Bank Alfalah 1

Bank AlfalahLimited

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Bank AlfalahLimited

PrefaceThe requirement of internship for BBA(HONS) is met by professional

program by involving a combination of theoretical education and practical

training. It gives student with skill, knowledge and professional values,

sufficient for performing as qualified professional and to continue to grow in

their career through an unending process of learning to learn.

Our department of management of sciences has been seized with the need

for developing training regulation, which not only cater for the above stated

requirements but would also help in providing experience to trainees to meet

the future needs of the market place.

In this concern I was given an opportunity to having 6 weeks training

in today’s well reputed ALFALAH BANK. During my whole time I was

visited through different departments of the bank and was thoroughly briefed

about the procedure and working by cordial senior staff of there. My

report is all based on what I have learnt there. I hope that my report will

given you good overlook of all the banking related matters.

Naima Khursheed

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Bank AlfalahLimited

Acknowledgement

All praises are for Allah almighty that has bestowed upon human

being the crown of creation and has endowed him with knowledge and

wisdom. After Allah, is the last prophet Mohammed (SAW) who brought for

us revelation and unlimited knowledge and civilized the barbarian human

being.

Although this report base only my name but numerous people were

very important to the development of this report without the support of them

I could never successfully completed the internship as well as the report.

I am highly thank full to the staff member of bank Alfalah limited.

Who really cooperated with me 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. Abdul Jabbar Qureshi (branch manager), MR.

Numan (operation manager), Mr. Taimur Arif (credit manager), Mr. Akil,

Mr. Tahir, Mr. Asif Masood CH, Miss Mah Zareen.

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Bank AlfalahLimited

My special thanks to Sir Nazki Hussain incharge of internship and

placement who arranged internship and provided me with his kind guidance

at each and every step whenever I felt difficulty and he made me capable of

making financial analysis of financial statement of this organization.

Naima Israr

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Bank AlfalahLimited

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Bank AlfalahLimited

Table of content

S. No Content Page No.

1 History of banking 09

2 Introduction of Bal 12

3 Accounts Opening Department 24

4 Remittances Department 41

5 IT Department 56

6 Accounts Department 63

7 Credit Department 77

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Bank AlfalahLimited

8 Financial Analysis 117

9 SWOT Analysis 121

10 Suggestion & recommendation 113

Executive summary

According to our internship program, I completed my nine weeks internship

at BAL CIRCULAR ROAD Branch BAHAWALPUR. . The Bank is

currently operating through 45 branches in 21 cities, with the registered

office at B.A.Building, I.I.Chundrigar, Karachi.

The bank ALFALAH is service oriented organization, which perform

numerous functions. In order to facilitate the working, there are different

department. Very skilled and experienced people are working in bank.

Bank ALFALAH comprise three main department which are General

Domestic Banking, Advances, and foreign exchange.

The function of general banking are as under.

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Bank AlfalahLimited

1. Account opening Department

2. Remittance Department

3. IT Department

4. Accounts Department

5. Credit Department

Deposit department provides various type of accounts to customer. All

parties are getting benefit from them whether individual, sole proprietorship,

partnership, private or public limited companies. Remittance department

deals with DD/TT/MT Pay order. Advances or Credit department provide

fund base and non fund base facilities to its clients

An account department is actually a concluding department, which

summarizes and consolidate all the accounts of different department.

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Bank AlfalahLimited

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Bank AlfalahLimited

Bank is derived form Bancus or Banque it is Italian word. History of

Banking is traced to 2000 B.C in Greece. Priests and goldsmiths acted as

financial agents by keeping money and valuables of people in temples in

strong safes. Thus the first stage in the development of modern banking thus

was accepting of deposits of cash from those who had surplus money with

them.

Banking in Pakistan:

At the time of independence there were practically no industries and resources so it

was very difficult of Pakistan to run its own banking system immediately. There

were 487 offices of scheduled banks in the territories now constituting Pakistan.

Therefore in accordance with the provision of India independence Act of 1947, and

expert committee was appointed to study the issue. The committee recommended

that the “Reserve bank of India” should continue to function in Pakistan until 30 th

September 1948. It was also stipulated that Pakistan would take over

the management of public debt and exchange control “Reserve bank of India” on 1st

April 1948. Then Indian notes would continue to be legal ender in Pakistan till 30 th

September1948. By 30th June 1948, the number of offices of scheduled banks in

Pakistan decline from 487 to 195. In order to establish a full-fledged control bank

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Bank AlfalahLimited

the Governor General of Pakistan Quaid-E-Azam Muhammad Ali Jinnah,

inaugurated the state bank of Pakistan on July1st, 1948.

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Bank AlfalahLimited

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Bank AlfalahLimited

Bank Alfalah Limited was incorporate on June 21st, 1997 as a public limited

company under the Companies Ordinance 1984. Its banking operations

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

commercial banking and related services as defined in the Banking

companies ordinance, 1962. The Bank is currently operating through 45

branches in 21 cities, with the registered office at B.A.Building,

I.I.Chundrigar, Karachi.

Since its inception, as the new identity of H.C.E.B 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.

This facilitates our commitment to a culture of innovation and seeks out

synergies with clients and service providers to ensure uninterrupted

services to its customers. We perceive the requirements of our customers

and match them with quality products and service solutions. During the

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Bank AlfalahLimited

past five years, we have emerged as one of the foremost financial

institution in the region endeavoring to meet the needs of tomorrow today.

H.E. Sheikh Hamdan Bin Mubarak

Al Nahayan

Mr. Mohammad Saleem Akhtar

Chief Executive Officer

Mr. Abdulla Khalil Al Mutawa

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Bank AlfalahLimited

Mr.Khalid Mana Saeed Al Otaiba

Mr. Abdullahawalileel AL-Mansoor

Mr. Ikram Ul-Majeed Sehgal

Mr. Nadeem Iqbal Sheikh

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Bank AlfalahLimited

Customer Relationship:

“Before we discover we must explore”

Knowing customer and their needs is the key for the success of a bank ,

Alfalah client relationship managers are well equipped and well trained to

provide most efficient and personalized service to each and every customer.

Alfalah products are as diverse as the market segment. Alfalah has

structured and syndicated financing arrangements , working capital ,

replacement facilities , financing of international trade , consumer credit ,

small business loans unparalleled investment products for the individual

saver.

Dedicated Professionals:

“Unusual efforts on the part of the employees who are apparently

ordinary workers is one of the key indicates of the superior enterprise”

Staff is the most valuable asset of nay organization. The human resource

philosophy at Alfalah bank focus on multi-talent hiring, professional

grooming , requisite training and meritocracy based reward system. Staff

welfare has been a priority.

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Bank AlfalahLimited

Employee productivity enhancement is organized through in-house and

external training programs. Bank continues to offer opportunity for people to

develop their knowledge, skills and personalities, thus ensuring greater self-

fulfillment and progression in the organization.

In short bank Alfalah team comprise of dedicated professionals equipped

with a diverse array of skills and vast experience. The management

concentrate its energies on making informed economic decisions, translating

it into greater returns for our investors and customer. The prudent attitude

has created a synergistic organizational structure leading to improvements in

profitability and a sustainable competitive advantage for the bank.

Training & Development:

Bank Alfalah is committed to the personal welfare and professional

development of all our team members.

Proper training of human resource is essential, not only for the more

productive and satisfied work force but for also homogenous corporate

culture.

