Internship Report Bank Alfalah LTD - Part2

CHAPTER – 01
Introduction to the Report
This Internship report is aimed at studying and analyzing Bank Alfalah LTD (BAL) in
general and its branch office at Abbottabad, in particular. The main purpose of the
internship is to prepare and submit a report as a partial fulfillment for the award of
MBA degree from COMSATS Institute of Information Technology Abbottabad.
1.1 Background of the Study.

Pakistan’s economy is growing with an appreciable rate. Sound banking system for
this growing economy is the need of the day, which must meet the financial needs of
the growing agriculture, industrial and commercial/services sector.
Bank Alfalah since 1997 has played a pivotal role in the development of Pakistan.
Like other multinational banks, BAL has adopted a customer-oriented approach, in
order to provide quality products according to customer needs and stands as a role
model for the other banks. In this report I have tried to cover all the aspects of BAL
banking operations.
1.2 Purpose of the Internship

The primary purpose of the internship is to fulfill the academic requirements of my
study. The secondary purpose of the internship is to evaluate the banking practices, in
corporate world and to compare these practices with the contemporary banking
practices. The purpose of the study also is, to do practical work, in the field and apply
the knowledge of classroom lectures to the real life situations, which thus enables a
student to be a future banking practitioner. Besides this, some other purposes are
associated, which includes:
 To give a comprehensive review of BAL.

 To analyze BAL organizational, financial and other aspects.
 To identify the areas of the bank where there is some room for improvement.
 To present some feasible solutions for the problems pertaining to BAL.
Mehraj Muhammad 1 SP07-MBA-011

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 To apply the knowledge gained in practical field.
1.3 Merits of the Report

The study conducted will benefit the finance students in particular and banking
students in general because the third chapter of this report comprehensively
encompasses most of the aspects of banking, followed by SWOT analysis, conclusion
and recomendations. Furthermore, BAL branch Abbottabad may also benefit from the
recommendations made at the end of the report.
1.4 Scope of Work/Report

Banking has a very broad scope. In only six weeks of internship, it is very difficult to
understand each and every aspect of bank. Due to the barriers of limited time and
space, the scope of work is usually confined. However this study of BAL will help the
management to identify their weaknesses and threats and over come them by using
their strengths and capitalizing on the opportunities. This internship report will be
source of financial data for all those who are interested in financial statement analysis
of BAL.
1.5 Methodology of the Report.

This study involves two types of data for report writing.
1.5.1 Primary Sources:
 Interviews and discussion with staff members
 Personal observations
1.5.2 Secondary Sources

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

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1.6 Limitations of the Report
As mentioned earlier, six weeks of time is very limited for a complete observation of
an institution like BAL. Moreover some of the data was confidential and was not
made available to me. Sometimes due to the busy schedule of the bank, complete
information regarding different activities was not provided in time.
1.7 Scheme of the Report

This internship report is divided into five chapters as:
Chapter one includes background, purpose, scope, limitations, methodology, and
scheme of the report.
Chapter two includes background and history of banking in Pakistan, background of
BAL, roles, functions and branches.
Chapter three includes organizational structure of BAL, organizational charts and
departments of BAL.
Chapter four includes financial, SWOT analysis and findings based on work in
chapter three.
Chapter five includes recommendations of the study based on the analysis in the
previous chapter.

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CHAPTER – 02
Introduction to Bank Alfalah Limited
2.1 Evolution of Banking

Consensus on the origination of word “Bank” has not yet reached. According to some
authors this word is derived from the words “Bancus” or “Banque” that mean a
bench. The explanation of this origin is attributed to the fact that the Jews in Lombard
transacted the business of money exchange on benches in the market place, and when
the business failed, public destroyed the Banco. Incidentally the word bankrupt is said
to have been evolved from this practice. The opponents of this opinion argue that if it
was so, then how is it that the Italian moneychangers were never called Banchierei in
the middle ages?
Other authorities hold the opinion that the word Bank is derived from the German
word “Back” which means joint stock fund. Later on, when the Germans occupied
major part of Italy, the word “Back” was Italianized into “Bank” (Aslam, 1999)
It is therefore, not possible to decide as to which of the opinions is correct, for no
record is available to ascertain the validity of any of the opinion”.
2.1.1 Early Growth
“Banking in fact is as ancient as human society. For ever since man came to
realize the importance of money as a medium of exchange. Perhaps these were the
Babylonians who developed banking system as early as in 2000B.C. It is evident
that the temples of Babylon were used as banks because of the prevalent respect
and confidence in the clergy. (Siddiqui, 2004)
2.2 Brief History of banking

The Clay tablets of Banking have been found in Babylonia and Assyria, showing
some of the functions of banker, such as money changing, advances. King
Hummurabi, the founder of Babylonians Empire, developed rules and regulations for

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banking operations that payments were made through a banker and by drafts against
deposits. Deposits bearing interest, letters of credit and other means of transferring
credits from one place to another were also know in anct Greece and Rome. In Italy
during the middle ages, continually from early times, it is now accepted that the first
public ‘bank’ properly so called, was the Banco di Rialto, established, at Venice by
acts of senate in 1584 and 1587. In 1587 Banco di rialto was formed at Genoa, the
famous Bank of St George; this was a private bank of deposits. In 1619 the Banco del
Giro was founded; this become the only public bank in the state, and was long famous
as the Bank of Venice. Later in 1609 the Bank of Amsterdam was also formed. This
bank rendered valuable services to the Netherlands trader up to the year 1820. In
1619 the Banco del Giro was founded; this become the only public bank in the state,
and was long famous as the Bank of Venice. Bank of Hamburg cant into existence in
Hamburg with the business of accepting deposits of fine silver or foreign currency.
The bank rendered great services to the merchants as well as the countries. It dealt
with them until 1873, when it was merged with the Reich bank. Their business lay in
the assistance of commerce not by loans but by the local manufacturers.
2.3 Role of Banking in the Economy

Banking principal roles in the Economy are as follows:
2.3.1 The Intermediation role:

Transforming savings received primarily from households into credit (Loans)
for business firms and others in order to make investments in new buildings,
equipment, and other goods.
2.3.2 The payments role:

Carrying out payments for goods and services on behalf of their
customers(such as by issuing and clearing checks, wiring funds, providing a
conduit for electronic payments, and dispensing currency and coin).
2.3.3 Guarantor role:

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Standing behind their customers to pay off customer debts when those
customer are unable to pay (such as by issuing Latter of Credit).
2.3.4 Risk Management role:

Assisting customers in preparing financially for the risk of loss to property
and persons.
2.3.5 Savings/investment advisor role:
Aiding customers in fulfilling their long-range goals for a better life by
building, managing and protecting savings.
2.3.6 Policy role:
Serving as a conduit for government policy in attempting to regulate the
growth of the economy and pursue social goals.
2.4 Banking in Pakistan

Banking started in Pakistan after the bold and emergent decisions of formulation of
SBP on July 30, 1948. Thereafter this sector was witnessed enormous growth. In 1974
banks were nationalized, in the hope that new era of growth could be achieved
through it. However the process is reverse since 1991, up till now MCB, ABL, ACBL
and HBL have been privatized.
2.5 History of Bank Alfalah Limited

Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited
company under the Companies Ordinance 1984. Its banking operations commenced
from November 1st, 1997. Bank Alfalah Limited started its life as “Pakistan
Operation” of BCCI. A multi-national conglomerate based in Luxembourg and Grand
Cayman. BCCI was the 7th largest bank in the world. The estimated assets of BCCI
were 20 billion dollars. The operations of the Bank were in 70 different countries of
the World. In July 1991, the Bank of England and International Liquidators accused
BCCI of being involved in money laundering to the tune of 1.54 billion dollars.

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Upon closing down of BCCI, in 1992 the operations of BCCI in Pakistan were
acquired by Habib Bank Ltd, and were run as a wholly owned subsidiary by the name
of Habib Credit & Exchange Bank (HCEB). HCEB was later acquired (through the
process of privatization) by the Abu Dubai Group, in 1997 and its 70% ownership
was transferred to Abu Dubai Group. The agreement was signed on July 7, 1997.
The bank is engaged in commercial banking and related services as defined in the
Banking companies ordinance, 1962.
2.6 Bank Alfalah Today

The strength and stand of Abu Dhabi Group, principal owners of BAL, have helped
Bank Alfalah Limited launch high quality consumer and corporate banking operations
in Pakistan. Bank Alfalah Limited have embarked upon a rapid expansion program to
make sure that the services reach more and more people, BAL is headed towards an
optimum sized network reaching major urban centers in Pakistan.
The Bank is well positioned and geographically poised, to cater for increased
business demands, from its existing and potential clientele. The bank is not only
making its contribution in accelerating Pakistan’s economy.
There are 238 Branches of Bank Alfalah Limited in 75 different cities of Pakistan,
with the registered office at B.A.Building, I.I.Chundrigar, Karachi.
With the implementation of the office automation and communication system BAL
will be poised to compete with the best in quality and speed of customer services.
During the period under review, Bank Alfalah made notable progress in business
volume, efficiency and profitability following its increased involvement in trade
finance, commercial lending, and foreign exchange and money market operations.
Good clientele is at the heart of good business. The Bank is very selective of its
clients and carefully checks all references. Referrals are excellent sources of new
accounts as they give the Bank an opportunity to learn about a potential client before
establishing a relationship. This helps protect the integrity of the Bank and ensures
that the client will share values necessary for a long-term and stable relationship.
Bank Alfalah Limited continually endeavors to develop wider spectrum of innovative
financial products based on consumer needs.

