INTERNSHIP REPORT ON BANK ALFALAH LIMITED

IBG I-9 MARKAZ BRANCH ISLAMABAD (5546)

Submitted by

Malik Atiq Ur Rehman

Roll no: 28632

BBA (Hons) Finance

Supervised By

Kaleem Saifullah

DEPARTMENT OF MANAGEMENT SCIENCES, HAZARA

UNIVERSITY MANSEHRA

Session 2012-2016

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 INTERNSHIP REPORT ON BANK ALFALAH LIMITED

IBG I-9 MARKAZ BRANCH ISLAMABAD (5546)

The internship report which is submitted to the department of management sciences

is in the partial fulfillment the of the requirements for the degree of

Bachelor of business administration.

DEPARTMENT OF MANAGEMENT SCIENCES, HAZARA

UNIVERSITY MANSEHRA

Session 2012-2016

ii
iii
 APPROVAL SHEET

Supervisor

Name Mr. Kaleem Saifullah

Signature __________________

Designation __________________

Date __________________

External examiner

Name __________________

Signature __________________

Designation __________________

Date __________________

Chairman

Signature __________________

DEPARTMENT OF MANAGEMENT SCIENCES, HAZARA

UNIVERSITY MANSEHRA

Session 2012-2016

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 DEDICATIONS

This report is dedicated to

My parents who love me, my teachers who encourage me,

And all those, who have soft corner for me in their heart

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PREFACE

Banking sector owes a pivotal importance in the economy of any country through its
vibrant functions. So I decided to do internship in Bank Alfalfa.

The Aim of my internship in BAL was that to convert my theoretical knowledge in

practical knowledge.

During my eight week internship in (5546) I did work in different departments, such
as Accounts, Clearing, credit, and Remittances etc. All of these departments help me
to understand that How to deal with different banking operations.

I have strong belief that this report will guide the readers to understand the operations
of banking system and more prominently have good knowledge about Bank Al-Falah
Limited, one of the most trusty and leading banks in Pakistan.

MALIK ATIQ UR REHMAN

Roll no 28632

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 ACKNOWLEDGEMENT

All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful and
beneficent who gave me courage to undertake and complete this task. I am very much
obliged to my ever caring and loving parents whose prayers have enabled to reach this
stage.

I am very thankful to my supervisor Mr. kaleem Saifullah for his valuable

suggestions, contribution and share personal experience and his valuable comments,
make possible to complete this report.

I also express my thanks to Mr. Adnan Abbasi (Branch manager) Mr. ImranRana
(Operation manager) and Mr. Rizwan Raees (Credit manager) of bank Alfalah
Islamic for their keen interest, suggestions, and provision of relevant material.

I am also very happy and thankful to my parents, friends, and those who have soft
corner for me in their heart for their prayers, supports, and wishes for the completion
of my internship report.

I feel great pride and pleasure on the accomplishment of this report.

MALIK ATIQ UR REHMAN

Roll no 28632

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 EXECUTIVE SUMMERY

The importance of internship cannot be denied because it reflects the level of

knowledge. An internship is essential academic requirement which provide me with
an opportunity to acquaint with the practical knowledge of an organization. This
practice is of enormous helps to assimilate me theoretical knowledge with action
learning process. Therefore I spent Eight weeks in Bank Alfalfa Islamic in I_9
(Islamabad 5546). This report will give a theoretical as well as practical knowledge
idea being performed by me in Bank Al-Falah Islamic. And it also covers introduction
history, background, and analysis portion which show us the financial position of
bank Alfalfah ltd.

The basic purpose of writing this report is that to give brief information of bank
Alfalfah Ltd. With the help of all possible data being collected by me with the help of
primary dada and secondary data

In the earlier period of Independence Day in Pakistan the banks were nationalized so
their performances were weak. After privatization in banking sector in 1970 the
banking industry introduced remarkable name and different changes in banking
sector.

The privatization introduced local incorporated banks, commercial banks.

Foreign incorporate banks, investments banks, micro finance banks. Discount and
guarantee house, venture capital companies, Islamic banks and micro finance banks.
In 1997 the bank Alfalfah Ltd was incorporated later privatized by the government.
After privatization in the banking sector the bank Alfalfa maintained its best progress
and introduced its products and services through opening and developing new
branches in Pakistan. As a result of outstanding performance the Bank Alfalfa
offering its product and services more than 200 cities, As well as overseas, such as
Bangladesh, Bahrain, and Afghanistan. The total number of branches of Bank Alfalah
in 2015 was 650 which include 158 Islamic branches. The total number of employee
in of bank Alfalah in 2013 was 7,562 which was increase of 25% from the past year.

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The tax after profit of Bank Alfalfah was Rs.4.675, 850 and its total Assets was Rs.31,
901,743 increasing rate of stock prices and earning per share.

Bank Alfalah also focusing on quality by using print and electronic media as a
medium for the promotion of product and services. In 2013 the growth rate was
recorded 34% from the previous year. The Abu Dubai has a remarkable role in the
BAL, s share and operations. The most effective factor of BAL has highly
competitive environment in both Islamic and conventional sides which is the source
of inspiration for all banks in Pakistan.

