ACKNOWLEDGMENT

I have completed a report based on my familiarity with my past

studies in order to get a bit familiar with the practical experiences

in organizations. By the grace of Allah Almighty I have

accomplished this report.

Sincerely, to my knowledge and exposure to this subject, I

dedicated my little effort to every one who works for the cause of

Pakistan. I express my appreciation to Bahria University that

scheduled and assigned me this report and I hope my efforts will

be duly regarded.

PREFACE

1

Theory and practice completes the cycle of human instinct quest

for knowledge and his need to solve day-to-day problems

systematically.

The purpose of this program is to give practical knowledge about

the functions of the organization.

The Internship Program also gives better comprehensive and

exposure of theoretical concepts, which are studied during BBA

as well as helps the students to get acquainted with actual

working atmosphere and requirements in organizations.

For the purpose of Internship I joined Bank Alfalah. During my

period of Internship I got a chance to work in different

departments and I have tried my best to compile the same in my

report.

2

THE VISION

Our vision is to be a leading financial institution, with a niche

in areas where we have a competitive advantage with

complete banking solutions. Our focus is on improving

performance in each of our businesses to achieve consistent

and superior returns for our highly valued clients and

stakeholders.

3

THE MISSION

Our mission is to maintain a competitive edge in quality

banking, customer service and profit performance. Our

activities are geared towards making Bank Alfalah a

responsible corporate citizen. The emphasis on “Quality and

Innovation” will remain our key mission statement. We will

continue to strengthen our position as the leading provider

of quality financial services in Pakistan.

4

THE PHILOSOPHY

Excellence in Service

Quality Performance

Product Innovations

5

INTRODUCTION

Banking background in Pakistan

At the time of independence there were 487 offices of scheduled

banks in the territories of Pakistan. The Reserve Bank of India

was the only bank to settle the problem of coinage, currencies

and exchange etc. There were 19 non- Indian foreign banks with

the status of small branch offices, which were engaged solely in

export of corps from Pakistan, while there were only 3 Pakistan

institution i.e. Muslim commercial bank, Habib bank LTD, and the

Australasia bank.

State bank of Pakistan was established on July 1, 1948 and

assumed full control of banking and currency in Pakistan. In order

to develop sound banking & weeding out weak institutions, the

Banking Companies Central Act was promulgated in 1949,

empowering the State Bank to control the operations of banking

in Pakistan.

Another very significant event in the development of banking in

Pakistan was the appointment of the Credit Inquiry Commission in

1959 to examine the scope and working of the institution

providing credit facilities to agriculture, trade, commerce and

industry and recommended measures for further improvements

Bank Alfalah

6

Bank Alfalah during the past five years, has assumed a brand

new identity plied with a spurred vision and revived commitment,

following the privatization of H.E.C.B in 1997. Since then the

Board and the Management of the bank have implemented

strategies and policies to carve a distinct position to carve an

instinct position for the bank in the market.

The strengths of Abu Dhabi Group have helped Bank Alfalah

contribute towards the development of quality retail and

Corporate banking in Pakistan.

The bank was acquired by the Abu Dhabi Consortium, which is

headed by Shaikh Nahyan Bin Mabarak Al-Nahyan, a prominent

business professional of the ruling family of Abu Dhabi and the

Minister of Higher Education and Scientific Research, (Govt. of

UAE). Other members of the Consortium include Royal Family

members and leading businessmen of UAE. The consortium owns

70% of the shares while the Govt. of Pakistan has retained the

remaining 30% of the bank’s shares. The financial and

managerial strength of Abu Dhabi Consortium has greatly

enhanced the credibility of the bank in Pakistan and is reflected

in the bank’s improved performance in all the spheres of banking.

In pursuance of State Bank of Pakistan, directives to all

commercial banks to get themselves “rated”. Bank Alfalah also

undertook the exercise with PACRA (Pakistan Credit Rating

Agency). The premier rating agency, which is an affiliate of IBCA,

rated the bank as AA- for long term and A1+ for short term. Both

ratings are investment grade and denote very high credit quality

7

and very low expectation of credit risk. The ratings are applicable

to senior unsecured creditors of the bank.