The bank continuous to follow its strategy of hiring batches of young and

energetic Management Trainees who are sent to our Training and

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Bank AlfalahLimited

Development Center for training in all areas of banking. Our Training and

Development Center is a state of the art facility with an impressive faculty.

Technological innovation:

“Modern science is not an option, it is an obligation”

Technology is rapidly changing the way we think, act and do business. Is

has played pivotal role in enhancing customer expectation, particularly with

respect to speed and quality of service.

Alfalah bank enjoys a strategic competitive advantage overall

domestic players by virtue of its leadership in technological innovation.

Phone banking service and Internet banking facility allows customer to

enjoy routine banking services from anywhere in the world. 365 days a year,

24 hours a day.

Ethical values:

“Professionalism without integrity is like a book without pages”

Because the right may not always be obvious, we must be guided in our

every action by set of well-defined values, governing our decision. Alfalah

bank understands that its commitment to satisfy customer needs must be

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Bank AlfalahLimited

fulfilled within in a professional and ethical framework. The following

primary core values, providing the guiding principles for the corporate

behavior.

Commitment

Integrity

Fairness

Teamwork

Product portfolio:

Not only comprehensive but also customizable to match the needs

and preferences of our customers. These strategic characteristics of

our portfolio have helped us to face challenging economic conditions.

Our product lineup continues to fulfill and satisfy the banking

requirements of not just the conventional consumer, but the

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Bank AlfalahLimited

demanding financial needs of the corporate sector as well. The lineup

includes.

Car financing

Rupee Travelers Cheques

Anmol Saving Certificates

MoneyGram Remittance Services

Monthly Income Plan

Credit Card

ATMs

Home Loans

Online Banking

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Bank AlfalahLimited

To develop & deliver the most innovative products, manage customer

experience, deliver quality service that contribute the brand strength,

establish a competitive advantage and enhances profitability, thus providing

value to the stakeholder of the bank.

To be the premier organizations operating locally & internationally that

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

roof.

Excellence in service

Quality performance

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Bank AlfalahLimited

Product innovation

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Chief Executive Officer

ExecutiveIn charge

Credit Card

Credit Audit International Banking

Marketing Finance

Bank AlfalahLimited

Branch Setup

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OperationsCredit

Mktg Admin Finance

Business

Develop

Help Desk

Trade

Finance

Accounts Consumer

Banking

IT

Import Export

Bkg/Ops/

Cust serv

CRO’S Cash

Clearing/

Collection

Assistant

ConsumerCredit

Bank AlfalahLimited

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Peons Guards Driver Others

Bank AlfalahLimited

TYPES OF ACCOUNT OPENING FORM

1) Personal account opening form

2) Business account opening form

1) Personal Account Opening

OPENING OF AN INDIVIDUAL ACCOUNT

Following are the requirements for opening of an individual account.

1. A photocopy of National Identity card.

2. Filled Account Opening Form

3. Photographs if the person is not able to sign.

OPENING OF JOINT ACCOUNT

For this account in addition to above said documents national ID

card f all the account opening parties is required. It should be clearly

mentioned that one person’s signatures will be enough to get it honored

the check or there should be signatures of all the parties.

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Bank AlfalahLimited

2) Business Account Opening

OPENING OF A PARTNERSHIP ACCOUNT

Along with the other document, “partnership deed” is also required.

A partnership deed is a document that shows the nature of the business that

will be carried out by the partners, number of the partners, their share. Who

will run the business, what will be the profit and loss sharing ratio, what will

be the initial investment of each partner, who will be the limited partner and

who will maintain the account with the bank. According to bank point of

view the most important thing is the person’s name who will maintain the

account with bank. National identity card of the person who will maintain

the account is required.

OPENING OF AN ACCOUNT OF A SOLE PROPRIETORSHIP

ACCOUNT

Along with the other documents, sole proprietorship declaration is

also must. In this declaration the proprietor of the concern will declare that

he is the sole proprietor of the concern.

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OPENING OF AN ACCOUNT OF A PRIVATE LTD. COMPANY

If someone is interested in opening an account of a private limited

company then in addition to above documents following documents are

required.

RESOLUTION

This is a document that states that the meeting of the directors of the

firm has taken place on the place mentioned and these person have been

selected to open and operate the bank account and they can sign all the

negotiable instruments on the behalf of the company. The specimen

signatures of the persons are attached. This document is very important with

bank point of view. With the help of this document the bank comes to know

that who will operate the account with the bank.

CERTIFICATE OF INCORPORATION

This is a certificate that shows that the company is registered

according to companies’ act and the nature of the business, which will be

carried out by the company. The number of shares by which the company is

limited is also mentioned on this document.

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Bank AlfalahLimited

LIST OF DIRECTORS.

This list contains the names of the directors of the company

MEMORANDUM AND ARTICLES OF ASSOCIATION

This contain the full name of the company, the location of the

registered office, the objectives of the company, information about the

liability of the member that whether it will be limited or unlimited, the

capital of the company, who will be the director and how he will be selected

and what will be the duties and powers of the director.

OPENING OF AN ACCOUNT OF A CLUB OR ASSOCIATION

For opening the account of a club or association articles & memorandum of

that club or association is required. List of directors is also attached with the

account opening form and the identity cards of the directors are also levied

with it.

Specimen Signature Card

This card contains account number, title of the account and the specimen

signatures of the account holder. When this form is submitted in bank the

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Bank AlfalahLimited

bank officer admits the signatures of the applicant and keeps this specimen

card in record.

Cheque Requisition Slip

This is a request made by the client to the bank to issue him a

checkbook containing number of leaves mentioned. When this slip is

submitted in bank, the bank as per instruction the account of the person is

debited or the client pays the amount in cash.If the account is to be debited

then party debit voucher is prepared which isactuallyintimation to the party

that her account has been debited. But if the amount paid is in cash, then

cash is debited which is actually cashier’s stamp. Regardless whether the

account is debited or cash is debited the account heads of Central Excise

duty and Sales Tax are credited.

Custody of cheque books

The cheque books are most sensitive item of the security stationery and due

care should be exercised in their issue process as well as management of

their stock.

Custody of cheque books:-

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Bank AlfalahLimited

i) Stock of cheque books must be kept in joint custody of Manager /

Accountant or Second Officer.

ii) Stock of the cheque books must be placed in the Fire Proof Safe.

Types of account

i) Current Account

ii) PLS Savings

iii) Royal Profit

iv) Saving Account

v) Royal Patriot

CURRENT ACCOUNT

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Bank AlfalahLimited

i) That is cheapest account. Minimum limit of money that require for

that account is 10,000.No profit is given on that account.

ii) PLS SAVING/ TERM DEPOSIT

In PLS amount is fix for some time period and according to that time

period the profit is given. Minimum range of amount that require for

pls saving is 25000 and above. In Pakistan, PLS account was

introduced in January 1982.

Deposit Rate (P.A)%PLS Saving Deposit (on balance upto RS.24,999 /=). 2.00PLS 7-29 Days Notice Deposit 2:00PLS 30 Days Notice Deposit 2:00PLS Term Deposit 1 Month 2:00PLS Term Deposit 3 Months 2.25PLS Term Deposit 6 Months 2.50PLS Term Deposit 1 Year 2.75PLS Term Deposit 2 Years 6.00PLS Term Deposit 3 Years 6.50PLS Term Deposit 4 Years 7.00PLS Term Deposit 5 Years 7.50PLS Saving Deposit On Rs.25,000 /=) and above 2.00

iii) ROYAL PROFIT

Minimum limit of amount is 50,000.