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 Table of content

Contents
Chapter 1.................................................................................................................................... 1
INTRODUCTION .......................................................................................................................... 1
1.1 BACKGROUND .................................................................................................................. 1
1.2 PURPOSE .......................................................................................................................... 1
1.3 SCOPE ............................................................................................................................... 1
1.4 AREA OF RESEARCH ......................................................................................................... 2
1.5 LIMITATIONS .................................................................................................................... 2
1.6METHODOLOGY OF RESEACH ........................................................................................... 2
1.7SCHAME OF REPORT ......................................................................................................... 2
Chapter 2.................................................................................................................................... 4
INTRODUCTION TOBANK ALFALFAH LIMITED............................................................................ 4
2.1HISTORY OF BANK ALFALAH LTD ...................................................................................... 4
2.2VISION AND MISSION OF BANK ALFLAH LTD .................................................................... 5
Vision.................................................................................................................................. 5
Mission ............................................................................................................................... 5
2.3Board of Director .......................................................................................................... 6
2.4ISLAMIC BANKING OPERATIONS ....................................................................................... 6
2.4.1MISSION STATEMENT .................................................................................................... 6
2.4.2COMPANY DETAIL .......................................................................................................... 6
2.4.3PERFORMANCE OF ISLAMIC BANKING .......................................................................... 7
2.4.4CORPORATE VALUES ...................................................................................................... 7
2.4.5STRATEGIC GOALS AND OBJECTIVE ............................................................................... 7
Chapter 3.................................................................................................................................... 9
ORGANIZATIONAL STRUCTURE & DEPARTMENTS ..................................................................... 9
3.1 BRANCH NETWORK OF BAL AND IBG............................................................................. 11
DEPARTMENTS OF BANK ALFALAH LTD ................................................................................... 12
(Worked During Internship) ..................................................................................................... 12
3.2 GENERAL AND OPERATIONAL BANKING DIVISION ........................................................ 12
3.3 Locker services ............................................................................................................... 13

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 3.4 Deposits Department ..................................................................................................... 13
3.5 Falah Islamic Current Account ..................................................................................... 14
3.6 Falah Islamic Assan Account ........................................................................................ 14
3.7 Falah Islamic Business way Account ............................................................................ 14
3.8 Saving Account ............................................................................................................... 15
3.8.1Falah Musharakah (Saving Account) ........................................................................ 15
3.8.2Falah Mahana Amdani Account (Saving Account) ................................................... 15
3.9 Joint Account.................................................................................................................. 15
3.10 Individual Account ....................................................................................................... 15
3.11Term Deposit account ................................................................................................... 15
3.12 Trade and Finance Department. .................................................................................. 16
3.12.1 IMPORTS ............................................................................................................... 16
Letter of credit ................................................................................................................. 16
3.12.2 EXPORTS .................................................................................................................... 16
3.13Clearing Department .................................................................................................... 17
3.13.1 Inward Clearing ..................................................................................................... 17
3.13.2 Outward Clearing .................................................................................................. 17
3.14 Account Department................................................................................................ 17
3.15 Cash department ......................................................................................................... 18
3.15.1 Cash receipts ......................................................................................................... 18
3.15.2 Cash payment ....................................................................................................... 18
3.16 Remittance Department .............................................................................................. 18
3.17Pay Order .................................................................................................................. 19
3.17.1Tele-phonic/Tele-graphic transfer ............................................................................. 19
3.17.2Demond Draft (DD) ................................................................................................ 19
3.18Foriegn Remittance ....................................................................................................... 20
3.18.1Inword remittance ................................................................................................. 20
3.19.1Outword remittance .............................................................................................. 20
3.19Alfalah Musharakah homes .......................................................................................... 21
3.20Alfalah Car Ijarah........................................................................................................... 21
Chapter 4.................................................................................................................................. 23
ANALYSIS .................................................................................................................................. 23
4.1Administrative analysis ................................................................................................... 23
4.1.1 Lack of specialized training ..................................................................................... 23

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 4.1.2Number of employees ............................................................................................. 23
4.1.3Shortage of space .................................................................................................... 23
4.2personal analysis ......................................................................................................... 23
4.2.1Marketing................................................................................................................. 23
4.2.1Media ....................................................................................................................... 24
4.3Operational Analysis ....................................................................................................... 24
4.4 Financial Analysis of company ....................................................................................... 25
4.4.2Income statement of BAL 2015 ............................................................................... 26
4.4.3Financial performance (2012-15)............................................................................. 27
4.4.4 Financial Ratio Analysis ........................................................................................... 29
4.4.4.1 Liquidity Ratio ...................................................................................................... 29
4.4.4.3 Solvency Ratio ...................................................................................................... 33
prgraph no: 7 ............................................................................................................................ 36
4.4.5 DuPont Analysis ...................................................................................................... 37
Chapter 5.................................................................................................................................. 38
RECOMMENDATIONS .............................................................................................................. 38
5.1 Workshops and Training ................................................................................................ 38
5.2 Customer services .......................................................................................................... 38
5.3 Feedback ........................................................................................................................ 38
5.4 Management by objective (MBO).................................................................................. 38
5.5 Electronic Audit .............................................................................................................. 39
5.6 working Conditions ........................................................................................................ 39
5.7 Publicity.......................................................................................................................... 39
5.8 International banking ..................................................................................................... 39
5.9 Merit basis selection ...................................................................................................... 39
5.10 Separation of activity ................................................................................................... 39
5.11 Accommodations ......................................................................................................... 40
5.12 Motivators.................................................................................................................... 40
5.13 Advance technology ..................................................................................................... 40
5.14 Introduction of Forecasting Techniques ...................................................................... 40
5.15 Development in technology ......................................................................................... 40
List of Abbreviations ............................................................................................................ 41
References …………………………………………………………………………………………………………………….42

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 Chapter 1

INTRODUCTION

1.1 BACKGROUND

The student of department of management sciences, Hazara University Mansehra

seeking bachelor’s degree (Business administration) are required to undergo the
internship program for the period of eight weeks in any national or international
organization of repute. This is an essential academic program, which flourishes
the practical skills as well as makes the internee aware of the actual work field.
The internee is required to submit an internship report to the research and
development division of IMS that is properly evaluated on the basis of his or her
description and analytical capabilities by internal and external examiners.

In order to fulfill this requirement and being a student of BBA (hons), I joined
the bank Alfalah Islamic Banking Division, I_9 Islamabad (4456)

1.2 PURPOSE

The main purposes of writing this report as a partial fulfillment for the award of BBA
degree from Hazara University Mansehra, and study the work in real environment and
feel the pressure of real work environment and apply management skills. The basic
purpose of this report is

 Analyze the operations of organization

 Suggest concrete and feasible recommendations
 Improve writing skills

1.3 SCOPE

 This report will add a great deal to the character of the internee working under
experience of quality management.
 It will help to those who want to realize the financial background of the BAL.
 It will also helpful to the students of business administration for preparing
their reports.

