Final File MBA Project

FINAL PROJECT ON

BANK ALFALAH LIMITED

Submitted By:

RAJA FAHEEM ANWAR

Department of Business

Administration

College of Information Technology,

Lahore

2003-2006

FINAL PROJECT ON

“BANK AL-FALAH”

By

Faheem Janjua

A Project submitted in partial fulfillment of the requirements for the Degree Program

BBA(Hons) (Bachelor in Business Administration)

AL-KHAIR

University of Azad Jammu & KashmirAffiliated Campus C.I.T.5/68 Usman Block New Garden Town Lahore

2003-2006

Approved by Mr. Javed Warraich

Principle College Of Information

Technology

A C K N O W L E D G M E N T

I HAVE NO WORDS TO EXPRESS OUR DEEPEST SOURCE OF GRATITUDE TO ALMIGHTY, COMPASSIONATE, SUPREME ALLAH, WHO ENABLE ME TO COMPLETE THIS PROJECT WORK. I FIRMLY BELIEVE THAT GOD NEVER SPOILS ANY EFFORT. EVERY PIECE OF WORK IS REWARDED ACCORDING TO THE NATURE AND DEGREE OF DEVOTION FOR IT. I OFFER MY HUMBLEST WORDS OF THANKS TO HIS HOLY PROPHET (PEACE BE UPON HIM) WHO IS FOREVER SOURCE OF GRATITUDE.

ORDINARY WORDS OF GRATITUDE ARE NOT ENOUGH TO ACKNOWLEDGE THE LOVE AND GUIDANCE PROVIDED BY MY FAMILY MEMBERS, ESPECIALLY BY MY PARENTS. THEIR LOVE AND PRAYERS ENABLE ME TO COMPLETE OUR WORK.I ALSO EXPRESS MY GRATITUDE TO MRS. BINA SAAD (PROJECT DIRECTOR), MISS KANWAL FAYAZ (HEAD OF EXAMINATION DEPARTMENT), AND ESPECIALLY MY BEST FRIEND MR. IMRAN KHURSHID FOR THEIR GREAT COOPERATION FOR COMPLETION OF WORK AND PROJECT REPORT.

I AM VERY THANKFUL TO PROFESSOR MR. JAVED WARRAICH (PRINCIPLE C.I.T LAHORE).WHO HELPED ME THROUGHOUT IN DEVELOPMENT AND ADVICE ME IN EVERY PORTION OF THE PROJECT.

I WISH TO ACKNOWLEDGE THE ADVICE, HELP AND ENCOURAGEMENT GIVEN TO ME BY MR. RAJA TAHIR MAHMOOD (EXECUTIVE DIRECTOR LINE CRAFT, LAHORE, MISS SADIA NOREEN ANWAR (FIELD EXECUTIVE AC NIELSEN PAKISTAN), MR. ASAD IMRAN JANJUA (FINANCE DEPARTMENT BEACONHOUSE SCHOOL SYSTEM), AND MR. FAISAL HAYAT ADVOCATE (BANDIAL & ASSOCIATES).

I AM GRATEFUL TO MY I.T. FACULTY FOR PROVIDING A NICE CHANCE TO WORK IN SUCH KIND OF ENVIRONMENT AND FOR HIS GUIDANCE AND HELP FOR ME.I AM AGAIN VERY THANKFUL TO MR. JAVED WARRAICH (PRINCIPLE CIT LAHORE) FOR HIS GREAT HELP AND VALUABLE TIME HE SPENT WITH ME.

REST PRAISE IS AGAIN TO ALMIGHTY ALLAH, BLESSINGS AND AFFECTIONS OF WHOM THIS WORK IS FINISHED. WE ARE PRAYERFUL TO MY PARENTS, TEACHERS, BROTHERS, SISTERS FOR THEIR LONG LIFE. WE ARE PRAYERFUL TO ALL MY FRIENDS FOR THEIR SUCCESSFUL FUTURE WITH HOPE THAT WE WILL NOT FORGET EACH OTHER.

_______________________Group Members

may not spare them to

Scope of Study

The scope of study at of the motion is limited only to the

preparation of the final project about “Al-Falah”. But by

searching on net and books and benevolent help of my

colleagues and staff of Bank Al-Falah Pakistan. I am able to

complete this project and most of all by visiting various web

sites, banking policies and by comparing bank Al-Falah with

other institutes. I am able to make this project well and these

methods are helpful for me.

