INTERNSHIP REPORT ON

BANK ALFALAH

Made by: Bilal Yasir 03458703330

1 | P a g e

Preface

Internship is the one of the crucial part of the B.com (hons) course and this provide

the practical knowledge of what we have learnt so far in this program. Internship

report is prepared to full fledge analysis of an organization. Internship is the only

experience that could lead someone to strengthen his position in market and proving

his abilities as well.

Firstly the purpose of internship period is to become familiar with the practical world

that what is actually happening in different national and multinational companies and

how different activities are performed over there. Secondly, to deal with the

theoretical knowledge with the practical side that what is being taught us in institutes

and how it is implemented in different enterprises?

I have done my internship in Bank Alfalah Limited (Circular road Branch,

Bahawalpur). I gained a lot of precious experience from this internship tenor under

the kind supervision and guidance of my internship supervisor.

During my whole time I have been visiting different cells of the bank and I was

thoroughly briefed about the procedure and working carried out in bank by cordial

senior staff.

My report is totally based on what I have learnt there. I hope this report could

provide actual position of this company.

2 | P a g e

Acknowledgement

All praises, thanks and acknowledgements are for CREATOR; the

ALMIGHTY ALLAH WHO has bestowed upon human being the crown of creation

and has endowed him with knowledge and wisdom. I offer thanks to the Holy

Prophet (PBUH) WHO is the beacon of enlightment and the greatest benefactor the

mankind ever had. Who brought for us revelation and unlimited knowledge and

civilized the barbarian human being.

I would like to present a token of thanks for the staff members of Bank Alfalah

Limited Circular road, Bahawalpur, who were cooperative to me in the completion of

this report and provide me their complete guidance. As banks are very much sensitive

about their secrecy, even then after taking an understanding, they let me handle their

delicate operations.

My special thanks to Mr. Zeeshan (branch manager), Mr. Zeshan (operations

manager), Mr. Amaan (credit manager), Mr. Jamshed (Accounts officer), Mrs. Fatima

(Account opening officer), Mrs Sana (incharge of Remmittance department) Mr.

Khalid, Mr. Sammi and Mr. Slaman who gave me a horde of useful information and

treated me extraordinarily at each step of my learning over there.

Bilal Yasir

L3f08bcom2364

3 | P a g e

2 Executive Summary

Bank Alfalah Limited was incorporated on June 21st, 1992 as a public limited

company under the Companies Ordinance 1984. Its banking operations commenced

from November 01, 1997. The bank is engaged in commercial banking and related

services as defined in the Banking companies ordinance, 1962. The Bank is currently

operating through 329 branches in Pakistan, Bahrain, Bangladesh & Afghanistan,

with the registered office at B.A.Building, I.I.Chundrigar, Karachi.

Since its inception, as the new identity of H.C.E.B (Habib Credit and Exchange Bank

Limited) after the privatization in 1997, the management of the bank has

implemented strategies and policies to carve a distinct position for the bank in the

market place.

Strengthened with the banking of the Abu Dhabi Group and driven by the strategic

goals set out by its board of management, the Bank has invested in revolutionary

technology to have an extensive range of products and services.

Today Bank Alfalah is operating in more than 70 cities of Pakistan and operating its

foreign branches in Bangladesh, Afghanistan and Bahrain. The total employees of

Bank Alfalah approximate around 7,600. The increase in the number of employees

joining Bank Alfalah shows that people feel confident in Bank Alfalah as a prospect

employer.

4 | P a g e

2.3 Major Activities in internship period

I have completed my 6 weeks internship at Bank Alfalah, circular road Bahawalpur. I

tried my best to gain something practically from this opportunity. I worked in Credit

administration department, Accounts Department, Credit marketing department,

Account opening department and remittances department. The overall experience at

the bank was good. A lot of things have been learnt, some of which relate to

classroom learning. Alfalah is expanding its network all over the Pakistan yet there

are many untapped areas. The competitors of BAFL are also in aggressive position.

The Economic and Political conditions of the country are very disturbing; the high

inflation and law and order situation affects every business including Alfalah. Social

and technological issues are of secondary importance but it could not be neglected.

BAFL is focusing positively regarding technological issues but it should also keep its

eye on the social cultural factors also.