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1.4 AREA OF RESEARCH

My area of research is Islamic and conventional banking both. And its functions
particularly different modes of Islamic Banking

1.5 LIMITATIONS

The study is limited because of unavailability of data, and also a very short time is
a barrier for limited study eight weeks was not enough to give comprehensive
detail on BAL, s operations.

1.6METHODOLOGY OF RESEACH

The data collected on the basis of two methods

 Primary data collection

 Secondary data collection

In a primary data collection the technique were used

 Personal observation
 Discussion with staff members
 Unstructured interviews

In a secondary data collection the information has been collected by

 Annual report of BAL 2015

 Promotional material
 www.Bank Alfalah.com
 Broachers for information to customer

1.7SCHAME OF REPORT

This internship report is broadly divided into five chapters. The brief summary of
each chapter as follow:

1. INTRODUCTION OF REPORT This chapter is about the Background,

purpose, scope, methodology and limitations of report.

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2. INTRODUCTION OF BANK ALFALAH LTD In this chapter the main focus
is: History of BAL, Background, Vision and Mission. And strategic goals of
BAL.
3. ORGANIZATIONAL STRUCTURE OF BAL Describe the organizational
setup, branches network of BAL.
4. FINANACIAL ANALYSISitinclude administrative and financial analysis
both.
5. RECOMMENDATIONS this chapter is about the suggestion and opinions for
further improvement in the organization.

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 Chapter 2

INTRODUCTION TOBANK ALFALFAH LIMITED

According to banking ordinance 1962 the banking is defined as “Bankers means

a person, transacting the business of accepting for the purpose of lending or
investment, of deposits of money from the people, repayable on demand or
otherwise and withdrawal by cheques, drafts or orders or otherwise”. Pakistan
banking system at the time of partition consists of 18 non-Indian foreign banks
and two Pakistani banks i.e. Habib Bank LTD and Australasia Bank. State bank
had started functioning on July 1 st 1948. In 2 nd June 1949 National bank of
Pakistan was established and started its functioning with six offices in former
East-Pakistan.

2.1HISTORY OF BANK ALFALAH LTD

The History of Bank Alfalah ltd will help us to more understanding about Banking
sector and BAL, s operation. The History will also help us to understand the
Historical background and working of an organization. The historical view of BAL
will also help us to understand more better its foundation and orientation.

The history of bank Alfalah ltd was started from the BCCI (Bank of credit and
commerce international). BCCI is the seventh largest Bank of the world. BCCI has
estimated US 21 Billion and they are operating more than seventy countries all over
the world. It was collapsed in July 1991 by the Bank of England liquidators by
accusing that BCCI involved amount of $1.5 billion by money laundering. BCCI
started their operation by HABIB BANK LTD through international liquidator were
paid three branches of BCCI in Pakistan. This made for the BCCI free of any charges
from international liquidators in Pakistan. The three branches of BCCI were owned by
HBL with the name of HCEB (Habib credit and exchange Bank) in 1997 the
government of Pakistan sold 70% shares to the Abu Dhabi group of companies the
member Royal family of UAE.

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The privatization by the government of Pakistan in 1997 HCEB becomes a new
identity as a Bank Alfalfa Ltd on 3rd July 1998. The charge of BAL was taken
by the H.H Sheikh Nahayan Mubarak Al-Nahayan, minister of education
government of Abu-Dhabi and prominent member of the Royal Families
the Chairman of the bank with energized vision, envisaging the
development of customer sector in Pakistan

Bank Alfalfah Ltd is a private Bank and it owned by Abu Dhabi group. BAL was
incorporated in 1997 as a joint stock company under the banking company ordinance
1984. BAL is register in Lahore and Karachi stock exchange ticker is called “BAFL”
Banking operations starts from Nov, 1997. The register office of

BAL is B.A Building 1.1 Chundrigar Road Karachi.

2.2VISION AND MISSION OF BANK ALFLAH LTD

Vision

To inspire and empower people to do things differently and shape their own path in
life and business

“To provide superior, proactive banking services to niche markets globally while
providing cost effective, responsive services to others in our role as a
development bank and in so doing, need the requirements of our stakeholders”.

Mission

We look at the market with fresh eyes to find new opportunities, and seek new ways
of enabling our customers to succeed and advance the world of finance.

Source: Annual Report of BAL 2015

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2.3Board of Director

Mr. Khalid Qurashi – Director

Mr. Kamran y. Mirza - Director

Mr. H.H. Sheikh Hamdan Bin Mubarak Al Nahayan – Chairman

Mr. Abdulla Nasser Hawaileel Al-Mansoori – Director

Mr. Abdulla Khalil Al Mutawa – Director

Mr. Khalid Mana Saeed Al Otaiba – Director

Mr. Atif Bajwa – Director& CEO

Mr. Efstratios Georgios Arapoglou – Director

2.4ISLAMIC BANKING OPERATIONS

2.4.1MISSION STATEMENT

To practice Islamic banking in its desired spirit that unfolds its true economic
potential resulting in prosperity to our customers and commercial rewards to our
sponsors and our employees

2.4.2COMPANY DETAIL

Bank Alfalah Islamic is a is a separate identity of BAL. Bank Alfalah Islamic

(IBG) offering HILAL PROFIT,INSURANCE,CAR IJARAH,HOME
FINANCING and broad range of Islamic product under personal. The BAL
Islamic is register from Jamia Darul Uloom Karachi department of Mark Azul
Iqtasadi and they are working under the Fatwa of sharia Board. Sharia board and

6
scholars also supervising their operations and giving advisory services to remove
the doubt of public and to make clean Islamic banking

2.4.3PERFORMANCE OF ISLAMIC BANKING

Bank Alfalah Islamic Banking division (Code 5546) started their operations in
2003. The base of capital was 102 million and total deposits were 114 million.
Their equity has risen four times up to 6 million. And balance sheet deposits side
has grown from less than 115 million to over 7,230 million. Assets also recorded
a 100% growth, deposits also double and rise more than 12.477 million.

