Internship Report

Bank Alfalah Limited

Submitted by:

Sadia Abad

Program:
Session:

M.Com
2012 2014

Registration No:

32131080

Department of Commerce
National College of Business Administration & Economics
Lahore, Pakistan

Dedication:

I dedicate my whole work to my almighty Allah who gave me the abilities to complete my
internship report and HIS beloved Prophet Hazrat Muhammad (P.B.U.H) then to the True
Followers His Prophet Hazrat Muhammad (P.B.U.H). I specially dedicate this report internship
to my parents who inspire me in every field of life, to my teachers, friends, and staff of the
bank. Everyone I mentioned above has helped me a lot in preparation the internship report and
learning the knowledge about banking.

Acknowledgement:
First of all thanks to Allah for his countless blessings, this is made possible to attain
knowledge. Im really grateful to my parents who helped and support me to get best practical
knowledge in every phase of life. I acknowledge that I have completed internship with the
help of my instructor and staff at bank. I acknowledge that I will complete internship report
with the guidance of Mr. Kashif Mehmood. They helped and guided me a lot in preparation
the internship report. I also acknowledge that the branch manager and other staff at the bank
also helped me in learning and preparing the internship report. All the staff members are
much cooperative.

Executive summary:
Pakistan after partition, banking sector does not have a strong economic position. The number of
events likes the nationalization of banks in the 1970s. However today, the banking industry of
Pakistan has been growing over the past few years, mainly consistent policies implemented by
the Government of Pakistan, including the privatization of the banks as will as the State Bank of
Pakistans monetary policy has been very friendly toward the banking industry..
The financial statistics of Bank Alfalah are as impressive as their human resource. The profit
after taxation for Bank Alfalah in 2013 amounted to Rs 4,675,950 (000) and its total assets
amounted to Rs.610,614, 291 (000). The earning per share moves up from Rs.3.38 to Rs.3.47 in
2013. Bank Alfalah promotes its products and services through print and electronic media. Bank
Alfalah also promotes itself by sponsoring different events. (As per Bank-Alfalah Annual
Report-2013)
The major 5 competitors of Bank Alfalah that are want to become the leading banks of Pakistan
and they are placed in large banks categories. To create this edge, technology has played an
important role in the industry as banks are continuously trying to improve its products and
services by introducing innovative products.
I have six weeks internship at Bank Alfalah Main Branch Toba Tek Singh and worked in
account opening and customer services department, operations department, and accounts
department. Some of the work that I can do in these departments included collecting cheques,
filling account opening forms, and activity checking. There were no such big problems found in
the working of Bank Alfalah.
Lastly Bank Alfalah has seen a rapid growth in its activities by introducing a range of products
and services and showing its existence in the country by opening new branches and in future
should keep this energy and always struggle to become the best.

Table of contents
Dedication:............................................................................................2
Acknowledgement:.................................................................................3
Executive summary:...............................................................................4
1. Brief introduction of the organizations business sector:......................6
2. Overview of Bank Alfalah Limited:.......................................................7
2.1

Brief history...................................................................................................... 7

2.2

Organizational Hierarchy chart.......................................................................8

2.3

Business volume...............................................................................................9

2.4

Product lines..................................................................................................... 9

2.5

Competitors.................................................................................................... 10

2.6

Brief Introduction of all the departments........................................................10

3. Plan of internship program................................................................13

3.1 Brief introduction of the branch where you did your internship.........................13
3.2 Starting and ending dates of your internship................................................13
4. Training program..............................................................................14

4.1 Reason for selecting the organization:........................................................14

4.2 Duties performed..................................................................................14
4.3 Learning Experiences............................................................................14
5. Ratio analysis...................................................................................16
6. Future Prospects of the Organization.................................................32
7. Conclusion........................................................................................33
8. Recommendations for Improvement...................................................34

