue to follow strategy based on business and deposit
enhancement and network expansion.

23
 ORGANIZATIONAL STRUCTURE

Executive VP
Organizational Structure of Bank Alfalah
Bahawalpur Branch
A. E. V. P

Operation Manager Foreign Exchange Credit & Advance Accounts

Remittance

Introduction of all the departments

Accounts opening
Clearing
Online banking facility
ATM facility
Cash Remittances
Credits
Clearing
A/C Opening
Agri Finance
Credit cards
Consumer finance 24
Registered Head Office
Karachi Pakistan

Detail of the departments is given in the “Section (12) Detailed description of the
operations/activities performed by the department(s) you worked in” portion.

Plan My Internship

Internship (BAL) Branch Introduction

I did my internship in Bank Al-Falah Limited, Bahawalpur Branch (0085). Branch is
the only Brach of Al-Falah exist in the middle of the city, no other branches of Bank Al-
falah in the Bahawalpur city. This Brach covers the Area from Bahawalpur to Hasilpur,
Ahmadpur and Lodhran.
As it covers the huge area, therefore, the banking operations are very fast and burden of
the customer some time overcome the efficiency of the staff.
Bank Al-Falah some time abbreviated as BAL. The in chain of command, on the top there
is Vice President, VP gives the direction to staff at OG-2 level, mainly there are four
persons gets the direction from the VP they are Operation manager, Accounts Officer,
Foreign Exchange Officer, Credit Officer. Operational Manager then deals with
operations of the different department like Account Opening, Remittance, and Clearing
etc.

My Internship Program

25
My Internship duration in the BAL BWP Branch (0085) was of Six Week. I started my
internship from 25-Nov-2009 to 10-Jan-2010. I am very pleased to have this six weeks
experience with the professionals and try to learn the system according to my best.

Departments In Which I Got Training

• Account Opening
• Remittances
• Clearing and Collection
• Car Finance
• AGRI Finance
• Credit Card

Whole Day Activates

The day in the BAL Bahawalpur Branch was started with the Tilat-e-Quran at 9am. Then
all the staff prays for thea Good day, then all the staff goes to their respective
departments. At 2 pm, employee started to leave their seat in different timings because
there is no proper time of lunch break and Namaz Break. After 4pm, closing is started,
rush of the customer get lower and employee started to match the data with the computer
as they have recorded in the registered for their personal record. In the 6pm, bank timing
finished.

My Activities During My Program

When I started my internship program, Mr. Zeshan Mustafa BM, introduced me to the
Officers of the Main department. Operation manager is the person who deals with the
internee supervision. Operation manager guide me and told me the sequences of
department that I had to attends.
Every Internee starts their internship from the filling of the voucher of different kind, my
internship was also started with this activity. After 3 days I went to the Account Opening

26
 department. There I learn about all the types of the account that are available for different
category of customer.

After getting the command in the account opening department, then I started to learn in
the remittance department. There was Mr. Saeed Sahab, he make me able to understand
about the Demand Draft, Pay Slip, Mail Transfer etc.

The next step of my internship program was to go in the Clearing department. There was
Mr. Jamshid Sahab, in the presence of him I learnt about the Inward and Outward
Clearing.
Following the sequence given by the operational manager, then the next department was
the credit card department. Credit card deparment was handled by Mr. Ali Rizwan, he
recently join the Bank Al-Falah. He taught me the requirement of the customer who
wanted to issue the credit card. VISA credit card was used by the bank.
After that, I cover the departments like Card Financing, AGRI Financing, Credit
department.
All the officer of the department were kind to me, they always care of the internee and
tried to provide the knowledge as they can.

DEPARTMENTS AT BANK ALFALAH LIMITED, CIRCULAR ROAD,

BAHAWALPUR

Given below is the list of departments in which the bank is performing activities.
 Accounts opening
 Remittances
 Credits
 Clearing
 AGRI Finance
 Credit cards

27
ACCOUNTS OPENING
It is the most significant front line department of bank. As an account in charge you
should know the banks products, profit rates, incoming and existing products. Account
department is also sensitive in term of data or personal information of clients does not
logout. If they do soothe the customer will annoyed and will loss the confidence. So
accounts department play its role to secure the customer information.

BASIC TYPES OF ACCOUNT

1) Personal Account
2) Business Account

TYPES OF ACCOUNTS
There are following types of accounts;
 Current account
 PLS /Saving account
 Royal profit account
 Kamyab Karobarar

o CURRENT ACCOUNT: The depositors can withdraw the money deposited in

current accounts at any time. Basically the profit is very low on current account.
 Non interest bearing checking account.
 Debit card is used to take out cash and make purchases at number of outlets
across Pakistan which provides access to funds whole day.
 No ZAkat deduction

o SAVING ACCOUNTS: Saving account is generally popular with middle income

groups. The bank undertakes to repay the money to the depositors up to a certain

28
 limit fixed by the rules of the banks. No restriction on number of withdrawals and
number of deposits.

 The saving bank account carries a considerable more interest on it.

 Profit or Interest on saving accounts is credited to the customer account on 6

months basis.

 Debit card can be used to withdraw cash and make purchases at thousands of
outlets across Pakistan which provides access to funds 24 hours a day.

o ROYAL PROFIT ACCONUT: In this account customer deposit and withdraw

money in his own choice. It works on both like current and saving accounts. The
profit is obviously more than the current and saving account.

 Higher returns on higher balances.

 No constraint on number of taking out and on number of deposits.

 Profit is credited to the customer account on monthly basis.

Title of Account
It includes the name of the person who wants to open the account. Name must be
written in block letters.
Address
It includes the address of the person who is going to open the account.
• Personal Account

There are two types of personal account.

a. Individual
b. Joint

29
i) Individual
If only single person wants to open the account then he will tick only on Individual box.

ii) Joint
When more than one person wants to open the account then he will tick on Joint box.
Both individual and joint provide their personal information like

i) Name
ii) Father name
iii) Country of residence
iv) Telephone number
v) N.I.C / Passport number
vi) Date and Place of issue

Nominee / Next of Kin

That portion is important. In case of death or any incident like accident etc. In order to
make money more secure the person who wants to open the account he tell the name of
the person who will owner of his or her money in case of any incident. After death of that
person the bank will contact with that nominee and tell them that now you are the owner
of the money of the person who wants to open the account leave blank that portion than
after the death the money will become ownership of bank.

DETAILS OF OTHER BANK ACCOUNT

As per existing procedure, an introduction is obtained from a customer of the branch/bank
in the account opening form. The signature of introducer is also verified/ authenticated
from bank’s record.

Further steps are to be taken and additional inquires are to be made as under:-

30
 1. Introduction preferably be obtained in person to establish the authenticity of
introduce otherwise, between introducer and new customer.

2. Original NIC alongwith photocopy of the same be obtained and original be

returned after authentication/ certificatiophotocopy. However, extensive use of NIC be
applied wherever it is applicable.

3. Other official papers document such as passport, Driving licence and Service
identity card bearing signature and photograph of applicant for an account are to be
checked, wherever possible.

4. Name, address, signature and other particulars mentioned in Account Opening

Form be tailed with that of appearing in any of the above documents.

5. Current account is opened on proper introduction preferably by the Current

account holder.

6. Managers and other holders holding power of Attorney/ IBS /AS May introduce
accounts only for those who are personally known to them and whose credentials are
absolutely clean.
Applicant Signature
Initial Deposit
• Initial deposit must be in cash. Cheque may only be accepted, as part of Initial
deposit in the case of undoubted parties and on the personal responsibility of
Manager. In all such cases, the cheque when tendered if

Uncrossed should be crossed by the customer before being lodged for collection. Cheque
book should only be issued after the proceeds of crossed cheque have been actually
realized.

31
2) PHASES IN BUSINESS ACCOUNT

1) Currency of Account
2) Type of Account
3) Title of Account
4) Business Address
5) Name
6) Father Name/Husband Name
7) Designation
8) Nationality
9) Country of Residence
10) Contact Number
11) NIC number
12) Type of Organization
i) Sole proprietorship
ii) Partnership
iii) Limited Companies
iv) Club / society
13) Detail of Other Bank Account
14) Introducer

CUSTODY OF CHEQUE BOOKS

The cheque books are most sensitive item of the security stationery and due care should
be exercised in their issue process as well as management of their stock.