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2.7 Vision of BAL
Vision statement identifies where the organization intends to be in the future or where
it should be to best meet the needs of stakeholder. Vision statement incorporates a
shared understanding of the nature and purpose of the organization and uses this
understanding to move the organization toward a greater purpose.
The Vision of Bank Alfalah is:-
VISION
“To be the premier
organizations operating
locally and internationally
that provided the complete
range of financial services
to all segments under one
roof”
Bank Alfalah is one of the leading financial institutes; Bank Alfalah operates only in
Pakistan now soon it will go internationally, and Bank Alfalah day by day increasing
its products for all the segments in Pakistan i.e. for Businessmen, Industrialists,
Agriculturists and for the Government bodies in the country. Bank Alfalah is trying to
reach each segment in Pakistan, and trying to provide its products at lowest charges
and with easiest way, under one roof.

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2.8 Mission Statement
Mission statements are "enduring statements of purpose that distinguish one business
from other similar firms. A mission statement identifies the scope of a firm's
operations in product and market terms." It addresses the basic question that faces all
strategists. A clear mission statement describes the values and priorities of an
organization. A mission statement broadly charts the future direction of an
organization.
Mission statement of Bank Alfalah is:-
MISSION
“To develop and deliver the
most innovative products,
manage customers experience,
deliver quality service that
contributes to brand strength,
establishes a competitive
advantage and enhances
profitability, thus providing
value to the stakeholders of the
bank
In the above Mission the Management of Bank Alfalah emphasis on the following
areas:

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 To provide the new and more innovative products than the other banks to the
customers.
 To take and manage the ideas of the valuable customer for the Bank
 This is a one of the main component of Bank Alfalah Mission Statement that
to deliver high quality and quick services to the customers, who are keep great
value for Bank Alfalah.
 Bank Alfalah tries to promote those activities which give the fruitful result
to the customers and the stakeholder of the bank.
2.9 Core objectives of BAL

Objectives can be defined as specific results that an organization seeks to achieve in
pursuing its basic mission. Objectives are essential for organizational success because
they state direction; aid in evaluation; create synergy; reveal priorities; focus
coordination; and provide a basis for effective planning, organizing, motivating, and
controlling activities.
Bank Alfalah Limited objectives are as follows:-
 To create maximum economic value for share holders through a constant
relationship focuses on financial services.
 Leveraging BAL Investments in the IT field.
 On going assessment of opportunities for customers, leading to the constant
development of new products and services.
 To promote industrial, agricultural and socio economic processes through the
active participation of private and public sector in the country.
2.10 BAL Credit Rating

Pakistan Credit Rating Agency – the leading credit agency in the country – has rated
Bank Alfalah very favorably. The Bank has been awarded an AA- (double A minus)
and an A1+ (A one plus) in the long and short term respectively. These ratings denote
very high credit quality and very low expectation of credit risk. The bank also issued
TFC’s in the year 2002. These were very well received in the market and were
Mehraj Muhammad SP07-MBA-011
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oversubscribed by 6 times. PACRA awarded an A+ (A plus) rating to these
certificates.
2.11 Branch Network of BAL

Since the privatization in 1997, Bank Alfalah Limited has remained consistent in its
mission to excel in providing innovative products and services to its customers. As a
result of that, the yare 2003 has been most favorable for bank in spite of varying
market conditions. The Bank recorded significant increase in its business volumes
coupled with the broadening of network and clientele base.
The Bank is fully aware that the branch network has direct implications on the service
that it provides to its customers. In the year 2003, nine (9) commercial banking
branches and five (5) Islamic banking branches were added to the Bank. In 2004,
Alfalah network extend the courage to 72 branches in 30 cities nationwide. Currently
Bank Alfalah has 238 Branches in 75 different cities. Bank Alfalah is confident that a
well-integrated branch network, offers greater potential for serving a larger client base
through high value products.

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BRANCH NETWORK OF BAL
Figure 2.1; Branch Network of Bank Alfalah Limited
2.12 O
r
g
a
n
iz
a
ti
o
n
a
l
Structure of BAL
Figure 2.2; Organizational Structure of Bank Alfalah Limited

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2.13 Departmentation
Every organization is divided into definite departments. Each department performs
different kind of job and requires staff with specialized skill to handle the particular
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job. This increases the efficiency of workers and makes the job of the employees
easier.
There are several aspects on which departmentalization in an organization can be
based. The division can be done on the basis of functions or product or customers or
geographical location.
In Bank Alfalah Abbottabad City Branch, departments are e made on the bases of
functions performed by the bank. The following are the major departments of the
BAL Abbottabad City Branch:
2.1.1 Accounts Department

Accounts Department is known as the backbone of any bank, this department
shows the performance of a bank in a particular area. The first step towards the
banker customer relationship is the opening of a customer’s account. Bank
Alfalah Abbottabad City Branch provides different types of accounts for various
business segments.
Figure 2.3; Accounts Department
 Procedure of Opening an Account

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Figure 2.4; Procedure of Opening an Account
 Types of Accounts
a) PLS Saving (Rupee) Accounts
Saving accounts are designed to mobilize savings primarily from a
large number of individuals and house hold. Any one or more
individuals or partners can open a PLS saving account with the Bank.
Salient features of PLS account are as follows:
 Minimum initial deposit is Rs.500/-
 A smaller deposit can be accepted at the discretion of branch
management if average deposit is expected to remain above
Rs.5,000/-
 Profit on PLS saving accounts is calculated on minimum
monthly balance basis.
 Profit rates are announced and paid biannually in January and
July respectively.
 Profit rate on the PLS saving is 2.25% per annum. However
profit rates are subject to change in response to change in the
return earned by the Bank on deployment of funds.
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 Checking Facility of the account is unlimited.
 25, 50, leaves Cheque Book is issued to the clients.
 With holding Tax is deducted from the profit and Zakat on total
amount.
b) Current Rupee Account

Individual, partnerships, companies, associations, clubs, societies
and NGOs are eligible to open current accounts. This type of account
is further classified as individual account and Joint Account. Salient
features are as follows:
 Minimum initial deposit is Rs.5,000/-
 Minimum average balance is Rs.10,000/-
 There is no restriction on number of transactions.
 There is no limitation on amount of withdrawal.
 No profit is paid on credit balance in current accounts.
 Checking Facility of the account is unlimited.
 25, 50,100 leaves Cheque Book is issued to the clients.
 There is no Tax application on this type of account.
c) Term Deposit
It is one of the popular account types. The amount is deposited in this
account for fixed time period i.e. from one month to five years. The
interest is various with the variation of time limitation. The rate of
profits increases as per increase in time period. The customer cannot
withdraw money before maturity. The profit on this account is paid
after the maturity. But if a customer want to withdraw before maturity,
so he will give a notice to the bank 7 days before borrowing.
d) Royal Profit Savings (Rupee) Accounts

Royal profit is a high yield rupee account intended to provide higher
rates of profit to high net worth customers and greater flexibility and

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convenience in terms of transactions. Current rates of profit are as
follows:
Amount Proposed Rates (P.A)

FFrom 50,000 To 999,999 1.50%
FFrom 1,000,000 To 9,999,999 1.75%
FFrom 10,000,000 To 49,999,999 2.00%
FFrom 50,000,000 To 149,999,999 2.50%
FFrom 150,000,000 & Above To be quoted by treasury
Table 2.1 Royal Profit Savings Account Proposed Rates
e) Royal Patriot (Rupee Term Deposit)

Royal Patriot is a rupee term deposit scheme with competitive rate of
profit. Current rates of profit are as follows:
Tenure 25,000-999,999 1,000,000-4,999,999 5,000 & Above
1 Month 1.50 % 1.60 % 1.70%
3 Month 1.75 % 1.85 % 1.95%
6 Months 2.00 % 2.10% 2.20%
1 Year 2.25 % 2.35 % 2.45%
Table 2.2 Royal Profit Rates
f) Foreign Currency Accounts

This Account is offered to resident and non-resident Pakistani’s as well
as foreigners can open foreign currency accounts. A foreign currency
account is opened either as savings account or current accounts.
Foreign currency accounts are opened and maintained subject to local
laws and regulations in force from time to time. Profit on foreign
currency saving account is paid on half-yearly basis and on term
deposit it is paid on maturity. No interest is paid on foreign currency
current accounts.
g) Notice Deposit