History of bank Alfalah shows that how it helps its Nation and Country in both war &

peace. After restructuring of the bank, the objectives of the bank are changed. Now it

has objectives to overcome past mistakes, realize the real importance of customer so

now it has main objective to achieve customization.

Bank also provides facility of L.C to support export and import in the region.

SWOT analysis of Alfalah Bank of Pakistan shows that it has small number of

strengths and lot of weaknesses. The bank should give attention to this drawback. But

bank has lot of opportunities to improve its quality of services, and do efficient

banking. Bank should give proper attention to overcome its threats.

Some of the problems found in the working of Bank Alfalah includes, incentive

schemes, less staff and long working hours. Lastly Bank Alfalah has seen a rapid

growth in its activities by introducing a range of products and services and showing

5 | P a g e

its presence in the country by opening new branches and in future it would try to

keep this momentum and always strive to become the best.

6 | P a g e

4 Table of Contents

Title Page #2.0 Executive Summary 32.6 Major Activities 45.1 Introduction 6

5.1.25.1.35.1.4

History Vision Mission

7

5.25.2.1

Description Main Shareholders

8

5.3.15.3.2

Banking Sector Products and Services

11

5.3.3 Important Products 125.4 Customers of Bank 165.5 Organizational Chart 175.6 List of Functions 195.7 Financial Statement Analysis 206.0 Internship Activities 237.1 Assessment of the internship 328 Recommendations 349 Appendices 3610 References 42

7 | P a g e

5.1 Introduction

Bank Name Bank AlfalahWeb link http://www.bankal-falah.comEmail karachi@bankal-falah.comStreet B.A Building, I.I Chundrigarh RoadCity KarachiState SindhCountry PakistanPhone 021-2414030Employees 7,462 (2009)Key people H.E. Sheikh Hamdan Bin Mubarak Al Nahayan

(Chairman)Bank Type Commercial BankInternet banking YesSource Bank Alfalah website

Logo

Credit Rating

PACRA, a premier rating agency of the country, has rated the bank ‘AA’ (double A),

Entity Rating for long term and A1+ (A one plus) for the short term. These ratings

denote a very low expectation of credit risk, strong capacity for timely payment of

financial commitments in the long term and by highest capacity for timely repayment

in the short term, respectively. The ratings of first and second and third unsecured

listed and subordinated TFC issues of PKR 650 million, PKR 1,250 million and

Rs.1,325 million have been maintained at AA- (Double A minus).

8 | P a g e

5.1.2 History

Bank Alfalah Limited (“BAL”) is a private bank in Pakistan owned by the Abu Dhabi

Group. Bank Alfalah was incorporated on June 21, 1997 as a public limited company

under the Companies Ordinance 1984. Bank Alfalah is registered at both Karachi and

Lahore Stock Exchange with a ticker name of “BAFL”. Its banking operations

commenced from November 1, 1997. The bank is engaged in commercial banking

and related services as defined in the Banking companies ordinance, 1962, with the

registered office at B.A.Building, I.I.Chundrigar Road, Karachi. Since its inception, as

the new identity of H.C.E.B (Habib Credit and Exchange Bank Limited) after the

privatization in 1997, the management of the bank started implementing strategies

and policies to carve a distinct position for the bank in the market place.

This was further strengthened with a partnership with the Abu Dhabi Group which

owns 70% of Bank Alfalah shares. This allowed the bank to invest more in

revolutionary technology to increase its range of products and services, perceiving

the requirements of their customers and matching them with quality products and

service solutions.

5.1.3 Vision

To be the premier organization operating locally & internationality that

provides the complete range of financial services to all segments under one

roof.

5.1.4 Mission

To develop & deliver the most innovative products, manage customer

experience, deliver quality services that contributes to brand strength,

establishes a competitive advantage and enhances profitability, thus

providing value to the stakeholders of the bank.

9 | P a g e

5.2 Description

Bank of Credit & Commerce International (BCCI) was a Pakistan based bank,

established by Mr.Agha Hassan Abdi from UBL, in association with U.A.E and

Europe. BCCI has its branches in 74 different countries of the world. It had its 3

branches in Pakistan. In 1991, the BCCI was banned, when it was accused by

European countries that the bank was involved in some illegal operations with Gulf

countries. The major reason behind European accusation was that BCCI was of

Islamic mode. Therefore, the bank was closed due to international pressure. Then, its

3 Pakistani branches were taken over by the Government of Pakistan, which were

named as Habib Credit and Exchange Bank (HCEB) and these were working as

subsidiary of Habib Bank Limited.