In the efforts to branch out overseas, the bank is in the process of

acquiring a 25% stake in a banking company in Bangladesh. This

acquisition will not only help the bank promote bilateral trade

with Bangladesh, but also help in the initiation of business with

other countries of SAARC and Far-East region.

The Management

Alfalah’s manegement is known for their hard work, product

innovation and dedication to make sure that the development

and modernization process keeps the bank ahead of competition.

With a team of talented, service dedicated professional bankers,

Bank Alfalah commits all of its energies, resources and time to

cater to banking and financial needs of its valued clients.

Following members form the board of directors of Bank Alfalah.

1. Shaikh Nahyan Bin Mabarak Al-Nahyan

(Chairman)

2. Mr. Abdullah Khalil al-Mutawa

8

3. Mr. Omar Z. Al-Askari

4. Mr. Abdulla Nasser Hawaileel Al-Mansoori

5. Mr. Nadeem Iqbal Sheikh

6. Mr. Ikram Ul-Majeed Sehgal

7. Mr. Mohammad Saleem Akhtar (Chief

Executive)

Organizational Structure

All the affairs of Bank Alfalah are run by the Board of Directors,

headed by the Chairman and Chief Executive, who are

responsible for all matters happened in the company i.e. profits,

plans strategies, losses and employee satisfaction etc.

The management network can easily be visualized in the

organization chart.

Management Structure

Chairman

9

Chief Executive Officer

Manager

Senior Authorized Officer

Senior Clerk

Junior Clerk

COMPANY ANALYSIS

Operating and Financial Analysis

The bank is currently operating in 38 branches within the country

and has been successful during the year on the further

mobilization of resources by attracting low cost and stable

deposits. Bank Alfalah has shown remarkable progress in their

operations within these few years.

Despite notable economic uncertainties, the bank’s financial

strength has greatly enhanced during the recent years. The

10

successful expansion program has proved the bank’s capability

and commitment in comparison with the competition in the

industry. It is heartening to note that in just a few years, which

are considered as the infancy stage in industry, the bank has

increased its branch network a lot. The expansion program is

strategically important to increase customer base and help the

bank to approach different customer segments

The bank’s treasury activities comprise of almost client-backed

transactions, emanating largely from foreign trade business. The

Treasury is quite active in both sections of the inter-bank market

i.e. foreign exchange and money market.

The bank continues to maintain positive and healthy liquidity.

Their surplus liquidity is mainly kept in fixed income securities,

issued by the Federal Government of Pakistan that can be easily

be converted into cash, if necessary.

Within the first year (1998) their Deposits grew up by 31%,

Advances by 44%, Trade Finance by almost 100% and the total

assets by 35%. The bank’s position has still improved in the year

2002.

This situation can be observed in the table on the other page:

11

– 2001

(Billions)

2000

(Billions)

Growth

%

Equity 1.631 0.901 51

Deposits 30.207 20.482 47

Imports 26.658 13.228 102

Exports 25.261 16.757 51

Profit before

Tax

524.164 400.350 31

Profit after

Tax

310.612 215.350 44

Total Assets 40.098 28.855 39

Advances 20.220 16.357 24

1. Current Ratio

Current Ratio = Current Assets

12

Current Liabilities

Year 2000 Year

2001

Rupees in 000’

7,390,481 8,090,672

6,654,962 7,731,087

1.11 1.05

2. Debt to Equity Ratio

Debt to Equity Ratio = Total Debt

Share Equity

Year 2000 Year

2001

Rupees in 000

27,136,530

37,938,411

900,680 1,361,292

30.128 27.869

3. Debt to Total Assets Ratio

13

Debt to Total Assets = Total Debt

Total Assets

Year 2000 Year

2001

Rupees in 000

28,854,632

40,098,095 27,136,530

37,938,411

1.06 1.56

Human Resource Analysis

Bank Alfalah believes that humans are their most valuable

assets. In the pursuit to impart sound technical skills to their

staff, the Training and Development Center continues to offer

programs in several skill areas. The bank’s training and business

philosophy is geared to provide professional, personalized and

efficient services to the clients at all times. The bank is making its

own positive contribution to the services culture of the banking

system as a whole, providing at the same time a breakthrough to

the customers in terms of choice based on quality.