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Bank AlfalahLimited

Deposit Rate (P.A)%From 50,000 to 999,999 2.75From 1,000,000 to 9,999,999 3.00From 10,000,000 to 49,999,999 3.50From 50,000,000 to 149,999,999 4.00From 150,000,000 & Above Contact us

iv) SAVING ACCOUNT

It is expensive than current account. Minimum limit for this account is

5000 and 2%

Profit is given after six month.

v) ROYAL PATRIOT

Tenure 25000-999,999 1,000,000-4,999,999 5,000,000 & Above1 Month 2.00 2.10 2.203 Month 2.25 2.35 2.456 Month 2.50 2.60 2.701 Year 2.75 2.85 2.952 Year 5.50 5.58 5.95

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Phases In Personal Account Opening

For coming customer who wants to open the account will pass through

different phases of account opening.

1) currency of account

There are five types of currencies in which customer can open an account.

He will select only one currency. Currency like PKR, USD, GBP, DM,

JPY

2) Types of account

i) Current Account

ii) PLS Savings

iii) Royal Profit

iv) Saving Account

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Bank AlfalahLimited

v) Royal Patriot

3) Title of account

It includes the name of the person who wants to open the account. Name

must be Written in block letters.

3) Address

It includes the address of the person who is going to open the account.

5) Personal Account

There are two types of personal account.

i) Individual

ii) Joint

i) Individual

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The individual account, which is opened only for an individual.

ii) Joint

They’re the account of two or more persons who neither partner

nor trustee. When such an account is opened the banker obtains

clear directions to whether one or more of them shall operate upon

the account. In the absence of such directions the bank allows the

operations under the signature of all the joint account holders.

Both individual and joint provide their personal information like

i) Name

ii) Father name

iii) Occupation

iv) Nationality

v) Country of residence

vi) Telephone number

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vii) N.I.C / Passport number

viii) Date and Place of issue

6) Nominee / Next of Kin

That portion is important in case of death or any incident of account holder.

In order to make money more secure the person who wants to open the

account he tell the name of the person who will owner of his or her money in

case of any incident. After death of that

person the bank will contact with that nominee and tell them that now you

are the owner of the money.If account holder leaves blank that portion than

after the death the money will become ownership of bank.

7) Zakat Deduction

8) Details of other bank account

9) Introducer (Introduction of new accounts

As per existing procedure, an introduction is obtained from a

customer of the branch/bank in the account opening form. The

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signature of introducer is also verified/ authenticated from bank’s

record.

Further steps to be taken and additional inquires are to be made as

under:-

i. Introduction preferably be obtained in person to establish

the authenticity of introduction.

ii. Account of introducer is checked to ensure good conduct

in

operation. The introducer should be a well-known person

to the bank preferably Bank’s customer.

iii. A brief enquiry be made to establish relation, business or

otherwise, between introducer and new customer.

iv. Original NIC along with photocopy of the same be

obtained and original be returned after authentication/

certification of photocopy. However, extensive use of

NIC be applied wherever it is applicable.

v. Other official papers document such as passport, Driving

license and Service identity card bearing signature and

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Bank AlfalahLimited

photograph of applicant for an account are to be checked,

wherever possible.

vi. Name, address, signature and other particulars mentioned

in Account Opening Form be tailed with that of

appearing in any of the above documents.

vii. Current account is opened on proper introduction

preferably by the Current account holder.

viii. Managers and other holders holding power of Attorney/

IBS /AS May introduce accounts only for those who are

personally known to them and whose credentials are

absolutely clean.

10) Applicant signature

11) Initial Deposit

Initial deposit must be in cash. Cheque may only be accepted, as part of

Initial deposit in the case of undoubted parties and on the personal

responsibility of Manager. In all such cases, the cheque when tendered if

uncrossed should be crossed by the customer before being lodged for

collection. Cheque book should only be issued after the proceeds of crossed

cheque have been actually realized.

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Bank AlfalahLimited

2) Phases in Business Account

1) Currency of Account

2) Type of Account

3) Title of Account

4) Business Address

5) Name

6) Father Name/Husband Name

7) Designation

8) Nationality

9) Country of Residence

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Bank AlfalahLimited

10) Contact Number

11) NIC number

12) Type of Organization

i) Sole proprietorship

ii) Partnership

iii) Limited Companies

iv) Club/society

Information of types of organization is mentioned above in business account

opening point.

Closing of account

It is also the responsibility of account opening department, for this purpose

the account holder for closing of account purpose gives an application. Then

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Bank AlfalahLimited

the department closes the accounts and gives all the deposit amount to the

account holder the bank takes the chequebook from the related person and

extracts him from the books.

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Bank AlfalahLimited

Transferring of funds from person to person, and from place to place,

constitute the concept of a remittance. Remittance is very important service

provided by banks to customer as well as non-customer. It is not a free

service hence is a continuous source of income for the bank.

PARTIES TO A REMITTANCE

1) REMITTER

One who make a remittance. He comes to the issuing or originating

branch, ask for a remittance to be made, and deposits the money to be

remitted. The bank charges him for the remittance. He may or not be the

bank’s customer.

2) REMITEE

Also sometimes called the beneficiary, or the payee. The person to whom

the remittance is made. The one who receives the payment.

3) ISSUING BANK

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The bank that effect the remittances, through the Demand Drafts,

Telegraphic Transfer, or Mail Transfer.

4) PAYING BANK

Also known as the drawee branch. The branch on whom the instrument is

drawn. It has to make the payment. (usually located in a different city or

country)

MODES OF TRANSFERING FUNDS IN

REMITTANCES

1) Demand Draft

2) Telegraphic transfer

3) Mail Transfer

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4) Pay Orders

6)Pay Slip

6) Rupee Traveler Cheque

1) DEMAN DRAFT

Demand draft is a written order , drawn by one branch of a bank upon

another branch of the same bank , or upon another bank under special

arrangements to pay a certain sum of money to or to the order of a

specified person.

Demand draft is a negotiable instrument.

Demand draft is neither issued payable to bearer nor drawn on

branches situated within the same city.

It is to be insured that the purchaser of Demand Draft is able to at

least sign his name.

Thumb impression is not to be accepted on DD. A person unable to sign and

not having an account may be advised to apply for DD through a literate

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Bank AlfalahLimited

person to sign on his behalf . To avoid complications DD are not to be

issued to Minors.

The followings are the parties to a Draft:

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

Issuing or Drawing Branch: Which issues a draft on another

branch.

Drawee Branch: Is one on which a draft is drawn.

Payee: Is a person named in the Demand Draft to whom or to

whose order the money is directed to be paid.

PROCEDURE FOR ISSUANCE OF DRAFTS

i) An application on printed form is obtain for issue of demand draft. It

should be properly filled in and signed by the purchaser.

iii) Before issuing the demand draft it must be seen that the

cheque is in order and sufficient amount is available in the

account of the drawer. If the manager is satisfied with the

creditability of the customer , he may issue a demand draft

on application and subsequently must obtain a cheque.

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Bank AlfalahLimited

Application form should be used as a credit voucher , where

as the cheque is to be as a debit voucher. The printed

number of the cheque in such cases should be reported on

the application form of the customer.