Financial results as of June 30, 2006, reflect growth but at more modest pace.
Total balance sheet size fell shy of Rs 18.2 billion – Rs 17,977m vs. Rs 15,636m
– and deposits climbed to Rs 14,121 million, rising Rs 1,637 million in six
month’s period. Income for the 6-month period was Rs 112.23 million.

2.4.4CORPORATE VALUES

The corporate value of Bank Alfalah is professionalism, team work, integrity and
respect, which play a unique role in the achievement of goals of BAL. These
values are always the high priority of BAL for attracting their customer.
Continuously recognizing the corporate value like respect, and team work, the
individual contribution from all employees become better. These corporate
values of bank are the fundamentals corner stone of Bank Alfalah, s success

2.4.5STRATEGIC GOALS AND OBJECTIVE

Objectives are the ends towards which activities are purpose. In fact, these are
the results to be achieved. The Bank Alfalah Ltd has the following objectives:

 To create maximum economic worth and values for shareholders through a

constant relationships focus on financial services.

7
 To promote industrial agricultural and social-economic processes through the
active participation of private and public sector in the Pakistan.
 Create a diversified and sound portfolio for the utilization of idle funds and
their investment in the existing and new venture specially in the pioneering
of high-tech agro-based, export oriented and engineering projects to ensure
maximum returns.

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 Chapter 3

ORGANIZATIONAL STRUCTURE& DEPARTMENTS

Bank Alfalah is a developed organization, disciplined along clear lines. This principle
of clarity of authority, responsibility, and job description is evident from their
organizational hierarchy.

Boards of director are at the top in structure which is Abu Dhabi Group. The
chairman of BOD is Sheikh Nahayan Mubarak Al-Nahayan. The six Directors are
more except Chairman. The office of CEO of Pakistan is in Karachi. The CEO is
reported be six executives who are looking after personnel training, credits, IT,
operations, strategic planning and finance.

The whole country is divided by two zones, Northern and southern. These two areas
headed by the area managers. And all Branch managers are responsible to report the
Area manager.

The organizational structure of Bank Alfalah is pyramid like, though culturally the
pyramid works upside down. The different zones are encouraged to setup their targets,
subject to approval from top management. In this same way, the different departments
after choosing their realistic goals allow these goals to goes down to employee level.
Due to care taking care in ensuring that the zones do not lose focus of the overall
goals and objectives of the organization while setting up their individual goalsand
objectives.

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 Table No: 1

Source: Bank Alfalah’s website (www.bankalfalah.org)

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3.1 BRANCH NETWORK OF BAL AND IBG.

The Bank Alfalah Ltd has objectives to expend their branches in all over the Pakistan
for meeting their customer needs. The BAL is in good position and has an advantage
geographically to expend their business and branches from its potential and existing
customer.

There are more than 192 Branches in more than 30 cities in all over the Pakistan. The
main head office of BAL at B.A.Building, I.I.Chundrigar, Karachithe Islamic Banking
(IBG) is operated separately because of differences in activities and operations in
transactions. The IBG Islamic banking group is a recent initiative of BAL. The BAL
is offering Hilal profit according to shraeh board of banking and finance. The Islamic
Banking of BAL is operating their business about all over the Pakistan. BAL Islamic
Banking serving their customer through more than 135 Branches according to annual
report of BAL 2015.

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DEPARTMENTS OF BANK ALFALAH LTD

(Worked During Internship)

Bank Alfalah is a financial institution showing high and strong growth rate from
previous 2 to 3 years. The Islamic branch of BAL Islamabad started their business in
December 2005. In a very short span of year the deposit grew than all Banking
services. The IBG I-9 performs all the commercial activities like advances and
excepting deposit and all type of remittances and custody services.

The Bank Alfalah ensures that they will record their activities in a direction and
procedure of bank. The bank is providing shraeh compliance product and services to
the customer. The Bank is also maintaining their good relationship with public and
private institution.

In bank Alfalah Islamic branch Islamabad the following departments are made on the
basis of activities performed by the bank. The major divisions are following.

 General and operation banking division

 Credit (loan) division
 Trade and finance division (import export)

In each division there are certain departments, the explanation of each division is
following.

3.2 GENERAL AND OPERATIONAL BANKING DIVISION

The general banking division includes.

 Deposit
 Accounts
 Remittances
 Clearing

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  And cash department

The general banking department is considering is very important for bank because
every important activity is performed in this department.

3.3 Locker services

Locker services are offered at different branches such as in I-9 Islamabad branch is
also offering locker services. The locker services may be in the form of.

 Small
 Medium
 Large

The minimums charges of locker are:

Table No: 2

Small Rs. 1200/-

Medium Rs. 2200/-

Large Rs. 3200/-

3.4 Deposits Department

The Bank Alfalah is offering current, fixed, and term deposits to its customer, for the
sake of seeking customer relationship with following features.

Table No: 3

Facility Minimum Profit Zakat

Balance required deduction
Current deposit Rs. 10,000/- Nil No Application

Musharakah fixed Rs.5.000/- Monthly payout Application

deposit
Musharakah term Rs. 50,000/- Monthly payout Application
deposit

13
 All profits 10% withholding tax:

Bank Alfalah also giving on line payment facility, and online cash facility between all
branches.

3.5 Falah Islamic Current Account

It enables you to derive maximum benefits from your deposits. It is very easy way for
Business man as well as individual to make frequent transaction. This current account
is free of interest. All deposits are invested are in Islamic assets.

3.6 Falah Islamic Assan Account

Falah Islamic Assan account is very easy to open. We need just Rs. 100/- and ID card
for open Assan account.

 Current and saving account both can be open in Assan account.

 Avail profit every six month
 No minimum balance required
 Free cheques book, pay order, and online banking

3.7 Falah Islamic Business way Account

Falah Islamic business way account is open in just Rs. 1000/- but you have to
maintain Rs. 25000/- for availing host of free exclusive services.