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The notice deposit is selected by the customer indication his intention
to withdraw the funds. Notice desists are usually held for pre-specified
tenors of seven days and thirty days. A deposit is placed for minimum
of 7 days in order to qualify for accruing profit.
h) Call Deposit
It is a non interest bearing deposit account with a mandatory 7 or 30
days notice period preceding the release of funds. This account can be
maintained in PKR. Call deposits are exempted from all/any
encumbrances and no profits are paid on them. In this type of deposit
there is no checking facility.
i) Minor’s Account
In respect of an account opened in the name of a minor, the bank
follow those instructions which is received from the guardian named
on the Account Opening Form, irrespective of whether the minor
account holder continue to be a minor or not unless the Bank receives
written instructions from the guardian or a notice to the contrary for an
appropriate authority. The minor’s account can be opened in any type
of account i.e. current or saving account.
j) Statement of Account
BAL issue quarterly or at such other interval as it may deem fit to send
to the customer statement of account, from which the customer can
check the entries made therein. In case of any discrepancy or error in
the statement of account, the customer notifies the bank within the 14
days of receipt of the statement of account.
k) Hold Mail Facility

Upon written request of the customer, the bank in its sole discretion
provide a “Hold Mail” facility whereby the Bank shall retain for
periodic collection by the customer, or his duly authorized agent, all

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communications or statements of account relating to the customer’s
account.
l) Stop Payment Instruction

BAL, in its absolute discretion, accept stop payment instruction for the
customer if a cheque is reported lost or stolen, provided the necessary
detail of the lost/stolen cheque are give by the customer on a
prescribed form. The customer is further liable to give charges of the
stop payment of a lost/stolen cheque.
m) Closure of Account
If a customer wants to close his account, so on closure of the account,
the customer must return to the bank the unused cheque(s),
relationship card, ATM card(s) and Credit Card for cancellation. And
the bank has the right to close the account without assigning any
reason by giving 14 days notice.
2.1.2 Remittances Department

Remittances department is a very important department in every bank. One of
the most frequently used banking services is the transfer of funds through the
banking channels. Transfer of funds shows the high efficiency and security of
the bank.
 Local Remittances
The transfer of funds within the Country or within the city is called
Local Remittances. The following are the different types of the local
remittances in BAL Abbottabad City branch:
a) DD (Demand Draft)
Demand Draft is drawn by one branch on another branch or on
the Head Office of the same bank or vice versa. Demand Draft is
basically a bill of exchange, that is, an order to pay money,
drawn by one office of a bank upon another office of the same

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bank for a cum of money payable o order on demand, purports to
be issued by or on behalf of the payee, the bank is discharge by
payment in due course.
b) TT (Telegraphic Transfer)
Telegraphic Transfer is a message transmitted via telegraph;
fax or telephone after the customer fills in and signs the
application form for transferring funds from one place to
another. The bank receives the amount to be transferred,
charges commission on the transfer. The schedule of charges of
Tele-graphic transfer is given in the appendix. The customer is
given the receipt and the TT officer sends coded instructions in
the form of test numbers to the drawee branch telegraphically.
The code is decoded at the drawee branch and payment made
to the beneficiary at the time of presentation. The amount of
TTs issued in a day are posted in the Branch’s online software
system by the related officers and then verified by the
supervising officers to balance the accounts in which
transactions occurred in the day. After the full verification the
payment is made to the customer. The following points are
scrutinized:
 The full name of payee along with his address and /or
account number
 The amount in words and figures should tally
 Currency in which the payment is to be made
 Signatures of the remitter/ purchaser should be present in
their respective box on the form.
 The bank/branch where the payee’s account is being held.
c) MT (Mail Transfer)
When the money is not required immediately, the remittances
can also be made by mail transfer. In this method of

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transferring funds, the sending bank sends instruction in
writing by mail to the paying bank for the payment of certain
sum money. When MT received by the paying bank, be make
payment.
d) Pay Order
Figure 2.5; Pay Order Processing
e) Travelers Cheques
Traveler Cheques are generally issued for the convenience of
persons traveling in the Pakistan or abroad. These are issued to
applicants without any excise duty or commission. These are
the safest way of carrying cash when traveling anywhere in
Pakistan. Before issuing, the officer receives an amount equal
to the face value of the cheques, and also chare a small
commission. The charges of traveler’s cheques are mentioned
in the appendix. The traveler’s cheques are for fixed amount
and are treated as order cheques payable only to the purchaser
whose specimen signature appears on each traveler’s cheque

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itself. Bank Alfalah presents Rs.1, 000, 5,000 and 10,000
denominations of traveler’s cheques.
 Foreign Remittances
Foreign Remittances can be either inward or outward. In case of
Inward Remittances where the authorized dealers purchase foreign
exchange received in the form of MTs, DDs, TTs, Travellers
Cheques and Foreign Currency Notes it flows in and in case of
Outward Remittances where the authorized dealers sell foreign
exchange by issuing the above mentioned instruments, it flows out.
 Instruments of Inward Remittances

The following are the different Instruments used for inward
Remittances
 Foreign Currency Cheques and Foreign Demand Drafts
deposited by BAL’s customers for collection.
 Foreign Money Transfers or Foreign Telegraphic transfers
received from foreign banks to the credit of its customers’
accounts.
 Rupees, DDs, MTs, and TTs drawn by one of the banks
correspondents/ branches on their Non-Resident Rupee
Account maintained with the branch.
 Encashment of Foreign Currency Travellers cheques and
Foreign Currency Notes.
 Export proceeds whether under Letters of credit or without
Letter of credit.
 Instruments of Outward Remittances

 Foreign Demand Drafts issued by BAL, Abbottabad City
Branch.
 Foreign Outward Bill for Collection (FOBC)
 Foreign Telegraphic Transfers/ Money transfers
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 Travellers Cheques
 Corresponding Banks for Remittance

Since Bank Alfalah does not have branches in all countries, it has
correspondence with the following banks for remittance.
 US dollar ($) Citi Bank, American Express,
ABN Amro, Banker trust and
Habib Bank New York.
 Pond Sterling Habib Bank London

 Deutch Mark (DEM) National Bank of
Pakistan Frankfurt
 Euro Commerce Bank
Frankfurt
 Money Gram
Money gram is a world wide setup. Money gram is a machine
setup, through which a customer deposit money. The customer fills
a form and deposit the money, the banker gives him a message.
The customer give that message to the other party either he is in
the country or outside the country. He visits that bank which is
listed in the money gram setup. He gives that message and takes
his money. It is a type of international online facility. Bank Alfalah
limited, in collaboration with Money Gram, offers remittance
service to Pakistan. Money Gram is person to person money
transfer service that allows consumers to receive money in just a
few minutes.
2.1.3 Cash Department

 The Cash Counter
The cash counter is occupied by four cashiers which is headed by a
head cashier that pay and receive cash from the customers after
carefully checking the instruments presented for payment and cash
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presented for depositing or paying. Besides, there is a officer
responsible for issuing RTCs, DDs, TTs, MTs, Pay Orders etc. and a
senior Grade I officer who supervises the transactions and gives
necessary advice in case of any doubtful activity. After closing of the
business hours, the tellers verifies the amount of cash , physically,
which is cross verified by the manager operations and tailed with the
general ledger account. Tellers take extreme are to detect counter fag
notes and if such notes are detected, the matter is referred to the
manger operations.
 Receipt and Payment of Cash

For cash collection a cash deposit slip is filled by the customers,
which include the branch name, branch code, title of account, the date,
amount which is deposited in the account and the signatures of the
depositor. The senior officer maintains with himself a “Cash Received
Stamp” that is affixed on the paying in slip after the cashier signs it.
Cash or any other instrument presented for depositing in the
customer’s or a beneficiary’s account is accepted and the account
credited only after the paying in slip has been signed and
countersigned by the officer.
For payment customer present cheque over the counter, the cheque
should not be crossed. Crossed cheque payment is made after the
clearing. Before the payment the cheque is verified by the officer. It is
verified for staling, post dated, payee’s name, crossing, signatures,
amount both in words and in figures and authentication of alterations.
If there is any ambiguity in the cheque so the cheque is than returned.
After making the full verification, the cheque is posted, supervised and
cancelled by the authorized officers before the cashier pays cash to the
presenter of the instrument.
 Counting Cash

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The authorized officer checks and counts cash in the afternoon after
the transactions by the customers have been closed for the day. The
number of stitched bundles and sealed bags containing coins are
properly checked and the results tallied with the recorded balance in
the cash register.
2.1.4 Clearing Department

Banks collect cheques for their customers that are drawn on other banks. This
function of clearing its customers’ cheques by a bank is performed for settling
payments through the clearing houses in the State Bank of Pakistan. In cities
with no SBP coverage, the clearing is than supervised by National Bank of
Pakistan.
 Types of Clearing
a) Inward Clearing
The process where instruments drawn payable on Bank Alfalah
Abbottabad City Branch are deposited by the holder with other
banks/ branch and presented for payment.
b) Outward Clearing
The process where the instrument drawn payable on some other
bank/ branches is deposited for collection with Bank Alfalah
Abbottabad City Branch.
 Process of Clearing
A clearing house is a place where clearing officers of all scheduled
banks get together to settle payments and receipt of cheques drawn
on each other. Cheques received at BAL Abbottabad City Branch
are sorted and entered in the outward registers by the officers and
is sent to the BAL Abbottabad Supply Branch. Than in the Supply
Branch a copy of the clearing schedule prepared sent to the
clearing house supervised by the State Bank of Pakistan in all the