Entry of DD

Entry in BAL bwp branch

Yellow slip

DD Payable credit

H Off debit-------------------------------------------------------------------------------------------------------

Entry in H off Karachi branch

H off debit

DD credit-------------------------------------------------------------------------------------------------------

Issuance Pink Slip

H off credit

DD debit-------------------------------------------------------------------------------------------------------

Entry when customer will draw amount from DD

DD payable debit

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Bank AlfalahLimited

Customer credit

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

Precautions For Issuance Of Drafts:

i) Scrutiny Of application Form:

ii) Rate of commission / charges:

i) Scrutiny Of application Form:

There should be our bank’s branch at the place where payment is

desired to be made.

Full name of the payee should be mentioned.

Amount in words and figure should not differ.

Purchaser’s name address and telephone numbers are complete.

ii) Rate of commission / charges

Commission and other charges should be recovered at the rates

mentioned in the bank’s schedule of charges, as advised from time

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Bank AlfalahLimited

to time, withholding tax will also be recovered wherever

applicable.

2) TELEGRAPHIC TRANSFER

Transfer of funds from one branch to another branch of the same

bank or upon other bank under special arrangements for the

payment to the beneficiary through Telegram / Telex / Fax is

called a Telegraphic Transfer (TT).

Telegraphic Transfer is not negotiable.

Telegraphic Transfer of funds to a branch situated with in same

city should not be effected.

Remittance can be made for credit of the account of the payee /

beneficiary if maintaining account with the drawee branch or may

be paid in cash.If the customer wants to send amount through TT

then he will provide information of the beneficiary like id card

number, name. Then bank will make a credit advice and send it to

branch on which it should be drawn .Now the beneficiary will go

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Bank AlfalahLimited

to that branch and show his ID card number and other information

and bank will make TTR and customer will get that amount from

cash department.

The followings are the parties to a TT

i) Applicant: A person, firm, company, or local authority etc who

desire to remit funds from one branch to another branch.

ii) Remitting or drawing branch: Which remits the funds on another

branch.

iii)Drawee branch: On which TT is issued.

iv) Beneficiary / payee: The person named in the TT whom the

money is payable.

Precautions For Issuance Of TT

Full name of payee / beneficiary or account number should be

mentioned in the application form along with his address.

Instruction regarding mode of payment should be obtained i.e

whether the amount of TT is credited to the payees account or

beneficiary should be advised to receive the amount of the TT

from a drawee branch either in cash on proper identification.

Special Request For Enhancement of cheque

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Bank AlfalahLimited

Because there is no real time banking so cheque is scanned and fax

that the Head Office.

Entry in Head Off KRC branch

Cheque debit

H. Off credit

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

If cheque is going in KRC main branch then they will make an IBC

and again Send it to BAL Bahawalpur.

Entry of BAL bwp

H. Off debit

Customer credit

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

3) MAIL TRANSFER

Transfer of funds from one branch to another branch of the same

bank within or outside the city or upon other bank under special

arrangement for the payment to the beneficiary through Mail/

Courier services is called MAIL TRANSFER.

Mail transfer is not negotiable.

The funds remitted by Mail transfer are not payable to bearer.

Like TT , funds can be remitted by MT for the credit of the payee’s

Account Or the payee / beneficiary can be advised to receive the

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amount from the drawee branch either on cash on proper

identification

4) PAY ORDER

Payment order is meant for bank’s own payments but in

practice these are also issued to our customer for making

payments.

A pay order is written authorization for payment, made in a

receipt form issued and payable by the bank, to the person

named and addressed therein on his giving a proper discharge

thereon.

It is issued by and drawn upon and payable by the same branch

of the bank.

It is neither transferable nor negotiable and as such it is payable

to the payee named therein.

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Pay order cannot be issued to a minor. Sometime bank don’t

want to give its deposits to customer. So in that case pay order

is given to that customer and he can use it for making

payments. When customer wants to cash the pay order then the

amount of the pay order will be debited from the bank. If pay

order submit to other bank like mcb, abl then the process of

claring will be adopt.

Entry of issuance “pay order”

Customer debit

Pay order credit---------------------------------------------------------------------------------

Entry when customer get amount from “pay order”

Pay order debit

Customer credit---------------------------------------------------------------------------------

Following are the parties to a pay order:

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

ii) issuing / paying branch: which issues / pays on presentation.

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Bank AlfalahLimited

iii) payee: is a person named therein.

5) PAY SLIP

Pay slip is for payment of branch expenses.

Entry of pay slip

Expense A/C debit

Pay slip credit-------------------------------------------------------------------------------------------------------

6) RUPEE TAVELER CHEQUE

54

Bank AlfalahLimited

BAL always provide to its customer’s different type of services. Which

are safe and quality services. RTC is very popular among the people of

the country. The bank provides RTC in the following categories.

1,000

5,000

10,000

Purchases of RTC

The person who wants to purchase RTC is required to fill a form. The

form contains name, address, amount or denomination and other

necessary information. The purchaser deposits the amount in the bank

and gets a voucher from the cashier. And then RTC is providing to the

purchaser. Before handing over to the purchaser, signature is taken from

him on the RTC and on the copy of form. BAL rupee traveler’s Cheques

are acceptable in all the branches of BAL in Pakistan.

Features

Following are some features of RTC.

55

Bank AlfalahLimited

It is acceptable in all the branches of BAL in Pakistan.

In case of lost the purchaser inform to BAL in 24 hours. Then there

is no way of loss of purchaser and his amount is safe.

Available easily in all the branches of BAL Acceptable by major

businesses of Pakistan.

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Bank AlfalahLimited

General Trouble Shouting

Creating A Client

Day Start / Day End

57

Bank AlfalahLimited

SS Card Scanning

Creating And Storing Daily Backup

Maintenance Of System

General Trouble Shouting

In general trouble shouting we mainly deal in day to day problems that

appear all at once i.e. any problem with printer or with any system on

network or any thing like this which could create trouble and you have to

resolve that problem applying best of your efforts in

minimum time is part of trouble shouting.

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Bank AlfalahLimited

Creating A Client

For creating or making a new system and client we have to install different

software required to make a client and then install most importantly LAN

card driver in it so that it

may detect the whole network. Whole that procedure is known as client

making.

Day Start And Day End Procedure

At the start of every working day before making any transaction we have to

follow few step that are known as day start step or procedure , after that you

are allowed by software to make any transaction are finished we again

follow few step that is known as day end procedure.

SS Card Scanning

In this procedure first of all scan all the SS card and through the bank

software we upload them on server.

Creating And Storing Of Daily Backup

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Bank AlfalahLimited

After following the day end procedure the changes which are made final in

system database are stored as backup on system and this backup is kept in

three to four different systems.

Backup Of Data

1) Before End Of The Day Backup

2) After End Of The Day Backup

That backup is store on different places:

a) Hard Disk

b) CD

c) CD-R

d) CD-RW

e) On Work Station

Maintenance Of System

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Bank AlfalahLimited

It mean general maintenance i.e. time to time up gradation

61

Bank AlfalahLimited

Voucher Sorting

Rectification of vouchers (Adjustment of back date

62

Bank AlfalahLimited

wrongly posted entries)

Preparation of cash payment voucher

Preparation of profit and loss sheet (on daily basis)

Monthly budgeting

Payment of outstanding invoices of H/O

63

Bank AlfalahLimited

Advances department plays a vital role in the functions of a bank. In BAL its

sharing ration in profit is high. The main source of Advances department is

mark up. Their Advances department is working under the trustworthy,

enthusiastic and committed a staff. The efforts of the staff are providing

good services to their customers and getting a good amount for contributing

the overall profit of BAL.The BAL provides loans to customers. These loans

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Bank AlfalahLimited

are sanctioned by the head office. There are different types of loans that are

provided to customers. The types are as under.