For a payroll account you need just Rs. 1000/- for employees benefits/services. This
account is according to shraeh principle.

Business way account has benefits include.

 Free cheques books

 Pay order/demand draft
 Account statement and E-statement
 Alfalah Debit card and SMS alerts

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3.8 Saving Account

Saving account is giving maximum benefit. You can draw money any time within
business hour than the current account.

3.8.1Falah Musharakah (Saving Account)

For FMSA we need minimum balance Rs. 5000/-. The profit distribution will be after
6 months. ATM facility is also available in FMSA.

3.8.2Falah Mahana Amdani Account (Saving Account)

For FMAA we need minimum balance Rs. 10,000/- . The profit distribution will be
every 1 month. The profit rate is 7.95%. Free ATM facility is also available in
FMAA.

3.9 Joint Account

Joint is for two or more person. If anybody wants to open an account with another
person, they have to open joint account.

3.10 Individual Account

Individual account is open by a single/one person. This account is operated by a

person who open it, but operated person also can give an authority to operate his/hers
account by other person, but he should have authority letter for operating his/her
account.

3.11Term Deposit account

The TDA is very popular account type. The amount which is deposit in this account is
fixed from 1 month to 5 year. The profit will be paid after maturity and customer does
not withdraw His/hers deposit till maturity.

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3.12 Trade and Finance Department.

3.12.1 IMPORTS

Letter of credit
All letter of credit transactions are handled in accordance with the Uniform Customers
and Practice for Documentary Credits as published time to time by the International
Chamber of Commerce. The vast network of our correspondents connected through
SWIFT ensures speedy procession of LC transactions.

Import Murabah finance

The bank Alfalah Islamic is offering Import Murabah finance for facilitating Importer.
This is a free Reba which is approved by Shraeh Board.

Other services

Bank Alfalah is also offering full range of services such as, imports: registration, bills,
shipping, guarantees, advance payments etc.

3.12.2 EXPORTS

Export Murabah finance

Bank Alfalah is offering export Murabah finance in order to facilitate manufacturing

and goods traded in international markets. This finance is completely Riba free for
BAL customer.

Other services

BAL is giving other services like, collection of export bills, advising, and transfer of
letter of credit open in another bank.

Letter of credit (L/C)

LC is an agreement between bank exporter/importer.

LC is a non-funded facility giving by bank to its customer on the basis of credit

worthiness of customer.

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A letter of credit is open request where by importer bank request to exporter bank
request to give advance money or to give loan to exporter to the exporter for a certain
amount and promises that he will repay the same to the exporter's bank to accept bills
drawn upon him for the amount.

3.13Clearing Department

Clearing department is a system or process used to clear all type of cheques and
financial instruments. This system enables the banker to save time of recording, and
clearing, labor and expenditure. All the clearing is supervised by SBP in the country
and outside the country. If SBP is not available in any cities than NBP will handle this
system

The clearing has two types

3.13.1 Inward Clearing

Inward clearing means those instruments which is drawn on Bank Alfalah Islamabad
branch, sent by any other bank, constitutes the inward clearing Alfalah Bank having
all types of stamps and dates, the cheques conformed. The concerned account will be
debited in Islamabad branch.

3.13.2 Outward Clearing

Outward clearing means the instruments which is payable on some other branches
deposited for collection with Bank Alfalah I-9 Islamabad.

Note: National institute of facilitation technology (NIFT) is used for clearing in

Banks.

3.14 Account Department

Account department is a department is department which is responsible to maintain all
type of accounting entries, such as Assets, Liabilities, Income, expenditure and
revenue is recorded in Account department. This department plays a very important
role in the banking system because foreign exchange currency also deals in account
department.

Account department is also used for:

17
  To maintain the book of account
 Deal with internal and external audit both
 Record and preparation of salary of bank staff
 And preparation of financial statement

3.15 Cash department

Cash department is also having a unique role by itself in the bank because the banking
started with the financial transaction, and cash department is responsible to make save
this transaction and maintain liquidity in the bank. The cash department also needs
efficient management for collection of receivables, and maintain liquidity in the cash.

In the cash department the Teller is responsible to maintain the daily cash and
transaction. He also detects the fake note in the department, and at the end of
business hour He verifies the cash and also it verifies by the branch manager. The
activity which is done in cash department is divided in two:

 Cash receipts
 Cash payments

3.15.1 Cash receipts

Cash receipts or collection is start from cash deposit slip, cash deposit is contain
name, account number, date, rupees both in word and number, and purpose of

Submission, after fulfill this requirement the deposit slip is verified by the taller, after
verification it is register for the deposit.

3.15.2 Cash payment

Cash payment is another activity in the cash department. Before cash payments it is
very necessary to check the name of account holder, account number, and most
important to verify the signature of account holder. In case of ill literate the taller
should verify the photo taken by the bank and thumb should be verified.

3.16 Remittance Department

Remittance department is used for transformation of funds through banking channel

in the country and outside the country.

18
Remittance has two types:

1) Local remittance

2) Foreign remittance

Bank Alfalah offering following local remittance:

 Pay order
 Tele phonic/ Tele-graphic transfer
 Demand draft

3.17Pay Order
Pay order is negotiable instruments which is used to transfer the local funds, it is
payable on the demand. It is valid for three months and it is non-transferable
instruments. It is also called Banker cheques.

3.17.1Tele-phonic/Tele-graphic transfer

Tele-phonic transfer is a quick encoded message between bank and beneficiary. It is

very quickest mode of transfer of money in one city to another

City or bank It is neither transferable and nor negotiable.

3.17.2Demond Draft (DD)

The demand draft is a bill of exchange, which is issued to customer on demand. For
demand draft the following parties and situation should be involved

 Drawing / Applicant Bank: The bank, which issues the Demand Draft

 Drawer Bank: The bank on which the issued Demand draft is drawn

 Payee: The person entitled to receive the payment

The Demand draft is valid for three (3) months i.e. 90 days of it being drawn.