Custody of cheque books:-

32
 i) Stock of cheque books must be kept in joint custody of Manager / Accountant
or Second Officer.
ii) Stock of the cheque books must be placed in the Fire Proof Safe.
iii) Cheque book for New Accounts

Cheque book for Existing Accounts

Apart from new / fresh Accounts, all subsequent cheque books shall be issued against the
Cheque Book Requisition Slip extracted from previous cheque book issued to the account
holder.

REQUIREMENTS OF OPENING AN ACCOUNT

DOCUMENTS REQIURED

 National Identity Card.

 Introducer.
 Business and residential telephone numbers and addresses.
 Required limit of the amount.

TASK ASSIGNED TO THE ME

In the account opening department, the task assigned to me is the filling of the form
according to the requirement by the bank and keeping the record of the customers opening
their account are un-blocking the accounts. With this I was responsible there for the
maintenance of the record regarding to the ATM cards and cheque book request.

33
 REMITTANCES
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/she comes to the issuing branch, ask for a remittance to
be complete, and deposits the money to be remitted to the issuing branch. He/She may or
not be the bank’s customer. The customer pays the charges for the remittance facility.

2) REMITEE
It is also sometimes called the beneficiary, or the payee. He is the person to whom the
remittance is made or the one who receives the payment.

3) ISSUING BANK
Issuing bank is the bank that affects the remittances, through the Demand Drafts,
Telegraphic Transfer, or Mail Transfer.

4) PAYING BANK
It is also known as the drawee branch. The branch on whom the instrument is drawn. It
has to make the payment. (Usually located in a different city or country)

Remittances are fund transfer either in local or foreign currency which can be affected by
way of a TT (telegraphic transfer) and DD (demand draft) etc.

34
TYPES OF INSTRUMENTS
There are three types of instruments that are used in funds transfer these are:
 Payment order (PO)
 Demand draft (DD)
 Telegraphic transfer (TT)
 Pay Slip
 Rupee Traveler Cheque
 Mail Transfer

PAYMENT ORDER: It is use within the city.

 Payment order is meant for bank’s own payments but in practice these are
also issued to our customer for making payments.
 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 don’t want to give its deposits to customer.

Entry of issuance “pay order”

Customer debit

Pay order credit

-------------------------------------------------------------------------------------

Entry when customer get amount from “pay order”

Pay order debit

35
 Customer credit

------------------------------------------------------------------------------------

Following are the parties to a pay order:

i) Purchaser: Is a person, firm, company or local authority

ii) Issuing / paying branch: which issues / pays on presentation?

iii) Payee: is a person named therein.

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.
 Legal provision as to crossing , endorsement , collection and payment in due
course are similar to those as for cheques and other negotiable instrument.
 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.

36
 The followings are the parties to a Draft:

 Purchases: Is a person, firm, company or local authority.

 Issuing or Drawing Branch: Which 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

whose order the money is directed to be paid.

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.

ii) 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.

PAY SLIP

Pay slip is for payment of branch expenses.

Entry of pay slip

Expense A/C debit

Pay slip credit

RUPEE TAVELER CHEQUE

Maximum limit of RTC is 10,000 and minimum limit is 1000 RS.

MAIL TRANSFER

37
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 payee’s Account
Or the payee / beneficiary can be advised to receive the amount from the drawee branch
either on cash on proper identification.

PROCEDURE OF REMITTANCES
There are different procedures that are followed by bank in different situations but some
of them are stated under:
 Outward DDs by account/cash
 Inward remittances DD advice
 Inward remittances DD (BAL A/c holder)
 Foreign transfer of funds through SWIFT

OUTWARD DDs BY ACCOUNT/CASH:

These are the steps that are to be followed during outward DDs:
1). Customer approaches the counter and requests for the issuance of instrument(s).
2). The customer fills up an application form. A cheque is also required for the minimum
amount of DD.
3). The designated officer verifies all the particulars e.g. signature, amount etc. for
completion and correctness and matches the information with the cheque.
3-a). If any errors are found, the documents are given back to the customer for completion
and rectification.
4). Charges stamp is affixed on the application and relevant amounts are written
according to the schedule of charges. The customer also has opportunity pay these
charges in cash or he can write a cheque with an amount covering the value of DD and
other charges.

38
5). Customer’s balance will be verified for sufficient funds on the system.
6). In case of insufficient balance, the cheque is either returned or referred to the higher
authority for approval.
7). The designated officer prepares DD and hand over to the customer.

ENTRY:
In cash Account holder
Sundry a/c Dr. Customer a/c Dr.
Head office Cr. Head office Cr.

1.
Customer approaches
the counter

2.
Filling up of
application
FLOW CHART form

3.
Errors/ 3-a.
Verification of
Discrepa Customers advise
particulars
ncies for completion or
rectification

5.
4.
Balance
Charges incorporated
Enquiry
on the application
form.
YES

6.
Balance Cheques returned or
Sufficient referred for approval

NO

39
7.
DD handed over to the
customer
INWARD REMITTANCES DD ADVICE: This is the procedure adopted when the
issuing branch sends copy of the instrument as an advice
1). The issuing branch sends the Advice Copy of the instrument, by courier to the branch
at which instrument is drawn.

2). Following particulars are verified:

 Name
 Date
 Attorney holder’s signatures
 Amount in words and figures
 Cutting etc.

2-a). If the particulars on the advice are not satisfactory or nay discrepancy is found, the
issuing branch is contacted for clarifications and rectification.

3). The designated officer enters the particulars into the system.

40
ENTRY:

1. Head office Dr.

DD Payable Cr.
2. DD Payable Dr.
Cash Cr.

1.
Advice
FLOW CHART
Received

2.
Verification of
particulars

Particular 2-a).
s found Contact issuing branch
satisfactor for clarification
y

NO

41
3.
Enter in to the
SYSTEM
 YES

ENTRY:
1. Head Office1. Dr.
Instrument presented at the
DD. Payable Cr.
counter with pay-in-slip

2. DD. Payable Dr.

2.
Customer’s
Verificationaccount
of Cr.
particulars

FLOW CHART
Errors 3.
Discre Instrument returned to
pancie source
s

4.
Affixing of Transfer Stamp and
Marking as PAID

5.
Cash
paymen YES
t
NO require
d

5a.
6.Counter slip to cash payment over the
customer counter

42
7.
Credit funds to account
 YES

NO

FOREIGN REMITTANCES: Foreign transfer of funds through SWIFT

This is explained through an example. Example: My account Ayesha’s account is in Abu

Dhabi BAL. I want to transfer amount in USD dollars to my account in BAL Islamabad.
These entries are passed for this procedure.

BAL Abu Dhabi (Ayesha’s account) Dr.

Citi Bank’s account Cr.

Citi Bank’s account Dr.

Nostro’s account (BAL KHI) Cr.

Nostro’s account (KHI main) Dr.

Demand account (KHI main) Cr.

Demand account Dr.

Ayesha’s account Cr.

43
FLOW CHART

Bank Alfalah Bank Alfalah Bank Alfalah

Citi Bank for
Limited Limited Limited
routing
Abu Dhabi Karachi main Islamabad

MY TASK
My Task in the Remittance Department initially was the filling of the form for different
instrumental. Demand draft, pay order, mail transfer etc, accounting entries and the
requirement of document was checked and I was involve in this process within 2 day.

My major focus on the entries of the instrument made by the remittance officer and the
also the requirement needed for order remittance, I do observe on the difference between
different instrument and noting the activities of the officer during his work.

CLEARING

The procedure by which cheques are exchanged between the collecting and the paying
bank, and the financial completion, is called “clearing”. In this part two types of clearing
takes place.
 Outward clearing
 Inward clearing

44
INWARD CLEARING
Cheques drew by BAL customer in favor of non-BAL customer. If dishonored the cheque
will be treated as return. Following steps are taken for inward clearing

1. The clearing dept. officer along with the NIFT/Clearing Schedules attached receives
cheques from NIFT.

2. Cheques are sent separately to the concerned dept.

3. The designated officer verifies all particulars from the instruments and the system for
sufficient balance etc. if any technical faults are found; the officer sends back the
instrument with a memorandum stating the reason for return.

3-a. A copy of the memo is retained as record.