14

The bank continues to hire fresh MBAs from prestigious

universities in batches of 20 – 25 officers, who then undergo

rigorous and intensive training, first at the hands on experience.

The Board places utmost importance to its human asset base.

Technology Analysis

Technology and automation play a pivotal role in the progressive

development of an organization. It has become impossible to

control the operations of a bank effectively in real time situation

without the latest technology.

Technological developments are opening up new vistas of

solutions for distributing traditional financial products.

Concurrently, rapid change in customer preferences has resulted

in major shift from manual to automated services.

Information technology today, is all pervading in the corporate

world. During the past years Bank Alafalah made heavy

investments towards enhancing its capabilities in the area of

automation and information technology. The bank plans to

achieve total connectivity between branches by the end of last

quarter, 2002. the objectives are to achieve efficiency in services

and to control costs. The bank is working on a plan to increase

their ATM installations and also join a Switch Group of other

prominent banks. In the first phase of this program, the

installation of 27 ATMs is already underway.

15

ENVIRONMENTAL ANALYSIS

Branch Network

Bank Alfalah’s objective has been to expand its branch network

to meet its clients’ needs. The bank’s strategy is to maximize the

synergies of branch network through an optimal allocation of

financial, human and other resources in order to meet the

dynamic challenges of present financial environment.

Inherited with a network of 3 branches, Bank Alfalah has

escalated it to 38 branches all over Pakistan. The bank is well

positioned and geographically poised to cater for increased

business demands from its existing and potential clientele. Now

there are branches in almost every major city.

The bank, at the end of 2002 plans it, that this figure of 38

branches would reach to 45.

Following are the cities in which branches of Bank Alfalah are

present.

1. Bahawalpur

2. Faisalabad

3. Gujranwala

4. Gujrat

16

5. Hyderabad

6. Islamabad

7. Karachi

8. Lahore

9. Multan

10. Mardan

11. Mingora

12. Peshawar

13. Quetta

14. Rawalpindi

15. Rahim Yar Khan

16. Sahiwal

17. Sukkur

18. Sargodha

19. Sialkot

Services

The Bank’s performance over the passing years seems to

improve even when faced by challenging economic conditions.

This has been the result of the bank’s highly prioritized product

portfolio, specifically tailored to suit the discerning needs and

preferences of customers.

Besides being focused on Corporate and Investment Banking

business, Bank Alfalah is now entering into Consumer Banking

area. In addition to tailor made products to meet customer’s

17

requirements, Bank Alfalah offers the following services to its

clients:

Cash Finance Facility

To meet short-term liquidity requirements, the bank offers

Current Finance Facility to meet working capital requirements.

A special relationship officer is assigned to look after corporate

accounts to ensure smooth and efficient functioning.

Structured Financing

The bank has a dedicated team of thorough professionals

providing tailor made financing solutions. In adherence to

requested requirements the team provides cost and time

effective solutions ranging from Equity Consultation, Finance

through Capital Markets in the form of TFCs and Debentures,

Underwriting and Warehouse Indirect Financing through

Project Financing and Syndication.

Collection Facility

The bank provides collection facility from any of the 35

branches. One can transfer funds from collection accounts

from any of the branches to his / her main account on daily

basis without any time delays and at very nominal rates. In

places where Bank Alfalah’s branches are not available, the

bank facilitates funds transfer through strategic alliance with

their correspondent banks.

18

Sort Term / Medium Term Fund Placement

To optimize returns on one’s surplus funds, the bank offers

competitive rates for which they have products that provide

returns on daily product basis. In addition, profit is paid on a

monthly basis that can boost one’s annualized rate of return.