1. Brief introduction of the organizations business sector:

Banks play a vital role in the economy of any country. The State Bank of Pakistan is responsible
for making monetary policy and over seeing all the activities being carried out in the banks. They
are also responsible to print the currency note and function of lender of last resort of other banks
as well as make policy to control the regulations of banking sector in Pakistan.
In addition to that the functions of the earlier banks were quite simple but in this modern world
we see that the banks perform a wide variety of functions. They perform not only depositing
money or issuing loans to different people or organizations but also they are involved in buying
and selling of shares, debentures and various stocks. They sell different types of securities, bonds
and deal with foreign exchange. Every bank issues debit and credit cards and provide online
banking to its customers. The most important function of the state bank is to making the
monetary policy to stabilize the economic conditions.
The commercial banks are interested in making profit. They give loans on interest bases and earn
profit in shape of interest. Mostly business communities are the customers of that bank. To
support the SME and agricultural sectors, banks provide loan at reasonable interest rate to fulfill
their needs. Commercial banks also accept the deposits of customers on saving scheme bases.
They provide the interest on saving amount of the depositors. Various saving schemes are use to
provide the interest benefits to their customers.
Nationalization of banks in 1970, in Pakistan was a major upset the domestic banking industry
affected by political leadership and bureaucracy. The era of nineties after privatization the
banking sector improve their business rapidly. The Muslim Commercial Bank was the first bank
to privatize.
Now Pakistan has well developed banking system, which provides wide variety of functions
which is the backbone of the economy. There is more then 43 banks works in Pakistan.

2. Overview of Bank Alfalah Limited:

2.1

Brief history

Bank Alfalah was incorporated as public limited company on june21, 1992 under the
companiesordinance1984 and deals in commercial banking and other services associated with it
as defined in the Banking companies ordinance 1962. Bank Alfalah is registered at both Karachi
and Lahore Stock Exchange. After privatization its banking operations commenced from
November1, 1997.The bank is owned and operate by Abu Dhabi Group and is the sixth largest
bank in Pakistan. They bought the majority shares of the bank and so got the rights to control the
banks operations. Bank Alfalah conducts a business through a network of 574 branches across
196 cities in Pakistan and also international presence in Afghanistan, Bangladesh, Bahrain and
representative office in UAE. The bank provides the financial solutions to consumers,
corporation, institutions and governments through a broad spectrum of products and services.

2.2 Organizational Hierarchy chart

Chairman

Board of Directors
President (CEO)
Chief Operating Officer
Group Head
Regional Manager
Area Manager
Branch Manager
Operation Manager
Officers

Non-Clerical Staff

2.3 Business volume

As per audited financial statements,
December 31, 2013.

Total Assets
Total Liabilities
Equity
Share capital
Reserve
Inappropriate profit

2014
Rs. 610,614,291
Rs. 578,712,547
Rs. 31,901,744
Rs. 13,491,563
Rs. 7,274,222
Rs. 7,499,831

2013
Rs. 536,567,969
Rs. 506,508,650
Rs. 30,059,319
Rs. 13,491,563
Rs. 5,636,549
Rs. 6,373,545

2012
Rs. 468,294,146
Rs. 442,740,604
Rs. 2,553,542
Rs. 13,491,563
Rs. 4,100,264
Rs. 5,024,563

2.4 Product lines

Bank Alfalah major products services are discussed below.
List of Bank Alfalah Products
1. Current Account
2. PLS Account
3. Alfalah Kifayat Account
4. Basic Banking Account (BBA)
5. Royal Profit Account (RP)
6. Alfalah Mahana Amdan Account
7. Alfalah Kamyab Karobar
List of Bank Alfalah Services
1.
2.
3.
4.
5.

Alfalah Karobar finance

Alfalah Milkiat finance
Alfalah Quick finance
Alfalah Agri-finance
Lockers

6. Remittance
7. Alfalah Car Finance
8. Alfalah Cards
9. Money Gram
10. On Line Banking

2.5Competitors
According to banking survey report prepared by KPMG Taseer Hadi & Co. in 2013, the banks
are categorized into large, medium and small by its total assets. Bank Alfalah are placed 6th
largest bank in Pakistan. The competitors of bank Alfalah have strong market position and huge
efforts are desired to lead the competitive market. The financial summery (in millions) of
competitors of Bank Alfalah and credit rating are given below.