Current Finance

Term Finance

FATR

FIM

FAPC I & II

FAFB

Current Finance

The bank provides Current Finance for short period less than one year. The

customers Pay markup in current finance on monthly basis. On the expire

date of limit he will just pay principal amount.

Term Finance

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Bank AlfalahLimited

Customer utilized the sanction limit or not the markup will be charged on

whole amount. Customer can withdraw whole amount at once.

FATR

There are two types of FATR

Import related type

Export related type

There are two modes of import related type

FIM

FATR

FIM

Loan is provided for import purpose. By using that loan the customer will

import merchandise. The merchandise are pledges with the bank.

FATR

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Bank AlfalahLimited

In FATR credit is given against trust receipt . Customer will sign the trust

receipt and import the goods and pledge these goods with the bank. As sales

proceeds the FATR will be liquidate.

There are two modes of export related type.

FAPC I

FAPC II

Different document required for facilities

FACILITY

1) CF

1. Demand promissory note

2. Letter of arrangement

3. Letter of continuity

4. Markup agreement

5. Latter of authority of debit markup

2) Term finance


2. Letter of disbursement

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Bank AlfalahLimited


4. Markup agreement


6. letter of installment

3)FATR



3. Markup agreement


5. Trust Receipt


4)FIM



3. Mark up agreement


5. Letter of authority

68

Bank AlfalahLimited

5)FAPC I

FAPC II


2. Letter of authority



5. Packing credit letter

6)Finance against

Foreign bills





5. Mark up agreement

69

Bank AlfalahLimited

Loans to staff members House loan

The house loan is provided to its staff members up to a certain limit. And up

to this limit there is no interest.

Car loan

This is expensive loan and interest is charged on this type of loan.

Motorcycle loan

Mainly this type of loan is provided to clerical staff. But the officers can also

apply for this loan.

Feature of credit department

It provides loans to different organizations, and against these loans

kept securities,

Proper judgment of these securities is also their duty.

Proper judgment of securities is the most crucial event in the process of

lending. Because in the case of default the securities are the only

compensation to the bank. Default mostly is the result of improper

judgment.

In the process of judgment they follow the following principles:

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Bank AlfalahLimited

1. SAFETY

character

capacity

capital

2. LIQUIDTY

3. DISPERSAL

4. REMUNERATION

5. SUITABILITY

Now I will discuss these principles in brief

(1)SAFETY

As the funds with BAL are mainly comprised of money borrowed

from depositors. They deposited their funds because they have trust and

confident on them. Therefore they are very much careful while lending, so

that the money goes in safe hands where the risk of loss does not exist. The

elements of character, capacity and capital help them in arriving at a

conclusion regarding the safety of advances.

1. 1 CHARACTER

This is the management ability factor that tells how successful

business has been in the past and what is its future. This factor indicates

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Bank AlfalahLimited

whether borrower will be able to pay the interest and principle amount

borrowed through the functions of the business or not.

1.2 CAPACITY

This is the management ability factor that tells how successful business has

been in the past and what is its future. This factor indicates whether

borrower will be able to pay the interest and principle amount borrowed

through the functions of the business or not.

1.3 CAPITAL

This is the monetary base, because the money invested by the

borrower himself represents his faith in the business and its future. BAL

provide short term capital for commerce and industry, yet some borrowers

insist that bank provide them most of the capital required. So the bank while

lending must consider the amount requested for is reasonable in relation to

borrower’s own resources or investment.

2) LIQUIDITY

It means the ability of recovering the advances in emergency, because

all money borrowed is repayable in lump sum on demand. The BAL has to

ensure that the funds being lent are not blocked for an undue logon period of

tie, and borrower is in such a position to pay the entire amount outstanding

against them on a short notice

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Bank AlfalahLimited

.

3) DISPERSAL

The dispersal of the amount of the advances should be broadly based

so that a larger number of borrowing customers may benefited from the

banker’s funds. It is also restricted, by the SBP, a bank cannot lend more

than 20% of its capital to one party. Dispersal of loan is very necessary

from the point of security as well, because it reduces the risk of recovery

when something goes wrong in one sector or in one field. For BAL security

is the main concern, so they act on this principle and follow it.

4) REMUNERATION

The BAL needs sufficient earning to meet the following obligations.

Interest payable to the money deposited with him.

Salaries and fringe benefits payable to the staff members.

Overhead expenses and depreciation and maintenance of the fixed

assets of the bank.

An adequate sum to meet possible losses.

Provision for reserve fund to meet unforeseen contingencies.

Profit to be remitted to head office by the operations in Pakistan.

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Bank AlfalahLimited

A major portion of BAL earnings comes from the interest charged on

the money borrowed by the customers.

In order to meet his above mentioned expenses BAL runs a great risk;

and he has to think twice that the advances should not become bad or

doubtful and should not lent to borrower with whom the remuneration may

not be much, but also equally risky.

5) SUITABILITY

It means that advances should be allowed not only to the carefully

selected and suitable borrowers; but also in keeping with the overall national

development plans chalked out by the authorities concerned. Before

accommodating a borrower BAL has to ensure the lending is for a purpose

in conformity with the current national credit policy laid down by the SBP.

Credit control is very efficiently exercised in Pakistan by the SBP, so

BAL should never ignore any of the restrictions issued by it.

Credit facilities are extended by the BAL, to the following borrowing

parties:

1. COMPANY

2. PARTNERSHIP

3. INDIVIDUALS

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Bank AlfalahLimited

4. GOVERNMENT

While lending to any of these parties the credit officer of BAL has to

check the following things.

1. COMPANY:

Where a company is a borrower the credit officer must ask and keep

on record following information:

The certificate of incorporation

The memorandum and articles of association

The certificate of commencement of business and

The last annual report containing accounts and balance sheet, to

ensure that the company is legally qualified to do business.

To ensure that the company is currently existing and is in good

standing. Credit officer should check with the registrar of joint stock

companies, and request the borrower to furnish certified-

List of shareholders (current)

List of directors

With public limited company verify its existence and standing on the

stock

Exchange.

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Bank AlfalahLimited

It is important that the borrowing company and its directors should

have requisite authorization and power to borrow which should be

reflected in the memorandum and article of association

Also see “corporate resolution to borrow”.

2. PARTNERSHIP

Where the borrower is a partnership, the credit officer must ask to see,

following documents;

Original partnership agreement/deed and the original certificate of

registration which will contain the name of the partners and the date

of their joining the partnership.

An individual financial statement from each partner

along these, also obtain the following document:

normal loan documents signed by all partners

continuing guarantee duly signed by all partners

Resolution/authorization to borrow and execute loan documents,

signed by all partners.

A letter signed by all partners, requesting the bank to extend credit

facilities to the firm

Certified copy of the partnership deed and certification of registration.

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Bank AlfalahLimited

3. INDIVIDUAL

Lending to an individual the credit officer must ask him to see.

His financial statements for, at least the previous three years.

A continuing guarantee.

The decision of extending credit to an individual borrower is

necessarily a decision for the officer concerned based on the reputation and

credit standing as a client. Depending on the amount advanced, the loan

should be secured by a pledge, hypothecation, or mortgage.