Other facilities are as follows:

Royal Profit (Daily / Monthly Interest earning accounts in

currency)

One of the fastest and most lucrative FCY accounts

mechanism

On line banking

ATM

Personal loans

Lockers

Internet banking

Car Financing

Staff Salary Accounts

Personal Relationship Banking

Competitors

Like all others, Bank Alfalah also has a number of competitors

1. Muslim Commercial Bank

19

2. National Bank of Pakistan

3. Union Bank

4. United Bank

5. Allied Bank of Pakistan

6. Citibank

7. Habib Bank Ltd.

8. Faysal Bank

9. Prime Commercial Bank

10. Platinium Commercial Bank

11. Saudi Pak Commercial Bank

12. Indus Bank

13. Soneri Bank

14. The Bank of Khyber

15. Bank of Punjab

16. Gulf Commercial Bank

17. Metropolitan Bank

20

MY WORKING IN BANK ALFALAH

As stated earlier, I joined Bank Alfalah for the purpose of

internship. I have worked here as an internee for two months.

During my stay of two months I have worked in different

departments. In these departments, I was assigned different jobs,

which helped me gain some practical experience.

I had to report at 9.00 am sharp and was given a warning that, if I

was late for 3 days, I would be fired. It was applicable for all other

employees. The bank timings were 9.00 am to 5.00 pm for all

other employees, but I am thankful to the manager, who relaxed

me and I was allowed to leave at 1.30 pm due to my classes of

the summer semester.

The overall staff was quite cooperative and friendly, and

everyone treated me very well. But at the same time, there was a

very strict policy about punctuality as well as discipline.

Following are the departments in which I have worked.

1.Car Leasing Department

I have worked in this department for almost 25 days. My

supervisor’s name was Mr. Imran Shami. Here I learned the

whole procedure of getting a car leased.

21

My duty was to contact clients at the time when their monthly

installment was due. Moreover, Mr. Imran Shami made me

deal with customers who came for the purpose of car

financing. I used to give out a presentation about all this

procedure.

In addition to this, I brought 4 interested customers for Bank

Alfalah. All the 4 were friends of mine, who got their desired

cars leased through me.

2.Remittance Department

The next 10 days of my internship were in the remittance

department. Here, my duty was to remit amounts. I was

responsible for remitting amounts to different accounts, which

were received from foreign countries.

3.Customer Services Department

I passed my last 15 days in the Customer Services

Department. Here I was given a telephone line and I had to

attend phones and guide people as well as transfer calls to

different departments.

22

Secondly I was assigned the duty of opening new public

accounts. I opened a number of new accounts during my

internship program.

23

IDENTIFICATION OF A MAIN PROBLEM

Problem

It is a universal truth that every thing in this world has its own

bright and dark sides. It is the case with Bank Alfalah. During my

Internship, I found a number of good things in addition to a few

problems.

The first day I entered the bank I was informed that on being late

for three days in a month, an employee is fired. Every one has to

report at 9.00 am sharp. Any one coming late is warned and is

fired after three days.

As mentioned before, I have also worked in the car-financing

department. The second problem was observed there. I noted

that there was no separate phone line for that department. Due

to this, the personnels over there have to wait quite long for the

phone line to be free.

Solution

The problem is quite serious, i.e. the rule is quite rigid and there

is no leniency anywhere. A person can have any problem, and at

anytime. No one is informed prior to getting in trouble. If a person

gets late, he should be allowed to explain the reason. If the

reasoning is justified, then he / she should be excused.

24

The second problem is not quite serious. It can easily be resolved

by adding one more phone line in the department.

25

FINDINGS

Following are the findings that I obtained during my internship.

1. The bank maintains a very strict policy about punctuality.

2. Internees are treated well.

3. The management continuously strives to minimize

absenteeism in employees.

4. Up till now, Bank Alfalah is offering the lowest mark up rates

in car financing.

5. The bank has remarkably escalated from 3 to 38 branches

within Pakistan.

6. The bank has heavily invested in order to enhance its

capabilities in the field of automation and technology.

7. Despite the uncertain economic conditions, the banks

financial position has improved quite a lot.

8. The internal computer system is quite slow and often gets

hanged up.

Findings

Following are the findings that I obtained during my internship.