19
3.17.3 Local Remittance Charges BAL

Table No: 4

Pay order Rs.50/- Issuance and Maximum Rs.500/-

cancellation both(minimum)

Demand draft Rs.200/- per item duplicate 1 lakh to 2 lakh Rs.1000/-

and cancellation(Till 1 lakh) and over 2.000,000
Rs.2,000/-

SBP Rs.500/- per cheques

TT Rs.200/- per cancellation

3.18Foriegn Remittance

The remittances which are outside the Pakistan, or transfer of funds outside the
Pakistanthe foreign remittance can be:

 Inward remittance
 Outward remittance

3.18.1Inword remittance
Inward remittance means to purchase of foreign currency as well as MT,TT Drafts,
and bill if exchange etc.

3.19.1Outword remittance
Outward remittance means sale of foreign exchange MT, TT, drafts, credits, bill of
exchange, and foreign currency etc.

BAL does not have branches bank in foreign country, so the BAL is correspondent
with following banks.

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Table No: 5

Us $ Citi bank, America express

Pound sterling (GBP) Habib bank London

Detach mark (DEM) NBP Frankfurt

Euro Commerce bank Frankfurt

3.19Alfalah Musharakah homes

Alfalah Musharakah home is very advantage able project of BAL. with Alfalah
Musharakah homes you can easily access to your own home. Just 20% is your
payment and remaining 80% is offering BAL to your easiness approach to Alfalah
Musharakah homes. Bank Alfalah Islamic banking division is offering home
financing just on shraeh basis now you can easily can be a sole owner of Alfalah
Musharakah home. With the help of Alfalah Musharakah homes you can purchase:

 Already constructed homes (Alfalah buyer)

 Purchase a plot (Alfalah builder)

3.20Alfalah Car Ijarah

With the help of car Ijarah now you can easily access to your own car. Car Ijarah is a
Shreah Car scheme with following feature:

 No registration charges

21
 No upfront premium charges
 No rental before delivery

22
 Chapter 4

ANALYSIS

In this chapter we will discuss Administrative, Personal, Operational, and financial

analysis of BAL. The Annual report of BAL 2015 as a main source in this chapter is
used. In This chapter I will try to analyze the performance of branch and as well as
Bank Alfalah limited.

4.1Administrative analysis

4.1.1 Lack of specialized training

The bank Alfalah provides training to their employees on the basis of generalization
rather than specialization. After tanning the employees inducted into specific field,
they are not willing to share knowledge with others and employees face problems to
perform their jobs efficiently.

4.1.2Number of employees
Number of employees is another problem in branch. The local remittance and
accounts activities are performed by one person also DMS job is performed by rider
man. Without knowledge and skills the job cannot be performed properly. BAL
should create more jobs to satisfied the customer and to accurate result.

4.1.3Shortage of space
It is also observed that the space is very short for visiting customer in the branch. Due
to shortage space the customer have to wait in the line that may be a negative effect
on the BAL.

4.2personal analysis

4.2.1Marketing
BAL Branches have two to three BDO (bank development officer) for marketing.
Who have lack of knowledge and skills and they do not have skills to convince
customer.

23
4.2.1Media
BAL is a new bank as compared to others bank, they need proper channel to advertise
itself. In order to increase the number of customer the need to advertise itself with
detail, through proper media channel.

4.3Operational Analysis

Bank Alfalah limited extends its branches more than 577 across the Pakistan that are
scattered throughout the four provinces. BAL is offering different varieties of product
and services are equipped to ensure that:

 Consumer banking
 Retail banking
 Electronic banking
 Treasury finance
 Corporate banking

24
 4.4 Financial Analysis of company

STATEMENT OF FINANCIAL POSITION

AS AT DECEMBER 31, 2015

Note 2015 2014

(RUPEES “000”)
ASSETS
Cash and balances with treasury banks 6 62,368,790 50,515,644
Balances with other banks 7 16,552,208 12,331,714
Lending’s to financial institutions 8 53,628,871 18,313,486
Investments – net 9 397,097,214 324,319,455
Advances - net 10 327,297,821 290,597,238
Operating fixed assets 11 17,241,970 15,740,101
Deferred tax assets 12 -- --
Other assets 13 28,420,651 31,310,662
902,607,521 743,128,300
LIABILITIES
Bills payable 14 9,733,929 11,758,156
Borrowings 15 172,393,198 55,232,917
Deposits and other accounts 16 640,188,735 605,963,225
Sub-ordinated loans 17 9,983,000 9,987,001
Liabilities against assets subject to finance -- -- --
lease
Deferred tax liabilities 12 1,824,054 853,332
Other liabilities 18 15,131,430 14,514,599
849,254,346 698,309,225
NET ASSETS 53,353,180 44,819,080
REPRESENTED BY
Share capital 19 15,898,063 15,872,429
Reserves 14,164,121 12,338,023
Unappropriated profit 12,362,597 9,613,378
42,424,77937 823,827
Surplus on revaluation of assets - net of tax 20 10,928,398 6,995,244
53,353,175 44,819,069

Source (Annual report of BAL 2015)

25
 4.4.2Income statement of BAL 2015
PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31, 2015

Note 2015 2014

(Rupees in ‘000)

Mark-up / return / interest earned 23 61,458,407 55,378,477

Mark-up / return / interest expensed 24 32,810,722 33,505,003

Net mark-up / interest income 28,647,685 21,873,474

Provision against non-performing loans and 2,150,209 1,447,931

advances – net
Provision for diminution in the value of investment 136,691 85,897

Bad debts written off directly 5

2,286,900 1,533,833

Net mark-up / interest income after provisions 26,360,785 20,339,641

Non mark-up / interest income

Fee, commission and brokerage income 4,384,496 4,385,319

Dividend income 514,401 492,348

Income from dealing in foreign currencies 1,379,097 2,042,957

Gain on sale of securities – net 25 1,606,751 1,058,167

Unrealised gain on revaluation of investments 229,063 160,098

Other income 26 736,928 727,212

Total non-mark-up / interest income 8,841,020 8,875,817

Non mark-up / interest expenses

Administrative expenses 21,956,115 20,100,591

Provision against off-balance sheet obligations 1,066 38,453

Provision against other assets 310,765 356,486

26
Other charges 329,789 206,362

Total non mark-up / interest expenses 22,597,735 20,701,892

12,604,070 8,513,566

Extra ordinary / unusual items

Profit before taxation 12,604,070 8,513,566

Taxation

-Current 5,008,992 3,122,512

-Deferred (495,545) (288,216)