Serial#
1
2
3
4
5
6

Total
Bank Assets
Equity
Deposits Investments
HBL 1,715,271
142,434 1,401,230
826,062
NBP 1,371,718
160,664 1,101,845
396,412
UBL 1,083,633
111,273
889,526
458,846
MCB
821,278
115,463
632,309
453,808
ABL
734,762
66686
608,407
363,811
BAF
610,614
31,902
525,526
219,690

Profit
after
Tax
23,027
5,307
19,731
21,950
14,783
4,676

Rating
Agency
JCR-VIS
JCR-VIS
JCR-VIS
PACRA
PACRA
PACRA

Short
Term
A-1+
A-1+
A-1+
A1+
A1+
A-1+

Long
Term
AAA
AAA
AA+
AAA
AA+
AA

2.6 Brief Introduction of all the departments

Bank Alfalah has a number of departments in a branch however it is possible that a specific
department may not be present/ offering its servicing in a branch. For example credit card
department may not be present in a branch. Following is the brief introduction of the departments
of Bank Alfalah Toba Tek Singh.
Account Opening Department
This Department is responsible for the opening and closing of all sorts of bank accounts. This
department mainly comes under the general banking facilities being provided by the bank. The

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process of opening an account starts by filling out a form and submitting your CNIC. The form
demands to input information like the person's name, DOB, address etc. A person can fill the
form according to the type of account he wishes to open at the bank. Alfalah generally offers
accounts for following types which are:
1- Accounts for Individuals & sole proprietorship business
2- Account for Joint persons
3- Account for Minors
4- Accounts for Partnerships
5- Accounts for Companies
6- Accounts for minors

Remittances Department
Remittance means the transfer of funds from one account to another or from one city to another
city. All banks charge a fee on such transfers and so it is a source of income for the banks.
Following instruments are used for transferring money.
1- Pay Order
2- Demand Draft
3- Travelers Cheques
4- Call Deposit Receipt
5- Telegraphic Transfer (TT)
Clearing Department
In the clearing department the transferring of funds is done. The transfer of funds may take
between the same banks or between different banks. Clearing is done for cross Cheques in the
following two ways inward clearing and Outward Clearing
Same day clearing takes place for local Cheques. The Cheques presented belonging to the
banks located in the same city are cleared on daily basis.

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Inter city clearing takes place between two branches of banks located in different cities. At
bank Alfalah the customer is charged the courier fee when he presents Cheques that fall in the
inter city clearing category.
Cash Department
Cash department is very sensitive department of every bank. No body is allowed freely like
other departments. Cash security is also important to safe from theft and also sensitive
department. Some times customer pays frauds are made in this department so extra care
needed.
Credit Department
The core activity in commercial banking is providing loans to people who have a legitimate
running business. The reason that this activity is considered to be vital is its potential to generate
revenue for the bank. Once all the investigation and back ground checks are done at the branch
level then the loans is sanctioned from the head office of Bank Alfalah in Karachi. The two types
of credit facilities offered at bank Alfalah are:
Accounts Department
This particular department is at the back end of the organization but it performs a list of vital
functions. These functions include:
a. Budgeting
b. Reporting
c. Maintenance & depreciation of fixed assets
d. Miscellaneous functions
Comments on the organizational structure

The organizational structure of all the private institutes is good. The organizational structure of
Bank Alfalah Limited is very good. The Bank Alfalah is working efficiently under this structure
build a customers relation with a strong team work. According to my branch manager, the
organizational structure of the Bank Alfalah is very good structure and whole the organization is
working under this structure efficiently and effectively.

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3. Plan of internship program

3.1 Brief introduction of the branch where you did your internship
I have completed my internship at Bank Alfalah Limited Toba Tek Singh branch. It is situated at
P-105 Farooq Road Toba Tek Singh. This is business market area, situated at almost near the
main bazaar Toba Tek Singh. It has many customers of this market as well as outside the market
and outside of city. This main branch has good value in the market.
3.2 Starting and ending dates of your internship
I have started internship from December 18, 2014 and will be ended on January 29, 2015 at Bank
Alfalah Limited Toba Tek Singh Main Branch. My internship duration is 6 weeks.
3.3 Names of the departments in which you got training and the duration of your training
Detail of Department(s) Attended by the Internee during the Internship Program
Sr. #