4. GOVERNMENT

Where the government is a borrower, the credit officer must ensure that

the documents of indebtedness are signed by an officer of the government

who is duly authorized in writing and or by the rules of business. Legal

counsel’s opinion should be taken in these cases.

77

Bank AlfalahLimited

78

Bank AlfalahLimited

Balance Sheet As At December 31,2001 & December 31,2002

Rupees ‘0002002 2001

AssetsCash & balance with Treasury Banks 4,540,486 3,885,612Balance with other banks 232728 1081208Lending to financial institutions 4634398 1698969Investments 24694397 11396616Advances 28319401 19131494Other assets 984847 1180775Operating fixed assets 1760774 1424883Deferred tax assets - 298538

65,167,031 40,098,09

LiabilitiesBills payable 758,961 305,658 Borrowing from financial institution 6,037,576 6,709,054Deposits and other accounts 51,684,984 30,207,324Sub-coordinated loans 650,000 -Liabilities against asset subject to finance lease - -Other liabilities 1,196,342 716,475Deferred tax liabilities 1,186,501 -

61,514,364 37,938,411

Net Assets 3,652667 2,159,684

Presented By Share Capital 1,000,000 750,000Reserves 3,65,727 361,591Unappropriated profit 250,050 249,701Surplus on revluation of assets 2,036,890 798,392

3,652,667 2,159,684

79

Bank AlfalahLimited

Balance Sheet As At December 31,1999 & December 31,2000

Rupees ‘0002000 1999

AssetsCash 2,044,725 1,678,256Balance with other banks 1,798,086 1,161,434Money at call and short notice 890,000 100,000Investments 4,967,542 4,993,035Advances 15,242,317 10,327,324Operating fixed assets 1,231,161 1,153,607Other assets 1,403,328 1,596,952

27,577,159 21,019,608LiabilitiesBills payable 106,353 120,,868 Borrowing from other banks, agents 4,639,130 2,972,240Deposits and other accounts 20,481,568 15,820,473Other liabilities 625,312 372,855Deferred liabilities 6,694 6,892

25,859,057 19,923,328

Net Assets 1,718,102 1,726,280

Presented By Share Capital 600,000 600,000Reserves 299,469 286,399Unappropriate profit 1,211 8,931Shareholder’s equity 900,680 895,330

Surplus on revluation of investment (13,528) -

887,152 895,330surplus on revaluation of fixed assets 830,950 830,950

1,718,102 1,726,280

80

Bank AlfalahLimited

Profit and Loss Account For theyear ended December 31,2001 &

December 31,2002Rupees ‘000

2002 2001Mark-up / return / interest earned 4,630,494 3,391,935Mark-up / return / interest expensed 3,112,313 2,515,074

Net Mark-up / interest income 1,518,181 876,861

Provision against non-performing loans (53,169) 13,705and advances netprovision for diminution in the value of investment - -bad debts written off directly (1,447) -

(55,066) 13,705

Net Mark-up / interest income after provisions 1,463,115 890,566

Non Mark-up / interest income

Fee , commission and brokerage income 316,368 147,277Dividend income 62,077 41,910Income from dealing in foreign currencies 95,165 113,923Other income 141,808 74,756Total Non Mark-up / interest income 615,418 377,866

2,078,533 1,268,432

Non Mark-up / interest expense

Administrative Expense 1,182,887 743,602Other provision / write offs - -Other charges 993 666Total non-markup / interest expense 1,183,880 744,268

Profit Before Taxation 894,653 524,164Taxation (448,974) (213,552)

Profit After Taxation 445,679 310,612

Unappropriated profit brought forward 249,701 1,211Transfer from general reserve 85,000 -Transferred from surplus on revaluation of fixed asset - -

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Bank AlfalahLimited

- prior year 38,098 -- current year – net of tax 20,708 -

58,806 -

profit available for appropriation 839,186 311,823

Appropriations

Transfer of statutory reserves (89,136) (62,122)Issue of bonus shares-interim @33.33%(2001:Nil) (250,000) -Cash dividend @ 25%(2001 : Nil) (250,000) -

(589,136) (62,122)

Unappropriated profit carried forward 250,050 249.701

Basic and diluted earning per share 4.46 3.65

82

Bank AlfalahLimited

Profit and Loss Account For theyear ended December 31,1999 &

December 31,2000Rupees ‘000

2000 1999Mark-up / return / interest earned 2,258,527 1,905,808Less: Cost/ return on deposits, borrowing etc.. 1,724,041 1,474,343

534,486 431,465

Fee , commission and brokerage income 103,838 58,043Profit from investment securities 19,617 13,792Dividend income 8,951 -Other operating income 138,963 114,250

Total Non Mark-up 271,369 186,085

805,855 617,550

Operating Expense

Administrative Expense 503,256 402,559Provision against non-performing advances (103,950) (136,076)Bad debt written off directly - 175Provision for other losses 7,619 -

406,925 266,658

398,930 350,892Other Income 1,420 3,523

Profit before taxation 400,350 354,415

Taxation – current (170,000) (220,000) - Prior 175,000 58,663 - Deferred (190,000) (36,554)

(185,000) (197,891)

profit after taxation 215,350 156,524

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Bank AlfalahLimited

Unappropriated profit brought forward 8,931 3,712

profit available for appropriation 224,281 160,236

Appropriations

Transfer of statutory reserves (43,070) (31,305)Transfer from general reserve 30,000 -Proposed dividend @RS.3.5 per share(1999 RS 2) (210,000) (120,000)

(223,070) (151,305)

Unappropriated profit carried forward 1,211 8,931

84

Bank AlfalahLimited

INCOME STATEMENT FOR ANAYLISIS FOR THE YEAR ENDED DEC 31,2001 & 2002

Rupees ‘0002002 2001

Mark-up Income 4,630,494 3,391,935Non Mark-up / interest income 615,418 377,866

Total Income 5,245,912 3,769,801

- Interest Expense 3,112,313 2,515,074 Gross profit 2,133,599 1,254,727

- operating expense

Administrative expense 1,182,887 743,602Other provisions - -Other charges 993 663Provision against not performing 53169 13705Loan & advances bad debts written off directly (1,447) -

Total Expense 1,238,046 757,970

Operating profit 895,553 496,757

- Tax 448,974 213,552

Net Profit 446,579 283,205

85

Bank AlfalahLimited

INCOME STATEMENT FOR ANAYLISIS FOR THE YEAR ENDED DEC

31,1999, Dec 31, 2000

Rupees ‘0002000 1999

Mark-up Income 2,258,527 1,905,808Non Mark-up / interest income 271,369 186,085

Total Income 2,529,896 2,091,893

- Interest Expense 1,724,041 1,474,343 oss profit 805,855 617,550

- operating expense

Administrative expense 503,256 402,559Provision against not performing (103,950) (136,076)bad debts written off directly - 175provision for other assets 7,619 -

Total Expense 406,925 266,658

Operating profit 398,930 350,892

- Tax 185,000 197,891

Net Profit 215,350 160,236

86

Bank AlfalahLimited

Horizontal analysis of income

statement for the year ended 31,2002

Rupees ‘000

∆ in amount % age ∆

Mark-up Income 1238559 36.51Non Mark-up / interest income 237552 62.86

Total Income 1476111 39.15

- Interest Expense 597239 23.74 Gross profit 878872 47.59

- operating expense

Administrative expense 439285 59.07Other provisions - -Other charges 330 49.77Provision against not performing 39914 291.2Loan & advances bad debts written off directly - -