26

9. The bank maintains a very strict policy about punctuality.

10. Internees are treated very well.

11. Up till now Bank Alfalah is offering the lowest mark up rates in car financing.

12. The bank has remarkably escalated from 3 to 35 branches within Pakistan.

13. The management continuously strives to minimize absenteeism in employees.

Operating and Financial Analysis

The bank is currently operating in 35 branches within the country. Bank Alfalah has

shown remarkable progress in their operations within these few years.

Within the first year (1998) their Deposits grew up by 31%, Advances by 44%, Trade

Finance by almost 100% and the total assets by 35%. The bank’s position has still

improved in the year 2002.

This situation can be observed in the table below:

– 2001

(Billions)

2000

(Billions)

Growth

%

Equity 1.631 0.901 51

Deposits 30.207 20.482 47

Imports 26.658 13.228 102

Exports 25.261 16.757 51

Profit before Tax 524.164 400.350 31

27

Profit after Tax 310.612 215.350 44

Total Assets 40.098 28.855 39

Advances 20.220 16.357 24

Human Resource Analysis

Bank Alfalah believes that humans are their most valuable assets. In order to improve

staff’s professional quality and proficiency, the bank conducted on-job training programs

and in house seminars / courses, at one training center. Bank Alfalah’s training academy

is equipped with the latest audio-visual training aids, which facilitate in the

discrimination of knowledge and skills.

The bank inducted thirty management trainees, who are being taken through a six-month

comprehensive banking training program. The bank intends to continue, on a need basis,

such programs each year.

Technological Analysis

Technological developments are opening up new vistas of solutions for distributing

traditional financial products. Concurrently, rapid change in customer preferences has

resulted in major shift from manual to automated services.

Information technology today, is all pervading in the corporate world. During the year

2000, Bank Alafalah made heavy investments towards enhancing its capabilities in the

area of automation and information technology. The bank is well positioned to meet

client needs, with improved competitive advantage.

28

Human Resource Analysis

Bank Alfalah believes that humans are their most valuable assets. In order to improve

staff’s professional quality and proficiency, the bank conducted on-job training programs

and in house seminars / courses, at one training center. Bank Alfalah’s training academy

is equipped with the latest audio-visual training aids, which facilitate in the

discrimination of knowledge and skills.

The bank inducted thirty management trainees, who are being taken through a six-month

comprehensive banking training program. The bank intends to continue, on a need basis,

such programs each year.

Services

Besides being focused on Corporate and Investment Banking business, Bank Alfalah is

now entering into Consumer Banking area. In addition to tailor made products to meet

customer’s requirements, Bank Alfalah offers the following services to its clients:

Cash Finance Facility

To meet short-term liquidity requirements, the bank offers Current Finance Facility to

meet working capital requirements. A special relationship officer is assigned to look after

corporate accounts to ensure smooth and efficient functioning.

Structured Financing

The bank has a dedicated team of thorough professionals providing tailor made financing

solutions. In adherence to requested requirements the team provides cost and time

effective solutions ranging from Equity Consultation, Finance through Capital Markets in

29

the form of TFCs and Debentures, Underwriting and Warehouse Indirect Financing

through Project Financing and Syndication.

Collection Facility

The bank provides collection facility from any of the 35 branches. One can transfer funds

from collection accounts from any of the branches to his / her main account on daily basis

without any time delays and at very nominal rates. In places where Bank Alfalah’s

branches are not available, the bank facilitates funds transfer through strategic alliance

with their correspondent banks.

Sort Term / Medium Term Fund Placement

To optimize returns on one’s surplus funds, the bank offers competitive rates for which

they have products that provide returns on daily product basis. In addition, profit is paid

on a monthly basis that can boost one’s annualized rate of return.

Other facilities are as follows:

On line banking

ATM

Personal loans

Lockers

Internet banking

Car Financing

Staff Salary Accounts

Personal Relationship Banking

Technological Analysis

30

Technological developments are opening up new vistas of solutions for distributing

traditional financial products. Concurrently, rapid change in customer preferences has

resulted in major shift from manual to automated services.

Information technology today, is all pervading in the corporate world. During the year

2000, Bank Alafalah made heavy investments towards enhancing its capabilities in the

area of automation and information technology. The bank is well positioned to meet

client needs, with improved competitive advantage.

31