College of Information Technology Al-Khair University

5/68 Usman Block New Garden

IN THE NAME OF ALLAH THE

MOST GRACIOUS AND MOST

MERCIFUL

Faheem Janjua

To

All mighty “Allah”

C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E

II NN T T H EH E N N A M EA M E O O FF A A L L A HL L A H

SS U B H A N A H UU B H A N A H U , T, T H EH E M M O S TO S T GG R A C I O U SR A C I O U S

TT H EH E M M O S TO S T MM E R C I F U LE R C I F U L ……

9

TT A B L EA B L E O O FF C C O N T E N T SO N T E N T S

........................................................................................................................................................................7

IN THE NAME OF ALLAH SUBHANAHU, THE MOST GRACIOUS THE MOST MERCIFUL…7

TABLE OF CONTENTS............................................................................................................................7

SECTION ONE............................................................................................................................................7

INTRODUCTION........................................................................................................................................7

CHAPTER ONE: INTRODUCTION TO THE REPORT......................................................................................7

CHAPTER TWO: THE BANK........................................................................................................................7

CHAPTER THREE: THE BRANCH.................................................................................................................7

CHAPTER FOUR: AN INSIGHT INTO BANKING............................................................................................7

SECTION TWO...........................................................................................................................................7

CORE PHILOSOPHIES.............................................................................................................................7

AT..................................................................................................................................................................7

BANK ALFALAH LIMITED.....................................................................................................................7

INTRODUCTION........................................................................................................................................7

THE VISION................................................................................................................................................7

THE MISSION.............................................................................................................................................7

SECTION THREE.......................................................................................................................................7

C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0

MANAGEMENT STRUCTURE OF.........................................................................................................7


CHAPTER ONE: INTRODUCTION..................................................................................................................7

CHAPTER TWO: TOP MANAGEMENT HIERARCHY......................................................................................7

CHAPTER FOUR: MANAGEMENT LEVELS...................................................................................................7

CHAPTER FIVE: SIGNIFICANT MANAGEMENT POLICIES.............................................................................7

CHAPTER ONE: THE ACCOUNTS DEPARTMENT.........................................................................................7

CHAPTER TWO: THE ACCOUNT OPENING DEPARTMENT...........................................................................7

CHAPTER FIVE: THE CLEARING DEPARTMENT..........................................................................................7

OUTWARD CLEARING............................................................................................................................7

INWARD CLEARING................................................................................................................................7

CHAPTER SIX: ONLINE TRANSACTIONS.....................................................................................................7

CHAPTER SEVEN: ALFALAH CAR FINANCING............................................................................................7

CHAPTER EIGHT: CREDITS DEPARTMENT..................................................................................................7

SECTION FOUR.........................................................................................................................................7

FINANCIAL ANALYSIS............................................................................................................................7

OF..................................................................................................................................................................7


A) FINANCIAL STATEMENTS......................................................................................................................7

B) RATIOS...................................................................................................................................................7

1998 - 2002....................................................................................................................................................7

C) FINANCIAL RATIOS ANALYSIS......................................................................................................7

1998 - 2002....................................................................................................................................................7

ACCOUNTING POLICIES........................................................................................................................7

SECTION FIVE...........................................................................................................................................7

MARKETING MIX.....................................................................................................................................7

OF..................................................................................................................................................................7



MARKETING MIX........................................................................................................................................7

PRODUCTS & SERVICES........................................................................................................................7

PRICE...........................................................................................................................................................7

PROMOTION..............................................................................................................................................7

PLACE..........................................................................................................................................................7

SECTION SIX..............................................................................................................................................7

SWOT ANALYSIS & RECOMMENDATIONS......................................................................................7

CHAPTER ONE: SWOT ANALYSIS.............................................................................................................7

CHAPTER TWO: RECOMMENDATIONS........................................................................................................7

ANNEXURES...............................................................................................................................................7

Annexure One: Borrowers’ Basic Fact Sheet-For Corporate....................................................................7


S E C T I O N O N E

I N T R O D U C T I O N


C H A P T E R O N E : I N T R O D U C T I O N

T O T H E R E P O R T

The basic purpose behind the preparation of an internship report is to make the

student jot down the experiences of the internship and discuss the understanding of

the operations of the organization.