4. If no discrepancy or technical fault is found, the officer at the system posts the cheques
into the system.

5. Accounts are adjusted accordingly.

6. Cheques returned data is entered into the “O/W return of Inward Clearing” register.
This register reflects particulars such as:
 Date
 Account no.
 Cheque/bill no.
 Drawn on
 Amount &
 Reason

6-a. returned cheques are given back to NIFT/Clearing Rep. from where they are
delivered back to the original source.

45
FLOW CHART

1.
Cheques received from
NIFT/Clearing house

2.
Cheques are sent
separately to relevant
personnel

Any
technical
faults
noticed 3.
Cheques are sent to
clearing dept. with memo

3-a.
Yes 4. Copy of
CHEQUES posted into memo is
a system retained
for record

5.
Returned cheque data
entered into a register

4-a. 46
Accounts adjusted 5-a.
accordingly Returned cheques are given
back to NIFT
 No

OUTWARD CLEARING
Cheque drawn by non-BAL customers in favor of BAL customer and deposited at one of
our branch. If cheque dishonored it will be treated as return. Following steps are taken for
outward clearing.
1. Customer approaches the counter with the instrument and fills in the pay-in-slip at the
counter.

2-3. Cheques and pay-in-slips bear handed over by the customer to the designated officer
at the counter. After verification officer affixes crossing clearing stamp on the instrument.

3-a. The counter slip is handed over to the customer, for record and reference.

4. The officer feeds the data into system. The posting no (OBC #) thus assigned is written
at the back of the cheque and pay in slips.

5. The instruments are received back by the clearing dept. after approval, where they are
arranged in bundles of 100 each. A ticket of NIFT is filled with the total amount of the
bundle is also attached with the same. The bundle is also handed over to NIFT.

47
FLOW CHART
1.
Customer approaches
the clearing counter

2.
cheque and pay-in-slip,
are handed over to the
clearing personnel

3. 3-a.
Crossing stamps are Counter receipt of pay-in-
affixed on the slip is handed over to the
instruments customer.

4.
Data is posted in the
system

48
5.
cheques in bundles, NIFT
ticket sent to NIFT
TASK ASSIGNED TO ME

The Clearing initially introduced me the different stamps and told me about the functions
of different stamps. I started to collect and clear the cheques and then after that I have to
record all the outward clearing in the register. Checking the correct entries also include in
my task.

Timing of collecting cheques was before 1 pm. After that no cheque was accepted. So
before 1 pm we collected the cheques and them make the entries and save them in the
TCS Bag for outward clearing.

During my days in Clearing department, my day was started with realizing the inward
clearing. I collected the inward and then make entries and clear the instrument. After that
daily work of outward clearing started and carry on.

CREDIT CARDS

It is plastic money that is used instead of cash. It is accepted in more than 130 countries
around the globe. It provides ease to the customers.

49
FEATURES OF CREDIT CARDS
Following are the characteristics of BAL VISA Credit Card:
 No joining fee
 No annual fee/renewal fee
 Lowest markup rate
 Cash withdrawal
 Global acceptability
 Revolving credit
 Balance transfer facility
 Free supplementary cards
 24 hour customer service
 All billing in Pakistani rupees
 Reward points

1) NO JOINING FEE: It’s an advantage for the customers that they enjoy free facility of
BAL VISA Credit Card.

2) NO ANNUAL /RENEWAL FEE: It has a competitive advantage upon all other credit
cards in Pakistan that it has no annual/renewal fee.

3) LOWEST MARKUP RATE: It has a lowest markup rate of 2.25% per month.

4) CASH WITHDRAWAL: Customer is allowed to withdraw 75% of the assign credit

limit from the BAL credit card. With drawl charges are 3% or 300 whichever is greater.

Example: a customer withdraws Rs. 25,000/- from credit card and he returns that amount
after 20 days. What amount he will pay after 20 days?
He will pay Rs. 26125/-. Following is the calculation of withdrawal charges.

Actual amount 25,000

Withdrawal charges (25000*3%) 750

50
Markup (250000*0.075%) *20 375

Rs. 26,125/-

5) GLOBAL ACCEPTABILITY: BAL VISA credit card is almost acceptable in more

than 130 countries so it’s a globally accepted.

6) REVOLVING CREDIT: Revolving credit means a customer must pay minimum 5%

or Rs. 500/- of the out standing balance and the remaining amount will be transferred to
next month. If the customer pays partially or minimum then only markup is to be hit and
he will not pay late charges (Late Charges are Rs. 300). Late charges will hit if customer
is not paying any thing.

Example: customer spends Rs. 25000/- and he doesn’t pay within a due date what amount
he will pay?

He will pay Rs. 25862.5/-

Actual spending Rs. 25,000

Late charges Rs. 300
Markup( 25000*2.25%) Rs. 562.5

Rs. 25862.5

7) BALANCE TRANSFER FACILITY: Balance Transfer Facility (BTF) means you

can transfer an amount from any other credit card to BAL VISA credit card and only 1.5%
mark up is to be hit on that amount for the initial one year. Balance transfer amount
should not exceed the limit of the credit card.

51
Example: suppose a customer has a credit card limit of Rs. 50000/-, his available credit
limit of BAL credit card is Rs. 45000 and he wants to transfers an amount of Rs.25000/-
from his Citibank credit card then how he will pay markup on this amount in case of
revolve?
He will pay 2.25% on Rs.5000/-(5000/- Rs. is the actual spending of BAL credit card) and
1.5% on Rs. 25000/-(25000/- Rs. is the amount that he wants to BTF from Citibank).

8) FREE SUPPLEMENTARY CARDS: Only ALFALAH VISA card provides you 6

free supplementary cards for your spouse, children, siblings and parents who are more
than 18 years. It is just like a joint account. Supplementary always shares with the basic
cardholder. Basic cardholder has a choice to specify the limit for supplementary and the
most important thing is that bill always be paid by basic cardholder in case of
supplementary.

9) 24-HOUR CUSTOMER SERVICE: Our 24-hour service helps you and assist you in
activating a card, answering your queries and reporting have stolen cards.
10) ALL BILLING IN PAKISTANI RUPEES: Whether you make transactions in
dollars or whatever for the convenience of customers always paid bills in Pakistani
rupees.

11) FORTUNES: Alfalah visa offers you fortunes, a reward point that allows you to earn
points on every rupee you spends on your card. You can accumulate and exchange the
fortune points earned for gifts of your choice from a deliver range of item to match your
lifestyle.

12) PROCESS FOR CREDIT CARDS

Following is the procedure that is to be followed:

The sales executive must ensure that the application meets the criteria as per BANK
ALFALAH CREDIT CARD Product Program.

52
 After the applicant’s eligibility criteria is ascertained, the sales executive is required to
do the following;

 Fill out the application form and obtain applicant signatures.

 Obtain all necessary documents from the applicant.

 The sales executive then gives the complete application form (i.e. filled application,
supporting documents) to the MAIN branch for verification (i.e. telephonic and
physical).

 The Branch Verification Officer is required to carry out the telephonic/ physical
verifications of the applicant (as required).

 Once the verifications are done, the Branch Credit Committee reviews the
application, write its remarks on the application form and proposes a credit limit for
the applicant.

 After the Branch Credit Committee reviews/ signoff, all completed applications are to
be forwarded to the Credit Card Division – Lahore.

CRITERIA AND DOCUMENTS REQUIRED

1) SALARIED CLASS

AGE: Primary: min 18, max 70

Supplementary: min 18, max no age limit

INCOME: Min Rs. 10,000/- for Cat “A” companies

Min Rs. 15,000/- for Cat “B” companies

53
 Min Rs. 25,000/- for Cat “C” companies
Min Rs. 40,000/- for specified companies.

LENGTH OF EMPLOYMENT: permanently employed for 3 months and continuously

employed for 6 months.

DOCUMENTS REQUIRED FOR SALARIED CLASS:

 NIC Copy
 Cat “A” latest original salary slip
 Cat “B” latest original salary slip
 Cat “C” : latest salary slip/salary letter with personal account six month bank
statement
 Specified companies: latest salary slip/salary letter with personal account six month
bank statement.