Total Expense 480076 63.33

Operating profit 398796 80.27

- Tax 235422 110.2Net Profit 163374 57.68

87

Bank AlfalahLimited

Horizontal analysis of Balance Sheet for the year ended 31,2002

Rupees ‘000

∆ in amount % age ∆ AssetsCash & balance with Treasury Banks 654874 16.853Balance with other banks (848480) (78.475)

Lending to financial institutions 2935429 172.77Investments 13297781 116.681Advances 9187907 48.025Other assets (195928) (16.593)Operating fixed assets 335891 23.573Deferred tax assets - -

LiabilitiesBills payable 453303 148.303

Borrowing from financial institution (671478) (10.008)Deposits and other accounts 21477660 71.100Sub-coordinated loans - -Liabilities against asset subject to finance lease - -Other liabilities 479867 66.976Deferred tax liabilities - -

23575953 62.142Net Assets 1492983 69.129

Presented By Share Capital 250000 33.333Reserves 4136 1.1438Unappropriated profit 349 0.1397

254485 18.694Surplus on revaluation of assets 1238498 155.12

1492983 69.129

88

Bank AlfalahLimited

Vertical analysis of income statement for the year ended 31,2002 & Dec 31,2001

2002 2001% %

Mark-up Income 88.26 89.97Non Mark-up / interest income 11.73 10.02

Total Income 100% 100%

- Interest Expense 59.32 66.71 Gross profit 40.67 33.28

- Operating expense

Administrative expense 22.54 19.72Other provisions - -Other charges 0.018 0.017

Provision against not performing 1.022 0.36Loan & advances bad debts written off directly 0.275 -

Total Expense 23.06 20.10

Operating profit 17.07 13.17- Tax 8.558 5.664Net Profit 8.51 5.66

89

Bank AlfalahLimited

Interpretation of income statement The markup income decrease in 2002. This shows that banks earn

lesser in markup income as compare to 2001.

Non markup income in 2002 is 11.73% where as in 2001 it is

10.02%. This shows non markup income is increase in 2002.

Interest expense is decrease in 2002 as compare to 2001.

Due to decrease in interest expense the gross profit is increase in

2002.

In the portion of operating expense the Administrative expense

increase in 2002. Other charges are increase in 2002 by 0.001%.

Provision against not performing Loan & advances are also

increase in 2002. Bad debts written off directly is the addition of

new expense in 2002. The total operating expense in 2002 are

23.06% where as 20.01% in 2001. That shows total operating

expenses are increase in 2002.

Operating profit in 2002 is 17.07% and in 2001 is 13.17%. That

shows the operating profit increase in 2002.

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Bank AlfalahLimited

Tax deduction from operating expense in 2002 is 8.558% and in

2001 it was 5.664%. That shows the interest increase in 2002.

Net profit in 2002 is 8.51% and 5.66% was in 2001. So that

shows the net profit is increase.

91

Bank AlfalahLimited

Vertical analysis of Balance Sheet As At December 31,2001 & Dec 31, 2002

2002 2001% %

AssetsCash & balance with Treasury Banks 6.96 9.69Balance with other banks 0.35 2.69 Lending to financial institutions 0.71 4.23Investments 37.89 28.4Advances 43.45 47.71Other assets 1.51 2.94Operating fixed assets 0.27 3.55Deferred tax assets -

LiabilitiesBills payable 1.16 0.76Borrowing from financial institution 9.26 16.7Deposits and other accounts 79.31 75.33

Sub-coordinated loans 1.00 -Liabilities against asset subject to finance lease - -Other liabilities 1.83 1.78Deferred tax liabilities 1.82 -

Net Assets Presented By Share Capital 1.53 1.87Reserves 0.56 0.90Unappropriated profit 0.38 0.62 Surplus on revluation of assets 3.125 1.99

92

Bank AlfalahLimited

Interpretation of Balance sheet

Assets

a) The liquid assets such as Cash & balance with Treasury Banks

decrease in 2002. It shows that management is investing cash in

high quality and maintains balances with other banks. The balance

with other banks decreases in 2002 i.e. 0.35 %as compare to 2001

which is 2.69%.

b) The portion of investment in total assets is 37.89% in 2002 and

28.4% in 2001. this is not much favorable trend because

management should advance more and invest less.

c) Portion of advances in percentage of total asset is decreased

43.45% as compare to 2001 which was 47.71%.

d) Portion of fixed asset decrease in 2002 as compare to 2001.

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Bank AlfalahLimited

e) Lending of Financial Institutions decrease in 2002 that is 0.71% as

compare to 2001 that was 4.23%. This shows that management

trend of giving loan to financial institution is decreases.

A) REGULATORY RATIOS

Advances To Deposit Ratio

This ratio is calculated by dividing the amount of advances by

deposits. This ratios shows the relationship of advances to deposits. It

means that what is the percentage of advances to deposit of a bank.

Whether the advances are enough tom pay its liabilities.

Formula

Advances

Deposits

2002 28,319,401

94

Bank AlfalahLimited

51,684,984

= 54.7 %

2001

19,131,494

30,207,324

= 63.33 %

2000

15,242,317

20,481,568

= 74.41 %

1999

10,327,324

95

Bank AlfalahLimited

15,820,473

= 65.27 %

Interpretation

This ratio shows the decreasing trend except 2000 where it increase

from 65.27 to 74.41. Overall this ratio shows that management is not

aggressive toward advancing of loan.

Cash To deposit Ratio

The ration is calculating by dividing the cash on hand and cash with

other banks by total deposits of the bank. This ratio shows the

percentage of cash available as compared to deposits . this ratio tells

that at any time if cash is needed to meet the liabilities of deposit

liabilities to what percentage it is available.

Formula

Cash on hand and cash with other bank

Total Deposit

96

Bank AlfalahLimited

2002

1,122,962

51,684,984

= 2.17%

2001

772,140

30,207,324

= 2.55%

2000

324,503

20,481,568

= 1.584%

1999

97

Bank AlfalahLimited

248,251

15,820,473

= 1.56%

Interpretation

This ratio is on increasing trend which is unfavorable. This shows that

bank is not proper utilizing its deposits.

B) CAPITAL ADEQUACY RATIOS

Equity To Assets

This ratio is calculating by dividing shareholder’s equity by total

assets.

Formula

Shareholder’s equity

Total Assets

2002

98

Bank AlfalahLimited

1,615,777

65,167,031

= 2.47%

2001

1,361,292

40,098,095

= 3.39%

2000

900,680

27,577,159

= 3.26%

1999 895,330

99

Bank AlfalahLimited

21,019,608

= 4.25%

Interpretation

This ratio shows continuously decreasing trend. It means that is not

favorable for bank.

Equity To Deposits

This ratio shows the percentage of shareholder’s equity to total

deposit. This ratio is calculating by shareholder’s equity by total

deposits of the bank.

Formula

Total Shareholder’s equity

Total Deposits

2002

1,615,777

100

Bank AlfalahLimited

51,684,984

= 0.312 x

2001

1,361,292

30,207,324

= 0.450x

2000 900,680

20,481,568

= 0.439x

101

Bank AlfalahLimited

1999 895,330

15,820,473

= 0.56x

Interpretation

This ratio shows decreasing trend except 2001 which increases from 4.39 to

4.50.

C) EFFICIENCY RATIOS

Deposit To Total Liabilities

The deposit is calculating by dividing total deposits by total liabilities.

This ratio shows the percentage of total deposits to total liabilities

which is the major liability of the bank.