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major cities of Pakistan and in the smaller ones by the National
Bank of Pakistan as an agent of the central bank. In the Clearing
House each bank receives from other banks cheques drawn upon it
and delivers to other bank cheques drawn upon them. The net
difference is settled by Dr, Cr. To their account with the
supervising bank.
2.1.5 Credit Department
MANAGER
Figure 2.6; Hierarchy of Credit Department
Commercial banks are so named because they specialize in loans to

commercial and industrial businesses. Banks make three types of loans:
commercial and industrial loans, consumer loans, and mortgage loans.
Commercial and industrial loans are loans to businesses or industrial firms.
These are primarily short-term working capital loans (loans to finance the
purchase of material or labour) or transaction or longer-term loans (loans to
purchase machines and equipment).
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Whether a bank will make a loan or not depends on the credit and loan history
of the borrower, the borrower’s ability to make scheduled loan payments, the
amount of capital the borrower has invested in the business, the condition of
the economy, and the value of the collateral the borrower pledges to give the
bank if the loan payments are not made.
 Types of Advances
a) Running Finance
This is the most common for m of bank advances. When a borrower
requires temporary accommodation, the BAL allows withdrawals on
his account excess of the balance with the borrowing customer have
in credit, and a running finance thus occurs. This accommodation is
generally allowed against collateral securities to reduce risk of the
bank. The borrowing customer is in an advantageous poison in
running finance, because he has to pay service charges only on the
balance outstanding against him. In case of default the bank has the
right to sell off the collateral and recover the amount outstanding.
b) Term Finance
This is very common form of borrowing by commercial and
industrial concerns, and it is made available either against pledge or
hypothecation of goods, produce or merchandise. In term finance, a
borrower is allowed to borrow money from the bank up to a certain
limit, either at once or as and when required. The mark-up is only
given on the amount actually utilized. It is a short term, self-
liquidating commercial loan. It is given for one year and renewed
after one year.
c) Loans
When a customer borrows a fixed amount repayable either in
periodic instalments or in lump sum at a fixed future time, it is

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called a “loan”. BAL Abbottabad city branch allows loans to their
customers. The bank first takes collateral securities against the loan.
Bank Loans are classified into:
i. Loan by Security
This type of loans is secured by security. The main types of
securities pledged with the bank are as follows:
 Equipment
 Real Estate
 Ware House Receipt
 Stock Bonds
ii. Loan by Maturity

This type of loans is classified according to maturities, which
are as follows:
 Short term Loans (payable within one year or on short
notice)
 Intermediate term Loans (It is paid in instalments, it is
for one to five years)
 Long term Loans ( This type of loans is for longer
period than the intermediate loans, it can be paid before
maturity)
iii. Loan by Purpose

A borrower can get the loan from BAL for various purposes;
BAL Abbottabad City Branch advances loans for the following
purposes to its customers:
 Commercial Loans
 Industrial Loans
 Personal Loans
2.1.6 Credit Cards Department

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Bank Alfalah visa cards introduced in 2002. During the fierce competition in
the market today, the Alfalah Visa Credit card has captured a significant
make share. It is accepted at nearly 30 million merchants and 870,000 ATMs
in more than 150 countries around the globe and over 10,000 establishments
in Pakistan.
Alfalah VISA helps to pay for shopping, travel, entertainment, meals and
much more. Card members are facilitated through a number of promotions
from time to time like Matchless Discounts (discounts at nationwide
merchants’ outlets, making each shopping spree an exciting one), Dine’a’
Discount (the best discounts at a wide range of selective restaurants) ,
Fortunes Rewards Program (exchange of fortune points against an array of
attractive products and services), etc. In addition, there are a number of
strategic business partnerships with leading local and international brands for
purchase of home appliances at exciting Step-BY-Step (SB S) monthly
installment plan with free home delivery at lowest interest rates.
Features
No Joining Fee
No Annual/Renewal Fee
Lowest Markup

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Auto Debit Card
Global Acceptability
Cash Withdrawal
Revolving Credit
Free Supplementary Cards
24-Hours phone Banking Service.
Zero Loss Liability.
All Billing in Pak Rupees.
Comprehensive Travel Protection .
 Categories of Alfalah Visa Credit Card
i. Alfalah gold card

(Is impressive combination of higher spending limits and
superior card services)
ii. Alfalah classic cards

(An extremely appealing product with features not available
on any other credit card in Pakistan)
iii. Alfalah blue card

(This card is specially for Graduates or the persons who has
just started his career)
iv. Women exclusive

(For the first time in Pakistan, BAL has introduced a credit card
exclusively for women. this card has its unique features which
have been tailor-made for the women in Pakistan)
(Forget your wallet and chill out with Alfalah Visa Mini)
v. Auto Debit Card

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(This is especially designed for the BAL account holder,
giving option of making minimum or full payment through
BAL saving and current PKR account specified on Alfalah
Visa monthly statement)
 Young Professional card

 Student card
 Scholarship card
 Supplementary Cards
All Bank Alfalah basic card members can apply for supplementary
cards in separate categories like;
 Daughter’s card (children who are above 13 years of age)
 Son’s card
 House staff card(for the cook and driver etc )
2.1.7 Auto Finance & Leasing Department

 Car Finance
Alfalah car scheme enables customers to own
a car at easily affordable and flexible installments
with minimum down payment and insurance.
 Corporate & Individual Car Leasing

BAL recently introduced car leasing facility for individuals and
corporate sector has set new dimensions for the product. Now
customers are provided with the option of either to get the vehicle
leased or financed.

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2.1.8 Home Finance Department
Home finance scheme as launched BAL during last quarter of 2003. This
product has received overwhelming from the customers due to its lowest
mark-up and high quality services provided by bank. Home finance
Department started its operation in September 12, 2003
 Major Purposes of Home Finance

Bank provides the loan for three major purposes:
 Purchase
 Construction
 Renovation
2.1.9 Foreign Exchange Department

BAL Abbottabad City Branch Foreign Exchange Department deals almost in
all types of foreign banking transactions such as:
a) International Trade
Banks play a very important role in settlement of rights and claims that
arises as a result in the contest of international trade between sellers

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and buyers. There are four methods available through which
international trade debts are settled
 Payment Against Documents
 Documentary Credits (Revocable, Irrevocable and Confirmed
L/Cs)
b) Authorized Rates for Foreign Exchange Transactions

State Bank announces the rate for foreign exchange transactions. The
authorized dealers are given general permission to determine their own
rates of exchange, both for spot and forward transactions for the public
subject to the condition that the margin between the buying and selling
rate should not exceed 50 paisa per US Dollar or its equivalent in other
currencies. This condition does not apply to inter bank transactions.
c) Collection Services
BAL provides collection services on foreign bills for collection to its
clients such as Foreign Currency Cheques, Travelers Cheques, Foreign
Demand drafts deposited by its customers for its collection.
d) Payment against Documents (PAD)

Payment against Documents is created at retirement of L/C or
Acceptance. It is a temporary loan to the importer and is adjusted as
soon as the payment is received and documents are delivered to
importer. At the lodgments are delivered to importer. At the lodgment
date the L/C amount is converted at prevailing or booked rate.
e) Documentary Credits (Letter of Credit)

International trade involves numerous factors such as payment for
imports in the exporter’s country; shipment of goods within the
limitation prescribed under Trade Control regulations, and difficulties
of enforcing legal rights in a foreign country, etc. therefore, with a
view to overcome these impediments a system has been enforced in

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order to deal with the above and other related factors so as to protect
importers and exporters of goods against unwanted risks. The system
is represented by ‘Letter of Credit’ and their operation is controlled
under the articles of the “Uniform Customs and Practice for
Documentary Credits” as adopted by the Council of the International
Chamber of Commerce and enforce with effect from January, 1994 in
the Brochure No 500
Figure 2.7; L/C Flow Chart
 Types of Credit

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There are various types of documentary credits and its
commercial value depends on its type but the two main
classifications are:
i. Revocable Credit
It can be amended or cancelled at any time without prior
warning or notification to the seller. It therefore, involves
risk as the credit may be amended or cancelled while the
goods are in transit and before the documents are presented
or although presented, before payment has been made. The
seller would then face the problem of obtaining payment
directly from the buyer. On the other hand it gives the
buyer maximum flexibility, as it can be amended or
cancelled without prior notice to the seller up to the
moment of payment by the bank at which the issuing bank
has made the credit available.
ii. Irrevocable Credit

This type can be amended or cancelled only with the
agreement of all parties thereto. It gives the seller greater
assurance of payment, but he remains dependent on an
undertaking of a foreign bank. It is lesser flexible as the
credit can be only amended or cancelled if all parties agree.
iii. Confirmed Irrevocable Credit