The following pages discuss my experiences at Bank Alfalah Limited, Township

Branch, Lahore. Nevertheless, before I proceed, I would like to mention that the

experience of working in a small, newly established branch was in itself a treat. All

the employees were extremely cooperative and accommodating. It was for the

first time that the branch had the experience of interns and as much as I was

learning, all the employees under whom I worked were learning from the

experience as well.

This internship report is based on the format that the first section discusses the

bank and its history, its current status and its future outlook.


C H A P T E R T W O : T H E B A N K

B A N K A L F A L A H L I M I T E D

Bank Alfalah Limited was incorporated on June 21, 1997 as a Public Limited

Company under the Companies Ordinance 1984. Its banking operations

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

and related services as defined in the Banking Companies’ Ordinance, 1962.

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 backing of the Abu Dhabi Group and driven by the

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

innovative technology to have an extensive range of products and services.

Currently Bank Alfalah Limited has thirty-five branches (45 branches covering 21

cities in 2003) spread all over Pakistan. In the coming years, the bank plans to open

a number of new branches to ensure that its customers get the benefit in the form

of extended branch network and comprehensive products and services.

PURSUIT OF EXCELLENCE

Bank Alfalah Limited has continued its upward climb in pursuit of excellence.

Strengthened by the backing of the Abu Dhabi Group and driven by strategic goals

set out by its Board and management, Bank Alfalah Limited increasingly inspires

trust and confidence of all its clients. Within a short span of time the bank has

carved a significant niche for itself in the banking industry.


These achievements have been preceded by concerted effort

to provide highest levels of service and value to our

customers. The bank aims to further enhance performance

standards through implementation of innovations in both

products as well as customer care, by discovering newer

avenues of client benefit. This customer focused strategy has

enabled Bank Alfalah Limited to evolve as a single source

financial service provider of corporate and retail banking

services.

DEDICATED PROFESSIONALS

The Bank Alfalah Limited team comprises of dedicated

professionals equipped with a diverse array of skills, vast

experience and pro customer attitudes. The management

concentrates its energies on making informed economic

decisions, translating it into greater returns for our investors

and customers. This prudent attitude has created a

synergistic organizational structure leading to improvements

in profitability and a sustainable competitive advantage for

the bank.

A HIGHLY RESPONSIVE PRODUCT

PORTFOLIO

Not only comprehensive but also customizable to match the

needs and preferences of the customers. These strategic

characteristics of the portfolio have helped Bank Alfalah

Limited to face challenging economic conditions. The product

lineup continues to fulfill and satisfy the banking

requirements of not just the conventional consumer, but the

demanding financial needs of the corporate sector as well.

The lineup includes:

Car Financing


Rupee Travelers Cheques

Anmol Saving Certificates

Home Loans

On–Line Banking

MoneyGram Remittance Services

Monthly Income Plan

Credit Cards

ATMs

A N O V E R V I E W O F T H E I N D U S T R Y

Bank Alfalah Limited is in the initial stages of growth. It has to face intense

competition from the well-established banks like Prime, Union, Askari, Muslim

Commercial Bank, PICIC, Bank Al-Habib etc. General trend in the market is that the

private banks are increasing there paid-up capital. Banks are expanding their

branch network.

A brief detail of some leading banks is given below:

BANK ALFALAH

During FY 2001 Alfalah has shown a positive trend of growth. Its deposits increased

by 48% and advances increased by 25%. The profit for the year has also risen.

Bank’s success in a few years of operations is appreciable. In spite of the intense

competition performance of bank is remarkable.

PRIME COMMERCIAL BANK

It was a profitable year for Prime Commercial Bank. Its profit before tax went up to

Rs. 241 million from Rs. 158 million of the last year. Instead of announcing the

dividend management opted to increase the bank’s reserves, which will have a

good effect on the profitability in the long run.


UNION BANK

It is one of the major competitors of Bank Alfalah. FY 2001 was not a very profitable

year for the Union Bank. Profit before tax was very low. Major causes of low profit

were sky-high administrative expenses. Provisions against non-performing loans

were very high.

The above comparison reveals that in spite of being new

bank, Bank Alfalah’s performance has been much better

than i ts competitors.

Following tables will reveal the position of Bank Alfalah as compared to its

competitors.