Name of the Department

Duration
From (Dates)

To (Dates)

Account Opening Department

18-12-2014

31-12-2014

Clearing Department

01-01-2015

07-01-2015

Remittances Department

08-01-2015

14-01-2015

Accounts Department

15-01-2015

29-01-2015

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4. Training program
4.1 Reason for selecting the organization:
The bank Alfalah is one of the fast growing banks in Pakistan. It started their banking operations
at Toba Tek Singh since 2004. It is a conventional banking branch. The staff of bank Alfalah
Toba Tek Singh is very friendly and cooperative. They have well interpersonal and on the job
skills. So I select this organization for internship.
4.2 Duties performed
I have performs duty in a bank is customer relations and receptions job and filling cash a
Cheques slip for local and online transactions. With this duty I also work in account opening
department and personally fill the account opening forms. Then I work in remittance fill
remittance applications to make pay order and demand draft etc. There are two types of transfers
Internal Transfers and Online Transfers After remittance I receive Cheques and clearing the inter
city as will as outward request of Cheques.
Lastly I work in account department and inspect the day to day transactions, I also deal with inter
office expanses and monthly performance reports.
4.3 Learning Experiences
Knowledge Gained
I learn how to work in an office like Banks, how to deal with customers and build up long terms
relations. I also learn how to work with in a team. Cooperative culture of an organization helps to
build long term customers relationship.
Skills Learned
First of all I learn communication skills, build up friendly relations with staff at bank and how to
improve professional experience and gain ability to work with in an organization and take a good
start of professional career. As a student of business administration I learn behavior of
organizational culture is very important and greatly effect on customers. Personality is also
important tip learn and how to lead the staff and build cooperative culture with in an
organization. I read financial reports of branch bank transactions process learning.
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Attitudes Observed/Values Gained

The bank staff is very integrated, responsible and hardworking. They work with in a team and
managers operations and branch managers are supervises the staff.
Most Challenging Task Performed
All works are done with in a process the staff members guides me at every task. With the help of
proper guide I have not face any problem at any stage o my training program.

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5. Ratio analysis
1. Net Profit Margin
2. Gross Spread Ratio
3. Spread Ratio
4. Non Interest Income to Total Income Ratio
5. Return on Assets (ROA)
6. Du Pont Return on Assets Ratio
7. Return on Total Equity (ROE)
8. Debt Ratio
9. Debt / Equity Ratio
10. Times Interest Earned Ratio
11. Advances / Deposits Ratio
12. Operating Cash Flow Ratio
13. Dividend per Share
14. Earnings per Share
15. Price/Earning Ratio

16

Net Profit Margin

Net Profit Margin

Net profit after taxation

100
Net Interest Income

2012

2013

2014

3,503,130
100
14,281,193
24.53%

4,556,121
100
15,021,330
30.33%

4,675,950
100
15,841,183
29.52%

Interpretation:
NBP has its net profit margin of 29.52% at 2013 that is good, want to meet the 2012s ratio trend.
These results show the increasing trends in the coming years by bank Alfalah. More earning
capacity makes a great goodwill of the business in the competitive market. With the increasing
margin the market value of shares also improve.

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Gross spread ratio

Gross spread ratio

Net Interest Income

Interest earned

2011

2012

2013

18,610,693
44,298,178

18,579,862
46,079,918

16,894,831
43,961,060

0.32 Times

0.33 Times

0.36 Times

Interpretation:
As compare to previous two years the ratio indicator go up which is positive and favorable sign
for bank Alfalah. The ratio trends of bank Alfalah are expected to improve in the coming years.
The more gross spread ratio means more share are offered to public to extend their business
volume.

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Spread Ratio
Spread Ratio

Interest earned
Interest expenses

2011

2012

2013

44,298,178
25,687,485

46,079,918
27,500,056

43,961,060
27,066,229

1.72 Times

1.68 Times

1.62 Times

Interpretation:
The spread ratio is decreasing constantly as compare to previous years but have a favorable
trend for current coming years. The banks have good control on interest expense and more
interest earn as compare to the previous years.