As there are often two banks involved, the issuing bank and
the advising bank, the buyer can ask for an irrevocable
credit to be confirmed by the advising bank. If the advising
bank agrees, the irrevocable credit becomes a confirmed
irrevocable credit. It gives the seller a double assurance of
payment, since a bank in the seller’s country has added its
own undertaking to that of the issuing bank. Since it

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represents an additional requirement on the part of the
seller, it is more costly.
iv. Sight Letter of Credit

In this type of Credit, when the document is received by the
importer, after the receiving of document he makes
payment to the other party. Sight Letter of Credit is also
called PD (Payment against documents).
 Parties to a Letter of Credit
Usually the following five parties are involved in a letter of
credit:
 The buyer who is the importer and the account party,
this party request the bank for opening of Letter of
Credit.
 The bank issuing the Letter of Credit or the opener bank
i.e. BAL
 The advising bank or the correspondent in the
exporter’s country, which advises the exporter of the
opening of a Letter of credit
 The negotiating bank to which the beneficiary presents
his documents for payment.
 The confirming Bank adds it conformation (for a fee),
thereby guaranteeing that it will pay if the terms of L/C
met irrespective of the opening banks’ ability to pay.
 The reimbursing Bank is the correspondent bank of the
issuing bank for reimbursing funds to the negotiating
bank. It only provides the services.
 The seller or exporter who is the beneficiary of the
credit
 Credit Application

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The instruction to be given by an applicant (customer) to BAL
covers the following
 The full and correct name and address of the beneficiary
(seller)
 The amount of the credit
 Whether the credit is to be available by payment,
acceptance or negotiation
 The party on who drafts, if any are to be drawn and the
tenor of such drafts
 A brief description of the goods, including details of
quantity and unit price, if any
 Details of the documents required
 The place of shipment or dispatch or taking in charge and
the destination
 Whether the transfer of the goods from one vessel to the
other, or from one mode of transport to another i.e.
transshipment is allowed or not
 Whether partial shipments are prohibited or it is a
transshipment
 The latest date for shipment, dispatch or taking in charge
(if applicable)
 The period of time after the date of issuance, for the bills
of lading or other shipping documents within which they
must be presented for payment, acceptance or negotiation
 The date and place of expiry of the credit
 How the credit is to be advised, i.e., by mail, or by cable,
telegram or telex
 Chick List for Applicant

 Category of import----to understand and describe
category example commercial sector, industrial sector

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and public sector and sub-field of interest to which
credit will relate.
 The importing item must be a regulated one.
 National Tax Number of applicant.
 National identity card of the applicant.
 Client of the issuing bank ----must have current
account.
 Client must have sanctioned limit for opening letter of
credit.
 Application form of credit
 Is the Performa invoice/indent/purchase order which
shows
i. Description of goods
ii. Specification of goods
iii. Unit price of goods
iv. Total price of goods
v. Terms of sales of goods
 “Form I” in triplicate----is forwarded to SBP for
reporting of sale of foreign exchange.
 Draft or Bill of Exchange, which include
i. Amount of draft is checked
ii. Tenure of L/C
iii. Name of the importer and account number
iv. Date of draft not later than validity date of L/C
and date of negotiation
v. The period between date of draft and date of
shipment on Bill of Lading should not exceed
21 days.
vi. Draft should be signed by the beneficiary and
drawn on opener

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 Insurance cover note/ Marine insurance policy must be
issued in the joint name of the issuing bank and the
importer.
 Amount in the insurance cover note must be equal to
L/C amount.
 The date on the insurance policy must not be later then
that of the shipment date.
 Marks if asked to be put on packages must be clearly
defined
 Transport Documents (Bill of Lading for import of
goods on ship, Airway Bill for import Air Cargo, or
truck receipt if the import is by road)
 Packing List
 Issuing a Credit
i) The buyer and the seller conclude a sales contract
providing for payment by Letter of Credit.
ii) The buyer instructs BAL, the issuing bank, to issue
a credit in favor of the seller, the beneficiary.
iii) BAL asks Bank “X”, usually in the seller’s country
to advise or confirm the credit.
iv) The advising or confirming bank informs the seller
that the credit has been issued.
v) The seller then sends the documents evidencing the
shipment to the bank where the credit is available
(this may be the issuing or the confirming bank or
any other named in the credit as the paying,
accepting or negotiating bank). Suppose, the credit
is available at BAL.
vi) As soon as the seller receives the credit and is
satisfied that he can meet its terms and conditions,

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he is in position to load the goods and dispatch
them.
vii) BAL checks the documents against the credit. If
they meet the requirements of the credit, it either
 effects payment in accordance with the terms of
the credit, either to the seller if he has sent the
documents directly to BAL or to the bank that
has made funds available to him in anticipation
 reimburses in the pre-agreed manner the
confirming bank or any bank that has paid,
accepted or negotiated under the credit after
checking the documents by BAL, they are
released to the buyer upon payment of the
amount due, or upon other terms agreed
between him and the bank. The applicant sends
the transport document to the carrier who will
then proceed to deliver the goods.
 Settlement
The following are the methods for settlement of a Letter of
Credit’s transaction:
i) By Payment/Sight/DP
In this method of the settlement the seller sends the
documents to BAL evidencing the shipment. After
checking that they meet the credit requirements, BAL
makes payment.
ii) By Acceptance/Usance
The seller sends the documents to BAL evidencing the
shipment accompanied by a draft drawn on it at the
specified tenor. After checking that they meet the credit

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requirements, BAL accepts the draft and returns it to the
seller. By accepting, the bank signifies its commitment
to pay the face value at maturity. In this method bank
take some collateral securities because title document
are released just against acceptance.
2.14 Management of BAL

BAL is managed by a 6-member Board of Directors headed by a Chairman. There
is an Executive officer, who runs the Executive Committee. In Executive
Committee there are 7 members.
The names of members of the Chairman, Board of Directors and Executive
Committee along with their designations are given in the annexure.
CHAPTER – 03
Bank Alfalah Services and Products
3.1 Bank Alfalah Products

Bank Alfalah has achieved a competitive advantage over other banking institutions by
offering a complete range of banking solutions for its valued clients. The concepts
entail creation of a financial super Market where a large variety of banking products
and services are available to meet diverse needs of the customers.
A summary of Bank Alfalah products and services is as follows:
3.1.1 Deposit Products

a) PLS Saving (Rupee) Accounts
 Saving accounts are designed to mobilize savings primarily from a
large number of individuals and house hold. Any one or more

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individuals or partners can open a PLS saving account with the
Bank.
)b Current Rupee Account

 Individual, partnerships, companies, associations, clubs,
societies and NGOs are eligible to open current accounts.
This type of account is further classified as individual
account and Joint Account.
)c Term Deposit
It is one of the popular account types. The amount is deposited in this
account for fixed time period i.e. from one month to five years. The
interest is various with the variation of time limitation. The rate of profits
increases as per increase in time period. The customer cannot withdraw
money before maturity. The profit on this account is paid after the
maturity. But if a customer want to withdraw before maturity, so he will
give a notice to the bank 7 days before borrowing.
d) Royal Profit Savings (Rupee) Accounts

Royal profit is a high yield rupee account intended to provide higher rates
of profit to high net worth customers and greater flexibility and
convenience in terms of transactions. Current rates of profit are as follows:
Amount Proposed Rates (P.A)

From 50,000 To 999,999 1.50%
From 1,000,000 To 9,999,999 1.75%
From 10,000,000 To 49,999,999 2.00%
From 50,000,000 To 149,999,999 2.50%
From 150,000,000 & Above To be quoted by treasury

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Table 3.1 Royal Profit Savings Account Proposed Rates
e) Royal Patriot (Rupee Term Deposit)

Royal Patriot is a rupee term deposit scheme with competitive rate of
profit. Current rates of profit are as follows:
Tenure 25,000-999,999 1,000,000-4,999,999 5,000 & Above

1 Month 1.50 % 1.60 % 1.70%
3 Month 1.75 % 1.85 % 1.95%
6 Months 2.00 % 2.10% 2.20%
1 Year 2.25 % 2.35 % 2.45%
Table 3.2 Royal Patriot Competitive Rates
f) Foreign Currency Accounts

This Account is offered to resident and non-resident Pakistani’s as well
as foreigners can open foreign currency accounts. A foreign currency
account is opened either as savings account or current accounts.
Foreign currency accounts are opened and maintained subject to local
laws and regulations in force from time to time. Profit on foreign
currency saving account is paid on half-yearly basis and on term
deposit it is paid on maturity. No interest is paid on foreign currency
current accounts.
g) Safe Deposit Lockers

Bank Alfalah provides safe deposit lockers facilities to its customers
for safe keeping of their valuables like documents, securities and
jewellery etc. Important features of lockers facility are as follows:
 Various sizes to choose from small to extra large: small,
medium & large