2)SELF EMPLOYED:

AGE: Primary: Min. 22, Max. 70

Supplementary: Min. 18, Max. No age limit

INCOME: Min. Avg. Balance 25,000 (At least)

LENGTH OF BUSINESS: At least One-Year business length required.

DOCUMENTS REQUIRED FOR SELF-EMPLOYED:

 Copy of N.I.C.
 Last six months personal or company bank statement
 Business Proof (Sole proprietorship Letter / Partnership Deed / Tax Documents)

54
3) ONNELARMED FORCES PERS NAVY

: to lieutenants and above

(Limit as per grid)

AIRFORCE: squadron leaders and above

(Limit as per grid)

ARMY: Lt. Col. and above

(Limit as per grid)

CAR FINANCE
It is not a new product in the market. It has gained importance because of increasing
inflation and increase in the price of motor vehicle. The purchasing power of consumers is
continuously declining, most of the banks are offering car financing. It helps especially
for those borrowers who are able to pay smaller amount by way of monthly installments
of total cost of the motor vehicle. The risk of losses for the bank is also minimized due to
comprehensive insurance cover. Bank allows the vehicles to be registered in the
borrower’s name.

BENEFITS AND FEATURES

 Quickest processing
 No hidden charges
 Minimum down payment
 Complete repayment at any point of time
 Balance transfer facility (BTF) for existing as well as new clients from other Banks
 Tenor period ranging from 1 to 5 years.
 Financing of all brand new locally assembled vehicles.
 Financing limit ranging b/w Rs. 200,000/- to Rs. 2000,000/-

55
CORPORATE & INDIVIDUAL CAR LEASING
BAF’s recently introduced car-leasing facility for individuals and corporate sector has set
new dimensions for the product. Now they are provided with the option of either to get
the vehicle leased or financed.

MARK-UP
offering lowest rate of markup of 17.5% on Suzuki manufacturing and 18.5% on other
vehicles, (per annum), BAL has captivated a major market share and so is the plan for
future.

REPAYMENTS
Easily affordable installments on monthly basis in the form of postdated cheques will set
free of depositing rental cheques every month.

SECURITY
Hypothecation of vehicle in the name of the Bank Alfalah Limited.

CO BORROWER
Acting as a co borrower, will enables family members (spouse, children- 18 year and
above) to avail the financing facility and can get the car registered in their names as well.

DOCUMENTS REQUIRED
 Copy of NIC
Last six months bank statement
Salary certificate (in case of salaried individual)
 Business proof (in case of self employed )
 Copy of utility bill
 Co borrower NIC copy ( if it is a co-borrower case)

56
WORKING
Following steps are taken by the bank for providing the loan.
The customers fill the forms.
 After completing the documents bank branch verify all these documents.
 The data provided by the borrower verify (physically) through visits by the
verification officer.
 Then proposal is to be made.
 All the data goes to credit committee for the approval.
 Documents send to the head office Karachi for checking that either he is a defaulter of
any other bank or not.
 After stamping of data check clear bank call customer for down payment and
signature etc.
 After completing all the documentation letter fax to the insurer and he insure the car.
 Bank get keys and original documents and sends the delivery order to the showroom.
 The documents send to ETO (Excise and Taxation Office for registration).
 Car and the registration copy hand over to the customer and the remaining documents
remain in the custody of the customer.
 NOC gives to the customer after completing all the installments.

ELIGIBILITY
A customer is eligible to apply for a car loan if:
 He is between 21_55 years.
 The income should be in excess of three times the monthly installment of the
borrower.
 In case where spouse also working, the income of both of them may be combined but
the loan burden should not exceed 33% of the income.

13. Structure of the Finance Department (minimum word limit: 150-200 words
a. Departmental hierarchy
b. Number of employees working in the finance department

57
c. Finance & accounting operations

Finance department’s hierarchy is started with the Finance director in the main office.
Finance director appoint finance administrator to the branches in the different cities of
Pakistan approved by the head office Karachi.
These administrators deal with the three authorities, they are Auditor, Treasurer and
Management accountant
.

FINANCE DEPARTMENT STRUCTURE AND THE FUNCTION OF

FINANCE DEPARTMENT

Department Head

Treasurer Chief Accountant Auditor

Cash Management Reconciliation Branch Budgeting

Currency Checking Reports to Head Office Audit

Pay rolls

Purchase Handling

58
There are five to seven employees in the finance department. There is a Head of finance
dealing with 3 managerial positions, Chief Accountant, Auditor, Treasurer.

All the three position have different functions and responsibilities

Treasurer: He is the person responsible for the Management of cash currency and Cash
checking.

Chief Accountant: He is responsible for the Reconciliation of Entry Vouchers, Payroll,

purchasing Matter, reporting to Head Office on daily basis.

Auditor: Auditor is responsible for Branch Budgeting and Audit.

Bank Accounting system is highly structured and complex and managed by computer
software specially design according to the specification ordered by the head office. There
are pre-determine Performa for data entry.

Different positions personal have limited access to their concern area of the software. If
there is any wrong entry exit, system has the ability to give some caution about the error.

59
 CRITICAL ANALYSIS

Throughout my Internship Program, I always tried to observe the environment and the
culture of the organization. I was applying my knowledge that I gained in my entire study,
I found that some of them were followed very strictly but there were some portions where
the improvement is to be essential.

The branch in which I did my internship was Bank Alfalah Bahawalpur Branch, this
Brach is Centralized Structured, all the decision has to be taken by the Branch manager at
the Branch level, and at country level, the decision was made by the head office in
Karachi, Span of control is small in the Branch, but hierarchy level is wide, there is long
authority line that is dealing the operations and the decision of the branch.

The key Strength I observe that all the employees including the managerial level as well
as operational level, every one was working according to their mission statement and
every person knows what the vision of the Bank and Customer is Boss. This makes the
employee a non-divisible team and creates synergy.

Main Defect I found in the culture and the in the environment of BAL Bahawalpur
Branch is that there is no back up HR for a person if he or she is not at his/her seat. There
is no Fix timing of Lunch break and Namaz. Employees are going for lunch and Namaz

60
according to their own, and there is no back up person who deal the customer in their
absence.

Another Problem I observe there is the security system of the customer, most of time I
saw that the metal detector is giving the beep but the guard is not taking action, but he let
the customer go into the bank.

Third problem was the authority of decision making in the Brach, Brach Manager is not
allowed to hire an employee even as an office boy, he/she had to get permission from the
head office and then the head office hire the person for the job. In the same way,
internship decision also taken by the head office mostly.

Defects and the strength are the part of some organization. But according to my
observation, strengths are comparatively at very high rate than the defect. I humbly told to
the Brach manager about my observation and Branch Manager appricaite me on my
efforts and observation and also have recorded my views in his diary.

61
FINANACIAL ANAYLSIS

62
Financial Statements

63
64
Source Documents

65
66
67
68
 RATIO ANALYSIS
Type Formula 2006 2007 2008
Liquidity
Ratios
Current Ratio Current asset / 259549500 / 310959731 / 326228285/
current Lib 250994656 298542781 317875111
= 1.034 =1.042 = 1.026

Note: Inventory = Investment, lending and advances are the inventory for the bank
Asset Test Ratio (Current asset – 40591312 / 47817116/ 54268378/
inventory) / current 250994656 298542781 317875111
Lib = 0.161 =0.160 = 0.170

Working Capital Current Asset – 259549500 - 310959731 - 326228285 -

Current Liabilities 250994656 298542781 317875111
= 8554844 =12416950 = 8353174

Leverage
Ratios
Times Interest EBIT / Interest Exp 8483996 / 5918051 12824663 / 8289111 12417459 /
Earned = 1.434 = 1.547 10622739 = 1.169

Debt – Equity ratio Total Debt / Total 251125627 / 297625396 / 328610485 /

Equity 10572605 = 23.75 13766673 = 21.61 14608523 = 22.49

Fixed asset / equity Fixed asset / equity 16136041 / 5000000 17935421 / 6500000 22762479 / 7995000
ratio = 3.23 = 2.76 = 2.85

Profitability
ratio
Net profit margin Profit after tax / net (1762691/ (3130229 / (1301301 /
sale x 100 21191470) * 100 = 25783871) * 100 = 31046583) * 100 =
8.31% 12.14% 4.2 %