Following the privatization in July 1997, Habib credit and Exchange Banned assumed

the new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based

bank as the family of Sheikh Nahayan Mubarik Al Nahayan purchased 70% of its

shares and 30% shares remained with Habib Bank on behalf of Government of

Pakistan.

Bank Alfalah Limited (the Bank) is a banking company incorporated in Pakistan on

June 21, 1992 as a public limited company under the Companies Ordinance, 1984. It

commenced its banking operations on November 01, 1992. The Bank registered

office is at B.A. Building I.I. Chundrigar Road, Karachi and the Bank is listed on the

Karachi, Lahore and Islamabad Stock Exchanges. The Bank is engaged in banking

services as described in the Banking Companies Ordinance, 1962 and is operating

through 254 conventional banking branches including 5 sub branches (December 31,

2009: 253 branches including 4 sub branches), 7 overseas branches (December 31,

2009: 7 branches), 60 Islamic banking branches (December 31, 2009: 60 branches)

and 1 offshore banking unit (December 31, 2009).

10 | P a g e

5.2.1 Main shareholders

Table in 5.2.2 shows the number of shareholders and 5.2.3 shows major shareholders.

5.2.2 Table

S.No Shareholder’s CategoryNumber of

shareholdersNumber of shares held Percentage

1 Individuals 26,471 941,800,047 69.81

2 Financial institutions 38 94,388,946 7.00

3 Investment Companies 24 42,985,477 3.19

4 Insurance Companies 16 3,239,690 0.24

5 Mutul funds 27 56,293,888 4.17

6 Joint stock Companies 223 97,728,896 7.24

7 Charitable Trusts 4 358,170 0.03

8 Leasing Companies 5 273,624 0.02

9 Modarabas 7 123,144 0.01

10 Cooperative Society 1 12,453 0.00

11 Others 40 111,951,915 8.30

26,856 1,329,156,250 100.0

Source: Annual Report 2009 (Bank Alfalah)

11 | P a g e

5.2.3 Table

s.no.Shareholder’s cateogory No. of

shareholders

No. of shares held

Percentage

1 NIT & ICP

National Bank of Pakistan

1 16,904,383 1.25

2 Directors & Chief Executive Officer

H.H. Sheikh Hamdan Bin Mubarak Al Nahayan , DirectorMr. Abdulla Nasser Hawaileel Al Mansoori , DirectorMr. Abdulla Khalil Al Mutawa , DirectorMr. Khalid Mana Saeed Al Otaiba , DirectorMr. Ikram Ul Majeed Sehgal , DirectorMr. Nadeem Iqbal Sheikh , DirectorMr. Sirajuddin Aziz , Director/CEO

7 239,556,962 17.76

3 Executives 433 43,441,846 3.22

4Public sector companies and corporation 1 604,350 0.04

5Banks, DFIs, NBFIs, Insurance Companies,Modarabas and Mutual Funds & Others

383 389,847,470 28.90

Source: Annual report 2009 (Bank Alfalah)

12 | P a g e

5.3.1 Banking Sector

At the time of independence in 1947, there were 38 scheduled banks with 195 offices

in “Pakistan” but by December 31, 1973 there were 14 scheduled Pakistani

commercial banks with 3,233 offices all over Pakistan & 74 offices in foreign

countries.

Nationalization of Banks was not done 1st January 1974 under the Nationalization act

1974, due to certain objectives. But it had negative effects on efficiency of the of the

banking sector afterwards a privatization Commission was set up on January 22,

1991, the commission transferred many banks to the private sector i.e., MCB & ABL.

The government approved & permitted the establishment of 10 new private banks in

1991; hence many new private banks have incorporated, since then, BANK

ALFALAH in one of the namely established private scheduled banks in Pakistan.