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 Annul locker rent ranges from Rs.1,000/- to Rs.3,500/-.
 Locker rent is waived for customers maintaining a minimum
deposit of Rs.2 million.
 Current account or above US $25,000/- in a current account or
US $ 50,000/- in a savings account.
 The key deposit of the Locker is Rs.1,000/- which is refundable
Locker Size Charges per annum

Small Rs.1000/-
Medium Rs.1500/-
Large Rs.3000/-
Special Rs.3500/-
Table 3.3 Locker Rates
3.1.2 Consumer Finance Products

Consumer finance is a fast growing segment of banking business in Pakistan.
Credit cards, car finance, personal loans, loans for purchasing household
appliances, computers and related accessories and housing financing are the
principal consumer finance products.
Being a market oriented bank; Bank Alfalah also has a strong focus on
consumer banking and consumer finance. A brief description of products is as
follows:
a) Auto Leasing and Financing

 Car Finance
Alfalah car scheme enables customers to own a car at easily
affordable and flexible installments with minimum down payment
and insurance.
 Corporate & Individual Car Leasing
BAL recently introduced car leasing facility for individuals and
corporate sector has set new dimensions for the product. Now
customers are provided with the option of either to get the
vehicle leased or financed.
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b) Credit Cards
Credit Cards are increasingly becoming way of life in Pakistan. Bank
Alfalah (visa) Credit Card product was launched in Dec, 2002. In a
short period of time, it has achieved a unprecedented success. BAL
Credit Card is unique in the sense that there is no cared issuance fee as
it is free forever.
c) Alfalah Hilal Card

Bank Alfalah through its commitment to provide superior and
improved services to its valued customers, has unveiled a nationwide
network of ATMs. Bank Alfalah introduce Alfalah Hilal Card the
revolutionary, new-age form of cash that provides greater freedom,
security and convenience combined with the wide reach of Visa
Network. This card can be use for all financial needs around the world,
round the clock, wherever; Visa electron cards are accepted locally and
internationally. It gives an unlimited access to the current/Saving
account with a simple swipe, at millions of retail shops or ATMs,
worldwide.
Bank Alfalah Limited ATM network is geared up to exploit the latest
technology, and is equipped to meet the highest standards of security
andefficiency.
d) Consumer Durables
Bank Alfalah continually strives to improve and add products to its
consumer Banking service. BAL launched Micro-Financing of
consumer durables on August 04, 2003, which is yet another milestone
towards its commitment of meeting all the financial needs of esteemed
customers.
The scheme is basically a term finance facility repayable in monthly
installments, giving customers an opportunity to own housed products.

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In this way, this product is facilitating the customers and helping them
out to improve their standard of living.
e) Home Finance
This product which was launched on September 01, 2003, provides a
wider range of Home Finance tailor-made plans, designed specially to
meet customers’ need at a very competitive rate. At present, Bank Alfalah
is the only Bank in the market, which offers a house finance scheme for
non-resident Pakistani customers based in the UAE besides Pakistani
residents. Housing finance is available from Rs.0.500 million to Rs.7.50
million to purchase, renovate or construct a house/apartment. Important
points are as under:
 Payment period ranges from 3 to 20 years.
 Owner only invest 30% of the value of property.
 Loan can be repaid before maturity without any penalty.
 Borrower’s age must be between 25 to 65 years.
 Salaried persons, businessmen and self-employed people are
eligible.
 Financing is also available for purchase of residential land.
 Complete freedom to move between floating and fixed rates.
 Financing available to resident & non-resident Pakistanis.
 Minimum amount will be Rs.05.500 million & maximum of
Rs.7.50 million.
 Mark-up option available for floating & fixed rates.
f) Alfalah Karobar Finance

Alfalah Karobar Finance is a new Product of BAL, which is launched
recently.
It is a hassle-free running finance facility for SMEs that meets all the
business needs like no other.

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g) Alfalah Zarie Sahulat
Bank Alfalah Ltd. (BAL) agri finance program has been named as "Bank
Alfalah Zarie Sahulat”. Bank Alfalah is extending this service to the
clients on a competitive markup rate. The scheme now covers financing of
a multitude of activities related to crop production, harvesting,
transportation, marketing, storage, processing, packing, export, agri
development, working capital and fixed investment financing of agri non
crop activities, storage, silos, etc. making it quite exhaustive and
comprehensive. The products have been, therefore, designed keeping in
mind objectivity of practical applicability in market scenario and to cater
to the most commonly demanded items of agricultural financing by
farmers.
Products:
Products of Alfalah Zarie Sahulat along with the nature of facility and
their purpose are quoted below.
Table 3.4 Alfalah Zarie Sahulat Products
Product Nature Of Facility Purpose

Alfalah Paidawari Zarie Sahulat Short Term Processor, agri producer, exporters
and other eligible items.
Alfalah Musalsal Zarie Sahulat Short Term (Running finance Credit needs under working capital
limit for 3 years with annual
clean up)
Alfalah Tractor and Transport Medium Term Purchase of tractors, trolleys, pick-
Zarie Sahulat up, motor cycle, trucks, milk van or
other such items including repair of
tractors, as per eligible items.
Alfalah Machinery & Equipment Medium/Long Term To finance machinery and

Zarie Sahulat equipments, such as, combine
harvester, thresher, picker, digger,
trolley, planter, sowing drill,
cultivator, plough, power tiller,

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harrow, sprinkler, cane crusher,
tobacco curing equipment etc.
Alfalah Aabpaash Zarie Sahulat Medium Term To meet irrigation water needs of the
farmers.
Alfalah Islah-e-Araazi Zarie Medium Term Land development and improvement,

Sahulat land leveling laser leveling,
clearance of jungle, farm field
layout, terracing,
contouring, soil reclamation,
embankment, land formation, bund
construction, water management,
water course improvement etc.
Alfalah Poultry Zarie Sahulat Short/Medium Terms Working capital and fixed
investment needs for broiler and
layer production, breeder flock, GP
flock, hatchery, product processing,
packing, transportation, storage,
compound feed making etc.
Alfalah Dairy & Livestock Zarie Sahulat Short/Medium Working capital and fixed
Term investment financing of dairy and
milch animals, feed lot and fattening
station structure and equipment,
livestock farm structure and
equipment, fattening of animal, milk
chilling plant, construction of sheds
for animal, opening of private
veterinary clinics (veterinary
equipment), opening of veterinary
store, milk plant and other eligible
items.
Alfalah Fisheries Zarie Sahulat Short/Medium Terms Inland:

Fish seed and feed, manure charges,
running charges of tube well pumps,
construction excavation, expansion
and rehabilitation of pond,
installation of tube wells, water
channels, fencing, boats, net twine,

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rope, fish yards etc and other eligible
items.
Marine:
Fuel, ration, and ice for marine
fisheries, engine and spare parts, new
boat and trawler, boat equipment etc.
and other eligible items.
Alfalah Silos/Storage Zarie Short/Long Term Construction of cold storage,

Sahulat godown, bins, silos, structure for
storage of wheat, steel/metal
capsules, hire charges for storage of
raw agri product etc. and other
eligible items.
Alfalah Marketing Zarie Sahulat Short Term To facilitate the marketing of the
produce and also for export of
cotton, cotton yarn, mutton, beef,
fruits, vegetables etc and all other
eligible items.
Alfalah Agri Industrial Zarie Medium/Long Term For setting up seeds processing units,
Sahulat installation of fruit and vegetables
machinery, milk chilling units,
polishing , grading, packaging of
fruits and vegetables cotton ginning
factories under BMR, Bio – gas plant
etc.
Alfalah Bills / Guarantees Zarie Short Term Financing against agri produce
Sahulat procurement receipt, purchase of
(For growers’ corporate client bills, deferred payment leaf vouchers
only) issued by tobacco companies,
continuing guarantees etc.
Alfalah Lease Zarie Sahulat Medium/Long Term For leasing tractors, farm machinery,
equipment etc
Alfalah Bio Gas Zarie Sahulat Medium /Long Term Setting up plants. This shall be an
alternate use of entry
Source: www.BankAalfalah.com

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h) Structured Finance
Established in 1998 in order to provide innovative investment banking
services to valued clients.
A team of hand picked professionals, dedicated to syndicated loans and
structured products. The team’s expertise is well known in the marketplace
with its capability to assist public & private sector entities, major financial
institutions, multinational corporations, domestic & international
institutional investors in innovative financing including underwriting &
private placements.
The scope of SFU’s activities also encompasses advisory assignments,
such as privatization, Mergers & Acquisitions (M&As), domestic listings,
IPOs and restructuring. During the past few years, SFU has been
successful in sourcing and participating in a number of prestigious
transactions involving large amounts.
Some of the value added services offered by SFU include the

following:
 Loan syndication
 Public floatation of Term Finance Certificates (TFCs) and equity
 Financial restructuring
 Private placement of Term Finance Certificates (TFCs) and equity
underwriting
 Guarantee syndications
 Mergers & Acquisitions (M&As)
 Fostering joint ventures
 Privatization – Sale side and buyers side advisory
 Structuring new financial instruments
i) Travelers Cheques