Return on asset Net income/ total (3675610 / (5977886 / (6177727 /

asset x 100 275685541)*100= 328895152)*100 = 348990764) * 100=
1.33 % 1.82% 1.77%

69
Sales to fix asset Net sale / fixed asset 21191470 / 25783871 / 31046583 /
10502990 = 2.02 11922324 = 2.16 13773293= 2.25

Gross Profit Gross profit / Net (5958584/ (9162908 / (10715389 /

Margin Sales * 100 21191470)*100= 25783871)*100= 31046583)*100=
28.11% 35.5% 34.5%

Activity
RATIOS
Total asset turnover Sales / Total Assets 21191470 / 25783871 / 31046583 /
275685541 = 0.077 328895152 = 0.078 348990764 = 0.089

Fixed asset Sales/ fixed asset 21191470 / 25783871 / 31046583 /

turnover 10502990 = 2.01 11922324 = 2.16 13773293 = 2.24

MARKET
RATIOS
Earning per share Net Income / 1762691 / 606132 = 3130229 / 650000 = 1301301 / 799500 =
Average Number of 2.91 4.82 1.63
Common Shares
Outstanding

Cash Flows
Ratios
Operating CF per Operating cash 7852362 / 606132 = 39645325 / 650000 2499606 / 799500 =
share flow / # of share out 12.95 = 60.99 3.12
standing

Operating cash Operating CF / Total 7852362 / 11616236 39645325 / 2499606 / 16261391

flow / Debt Debt = 24451555 = 0.153
0.67 = 1.62

Formula Applied
Ratio 2005 2006 2007 2008
For Calculation
REGULATO
RY RATIOS

70
Advances to Advances / 149,999/ 171,199/ 192,671/
Deposits Ratio Deposits 118,864/222,345 239,509 273,174 300,733
0.53:1 0.62:1 0.62:1 0.64:1

Cash to Cash / Deposits 248,222/ 275,511/ 328,895/ 348,990/

Deposits Ratio 222,345 239509 273,174 300733
1.1:1 1.15:1 1.20:1 1.16:1

CURRENT RATIO
Current asset / Current Liabilities

Years 2006 2007 2008

1.034 1.042 1.026

1.045
1.04
1.035
1.03
1.025
1.02
1.015
2006 2007 2008

Interpretation:

71
Current ratios show the relationship between current asst and current liabilities and show
the ability of the company to pay back its current liabilities by utilizing its current asset.
The current ratio for BAL in 2006 was 1.034 that increases in 2007 to 1.042. That was a
good sign for a company. But due to economic downfall in 2008, its ratio was disturb to
1.026. But that was also a good ratio.

Asset Test Ratio

(Current asset – inventory) / Current Liabilities

Years 2006 2007 2008

0.161 0.160 0.170

0.172
0.17
0.168
0.166
0.164
0.162
0.16
0.158
0.156
0.154
2006 2007 2008

Interpretation:

72
This ratio shows the relationship between the quick asset and the current liabilities and
shows the company ability to pay back its current liability within its short period of time.
There is a slight change in this ratio since last three years. This ratio is slightly
unfavorable for the bank, it should be improved.

Working Capital

Current Asset – Current Liabilities In Millions

Year 2006 2007 2008

8.5 12.4 8.3

73
 14
12
10
8
6
4
2
0
2006 2007 2008

Interpretation:

Working capital is the difference between the current asset and current liabilities. This is
the amount used for day to day operations of the company. In 2006 working capital of
BAL was 8.5 million, and the graph shows the increase in the working capital in 2007
12.4 million, which mean the current asset (may be cash or Balance with other bank) may
increase, that is, in some cases good for the bank if the bank treat it like a reserve account
but in other conditions its unfavorable because of less utilization of the current asset.

LEVERAGE RATIO

Times Interest Earned

EBIT / Interest Exp

Years 2006 2007 2008

1.434 1.547 1.169

74
 2

1.5

0.5

0
2006 2007 2008

Interpretation:

It shows how many times the company can pay its interest with its income of one year,
higher the ratio will be more favorable for the organization. In 2006 the ratio was 1.434
that increases in the 2007 at 1.547 it indicate two aspects, one is to increase in the income
or second one is to decrease the interest expense. In 2008 this ratios goes down ward, it
should be improved.

Debt – Equity Ratio

Total Debt / Total Equity

Years 2006 2007 2008

23.75 21.61 22.49

24

23

22

21

20
2006 2007 2008

Interpretation:
75
This ratio shows the relationship between Long term debt and total equity of the bank. For
bank BAL, this ratio stands at an average of 23 approx. This ratio is unfavorable for the
bank because of higher ratio between debt and equity e.g Rs. 23 is invested again 1 rupee
of capital investment.

DEBT RATIO

Formula:
Total liabilities / total assets *100

Year 2006 2007 2008

Debt Ratio 96.16% 95.1% 95.21%

76
 97

96

95

94
2006 2007 2008

Interpretation:

This ratio shows that how much portion of the assets are covered by the liabilities of the
organization. In 2006 maximum assets were covering by liability, but in 2007 and 2008
equity is increasing and decrease in liability portion as compare to the 2006.

EQITY RATIO
Formula:
Equity / total assets *100

Year 2006 2007 2008

Equity Ratio 4.4% 4.93% 4.88%

77
 5

4.5

4
2006 2007 2008

Interpretation:
This ratio is showing increasing trend except in 2006 in which it was at its lowest value
because increase in equity is lower increase than assets.

Fixed Asset to Equity Ratio

Fixed asset / equity

Years 2006 2007 2008

3.23 2.76 2.85

78
 3.3
3.2
3.1
3
2.9
2.8
2.7
2.6
2.5
2006 2007 2008

Interpretation:

This ratio shows the relationship between fix asset of the company with the equity held by
the company. This ratios show that how much times your fixed asset are of your equity.
For BAL this ratio stands at 2.85 in 2008 that shows the fixed asst are 2.85 time of the
equity of the bank. That is almost equal to 2007 ratio. Although the equity was increased
but fixed asset was also increase that is the reason of sustainability of the ratio.

Profitability Ratios

(% Net Profit Margin (in

Profit after tax / net sale x 100
Years 2006 2007 2008
8.31 12.14 4.2

79
 14

12

10

0
2006 2007 2008

Interpretation:

This ratio interprets the net profit as a percentage of net sales. In 2007, the ratio was pretty
good but in 2008, there was enormous decline in 2008, and the ratio went to 4.2. That is
Alarming for the organization and bank should take action for its improvement. Higher
the ratio results higher market position of the organization.

Return of Asset (in %)

Net income/ total asset x 100

Years 2006 2007 2008

1.3 1.82 1.77

80
 2

1.5

0.5

0
2006 2007 2008

Interpretation:
This ratio shows the relationship between net profit and total assets. It is the main
objective of an organization to maximize its return on assets. The RoA was maximum in
2007 but again decreased in 2008 due to economic slump and separation of WARID
telecom from Bank Alfalah ltd.

Sales to Fix Asset

Net sale / fixed asset
Years 2006 2007 2008
2.02 2.16 2.25

81
 2.3
2.25
2.2
2.15
2.1
2.05
2
1.95
1.9
2006 2007 2008

Interpretation:

This ratio also shows the utilization of the asset but the fix asset. If we look at the graph,
there is gradual increase in this ratio. This shows the fix assets are properly being utilized
for the purpose of earning interest. In 2006 this ratio was 2.02 while in 2008 it increases
to 2.25. This increase shows the improvement in the efficiency of the organization.

Gross Profit Margin (%)

Gross profit / Net Sales * 100

Years 2006 2007 2008

28.11 35.5 34.5

82
 40
35
30
25
20
15
10
5
0
2006 2007 2008

Interpretation:

Gross profit margin ratio the shows the gross profit as a % of the net sale. In 2006 the
ratio was 28.11% that was much improved in 2007 and stood at 35.5%, in 2008 the ratio
was at 34.5% there was nominal change. This ratio is favorable for the company, there
may be two reasons for this increase, one is to increase interest earning or lowering the
interest expenses.

Activity Ratios
Total Asset Turn Over
Sales / Total Assets

Years 2006 2007 2008

0.077 0.078 0.089

83
 0.1

0.05
2006 2007 2008

Interpretation:

This ratio shows the utilization of the total asset. If we look at the graph, there is gradual
slight increase in this ratio. This shows the total assets are properly being utilized for the
purpose of earning interest. In 2006 this ratio was 0.077 while in 2008 it increases to
0.089. This increase shows the improvement in the efficiency of the organization.