5.3.2 Product and services

General Banking

Deposit Accounts

Financial services

Structured Finance Trade finance Lease finance SME

Alfalah Karaobar Finance Alfalah Milkiat Finance Alfalah Quick Finance

Agri finance

13 | P a g e

Consumer finance

Credit cards Home loans AutoVehicle loans Prepaid card Debit cards

Islamic banking Personal Banking Corporate Banking Consumer Banking

5.3.2 Important products

Car Financing:

Car Financing is one of the major renowned product of Bank Alfalah and can be

utilized in terms of Financing of Used Vehicles, Loan against Car, Balance

Transfer Facility, Refinancing Facility (only for Alfalah Customers) and it is

characterized in terms of:

Lowest Mark up Lower Insurance Quick Processing Lower Down Payment

14 | P a g e

Home Loan

Major features of Bank Alfalh Home Financing are Lowest Mark-up, Quick

Processing, Multiple Repayment Options and Free Valuation. It has been

bifurcated in terms of “Home Buyer, Home Construct, Home Improver, Home

Balance Transfer Facility”.

Financing Limit upto: Rs. 10,000,000/-

Tenure upto: 20Years Equity Participation: 30%

Borrower / 70% Bank

Debit cards

Bank Alfalah Limited presents Alfalah HilalCard,

the first Visa Electron International Debit Card

which gives an unlimited access to current /

savings account with a simple swipe, at millions

of retail shops and ATMs, worldwide. The

Alfalah Hilal Card comes with a host of conveniences and benefits combined with

the wide reach of Visa Network enabling it to be accepted at more than 840,000

ATMs and 13 million retail outlets around the world, making it the most

acceptable Debit Card available in Pakistan

15 | P a g e

Credit card

Bank Alfalah Credit Card is globally accepted and welcomed at locations displaying

the VISA logo. It is accepted at over 29 million locations in more than 200 countries

around the globe and over 27,000 Bank Alfalah’s establishments in Pakistan.

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

Center and Auto Debit instructions SMS for card usage, mini statement, payment receipt confirmation, etc. Cash withdrawal at all 1LINK ATMs Special offer on Warid post paid connections

Platinum Card

It is accepted at over 29 million locations in more

than 200 countries around the globe and at over

27,000 establishments in Pakistan.

Titanium Card

Titanium MasterCard is globally accepted and

welcomed at locations displaying the MasterCard

logo.

Gold Card

A perfect card combination for all segments of

salaried & professional individuals.

Supplementary Card

All Bank Alfalah basic credit card members can apply

for supplementary cards for their sons, daughters

(Children who are above 13 years of age), house staff

or anyone.

16 | P a g e

Islamic Banking

A separate division is a recently initiated, which operates as separate branch. It offers

Shariah Compliant products through a network of five branches. Islamic Banking has

launched following products with the perception that these are in accordance with the

Shariah Principles.

Alfalah Masharaka Homes Murabaha Finance Aflalah Car Ijarah

Corporate and Structured Financing

The portfolio concentrates on all aspects of conventional banking as well as the financial needs of corporate sector including dynamic and high value product.

Loaning against securities Letter of Credit Letter of Guarantee Demand Finance Cash Finance

Automated teller Machine

The bank offers 24 hours self service banking facilities to its customers on

country wide basis through deployment of Automated Teller Machine. This

system allows the banking facilities such as cash withdrawals, cash deposits, and

funds transfer, balance inquiries, account statements. Electronic cash dispensing

facilities are available in major cities of Pakistan. All ATMs are linked through a

17 | P a g e

state-of-the-art Satellite Based Communication System which offers 24 hours real

time service.

5.4 Customers of Bank Alfalah

Accounts for customers Minor Account Illiterate Person Account Individual Account Proprietorship Account Partnership Account Limited Company’s Account Current Account  PLS Savings Account Royal Profit  Basic Banking Account  Alfalah Kifayat Alfalah Mahana Amdan  Alfalah Education  Alfalah Kamyab Karobar

Types of accounts shows that bank Alfalah has all types of customers like

businessman, individuals, salaried persons, companies, institutions, students,

employees, retailers, manufacturers etc. Every type of account is specially made

for nature of work a person performs.

For example royal profit is made for rich persons and minimum deposit

requirement is of Rs. 50,000 only. Customer receives higher returns on higher

balances. Alfalah Mahana Amdan is a 3 year TDR with expected rate of profit of

10% p.a. This term deposit will provide an opportunity to individual/joint

customers to enjoy higher returns that will automatically be credited to his/her

current/PLS/RP/BBA account on 1st working day of each month. This facility is

not available for business and corporate customers.