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Non-interest income to total income Ratio

Non interest income to total income Ratio
2011
5,367,713
4,675,950
1.53 Times

Non Interest Income

Total Profit

2012
7,281,340
4,556,121
1.60 Times

2013
8,278,694
4,675,950
1.77 Times

Interpretation:
As compare to the previous years the bank Alfalah gain more non interest income. This is a
favorable sign for Bank Alfalah and trend to improve non-interest income in coming years. A
great proportion of non-interest income mean save more expenses.

20

Return on Assets (ROA)

Return on Assets

Profit after Taxation

*100
Total Assets

2013

2012

2011

4,675,950
610,614,291

4,556,121
536,466,694

3,503,130
468,173,802

0.00766 Times

0.00849 Times

0.00748 Times

Interpretation:
Return on Assets of Bank Alfalah show the favorable sign and want to meet the trend of 2012.
The graph of ROA shows that to improve in coming financial years. The bank wants to
improve that ratio to meet the liabilities against assets in future.

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Du Pont Return on Assets Ratio

ROE
Du Pont ROA Ratio=
100
Equity Multiplier
Profit After Taxation
ROE=
Total Equity
Total Assets
Equity Multiplier=
Total Equity
2011
3,503,130
25,777,038

468,173,802
25,777,038

0.75%

2012
100

4,556,121
30,247,402

536,466,694
30,247,402

2013
100

0.85%

4,675,950
31,901,744

610,614,291
31,901,744

100

0.77%

Interpretation:
The difference between the two profitability measures, ROA and ROE, is the use of debt
financing. Du Pont Return on Assets of Bank Alfalah show the improving and favorable sign.
The trend of that ratio is increasing in the upcoming years.

22

Return on Total Equity (ROE)

ROE=

Profit After Taxation

Total Equity
2013

2012

2011

4,675,950
31,901,744

4,556,121
30,247,402

3,503,130
25,777,038

0.14657 Times

0.15063 Times

0.13590 Times

Interpretation:
Return on Equity of Bank Alfalah show the improving sign but not meet 2012 results. The
value of ROE aspect to improves in coming financial years. This is a good sign for share
holders.

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Debt Ratio
Debt Ratio

Total Debt
Total Assets

2011

2012

2013

442,396,764
468,173,802

506,219,292
536,466,694

578,712,547
610,614,291

0.94 Times

0.94 Times

0.95 Times

Interpretation:
Debt ratio expresses total obligations or liabilities against total value of assets. The results show
that the Bank Alfalah debt values more than previous years which means business volume
expand.

24

Debt / Equity Ratio

Debt / Equity Ratio

Total Debt
Total Equity

2011

2012

2013

442,396,764
25,777,038

506,219,292
30,247,402

578,712,547
31,901,744

17.16 Times

16.74 Times

18.14 Times

Interpretation:
Obligations or liabilities against total value of equity represent the debt burden face by the
share holders. The results show that the Bank Alfalah debt values more than previous years
which means business affect on share holders equity.

25

Times Interest Earned Ratio

Times Interest Earned Ratio

Earning before Interests & Taxes

Total Interest Expenses

2011

2012

2013

19,648,906
25,777,038

22,302,670
30,247,402

24,119,877
31,901,744

1.38 Times

1.44 Times

1.39 Times

Interpretation:
The ratio indicates how many times a company could pay the interest with its before tax
income. The results of Bank Alfalah indicate the positive sign but not meet the 2012s results.

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Advances / Deposits Ratio

Advances / Deposits Ratio

Advances
Deposits

2011

2012

2013

198468512
401247886

233933358
457118723

260779850
525525770

0.49 Times

0.51 Times

0.50 Times

Interpretations:
Banks liquidity measures by dividing the banks total loans by its total deposits. The advance
deposit value show positive sign but not meet 2012s value.

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Operating Cash Flow Ratio

Operating Cash Flow Ratio

Operating Cash Flow

Current Liabilities

2011

2012

2013

54274913
15831207

49944024
21997993

45112298
20080675

3.43 Times

2.27 Times

2.25 Times

Working:
Current Liabilities = Bills payable + Other Liabilities
2013: 9543480 + 10537195 = 20080675
2012: 8430910 + 13567083 = 21997993
2011: 5403453 + 10427754 = 15831207

Interpretations:
Banks operating liquidity measures by dividing the banks total operating cash flow by its
current liabilities. The operating cash flow value show positive sign but not meet previous
year performance.