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Bank Alfalah presents Rs.1,000, 5,000 and 10,000 denominations of
travelers cheques, making it very convenient to carry money while
traveling or keeping your emergency cash safe.
j) Money Gram
Bank Alfalah limited, in collaboration with Money Gram, offers
remittance service to Pakistan. Money Gram is person to person
money transfer service that allows consumers to receive money in just
a few minutes.
k) Online Banking
Bank Alfalah now offers the facility of on-line banking to its

customers through its country wide network of branches.
Customers can use the ATMs or the banking counters of any
branch for day-to-day banking needs, irrespective of branch
where they maintain their accounts.
For Corporate customers centralized Cash Management facility
is also offered through on-line banking.
CHAPTER – 04
Analysis of Bank Alfalah

This chapter is about the financial and general analysis of BAF based on the
observation during the six week internship period and also from the discussion with
the cooperative staff of BAF
4.1 Common Size Analysis
BAL today represents a bank that has grown with time and experience. At
present it is a major financial institution in scope and size. It symbolizes a fully
grown tree, ever green, strong and firmly rooted
4.1.1 Vertical Analysis

 Based on Total Assets of Balance Sheets

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Table 3.5; Vertical Analysis Based on Total Assets of Balance Sheets
 Based on Total Revenue of Income Statements

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Table 3.6; Vertical Analysis Based on Total Revenue of Income Statement
4.1.2 Horizontal Analysis/Trend Analysis

 Summarized Balance Sheets Trend Analysis (Base Year 2002)
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Table 3.7; Summarized Balance Sheets Trend Analysis (Base Year 2002)
 Summarized Income Statements Trend Analysis (Base Year 2002

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Table 3.8; Summarized Income Statements Trend Analysis (Base Year 2002)
4.2 Financial Analysis

Financial analysis is the process of identifying the financial strengths and weaknesses
of the firm by properly establishing relationships between the items of balance sheet
and profit an loss account, Financial analysis can be undertaken by management of
the firm, or by parties outsides the firm viz, owners, creditors, investors and others.
The nature of analysis depending on the purpose of the analyst. Such analysis is of
special interest to the following groups:
 Bankers, Creditors
 Investors, Shareholders and owners
 Government agencies
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 Management
The various stakeholders of business are all interested in the analysis of financial
statements. But the focus of interest of all is not the same. For example Trade
creditors are interested in firm’s ability to meet their claims over a very short period
of time. Their analysis will, therefore, confine to the evaluation of the firms liquidity
position.
Suppliers of long term debt on the other hand are concerned with firm’s long-term
solvency and survival. They analysis the firms profitability over time, its ability to
generate cash to be able to pay interest and repay interest and repay principal and the
relationship between various sources of founds (Capital structure relationship). Long-
term creditor do analyses the historical financial statements by they place more
emphasis on the firms projected financial statement s to make analysis about its future
solvency and profitability
Investors who have invested their money in the forms share are most concerned about
the firms that steady growth in earnings. As such, they concentrate on the analysis of
the firm’s present and future profitability. They are also interested in the firms finical
structure of the extent it influences the firms earnings ability and risk.
Management of the firm would be interested in every aspect of the financial analysis.
It is their overall responsibility to see that the resources of the firm are used most
effectively and efficiently and that the firm’s financial condition is sound.
The financial growth of any organization can be measured in terms of the profits it
generates at the end of its financial year. In the case of banks this financial expansion
can further be measured by the increase in its base of equity, deposits and profits. The
increase in its advances to customers as well as its financing of imports and exports
emphasizes a bank’s financial enrichment. These factors give a clear indication of the
enlargement and progression of the bank’s operations.

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4.2.1 Financial Highlights (Graphical Representation)
a) Profit After Tax (in Rupees)
Graph 4.1; Profit after Tax (in Rupees)
b) Earning Per Share (in Rupees)

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Graph 4.2; Earnings per Share (in Rupees)
c) Investment (in Rupees)

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Graph 4.3; Investment (Rupees)
d) Net Asset Value Per Share (in Rupees)
Graph 4.4; Net Asset Value per Share (in Rupees)
e) Earning Assets to Total Assets

Earning Assets to Total Assets= Earning Assets/ Total Assets *100
For Year 2003: 81%
For Year 2004: 78%
For Year 2005: 82%
For Year 2006: 82%
For Year 2007: 80%
The ratio shows improvement in 2003, 2005 and 2006 from
the previous year

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82
81
80
79 Earning Assets to Total

Assets
78
77
76
2003 2004 2005 2006 2007
f) Advances to Deposit
Credit Advances to Deposit Ratio= Advance/ Deposits and other
Assets *100
For Year 2003: 70.84%
For Year 2004: 83.58%
For Year 2005: 81.54%
For Year 2006: 87.25%
For Year 2007: 83.44%
100
80
60
40 Credit Advances to Deposit
20
0
2003 2004 2005 2006 2007

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6
g) Return on Assets
Return on Assets= Net Profit/ Average Total Assets *100
For Year 2004: 1.2%
For Year 2005: 2.2%
For Year 2006: 2.8%
For Year 2007: 2.7%
3
2.5
2
1.5
Return on Assets
1
0.5
0
2004 2005 2006 2007
h) Net Interest Margin

Net Interest Margin=Interest Income-Interest Income/Average earning
Assets *100
For Year 2004: 3.05%
For Year 2005: 5.1%
For Year 2006: 6.07%
For Year 2007: 5.9%
7
6
5
4
3 Net Interest Margin
2
1
0
2004 2005 2006 2007

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i) Operating Profit Margin
Operating Profit Margin=net interest income-Operating Profit/Total
interest income *100
For Year 2003: 22.8%
For Year 2004: 26.2%
For Year 2005: 36.0%
For Year 2006: 37.8%
For Year 2007: 38.4%
40
35
30
25
20
Operating Profit Margin
15
10
5
0
2003 2004 2005 2006 2007
j) Cost to income Ratio

Cost to income Ratio=Operating Profit/Net Interest Income +Non
Interest Income *100
For Year 2003: 41.4%
For Year 2004: 38.0%
For Year 2005: 20.8%
For Year 2006: 19.1%
For Year 2007: 18.6%
45
40
35
30
25
20 Cost to Income Ratio
15
10
5
0
2003 2004 2005 2006 2007
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k) Net Non Performing Assets
Net Performing Assets= Net Performing Assets/loans given *100
For Year 2003: 1.04%
For Year 2004: 0.7%
For Year 2005: 0.9%
For Year 2006: 0.97%
For Year 2007: 1.38%
1.4
1.2
1
0.8
0.6 Net Performing Assets
0.4
0.2
0
2003 2004 2005 2006 2007
l)

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4.2.2 Financial Highlights/Financial Ratio Analysis (for Last Six Years)
Table 4.1; Financial Highlights

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4.3 SWOT Analysis

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This SWOT analysis of Bank Alfalah Limited takes into consideration the
external as well as the internal environment internal structure of the bank.
4.3.1 Strengths
The predominant strengths of Bank Alfalah Limited are
 Humble Management
 Strength And Commitment Of Sponsors
 Efficiency
 Phenomenal Growth
 Vastly Experienced Management
 Highly Professional Human Resource Department
 Crucial Location Of Branches
 Image Building Activities
 Bank is financially strong and has a huge deposit reserve
 Its cost of funds is less as compared to many of its competitors
 Personnel of Alfalah are well trained and highly skilled. Majority of
employees has many years of experience in banking sector and are an
asset for the bank
 Bank Alfalah has a wide network of branches at the ideal locations,
catering the financial needs of its clients
 Foreign Trade is the focus of bank. It has become an ideal bank for the
importers and exporters
4.3.2 Weaknesses
The chief weaknesses are
 Small Size
 Less Efficient Computer And I. T. System
 Disproportionate Presence Of Old Staff In The Upper Management
Hierarchy

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 Skill Set Of Employees Is Not Up to The Mark As There Is No Job
Rotation
 Foreign Banks Still Are A Little More Prestigious
 Bank Alfalah Limited Does Not Possess Foreign Network
 No Advertising In Electronic Media
 It is a step behind in using new technology as compared to other banks
 Most of the employees are overloaded with work. There is uneven
distribution of work and promotions are not very timely
 It is slow in the introduction of new services
4.3.3 Opportunities
The opportunities on which bank Alfalah can capitalize upon are
 Extension of local branch network

 Establishing foreign branch network
 Capitalizing on information technology
 Unexplored market of multinational corporations
 Growth in textile sector
 Adopt E-banking
4.3.4 Threats
The predominant threats Bank Alfalah is facing at the moment are discussed
in the following lines.
 Private sector banks
 Heavy reliability on only one market segment i.e. Textile.
 Network expansion by foreign banks
 If Pakistani banks (especially state owned banks), backed by huge
network improve the service they give and their employee skill set
 Terrorist image of the country
 Inconsistency in government policies

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4.4 Market Structure of BAL
Definition
A market consists of all the actual and potential buyers and sellers of a
particular product. Market structure refers to the competitive environment in
which the buyers and sellers of the product operate.
4.4.1 Types of Market Structure

The following are the main types of the Market structure
 Perfect Competition
 Monopoly
 Monopolistic Competition
 Oligopoly
4.4.2 Market Structure Bank Alfalah Limited

The Bank Alfalah Limited Comes under the Monopolistic Competition Because;
 There are large number of Financial Institutions in the Market.
 Habib Bank Limited
 United Bank Limited
 Allied Bank Limited
 Muslim Commercial Bank Limited
 National Bank of Pakistan
 Bank of Khyber
 National Saving Centre
 Al-Faysal Bank Limited
 Saudi Pak Bank Limited
 Standard Charted Bank Limited
 First Women Bank Limited

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 Bank Al-Habib Limited
 PICIC commercial Bank Limited
 KASB Bank Limited
 NIB Bank Limited
 There is large number of customers in the Market.