18 | P a g e

19 | P a g e

5.5 Organizational Chart

20 | P a g e

President CEO

Chief Operating Officer

Group Head Regional manger

Area Manager

Branch Manager

Operation Manager

5.5.2 Board of directors

In 2007 employees were 7,371. It increased to 7,584 in year 2008 and then it declined to 7,462 in 2009.

21 | P a g e

Operation Manager

Account opening deptt.

Remittance deptt.

Sales deptt.

Cash deptt.

Account and admin deptt.

Customer service deptt.

Credit deptt.

H.E. Sheikh Hamdan Bin Mubarak Al

NahayanChairman

Mr.Khalid Mana Saeed Al OtaibaDirector

Mr. Ikram Ul-Majeed Sehgal

DirectorMr. Nadeem Iqbal

SheikhDirector

Mr. Abdull Khalil Al MutawaDirector

Mr. Sirajuddin AzizDirector & CEO

Mr. Abdulla Nasser Hawalileel Al-Mansoori

Director

5.6 List of functions performed by the employees in Bank Alfalah

In Bank Alfalah Circular road Bahawalpur there are certain departments and staff deal in those departments are well experienced.

Business is headed by the Branch Manager, who heads the C.S.Rs, LSF and Consumer Staff, He works with them to get the branch targets.

Operational manager:

An operation is headed by C.S.M previously known as Operation Manager. He heads the C.T and U.Ts. All the activities of Branch are done by Operation Staff.

Account opening department:

In account opening department and make accounts of new introduce.

Accounts:

Check intercity clearing and Nift documents.

Remittance:

Make outward DD’s and inward DD’s and all relating documents.

Credits:

Advance loan to customers.

22 | P a g e

5.7 Financial statement analysis

You can see Balance sheet and Income Statement in Appendices

5.7.1 Operational results

Table 5.7.2All figures are in millions2007 2008 2009

Operational resultsTotal Income 31,822 35,789 40,743Operating Expenses 8,289 9,957 11,002Profit before income tax and provisions 6,906 3,831 4,711Profit before income tax 4,536 1,795 1,016Profit after tax 3,130 1,301 897

EPSBasic earnings per share (Rs.) 3.92 1.41 0.71Source: Bank Alfalah Annual report

Total income was 8289 million in year 2007 and it has increased in the last two years.

Operating expenses has been increasing in last three years. Following the year 2007

operating expense was 8289 million, year 2008 it was 9957 million and in year 2009

it was 11002 million. Basic earnings per share have decreased so far with 0.71 till

now.

Table 5.7.3

Graph 1 Graph 2Source: Bank Alfalah annual report

23 | P a g e

5.7.4 Profit before tax

Profit before tax as you can see above in Table 5.7.3, It has been decreasing in last

three years. The graph 1 shows that year 2008 profit is much lower as compared to

year 2007. The same is the case with the second graph in which year 2009 profit is

less than year 2008. The reason being this decline is higher operating expenses which

lead its profit to cut down.

5.7.5 Balance Sheet

Table below shows the advances and deposits comparison as well as last three year change.

Table 5.7.6

24 | P a g e

All figures are in millions2007 2008 2009

Balance SheetShareholders’ Equity 13,767 14,609 19,770Total Assets 328,895 348,991 389,070Advances - net of provision 171,99 191,790 188,042Investment - net of provision 88,492 75,973 99,160Deposits and other accounts 273,174 300,733 324,760

5.7.5 Ratio Analysis:

Table on ratio analysis is shown in appendices.

Profit before tax

Profit before tax is PBT/Gross markup income and PBT looks at a company's profits

before the company has to pay corporate income tax. PBT ratio is 17.59% in year

2007 and it has been decreasing in year 2008, 2009 with 8.80% and 2.86%

respectively.

Return on average equity:

The amount of net income returned as a percentage of shareholders equity. Return on

equity measures a corporation's profitability by revealing how much profit a company

generates with the money shareholders have invested.  So in year 2007 ROAE was

25.72 % and in year 2008 it was 9.17% and decreased to 5.22 % in year 2009.

Return on average assets:

It shows how efficiently a company is utilizing its assets and is also useful to

aide comparison among peers in the same industry. In year 2007 it was 1.04% and

year 2008 with 0.38% and year 2009 with 0.24%.

Advances to deposits ratio

25 | P a g e

Deposits have been increasing in last 3 years and in year 2009 it increased to 324760

million. It is greater from last two years. In year 2009 advance / deposit ratio is

57.90%.