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Dividend per Share

Dividend Per Share

Dividend
No. of Outstanding Shares

2011

2012

2013

191,708
1,349,156

349061
1,349,156

482567
1,349,156

0.14 Per Share

0.26 Per Share

0.36 Per Share

2013: Shares Face Value @20%

= 10*0.20=2 per Share
2012: Shares Face Value @20%
= 10*0.20=2 per Share
2013: Shares Face Value @17.50%
= 10*0.175=1.75 per Share
Note: These values based on % are approved by directors and value in column is actually
distributed to shareholders. The graphical representation is based on column.

Interpretations:
Dividend distributed to the share holders as value improves as compare to the previous years
this is a positive sign and beneficiary for the share holders as well as for Bank Alfalah.

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Earnings per Share

Earning Per Share

Profit After Taxation

No. of Outstanding Shares

2011

2012

2013

3,503,130
1,349,156

4,556,121
1,349,156

4,675,950
1,349,156

2.60 Per Share

3.38 Per Share

3.47 Per Share

Interpretations:
Earnings per share value show more earning as compare the previous years. The value of EPS
improves constantly. EPS is a positive sign for the bank and aspect to improve in coming years.

30

Price/Earnings Ratio
Price/Earning Ratio

Average Market Value Per Share

Earning Per Share

2011

2012

2013

10.59
2.60

15.91
3.38

19.83
3.47

4.08 Per Share

4.71 Per Share

5.72 Per Share

Interpretations:
Average market value of the shares indicates growing sign for bank Alfalah. With increase the
market value the EPS increase with increasing rate. Mostly the price fluctuation is based on
market ups and down.

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6. Future Prospects of the Organization

Bank Alfalah intends to increase their network of branches with in Pakistan in the future. Bank
Alfalah track reliable record of strong performance in Pakistans competitive banking sector. The

management of Bank Alfalah has made a clear statement that they will get aggregate progress in
the fields of microfinance and SME lending.
In addition Islamic banking in Pakistan a lot of peoples is taking interests in the products
currently offered by the Islamic banking system of Bank Alfalah. Thus more Islamic Branches of
Bank Alfalah being established inside Pakistan. Their strategy looks to be aggressive here too as
the intent is to grab most of the market share by offering new products to its customer and take
an early lead in the competition.

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7. Conclusion
Based on my experience and ratio analysis, the Bank Alfalah is one of the fast growing banks in
Pakistan. His main competitors have a strong position in the competitive market. So to lead the
market the Bank Alfalah wants to improve their marketing strategy, introduce new innovative
product and technological improvement. Their focus would be to continually seek out
development opportunities through increased quality in a wider range of products and services to
their customers. It is providing top quality of customer services.
Overall, Alfalah Bank has a very dynamic position, technologically updated. Keeping in view the
growing trend of Islamic banking is Pakistan, Bank Alfalah also establish Islamic Banking
branches for customer and deal according Islamic mode of financing.
Lastly I can say the bank Alfalah is gain more value of EPS attracts the share holders to buy
more shares.

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8. Recommendations for Improvement

During my internship program, I see the internal atmosphere, banking policies, products and
services. Some of the recommendation assigns for bank Alfalfas staff.
Equal employment opportunities should be provided at merit bases.
Customer survey should be obtained on banking operation by personally visiting the market.
Frequent training sessions are conducted to improve the working performance of employees.
Cash rewards for employee an also provided promotional opportunities.
Revision of HR policy are desire to improve the hiring the staff.
Performance evaluation techniques should be adopted
Keep the work done by the staff as a team work so improve the overall organizational
performance.
There is need to establish new branches with professional employees so that its market position
improved.
Delegation of authority to lower levels is necessary for reduce decision making time.
Employees job rotation is need so that their experience is increased.
There is need to increase equity part and reduce reliance on long term debt.
Modern commercial advertisement on cable is effective.
There is need to increase earning of the bank so that its net profit margin goes up.

34