Fixed Asset Turn Over

Sales/ fixed asset

Years 2006 2007 2008

2.01 2.16 2.24

84
 2.3
2.25
2.2
2.15
2.1
2.05
2
1.95
1.9
1.85
2006 2007 2008

MARKET RATIOS

Earning per Share

Year 2006 2007 2008

2.91 4.82 1.63

6
5
4
3
2
1
0
2006 2007 2008

Interpretation:

This ratio shows the earning on each share of the company. In 2006 the earning per share
was 2.91, which increase to 4.82 in 2007 and then decrease to 1.63 in 2008. There may be
some reason for this variation, this variation may be caused due to three factors, Increase
or Decrease in Interest Earned, Expenses or number of shares issued.

CASH FLOWS RATIOS

Operating CF per Share
Operating cash flow / # of share out standing

85
 Year 2006 2007 2008
12.95 60.99 3.12

80

60

40

20

0
2006 2007 2008

Interpretation:

Operating cash flow shows the actual cash incoming and outgoing through the operation
of the company/organization. Operation CF will be favorable if it shows the positive
balance. Higher the Operating CF, stronger the organization will be considered. In 2006
and 2008, ratio shows that cash flow generated by the operating activities is much lesser
than in the 2007. This mean more dividend was expected to be given in 2007, to the share
holder and market price of the share was appreciated.

Operating CF - Debt
Operating CF / Total Debt

Year 2006 2007 2008

0.67 1.62 0.153

86
 2

1.5

0.5

0
2006 2007 2008

Interpretation:

This ratio shows the relationship of operating cash flow with the debt taken by the
organization. From the above graphical representation, this ratio shows how much cash is
generating through operating activates again debt. In 2006 and 2008 cash generated by
the operations of the organization is not looking very positive, but in 2007, operating cash
flow overcoming all the debt of the bank, this is good sign, positive operating cash mean
the organization is very strong.

RETURN ON EQUITY

Formula:
Net profit/ equity *100

87
 Year 2006 2007 2008
RoE 20.37 25.72 9.17

30
25
20
15
10
5
0
2006 2007 2008

Interpretation:
This ratio is showing volatile trend. In 2007 the return equity was very high due to the
much higher rate of profit as compared to equity. In 2008 it is very low due to greater
expenses than earlier years.

ADVANCE TO DEPOSIT RATIO

Formula:
Advance / deposit *100

Year 2006 2007 2008

ATD 62.63% 62.67% 64.1%

88
 64.5
64
63.5
63
62.5
62
61.5
2006 2007 2008

Interpretation:
This ratio is showing volatile trend. This ratio is highest in year 2008 due to the fact that
bank has advanced more loans in this year than the deposits collected.

EQUITY TO DEPOSIT RATIO

Formula:
Equity / total deposit *100

Year 2006 2007 2008

ETD 5.11% 5.94% 5.66%

89
 6.2
6
5.8
5.6
5.4
5.2
5
4.8
4.6
2006 2007 2008

Interpretation:
This ratio is volatile. This ratio is highest in year 2007 because equity is more than
deposit. Deposit is the liability for the bank, from this ratio we can estimate that how
much asset are covered with the equity and how much with the deposit.

DEPOSIT TO TOTAL LIABILITY RATIO

Formula:
Total deposit / total liabilities *100

Year 2006 2007 2008

DTL 90.9% 87.36 90.5%

90
 92
91
90
89
88
87
86
85
2006 2007 2008

Interpretation:

This ratio is showing volatile trend, It was highest in 2006 but decreased in 2007. But
overall it is satisfactory but a decrease comes in year 2007. This ratio is highest in year
2006 because deposit is highest than liabilities.

INVESTEMENT TO TOTAL ASSETS RATIO

Formula:
Investment / total assets *100
Year 2006 2007 2008
ITA 20.50% 26.9% 21.7%

91
 30
25
20
15
10
5
0
2006 2007 2008

Interpretation:

This ratio shows the relationship between the investment and the total asset, this ratio is
highest in year 2007 because investment covers the major portion of the total asset while
in 2008 it comes decrease it can be either favorable or un-favorable for the company
according to the policy of the company.

ADVANCE TO ASSETS RATIO

Formula:
Loans given / total assets *100

Year 2006 2007 2008

ATA 54.40% 52.05% 55.2%

92
 56
55
54
53
52
51
50
2006 2007 2008

Interpretation:

This ratio is showing volatile trend. This ratio is highest in year 2008 because bank given
more advances as compared to other years. This means the major portion of the asset of
the bank is covered by the advances made by the bank in 2008.

Common size analysis

93
 • Horizontal analysis
• Vertical analysis

1. Horizontal Analysis of Balance Sheet

2004 2005 2006 2007 2008

Assets
Cash and balances with treasury banks 100.00 125.78 141.36 149.36 165.85
Balances with other banks 100.00 305.07 399.88 577.29 677.81
Investments 100.00 161.75 159.15 249.25 213.99
Advances 100.00 133.66 168.67 192.51 216.65
Other assets 100.00 119.35 174.56 186.34 278.57

94
Operating fixed assets 100.00 154.66 245.37 278.53 321.77
TOTAL ASSETS 100.00 160.37 178.05 212.42 225.40
LIABILITIES & EQUITY
Bills payable 100.00 167.13 138.39 185.27 154.55
Borrowings from financial institutions 100.00 45.93 65.97 166.86 107.60
Deposits and other accounts 100.00 171.41 184.64 210.60 231.84
Subordinated loans 100.00 169.70 169.63 169.57 135.36
Other liabilities 100.00 191.52 268.06 349.75 414.31
Deferred tax liabilities 100.00 175.49 696.56 500.23 75.58
TOTAL LIABILITIES 100.00 161.02 176.13 209.05 221.93
REPRESENTED BY
Share capital 100.00 120.00 200.00 260.00 319.80
Reserves 100.00 233.08 272.56 239.38 313.85
Unappropriated profit 100.00 161.20 328.15 563.97 400.73
Surplus on revaluation of assets 100.00 81.36 187.06 274.89 272.99
Total EQUITY 100.00 141.86 232.67 308.28 323.95
Total Liabilities and Equity 100.00 160.37 178.05 212.42 225.40

95
2. Horizontal Analysis of Income Statement

96
 2004 2005 2006 2007 2008
Mark-up/return/interest earned 100.00 217.91 377.06 458.77 552.41
NON MARK-UP /INTEREST INCOME
Fee, Commission and brokerage
income 100.00 171.45 267.06 359.48 375.71
Dividend income 100.00 99.00 71.17 123.19 572.80
Income from dealing in Foreign
currency 100.00 132.57 176.86 216.85 418.08
Gain on sale of securities - - 100.00 1,135.92 234.70
Unrealized (loss) /gain on
- -
revaluation of Investments 100.00 54.09 657.89
Other income 100.00 129.97 147.01 180.05 217.81
Total Non mark-up/ Interest income 100.00 147.72 212.14 397.25 345.08
TOTAL INCOME 100.00 202.96 341.95 445.68 508.27
EXPENSES
Mark-up/return/interest earned
expensed 100.00 295.96 625.72 682.74 835.14
Provision against non-performing
loans and advances-net 100.00 108.67 188.46 640.41 549.96
Provision for the diminution in the
- -
value of investments 100.00 (1,069.88) 68,316.95
Bad debts written off directly 100.00 145.87 437.89 1,664.96 8,062.11
NON MARK-UP/ INTEREST EXPENSES
Administrative expenses 100.00 161.08 219.40 308.95 391.07
Other Provisions/Write Offs - 100.00 - 0.69 282.29
Other charges 100.00 1,241.41 2,547.41 562.65 7,221.06
Total non mark-up/ Interest
expenses 100.00 162.14 220.88 309.37 396.47
Extraordinary / Unusual items
PBT 100.00 155.00 155.16 274.26 108.53
Taxation
-Current 100.00 101.10 81.25 294.60 295.15
-Prior years 100.00 (5.00) 486.12 0.00 1,068.85
-Deferred 100.00 (7,303.41) (11,681.74) 8,776.60 27,705.02
TOTAL EXPENSES 100.00 211.47 374.54 474.39 578.52
PAT 100.00 155.87 161.42 286.65 119.17

97
Interpretation

 Cash and balance with treasury banks is increasing from 2004 to 2008 due to
increase in Cash deposits and other accounts. Due to increase in deposits
following phenomenon happened

o Balance with other banks is also increasing

o Investments are increasing with volatile trend
o Advances are increasing with increasing trend
 Fixed assets are also increasing from 2004 to 2008
 Overall total assets of Bank Alfalah are increasing which is good sign for the
company
 On the other hand the mark up interest earned also increased from 2004 to 2008
 Other non mark-up/ interest income also increases that includes the fee,
commission income, dividend income, gain on sale of securities and other income.
 On the other hand the expenses i.e. Interest expenses, provisions against
nonperforming loans, bad debts which were written off directly and administrative
expenses are increasing. But the increase in income is more than increase in
expenses
 Profit before taxes and after taxes increasing from 2004 to 2007 but decreased in
2008 due to…………………………………………………..