6.0 Internship activities

6.1 Account Opening Department

It is most important department of bank. Ms. Fatima deals in this department.

Following procedure is adopted for this purpose.

6.1.1 Account opening procedure

The basic requirements to open an account for individuals/self employed are as follows;

CNIC Source of income (salary slip etcNTN certificate (optional) Company letterhead or authorization (as required)

The basic requirement to open an account for a partnership:

Partnership DeedPartners CNICCompany LetterheadNTN certificate (optional)

The basic requirement to open an account for companies:

Memorandum of AssociationArticle of AssociationDirectors CNICCompany LetterheadNTN certificate (optional)

Major deposit account products

Current Account

26 | P a g e

Non interest bearing checking account.Minimum account opening requirement of Rs. 10,000 only.Debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day.No restriction on number of withdrawals and on number of deposits

PLS saving Account

Profit & Loss Sharing Saving Bank Account.Minimum account opening requirement of Rs. 5,000 only.No restriction on number of withdrawals and number of deposits.  Profit on saving accounts is credited to the customer account on half-yearly basis.Debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day.

Basic banking Account

Initial deposit for account opening is Rs. 1,000 with no minimum balance requirement.Non interest bearing checking account.Maximum 2 deposits & 2 withdrawals through cheque is allowed.Debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day.No restriction on ATM withdrawal.

Royal profit

Minimum Deposit requirement of Rs. 50,000 only.Higher returns on higher balances.No restriction on number of withdrawals and on number of deposits. Profit is credited to the customer account on monthly basis.

Other Accounts includes;

Minor Account, Illiterate Person Account Individual AccountProprietorship AccountPartnership AccountLimited Company’s Account

27 | P a g e

Alfalah KifayatAlfalah Mahana AmdanAlfalah EducationAlfalah Kamyab Karobar

28 | P a g e

6.1.2 Remittances

The need of remittance is commonly felt in today’s business. I have spent some of

time in remmitance department. A major function of any bank is to “transfer of funds

from one place to another”.

There are two main types of instruments that are used to transfer money, which are as

follows:

Pay order: Used to transfer money within the city Demand Draft: Used to transfer money outside the city

Pay order

Pay orders are made to transfer money within the city and this is a safe way to

transfer money as the person who makes the transfer through pay order pays in

advance. The procedure that is carried out in transferring money through pay order is

as follows:

The customer will come to the bank and fill in the pay order application, giving in the

details to which account the money is being transferred, the amount etc and attach

a cheque to pay for the pay order. Pay orders can also be made through cash but

mainly it is made through cheque.

Demand Draft

Demand Draft is another way in which customers can transfer money outside the city.

There are two types of situations for transfer of money through demand drafts:

Outward DD’sInward DD’s

29 | P a g e

Outward DD

When a customer comes to Bank Alfalah to make a DD to transfer money outside the

city is known as outward DD. The customer will fill the details in a DD application

form, and will attach a cheque or pay cash as he wish.

Inward DD

This is the procedure adopted when the issuing branch sends copy of the instrument

as an advice. When the bank receives the advice, the officer will pass the following

entries:

Head Office A/c

DD Payable A/c

When the customer comes with the DD to get his payment, the following entries are

passed:

DD Payable A/c

Cash

If that customer is a Bank Alfalah account holder then the following entries are

passed:

DD Payable A/c

Customer Account

30 | P a g e

6.1.3 Credit marketing Department

Credit means belief or trust. “The quality of being credible or trustworthy”. Another

words we can define credit as “trust in one’s integrity in money matters and one’s

ability to meet payment when due”.

Credit marketing department deals with extending loans (credit facility) to customers

before sanction advice. State Bank of Pakistan has prescribed regulations which are

called “PRUDENTIAL REGULATIONS”. Every bank has to follow these

regulations. If any bank violates the regulations it should be liable for penalties.

The Bank Alfalah limited credit is extended on the basis of these rules and

regulations. These regulations tells the term and conditions under which you can

extend loans to the borrower and to what extent.

At BAL there are two types of credit facilities

Funded facilities Non funded facilities

6.1.4 Funded Facilities

These are the facilities in which there is direct involvement of cash fund. Following are the funded facilities.