Formula

Total Deposits

Total Liabilities

102

Bank AlfalahLimited

2002

51,684,984

61,514,364

= 84.01%

2001

30207324

37,938,411

= 79.62%

2000

20,481,568

25,859,057

= 79.20%

103

Bank AlfalahLimited

1999

15,820,473

19,293,328

= 81.99%

Interpretation

This ratio increases in 2002 that is positive sign that bank has more

funds to invest. In 2000 and 2001 this ratio becomes down it mean

that management was not properly invest its funds.

Investment To Total Assets

This ratio is calculating by dividing investment by total assets. This ratio shows

the percentage of investment to total assets.

Formula

Investment

Assets

2002

24,694,397

104

Bank AlfalahLimited

65,167,031

= 37.89%

2001

11,396,616

40,098,095

= 28.42%

2000

4,967,542

27,577,159

= 18.01%

105

Bank AlfalahLimited

1999 4,993,035

21,019,608

= 23.75%

Interpretation

The investment to total asset of bank alfalah indicates the portion of

investment in bank’s total assets, in 2002 it is increasing which is not a

favorable trend. This shows that management does not work properly and

efficiently and not utilizing the assets fully by investment. In 2000 when the

ratio decrease from 23.79 to 18.01 it mean management is properly utilizing

the asset fully by investment.

D) PROFITIBILITY RATIOS

Net Profit Margin

This ratio is calculating by dividing profit after tax by total income.

This ratio shows that what is the percentage of net profit to the total

income.

Formula

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Bank AlfalahLimited

Profit After Tax

Total Income

2002

446579

5245912

= 8.51%

2001

310,612

3769801

= 8.23%

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Bank AlfalahLimited

2000

215,350

2,529,896

= 8.51%

1999

160,236

2,091,893

= 7.65%

Interpretation

This ratio shows increasing trend which is favorable this shows

management work efficiently. Management has ability to operate

business with great success.

Operating Profit Margin

This ratio is calculated by dividing the operating profit by total

income. This ratio shows that what is the percentage of operating

profit to the total income.

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Bank AlfalahLimited

Formula

Operating Profit

Total Income

2002

894653

5245912

= 17.05%

2001

524,164

3769801

= 13.90%

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Bank AlfalahLimited

2000

398,930

2529896

= 15.76%

1999

350,892

2091893

= 16.77%

Interpretation

Operating profit ratio shows the profits of a firm that earn on its

income. In 2002 the trend of this ration is 17.05% this is a favorable

trend for the bank..

Gross Profit Margin

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Bank AlfalahLimited

This ratio is calculated by dividing the gross profit by total income.

This ratio shows that what is the percentage of gross profit to the total

income.

Formula

Gross Profit

Total Income

2002

2133599

5245912

= 40.67%

2001

1254727

3769801

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Bank AlfalahLimited

= 33.82%

2000

805855

2529896

= 31.85%

1999

617550

2091893

= 29.52%

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Bank AlfalahLimited

Return On Equity

This ratio is calculating by dividing net profit by total equity. This

ratio shows that how much the company is earning on shareholder’s

equity.

Formula

Net Profit

Total Equity

2002

445,679

1,615,777

= 27.58%

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Bank AlfalahLimited

2001

310,612

1,361,292

= 22.81%

2000

215,350

900,680

= 23.90%

1999

160,236

895,330

= 17.89%

Interpretation

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Bank AlfalahLimited

In 2002 the ratio is increase from 22.81% to 27.58% . This shows that

management is utilizing its equity in good way. So this is favorable

for bank.

Return On Total Assets

This ratio is obtained by dividing net profit by total assets. This ratio shows that

what percentage of earning the company is attaining on total assets.

Formula

Net Profit

Total Assets

2002

446579

65,167,031

= 0.685%

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Bank AlfalahLimited

2001

310,612

40,098,095

= 0.774%

2000

215,350

27,577,159

= 0.780%

1999

160,236

21,019,608

= 0.762%

Interpretation

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Bank AlfalahLimited

This ratio measure bank ability to utilize its assets to create profit by

comparing profit with assets generates profit. This ratio shows

decreasing trend. this mean that management is not properly using its

assets.

Six-Year Financial Summary

1997 1998 1999 2000 2001 2002Rupees in Million

OPERATIONAL RESULT

Total income 1,248 181,4 2,096 2,531 3,770 5,246

Operating Expense 233 337 403 511 744 1,184

Profit before income tax 81 162 218 304 510 948

Profit before income tax 7 68 354 400 524 895

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Bank AlfalahLimited

Profit after taxation - 145 157 215 311 446

BALANCE SHEET

Shareholder’s Equity 713 850 895 901 1,362 1,616

Total assets 10,527 14,321 21,019 28,855 40,09865,167

Advances Net of provision 4,850 7,758 10,327 15,242 19,13128,319

Investment Net of provision 3,349 3,407 4,993 4,875 11,39724,694

Deposits and other Accounts 9,019 11,878 15,821 20,482 30,20751,685

OTHERS

Imports 1,491 4,709 5,909 13,856 26,65833,676

Exports 4,313 6,787 10,020 16,756 25,26133,042

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Bank AlfalahLimited

STRENGHTS

BAL provides its customers a complete range of banking products and

services including retail banking, corporate and institutional banking,

trade finance and consumer finance.

BAL has planned to institute major improvements in customer

services and internal systems to improve efficiency. It also intends to

launch innovative products. The bank is increasing resource

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Bank AlfalahLimited

mobilization through regular deposit campaigns and accelerating the

process of recovery of outstanding advances.

The Management of ALFALAH Bank Limited (BAL), in order to

further improve the quality of service.

Bank has very good financial resources.

Bank has good brand name.

Banks have competent human resource.

Automated process and procedure.

The services and Profit rate is competitive in market.

BAL has attracted most of customers in Pakistan. BAL has attractive

and good Buildings.

BAL RTC is market leading.

BAL is Successive and Market oriented. Investment in human

development and social welfare project is high

and Less default customer.

Bank is providing best services according to the requirement of the

customers.

WEAKNESS

Smaller branch network

Age of bank is very low.

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Bank AlfalahLimited

Less banking experience.

Some management positons needed are not professional.

Customers having accounts with small amounts are not given same

services and dealing given to those with high accounts.

OPPORTUNITIES

Business in market

Branch network

Technology

THREATS

Privatization of HBL & UBL

Growing global technological advancement.

Emerging banks

Innovative services of other banks

Change in economic trend

Change in international banking services

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Bank AlfalahLimited

BAL is not using ATM while other banks or providing this facility

so that is also technological threat for Bal.

SUGGESTIONS & RECOMMENDATIONS

The following are the suggestions that I have recommend for the Alfalah

bank limited.

Try to establish effective communication between top-level

management and executive.

Also do marketing through internet

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Bank AlfalahLimited

Effective training and qualified, dutiful and vigilant inspection teams

are inducted per force in all the bank.

civil services of the country

The branch should improve his position to attract more customers.

The behavior with the customers should be improved.

There is a great need of proper training of employee.

The bank must have to apply the marketing strategies to attract the

customers which are depositors.

LIMITATION

There was not a single person with proper knowledge of banking.

No proper material of banking was provided during my internship.

The branch, where I did my internship is providing very few customer

services.

No concept of right person for right job.

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Bank AlfalahLimited

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Bank Alfalah 1

Documents

Transcript of Bank Alfalah 1