1.2 Vertical Analysis of Balance Sheet

98
 2004 2005 2006 2007 2008
Assets
Cash and balances with treasury banks 12.73 9.98 10.11 8.95 9.37
Balances with other banks 2.06 3.91 4.62 5.59 6.18
Investments 22.93 23.13 20.50 26.91 21.77
Advances 57.44 47.87 54.41 52.05 55.21
Other assets 2.08 1.55 2.04 1.83 2.58
Operating fixed assets 2.76 2.67 3.81 3.62 3.95
TOTAL ASSETS 100.00 100.00 100.00 100.00 100.00
LIABILITIES & EQUITY
Bills payable 1.44 1.50 1.12 1.26 0.99
Borrowings from financial institutions 8.22 2.35 3.04 6.46 3.92
Deposits and other accounts 83.78 89.54 86.88 83.06 86.17
Subordinated loans 1.23 1.30 1.17 0.98 0.74
Liabilities against assets subject to
- - - - -
finance lease
Other liabilities 1.76 2.10 2.65 2.90 3.24
Deferred tax liabilities 0.18 0.19 0.70 0.42 0.06
TOTAL LIABILITIES 96.60 96.99 95.56 95.07 95.12
REPRESENTED BY
Share capital 1.61 1.21 1.81 1.98 2.29
Reserves 0.65 0.95 1.00 0.73 0.91
Unappropriated profit 0.56 0.56 1.02 1.48 0.99
Surplus on revaluation of assets 0.58 0.29 0.61 0.75 0.70
Total EQUITY 3.40 3.01 4.44 4.93 4.88
Total Liabilities and Equity 100.00 100.00 100.00 100.00 100.00

2.2 Vertical Analysis of Income Statement

2004 2005 2006 2007 2008

Mark-up/return/interest earned 78.71 84.51 86.79 81.02 85.55
NON MARK-UP /INTEREST INCOME
Fee, Commission and brokerage 9.47 8.00 7.39 7.63 7.00

99
income
Dividend income 0.74 0.36 0.15 0.20 0.83
Income from dealing in Foreign
currency 3.06 2.00 1.59 1.49 2.52
Gain on sale of securities 0.00 0.00 0.74 6.45 1.17
Unrealized (loss) /gain on
- -
revaluation of Investments (0.11) (0.05) (0.50)
Other income 8.02 5.14 3.45 3.24 3.44
Total Non mark-up/ Interest
income 21.29 15.49 13.21 18.98 14.45
TOTAL INCOME 100.00 100.00 100.00 100.00 100.00
EXPENSES
Mark-up/return/interest earned
expensed 34.09 49.72 62.39 52.23 56.02
Provision against non-performing
loans and advances-net 5.18 2.78 2.86 7.45 5.61
Provision for the diminution in the
- -
value of investments 0.03 -0.16 4.08
Bad debts written off directly 0.00 0.00 0.01 0.02 0.08
NON MARK-UP/ INTEREST EXPENSES
Administrative expenses 37.50 29.76 24.06 26.00 28.85
Other Provisions/Write Offs - 0.07 - 0.02 0.08
Other charges 0.02 0.15 0.18 0.03 0.34
Total non mark-up/ Interest
expenses 37.52 29.98 24.24 26.05 29.27
Extraordinary / Unusual items
PBT 23.16 17.69 10.51 14.25 4.95
Taxation
-Current 8.21 4.09 1.95 5.43 4.77
-Prior years (0.29) 0.01 (0.41) 0.00 (0.61)
-Deferred (0.05) 1.85 1.75 (1.01) (2.80)
TOTAL EXPENSES 84.71 88.26 92.78 90.16 96.41
PAT 15.29 11.74 7.22 9.84 3.59

Vertical Analysis of Balance Sheet:

100
The Balance sheet shows that the balance of bank Alfalah with other banks is increasing
from 2004 to 2008 which is a very good sign for the company. But on the other hand the
landings to financial institutions is decreasing from 2005-2008 and it is not good for the
organization. The percentage changes in investments and advances is a little bit but is
satisfactory.
The borrowing from financial institutions is decreasing from 8.22% to 3.92% due to
which the interest expense is decreasing and income is increasing which is very good for
the company. The deposits to the banks are increasing which show the customers trust on
the bank Alfalah. The deferred tax liabilities increased up to 2006 to 0.70% but decreased
to 0.06% in 2008 which is very good for the company.

Vertical Analysis of Income Statement

The income statement represents that the mark up/ interest earned is the major source of
income for the company and it is increasing 78.71% in 2004 to 85.55% in 2008 which is
very good sign for the company. In the non interest income the fee, commission and
brokerage income weights a lot but it is decreased from 9% in 2004 to 7% in 2008. But it
does not affects the company’s performance because it is not the core operation of the
company.

101
 ORGANIZATIONAL ANALYSIS

STRENGTHS
o Study leave provisions are made

102
o Experienced management
Proper internal audit based at head office in accordance with SBP requirements
Organizational loyalty among employees
BAL audit policy is duly approved by board of directors of SBP
MIS with respect to audit reporting in place

WEAKNESSES
o Poor reward system
o No back up of employee
o Non-fix timing of lunch break
o Lack of delegation of authority
o Lack of decentralization
o Lack of proper job rotation
o Lack of effective motivation
o Generally fewer right men for the right job
o Promotions generally on seniority basis
o Secretive management
o Great difference in perks of executives and other officials
o Attitude of senior managers at head office has to change towards junior staff
o Delegation of authority and responsibility specially in international division
needed
o Lack of adequately trained CA’s
o Competent staff unwilling to serve in the audit due to an absence of firm rotation
policy
o Audit staff has a tendency to be overconfident leading to attitude problems due to
the absence of firm rotation policy
o Professional training of audit staff lacking

103
 OPPORTUNITIES

o Globalization, i.e., barriers will be removed and good uses can be made from it.
o Free staff training facilities offered by foreign correspondents should be taken up
o Greater profitability can be achieved through strong internal control
o Elimination of risk of fraud through professional training
o Reduction of communication gap between audit and banking staff through rotation
policy
o Improvement of overall quality of audit through incentives. e.g. mandatory audit
service in career planning process.

THREATS
o There is a threat of brain drain
o Restructuring of privatized banks
o Tough competition by foreign nationalized and privatized banks in foreign trade
business
o Government policies
o Adverse economic conditions
o Further outward flux of competent staff from audit due to absence of firm rotation
policy
o Lack of professional training of audit staff may result in weakening of internal
control mechanisms of the bank.

CONCLUSION AND RECOMMENDATIONS

CONCLUSION:
BANK ALFALAH 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

104
and Management, Bank Alfalah increasingly inspires trust and confidence of all its
clients.

These achievements have been preceded by the concerted efforts to provide highest levels
of service and value to their customers. The bank plans to further improve performance
standards through execution of novelty in both products as well as customer care, by
discovering newer avenues of client benefit. This customer-focused strategy has enabled
Bank Alfalah to evolve as a single source financial service provider of corporate and retail
banking services.

The present political structure of the government is determined in adopting the policies
and reforms introduced by the last regime especially in privatization and deregulation of
the government controlled sectors. Continuation of these policies would guarantee the
measure in foreign investment and result in restoration of investors confidence (both local
and foreign) in government plans and their continuity.