Current finance “CF”Term finance “TF”Finance against foreign bills “FAFB”Finance against packing and credit “FAPC”Finance against imported merchandise “FIM”Finance against trust receipt “FATR”Local bills discounted “LBD”

31 | P a g e

Current Finance “CF”

The extensively used financing mode at BAL is current finance (CF) current finance

is used to finance both individuals and industries. Individual take current finance for

their personal use while in industries. It is taken for fulfilling the requirement of

working capital.

Term Finance “TF”

Term finance is for specified time period. Term finance is given for fixed asset

financing.

Finance against Foreign Bills “FAFB”

In FAFB facility exporter take loan from bank on the behalf of their foreign export

bills. Like exporter sends shipment but at that time he needs fund for the operation of

the business. He may go to the bank and surrenders all the documents including L/C,

Bill of lading etc. bank checks all the documents to be in accordance with terms and

conditions. If they find no discrepancy, they give money to exporter but take some

margin on it.

Finance against Packing and Credit “FAPC”

FAPC is taken for the preparation of consignment. It has two forms.

Pre shipment Post shipment

Pre Shipment

Pre shipment loans are export related working capital financing.

Post Shipment

Post shipment financing is essentially the receivable financing to the exporters till the

period he is out of cash after the shipment.

32 | P a g e

Finance against Imported Merchandise “FIM”

This facility is allowed against the commodities imported from other countries

usually through letter of credit. Some time importer does not have enough amounts

for paying the imported merchandise therefore. He request to the bank to pay all dues

to the exporter against the security of imported merchandise. Bank pays the amount

and releases the goods, when the importer pays off its liability partially / fully.

Finance is extended upon the trust receipt signed by borrower. Importer has to import

the product. There are three conditions.

Pay money and get thing, Get fine facility, and third is that if that client is trust

worthy for bank believing on him based upon his past record. He releases the goods

against the trust receipt. Trust receipt is given to the bank by the customer. The

customer in turn commits that I will pay on such and such date.

Local Bills Discounted “LBD”

Payment against documents or local bills is made by the banks as payment against

L/C comes due payment is made for imported documents. For example when seller of

raw cotton gives all the documents or bills to bank as to get bills discounted in which

he gets immediately payment which he would receive after the season.

33 | P a g e

6.1.5 Non funded facilities

The facilities where there is no direct involvement of banks fund. There are two types

of unfunded credit line facility, which are as follows:

Letter of Credit (LC) Letter of Guarantee (LG

Letter of Credit (LC)

A letter of credit is a written undertaking by a bank (issuing bank) given at the request

and accordance of a buyer (the applicant) to the seller (the beneficiary) to a fact

payment up to a stated amount of money within prescribed time limit provided that

the terms and conditions are complied with. Letter of Credits issued in the

international trade business. There are two types of Letter of Credits: Usance LC and

Sight LC.

Letter of guarantee

Letter of guarantees is a guarantee that the bank gives to an organization on behalf of

the bank. Letter of Guarantee’s are mainly used when a tender for a specific job is

filled by a customer.

6.1.6 Agri finance

Bank Alfalah Limited acknowledging the vital role of a agriculture in the economic

development of Pakistan has designed Rural Finance Program named as "BANK

ALFALAH ZARIE SAHULAT". The product is designed to cater for multiple

financing requirements of our farming sector. BANK ALFALAH ZARIE SAHULAT

is available for Short, Medium and Long terms.

34 | P a g e

Alfalah Paidawari Zarie Sahulat Alfalah Musalsal Zarie Sahulat Alfalah Tractor and Transport Zarie Sahulat Alfalah Machinery & Equipment Zarie Sahulat Alfalah Aabpaash Zarie Sahulat Alfalah Islah-e-Araazi Zarie Sahulat Alfalah Poultry Zarie Sahulat Alfalah Dairy & Livestock Zarie Sahulat Alfalah Fisheries Zarie SahulatAlfalah Silos/ Storage Zarie Sahulat Alfalah Marketing Zarie Sahulat Alfalah Agri Industrial Zarie Sahulat Alfalah Bills /Guarantee Zarie Sahulat (for growers corporate clients only).Alfalah Lease Zarie Sahulat

Special Terms

NIFT- National Institutional Facilitation Technologies (Pvt.) Limited:

NIFT is a joint venture between a consortium of six major banks and private sector. It

is responsible for the establishment and management of automated clearinghouse

facilities in Pakistan. NIFT is proactively involved in the modernization of payment

systems in Pakistan.