 In the Market there are number of substitutes are available
 National Saving Centre
 Stock Exchange
 Government Securities
 Advances
 The products characteristics are different according to:

 Rate of Interest
 Mode of delivery
 Duration of delivery
 Services
 Communication
 The products are relatively homogenous

 Types of Accounts
 Credit Cards
 Debit Cards
 Car Finance
 Advances
 Consumer Durables
 Foreign Exchange dealings

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CHAPTER – 05
Findings, Recommendation & Conclusion

5.1 Findings
The findings and analysis of Bank Alfalah Limited are as follows:
 Good Image
Bank Alfalah has the benefit of having better reputation and image because of
having the strength of Abu Dhabi consortium and under the leadership of His
Highness Sheikh Nayan Mabarak Al-Nahayan. People feel lesser risk for
investing their money with the bank.
 World Class Services:

The bank is providing its customers world class and excellent services. This is the
main reason for the growth of the bank.
 Coordination:
Meetings are held very frequently which keeps the head-office well informed
about the performance of its branches and also provides officials with the
opportunity to communicate, discuss and deals with different situations as they
arise.
 Employee Behavior:

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The employees of Bank Alfalah Limited are very committed to their work. They
are very hard working and punctual but some of them have problems with he
environment of the bank and they feel that the branch environment is not very
encouraging.
5.2 Recommendation
Based on my six weeks stay with Bank Alfalah Limited, I want to give some
suggestions for improvement in its operations as under:
 Misdistribution of work:
In Bank Alfalah, there is misdistribution of work; some people are over burdened
with the work. So I suggest that there should be fair distribution of work in all the
departments.
 Participative management:
Participative management concept should be adopted, where ideas from the
employees should also be taken, not only for developing products but also on
service, efficiency, employee morale etc. in order to improve them.
 Fax Machines and Photocopying Machine:

The number of Fax machines and photocopying machine in the bank are also less
than they are needed. For photocopying one has to go upstairs. So there should be
more machines and also their placement should be at the right place.
 Training programs
BAL should introduce more training programs for their employees. It will help
less educated and less experienced staff to grow and be a valuable part of the
bank.

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5.3 Conclusion
The six weeks spent at Bank Alfalah Limited, Abbottabad branch were, no doubt a
source of great learning for me about a lot of things particularly working in bank’s
atmosphere and system of bank. It’s my quite first experience to do work practically
in some organization. This practical training program did not only help me acquire
loads of knowledge about the predominant functions performed by banking
companies, but also imparted a lot of training as regards the set of behavioral traits
which distinguish a particular person from the rest of the lot in a professional
environment.
 During my internship I concluded that currently bank Alfalah has a high
market share and is not facing any type if risk.
 Due to highly trained professionals it is used to make progress leaps and
bound.
 The main objective of bank is to build strong relationship with the
customers and make them believe that bank Alfalah is right for them by
providing effective and efficient services.
 It has also created a strong goodwill and trust in the market.
 At this point it is significant to write a word of gratitude for the institute,
which makes it sure, that all the students get an exposure to practical life
in relatively well-reputed organizations
 I must underscore the fact that writing this internship report was an
evenly memorable experience as actually doing the internship. I

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honestly tried my level best to come up with an original piece of
writing that could serve as a vivid proof of the fact that students at
COMSATS Abbottabad are certainly doing the internship.
References
Annual Report BAL; 2008
Aslam, S (1999); Banking & Finance.
Adnan, Credit Officer , Bank Alfalah Abbottabad.
Bilal Maqbool, Manager Operations, Bank Alfalah Abbottabad
Hussain, S; Rana,K & Shabbir, A (1991); Banking Currency and Finance. , Lahore:
Ilmi
Iffland, Charles & Langueton, Pierre ; International Banking. New York: Irwin Book
Co.
Siddiqui, A.H; Practice and Law of Banking in Pakistan.
www.bankalfalah.com
http://www.bankalfalah.com/about/financial_performance.asp (last time Accessed on
January 15, 2009)

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Annexure
Annexure A
BOARD OF DIRECTORS & MANAGEMENT
CHAIRMAN
H.E. Sheikh Hamdan Bin Mubarak Al Nahayan
BOARD OF DIRECTORS
H.E. Sheikh Hamdan Bin Mubarak Al Nahayan
Mr. Abdulla Khalil Al-Mutawa
Mr. Abdulla Nasser Hawaileel Al-Mansoori
Mr. Khalid Mana Saeed Al Otaiba
Mr. Ikram Ul-Majeed Sehgal
Mr. Nadeem Iqbal Sheikh
CHIEF EXECUTIVE OFFICER

Mr. Mohammad Saleem Akhtar
EXECUTIVE COMMITTEE

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Mr. Mohammad Saleem Akhtar
Mr. Ikram Ul-Majeed Sehgal
Mr. Parvez A. Shahid
Mr. Mohammad Yousuf
Mr. Tanweer A. Khan
Mr. Sirajuddin Aziz
Mr. Mahmood Ashraf
Annexure B

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Eight years Financial Summary [2000 - 2008]
Annexure C
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Source: Bank Alfalah Annual Report 2007

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Annexure D

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Annexure E

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Annexure F

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Annexure G

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Annexure H

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Annexure I

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Annexure J
Formulae of Financial Ratios
1. Net Profit Margin
Net Profit
x 100
Total Revenue
2. Gross Profit Margin
Gross Profit
x 100
Total Income
3. Return on Investment
Net Profit
x 100
Total Assets
4. Return on Equity
Net Profit
x 100
Total Equity
5. Total Asset Turnover
Mark-Up Revenue
Total Assets
6. Fixed Asset Turnover
Mark-up Revenue
Operating Fixed Assets
7. Current Asset Turnover
Mark-Up Revenue
Total Current Assets

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8. Current Ratio
Current Assts
Current Liabilities
9. Cash Ratio
Cash
Current Liabilities
10. Debt to Equity Ratio
Total Debt
Share holders Equity
11. Debt to Total Assets
Total Debt
Total Assets
12. Interest Coverage Ratio
Earnings before Interest and Taxes
Interest Expense
13. Advances to Deposits
Advances
Deposits
14. Investment to Deposits
Investments
Deposits
15. Op. Expenditure to Tot. Income
Operating Expenses

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Total Income.
16. Interest Earned to Advances
Interest Earned
Advances
17. Interest Expense to Deposits
Interest Expense
Deposits
18. Earning Per Share
Profit after Tax

Shares Outstanding

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Internship Report Bank Alfalah LTD - Part2

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CHAPTER – 01

Introduction to the Report

1.1 Background of the Study.

1.2 Purpose of the Internship

 To give a comprehensive review of BAL.

Mehraj Muhammad 1 SP07-MBA-011

1.3 Merits of the Report

1.4 Scope of Work/Report

1.5 Methodology of the Report.

1.5.2 Secondary Sources

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1.7 Scheme of the Report

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Introduction to Bank Alfalah Limited

2.1 Evolution of Banking

2.2 Brief History of banking

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2.3 Role of Banking in the Economy

2.3.1 The Intermediation role:

2.3.2 The payments role:

2.3.3 Guarantor role:

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2.3.4 Risk Management role:

2.4 Banking in Pakistan

2.5 History of Bank Alfalah Limited

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2.6 Bank Alfalah Today

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The Vision of Bank Alfalah is:-

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Mission statement of Bank Alfalah is:-

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2.9 Core objectives of BAL

2.10 BAL Credit Rating

2.11 Branch Network of BAL

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Figure 2.1; Branch Network of Bank Alfalah Limited

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2.1.1 Accounts Department

Figure 2.3; Accounts Department

 Procedure of Opening an Account

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b) Current Rupee Account

d) Royal Profit Savings (Rupee) Accounts

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Amount Proposed Rates (P.A)

Table 2.1 Royal Profit Savings Account Proposed Rates

e) Royal Patriot (Rupee Term Deposit)

f) Foreign Currency Accounts

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k) Hold Mail Facility

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l) Stop Payment Instruction

2.1.2 Remittances Department

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Figure 2.5; Pay Order Processing

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 Instruments of Inward Remittances

 Instruments of Outward Remittances

 Corresponding Banks for Remittance

 Pond Sterling Habib Bank London

2.1.3 Cash Department