-Prior years 567,813 38,419

5,081,260 2,872,715

Profit after taxation 7,522,810 5,640,851

Basic earnings per share 4.73 4.09

Diluted earnings per share 4.71 4.09

Source (Annual report of BAL 2015)

4.4.3Financial performance (2012-15)

 Total Assets

Table No: 6

2012 537 Billion

2013 611 Billion

2014 743 Billion

2015 903 Billion

27
  Deposits

Table No: 7

2012 457 Billion

2013 526 Billion

2014 606 Billion

2015 640 Billion

 Total income

Table No: 8

2012 53.1 Billion

2013 52.3 Billion

2014 64.5 Billion

2015 70.4 Billion

 Total Expense

Table No: 9

2012 15.4 Billion

2013 17.6 Billion

2014 20.3 Billion

2015 22.5 Billion

28
  Total Advances (Gross)

Table No: 10

2012 249 Billion

2013 273 Billion

2014 306 Billion

2015 344 Billion

4.4.4 Financial Ratio Analysis

Financial ratio analysis is used to identify the financial strength and weakness.
Financial ratio is also helpful for creditors, management, shareholder, government to
identify the financial position of the company. Financial ratio is nothing more than a
ratio whose numerator and denominator are comprised of financial data. While to
determining the financial strength and weakness we need following ratio to calculate,
and analyze.

4.4.4.1 Liquidity Ratio

Liquidity ratio shows the cash level of the company, and shows the ability to turn its
other assets to pay off liabilities and other current obligations. Or it shows the ability
of a firm to pay its short term and long term obligation with current assets. I applied
following liquidity ratios to identify the cash level of BAL.

 (a) Cash Ratio

Formula: Cash/Current Liabilities.

29
Table No: 11

Years Computations Results

2013 61,204,697 / 9,543,480 6.41

2014 50.515,643/11,758,155 4.2

2015 62,368,790/9,733,929 6.40

7
6
5
4
3
2
1
0
2013 2014 2015
Graph No: 1

INTERPETATION:

The cash ratio of Bank Alfalah is acceptable because the cash ratio is increasing in the
year 2015, although it was decreasing in the year 2014. That’s mean the

BAL is trying to cover and its short term liabilities with cash. In the year 2013 the
cash ratio was touching the highest oh BAL history, which indicates that the BAL is
continuously improving their cash ratio.

 (b) Quick/ Assets Test Ratio

Formula: Current Assets-inventories/Current Liabilities.

30
 Table No: 12

Years Computations Results

2013 302,634,611 / 506,508,650 0.597

2014 349,834,441/ 578,712,547 0.604

2015 902,607,521/ 849,254,346 1.062

1.2

0.8

0.6

0.4

0.2

0
2013 2014 2015
Graph No: 2

INTERPETATION

This ratio is continuously increasing from 2013-15 as (0.597, 0.604, 1.062) It shows
the good sign for Bank Alfalah that they become able to pay its short term obligations
by most quick and liquid assets in 2015. The increase in quick assets also indicates
they have sufficient assets to cover up their current liabilities in the year 2015.

4.4.4.2 Profitability Ratio

Profitability ratio shows the ability of firm to generate its profit from operations. It
focuses on return on investment in assets and inventory. It also indicate the efficiency
of operations that how a company run their operations. I have calculated the following
profitability ratios to check the bank Alfalah operations that how efficiently BAL
achieve their profit from operations.

31
  (a) Gross profit margin.

Formula: Gross profit margin=profit/sale*100

Table No: 13

Years Computations Results

2013 16.894,831/ 43,961,060 38.41%

2014 21,873,474/ 55,378,477 39%

2015 28,647,685/ 61,458,407 46.6%

50
45
40
35
30
25
20
15
Graph No: 3
10
5
0
2013 2014 2015

INTERPETATION:

Gross profit margin is increasing continuously from 2013 this means that bal is
continuously utilizing their resources efficiently. It also indicates that bal is selling
their inventory on profitable basis.

 (b) Net profit margin.

32
 Formula: Net profit margin=Net profit/sale*100

Table No: 14

Years Computations Results

2013 4,675,950/ 43,961,060 10.63%

2014 5,040,851/ 55,378,477 10%

2015 7,522,810/ 61,458,407 12.2%

14

12

10

0
2013 2014 2015
GRAPH NO: 4

INTERPETATION:

The net profit margin indicates that the bank Alfalah is earning 0.10 in 2013, 0.1 in
2014, and 0.122 in 2013, to spending one rupee. This ratio is also shows that the BAL
has earned more rupees in 2015 which is good sign for company.

4.4.4.3 Solvency Ratio

Solvency ratio is also called leverage ratio, it measure the sustain operation of a firm,
and compare debt level with equity, assets and equity. In a simple word this ratio is
measure ability of a firm to pay its long term bills. I have calculated the following
solvency ratio.

33
  (a) Debt to equity ratio

Formula: Total debt/ Total equity

Table No: 15

Years Computations Results

2013 9,991,000/ 28,265,616 35

2014 9,983,000/ 42424778 23

2015 9987000/ 37823827 26

35

30

25

20

15 Graph No: 5
10

0
2013 2014 2015

INTERPETATION:

Debt to equity ratio of BAL was increased to much in 2013, which show bank
Alfalah used creditor financing ( Bank loans) in 2013 but the ratio were little bit
decreases in 2014 which shows more financing from (Shares holder) and in 2015 the
ratio were again increase which show the highly risk for creditors in financing.