Credit Information Bureau (CIB)

State Bank of Pakistan requires banks to obtain detailed information from CIB, SBP

when considering proposals of over Rs. 0.5 million to any borrower. In case CIB

report indicates over exposure/ default in meeting obligation etc. The accommodation

to the concerned borrower can be derived.

35 | P a g e

7.1 What skills and qualifications you think that you have gained

from the internship?

I have achieved great amount of knowledge and practical experience through

internship. I have gone through workings of many departments and gained

confidence. I have seen working papers and the behaviour of staff while dealing with

customers.

7.2 What kind of responsibilities you have undertaken during the

internship period?

I have been doing following types of work in bank;

1. Reciepts Table

2. Account opening department for checking of customers data.

3. Agri finance (Customers land information and mark up comparison)

4. Remittance

5. Car finance

6. Credits

7.3 How do you think the internship will influence your future career plans?

Internship turned out to be more useful and I would be in great ease before applying

for a new place for job. This practical knowledge would help me a lot as I would be

able to understand the way of customer and institution relationship and as well as

dealing with them. As a result I would surely be getting a greater position in my

future career.

36 | P a g e

7.4 How do you think the internship activities that you carried out are correlated with your classroom knowledge?

Classroom knowledge is not up to date with the practical knowledge as there is a bit

difference. In class rooms we are told about the terms and procedures but in real it

differs or we are not so cleared about it. I think this internship tells us the real view of

what we study in classrooms as a person would not be perfect until or unless he is

familiar with the practical knowledge.

37 | P a g e

8.0 Recommendations

After doing internship of six weeks in Bank Alfalah Limited, I would like to give

some recommendations to count over some problems.

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.

Bank Alfalah is only dealing in Money Gram; it should also starting providing the

service of other money transfer lines like Western Union.

Bank Alfalah has equipped its branches with all major IT tools being used in the

industry like ATM’s, fax machines, photocopiers, printers, latest computers and a

good connectivity architecture, however it has been observed that when it’s time

to work, there are many failures seen in the different devices used by Bank

Alfalah, especially its connectivity architecture and remains offline with the main

server, that creates problems for the customers

Bank Alfalah Limited needs to use more marketing channels such as radio to

make the public aware of its products and services. In the presence of intense

competition Bank Alfalah Limited has to realize the importance of marketing.

The top management should immediately start thinking in terms of rotating the

employees in various departments, as this transforms work force into human

capital, if a particular individual keeps on employing his\her efforts in one sphere

of banking it would not only create a sense of monotony, but also not help

improving the skills of Bank Alfalah Limited employees

38 | P a g e

Bank Alfalah limited has the web site, which has not been updated. The web site

is very less informative and it won’t leave a good impression on the visitor. So I

suggest that it should be updated to meet the requirements of the visitors.

In rushing hours, there is shortage of seating facility not only for customers but

also for the employees of the managers. Number of seats should be increased on

priority basis for employees and customers.

39 | P a g e

9 Appendices

Balance Sheet 2007-2008

Source: Bank Alfalah Annual report

40 | P a g e

Balance Sheet 2008-2009

Source: Bank Alfalah Annual report

41 | P a g e

Profit and Loss 2007-08

Source: Bank Alfalah Annual report

42 | P a g e

Profit and Loss 2008-09

Source: Bank Alfalah Annual report

43 | P a g e

Source: Bank Alfalah Annual report

44 | P a g e

Codes

BAFL Bank AlfalahBAL Bank AlfalahNIFT National Institutional Facilitation Technologies (Pvt.) Limited:CIB Credit information bureauAgri AgricultureDD Demand Deposits

Achievement makes commitment known

45 | P a g e

10 References

Bank Alfalah. (2010, September 20). Products. Retrieved 1 24, 1, from Bank Alfalah: http://www.bankalfalah.com/general/deposit_accounts.asp

Finanacial position. (2010, September 02). Retrieved 1, from Bank Alfalah: http://www.bankalfalah.com/about/financial_performance.asp

Wikipedia. (2010, July 28). Wikipedia Bank Alfalah. Retrieved 1, from Bank: http://en.wikipedia.org/wiki/Bank_Alfalah

46 | P a g e