In spite of unsettled economic condition at home and globally during 2002, bank has
shown an impressive performance and the financial strength has greatly enhanced.
Confronted with a more open financial market but tougher competition, bank with its
professional outlook and commitment, maintained steady growth in resource mobilization
and financing of foreign trade. The bank has increased its branch network from 145 to
185 during the year. The expansion program is in line with strategic business plan.

Bank Alfalah aspires to evolve as the premier banking institution in the country. The path
towards this goal is challenging but realistic. Strategic alternatives are continually
evaluated so that their corporate strategy remains relevant to emerging trends in the
market. This adequately prepares the organization to cope with unexpected challenges to
deliver products and services more efficiently.

Customer satisfaction should always remain the number one benchmark as they move
forward towards attaining their goals. They employ and retain an unparalleled workforce

105
of highly motivated, energetic, well-trained and productive employees. They offer an
inspiring work environment, competitive salaries, excellent benefits and caring
leadership.

They try to achieve superior financial performance, to be considered a lending bank in

Pakistan by reputation and performance, and to be a good corporate citizen of the
communities they serve.

They promote strong and ethical business practices in the in the industry by focusing
more on effective collaboration with their stakeholders. Team members remain aware of
the organization’s commitment to them as well. They cultivate a sense of ownership,
amongst the employees, with the overall business plan and the direction in which their
organization is headed.

Their corporate strategy focuses on the striking the optimum balance in organizational
workflow and processes. The dynamic environment in which they operate impels them to
remain poised for the unexpected as competitive pressures mount. Consequently business
process reengineering and benchmarking remain notable guidelines for strategy
development. This requires flexibility in operations, as well as management thinking.
Also quality control in all facets of operations remains an area of focus. Information
technology remains an indispensable tool to empower more effective decision making and
stream line workflow.

Basically its mission is to maintain a strong grip in market for professional banking,
customer service and profit performance. And for their challenging trek towards
realization of their goals, Service Quality and Innovation will be their preferred tools. Its
core objective is to offer both traditional and innovative products, and to deliver
unparalleled personalized service to their customers. Its primary focus is on taking service
excellence to new heights.

106
At the end of this report there are some recommendations, it is hoped that the successful
implementation of these guidelines will be of mutual benefit to organization.

RECOMMENDATIONS:

BAL is an international banking organization that has its operations spread all over the
globe. All the practices and procedures implemented in the bank have been adopted after
careful thought by very experienced financial experts from around the world. Considering
this, it might sound somewhat strange to give in suggestions to BAL regarding its
business, especially when the recommendations come from student level. It should,
however be noted that the exhortations that follow are not about the technical aspects of
BAL operations, but are merely about some of the routines observed daily that, if
improved, could enhance the work efficiency at the Islamabad branch.

WORKSHOPS
The bank should examine the possibility of designing a structured series of workshops
offered at regular intervals that lead to a certificate or diploma. To date,
workshops offered at the conference have been dependent upon conference
proposals from the membership; the bank should work to reevaluate the system.
The bank should strongly consider taking a more active role in workshop
development and consider the survey respondents' comments and suggestions.
The bank should examine the possibility of offering workshops in alternate
locations and co-sponsoring workshops with other organizations.

SCHOLARSHIP PROGRAM
Scholarship has a significant shore up for employees who wish for more education and
studies to be a well educated and qualified and professional employee.

107
SEPARATE RECORD ROOM
Remittances department that is by far busiest department of the bank dispel a lot of time
maintaining and fill up the debit and credit advice. While the preparation of these
documents is the job of the remittances, their grouping and placement should be the job of
a separate department (i.e. record room) the prepared documents should be handed over to
department for filing and storage, thus improving the remittances processing speed.

CUSTOMER SERVICES DEPARTMENT

Similarly, customers coming to the remittances for balance inquiries and statements are
checked whether they are authorized or not to collect the statements. Firstly, they are not
properly welcomed by bank. When they reach the required department either the
designated officer is busy or he is not on the seat. Dues to this lengthy procedure customer
pile up in tens. To make the process fluent, the customer services department should
perform their services in a better way. Efficiency in services should be improved to serve
and prevent customers from waiting for two days long e.g. by increasing the number of
qualified workers or increase in computers in the bank.

INDIVIDUAL CAREER COUNSELING

Individual career counseling should be provided to each employee. It is

recommended that bank must develop an individual development plan for
each employee and should receive reports periodically during the year. A
written summary report should be receive from the employee that will help the
bank to circulate that summary to other employees that will extend the value
of training without additional cost. So it is a posttest in the form of summary
report and it is necessary that the bank must take a posttest of employees.

NO DISCRIMINATION
There should be no discrimination between the contractual and the permanent employees
for training and promotion purposes. Even discrimination should not take place in

108
anywhere. So training not only given to the front-end employees but also to backend
employees so that at the time of job rotation they are equally compatible.

PROPER PLACEMENT OF EMPLOYEES

When one of its employees goes on leave, the resulting workload on the remaining ones
substantially increase. Even during normal days. Understaffing in departments can still be
felt. The best solution of that problem is that there is proper job rotation between
employees so that all employees work in a proper way if his colleague is not present.
INNOVATIVE PRODUCTS
The products are mostly copied of other products. It should try to introduce innovative
products that give more profits to them because customers are more attract towards these
products.

PROPER EMPHASIS ON HUMAN RESOURCES POLICIES

Trained staff is the most valuable asset in an organization particularly in the services
sector. Improper human resource policy can lead to deficiency of this valuable asset
resulting in high staff turnover causing financial and other loses. Demotivated staff is the
most dangerous threat to a service oriented organization like bank .BAL should try to
restore the confidence of its staff in management by altering its human resources policy in
such a way that employee motivation is achieved.

INFORMATION TECHNOLOGY
Although BANK ALFALAH is giving huge stress on information technology yet there is
a lot of potential for more developments in this sector. In this century those people will be
won by those who are well prepared for it in terms of advancement in the information
technology and computerization of their operations. The development of effective
computerized and technically advanced information system will ensure BAL’s success.

109
INCENTIVES
If the employees are motivated it will be the biggest assets of an organization. The
incentive policies can greatly alter the motivational level of employees within an
organization. BAL by effective utilization of motivational techniques and restructuring of
its employee award policy can increase productivity considerably.

APPROPRIATE MARKETING
Marketing is the key aspect, which plays a vital role in attaining its goals efficiently and
effectively. Bank should emphasis on the marketing policies and it hires a specialized
market force at all levels. It should provide higher commission to them so that they
attracted towards them.

PROPER COMMUNICATION
There should be a proper communication between the boss and employee and even
between employee and customer. Bank should adopt such a culture in which employees
don’t hesitate to interact with each other. If this style of communication is adopted then
there is no communication gap between the employees and they achieve their goals easily.

The above suggestions have been formulated after careful observation of the processes
and conditions prevailing in BAL. If they are implemented, the bank will surely benefit
from them, both in terms of efficiency as well as output.

110
BRANCH SUGGESTIONS

• For promotion of employees on the basis of professional justice.

• Political influences on the banking operations should be eliminated

• Deposit collection pressure on employees should be removed

• There should be a proper training system for internees.

• Establish effective relationship between top-level management and executives.

111
 • HRD of BAL should be improved.

• Recruitment system should be improved by decreasing personal biases.

• B branch is too small so it should be to enlarged.

• HRD should introduce new ways to gain employee commitment.

REFERENCE:

1. http://www.allfreeessays.com/essays/Faysal-Bank/8625.html

2. Diary of Branch Manager BAL Bahawalpur, Zeeshan Mustafa, Topic: History

of Banking

3. http://www.sbp.org.pk/warn.htm

4. http://www.scribd.com/doc/5131283/banking-in-Pakistan

5. http://en.wikipedia.org/wiki/Bank_Alfalah

6. http://www.bankalfalah.com/about/download/BALAnnualReport2002.pd

7. http://bankalfalah.com/about/financial_performance.asp

Note: Data used in the Financial Ratios and Vertical and Horizontal Analysis is taken

from the Annual Report of Bank Alfalah. Copy of Balance Sheets and Income Statement

112
are shown to the concern Topic, and the link of the annual report also be provided for

more verification in the Ref: 7

113