 (b)Equity ratio

Formula: Total equity/Total Assets

34
Table No: 16

Years Computations Results

2013 28,265,616/ 610,514,291 4.6%

2014 42,424,778/ 902,607,521 4.70%

2015 37,823,827/ 743,128,293 5.08%

5
Graph No: 6
4

0
2013 2014 2015

INTERPETATION:

The equity ratio of bank alfalfa is increasing continuously from 2013, which shows
that the assets of bank are financed by owners, s equity.

 (c)Debt Ratio

Formula: Total Debt/Total Assets

35
 Table No: 17

Years Computations Results

2013 9,991,000/ 610,614,291 1.64%

2014 9,983,000/ 902,607,521 1.10%

2015 9,987,000/ 743,128,293 1.34%

2 GRAPH NO: 7
1

0
2013 2014 2015

INTERPETATION:

The debt ratio of bank Alfalah is increasing in 2015 which shows the bank Alfalah
mostly their assets is financed by debt financing. And it also indicates the risky
financing and creditors wants back their money.

36
 4.4.5 DuPont Analysis

Ratio Formula 2013 2014 2015

Net operating margin (PAT/Total Income) 8.96% 8.79% 10.71%

Assets utilization (Total Income / Average 9.11% 9.48% `8.55%

Assets)

Return on assets (Total Income / Average 0.84% 0.86% 0.92%

Assets)

Leverage ratio (Average Assets / 21.62 22.12 20.79

Average Equity)

Return on equity (PAT/Average Equity) 18.03% 18.87% 19%

Table No: 18

37
 Chapter 5

RECOMMENDATIONS

At the end of this report I want to recommend some points based on the analysis of
the Bank Alfalah limited, which may help to increase the efficiency level of bank
Alfalfa. And it would also be helpful to solve the problems in the organization.

The recommendations are given to bank Alfalah are following:

5.1 Workshops and Training

Workshops and training for the employee of BAL should be given by specialized
trainer, And every aspect of banking should be discuss in the workshops.

Training program of BAL should on the basis of modern techniques and technology
to improve the decision making power of Managers and to improve the inter-personal
skills of individuals.

5.2 Customer services

Bank Alfalah is needed to improve the customer services in this competitive

environment. It becomes very necessary today to adopt the personalized banking for
attracting customer, equal respect and services should be given to customer.

5.3 Feedback

The employees of bank Alfalah is needed to improve the upward communication for
giving better feedback.

5.4 Management by objective (MBO)

The concept of management by objective should be introduced in the bank, where the
subordinates should be expected to formulate these objectives for themselves. The
MBO will also be helpful for achieving the goals, because MBO is used in goals
setting.

38
5.5 Electronic Audit

The audit of bank Alfalah should be electronic based, electronic data processing
should be adopted (EDP) for audit, so any discrepancies resulting fraud or error can
be detected easily.

5.6 working Conditions

Working area is comparatively small as compared to the need of work. The employee
have lesser working space, therefore they can’t do their activities efficiently. It is
suggested that the enough apace should provide to the employees for maximum
output.

5.7 Publicity

The BAL have not a comprehensive strategy for advertisement and publicity, They
realize on personal banking, so it does not give proper attention to more sophisticated
attention to publicity, web sites and bill boards also do not give complete sense and
information to the customer. So BAL should adopt strong strategy for promotion and
publicity.

5.8 International banking

The bank Alfalah should expend their branches in the maximum countries to generate
the maximum profits for fulfillment of their mission statement.

5.9 Merit basis selection

Every candidates of BAL should appoint on merit, no favor given to any candidates.
This will ensure the obedient and competent entry in the organization.

5.10 Separation of activity

The activity are not separated in the Branches, thus a clearing and accounts
department is operated by one person along with that the trade and credits activities is
done by one persons, mostly branches do not have DMS officer, the ruder men

39
perform scanning activity. So that type of gathering create confusions, to remove
these confusion and creation of effectiveness the BAL should separate things and hire
complete number of employees.

5.11 Accommodations

The waiting place in the bank is not adequate especially the setting arrangement. The
branches should give a clean and well seated place to customer.

5.12 Motivators

In order to motivate employee and retain best employee in the bank the BAL should
recognition and rewards for achievements.

5.13 Advance technology

Advance technology such as latest computer, and software should be adopted by BAL
for increase in data processing speed.

5.14 Introduction of Forecasting Techniques

Qualitative techniques of forecasting and inventory maintenance should be introduced

in the bank, so the management will aware for future needs and can make better
arrangements to meet these needs.

5.15 Development in technology

The bank Alfalah is needed to develop the following infrastructure, for competition in
this modern world.

 Electronic funds transfer (EFT)

 EFIPOS ( EFT point sale)
 Home Banking
 Internet Banking
 Smart Cards
 Tele Banking

40
 List of Abbreviations

A/C Account
ATM Automated Teller Machine
BAL Bank Alfalah
BCCI Bank ofCommerce &Credit International
CEO Chief Executive Officer
DD Demand Draft
EDP Electronic Data Processing
EFT Electronic Fund Transfer
EFTPOS Electronic Fund Transfer Point of Sale
DD Demand Draft
HCEB Habib Credit & Exchange Bank
HRM Human Resource Management
IT Information Technology
L/C Letters of Credit
MBO Management by Objective
NBP National Bank of Pakistan
PC Personal Computer
SBP State Bank of Pakistan
SWIFT Society for Worldwide Interbank Financial Telecommunication
TC Travelers Cheques
TT Telegraphic Transfer
UAE United Arab Emirates

41
 REFERENCES
http://www.bankalfalah.com/about-alfalah-bank/financials-results

https://www.scribd.com/doc/25258216/Internship-Report-on-Bank-Alfalah

http://www.virtualians.net/group/bnki619/forum/topics/internship-report-on-bank-alfalah-

of-bnki619-final-pro

http://www.bankalfalah.com/branch-locator

http://adeelkz.blogspot.com/2009/04/download-internship-report-of-bank.html

http://www.bankalfalah.com/cltp-content/uploads/2016/03/Bankalfalah-PDF-1.pdf

Previous internship report of Mr. Saifullah session 2011-2015

42