DEPOSITS (RS. IN MILLION)

Banks 2001 2000

Bank Alfalah 30,207 20,482

Union 20,721 17,171

Prime 10,367 8,264

ADVANCES (RS. IN MILLION)

Banks 2001 2000

Bank Alfalah 19,131 15,242

Union 13,689 13,346

Prime 6,853 6,794

An overview of industry shows that Bank Alfalah is among the top banks of the

country. In fact Bank Alfalah can be ranked second after Askari Commercial Bank.


C H A P T E R T H R E E : T H E B R A N C H

T O W N S H I P B R A N C H L A H O R E

The Township Branch is strategically located at the intersection of three big towns

of the city. It is located adjacent to Akbar Chock, which forms the junction of

Township, Faisal Town and Johar Town. It is spread over an area of more than 4

canals. It has ample of parking space and due to the attention and interest of the

branch manager, Mr. Rizwan; the exterior of the branch has been delightfully

decorated with flowerbeds, grass and trees.

At the time of my internship, the branch was passing through the initial one year of

its existence and therefore had a small number of staff members. It has a total of 24

employees, ranging from the Bank Manager to the Tellers. Other than these

officers, there were about eight workers ranging from the Security Guard to the

Cleaning Boys to the Incharge of the kitchen etc.

The main reason of the bank’s existence is the acceptance of people’s money to

keep safe until they need it back and extending money on interest to those who

need it for investment purposes. At the first day of my internship, the Township

Branch had crossed the Rs. 398 million mark for deposits but had extended credit of

only Rs. 34 million. Out of the total deposits, foreign currency deposits were around

Rs. 35 million whereas the local currency deposits were around Rs. 362 million.


CHAPTER SIX: THE FUTURE OF BANK ALFALAH LIMITED

“ O“ O U RU R C C O R EO R E P P H I L O S O P H YH I L O S O P H Y O O FF H H O N E S T YO N E S T Y ,,

TT R A N S P A R E N C YR A N S P A R E N C Y I I NN C C U S T O M E RU S T O M E R D D E A L I N G SE A L I N G S , P, P R O D U C TR O D U C T

II N N O V A T I O NN N O V A T I O N , E, E X C E L L E N C EX C E L L E N C E I I NN C C U S T O M E RU S T O M E R S S E R V I C EE R V I C E ,,

AA N DN D O O U RU R C C O M M I T M E N TO M M I T M E N T T T OO B B E I N GE I N G A R A R E S P O N S I B L EE S P O N S I B L E

CC O R P O R A T EO R P O R A T E C C I T I Z E NI T I Z E N P P E R V A D E SE R V A D E S T T H I SH I S B B A N KA N K ””

These are the words that the Chairman His Highness Sheikh Nahayan Mabarak

Al-Nahayan uttered for the commitment of the bank towards providing satisfaction

to its customers. Confronted with a more open financial market but tougher

competition, Bank Alfalah Limited, with its professional outlook and commitment,

maintained healthy growth in resource mobilization and financing of foreign trade.

The management at the bank feels that in the coming years, the bank would

expand more to provide their customers an easy to use network of branches in all

major cities of the country. The chairman of the bank feels the bank has managed

to establish a name for it self in the financial markets and will continue to institute a

strong foothold in the minds of the customers as well.

Here I would like to mention that after the privatization of United Bank Limited

(UBL) by the Privatization Commission Of Pakistan and the takeover by the

consortium of Best Way Group and Abu-Dhabi Group, the Chairman of Bank Alfalah

Limited H. H. Sheikh Nahayan Mabarak Al-Nahayan has been given the

charge to run UBL as its chairman, while his younger brother, H.E. Sheikh

Hamdan Bin Mabarak Al-Nahayan has been appointed as the New Chairman

of Bank Alfalah Limited. Here I would like to cite some portions of the new

chairman’s review in order to make clear the future targets of Bank Alfalah Limited

under his leadership.


At the close of the sixth year of operations after its privatization in 1997, Bank

Alfalah Limited has been steadily reaching higher standards of service excellence

and performance despite many challenges.

The year 2002 has seen Bank Alfalah Limited achieving significant success both in

terms of product portfolio and customer service. The unfortunate “9/11” incident

caused economic uncertainty and political turbulence. However, Bank Alfalah

Limited was able to face these challenges valiantly and courageously.

Consequently, the size of the bank’s client base was increased that showed the

favorable reputation Bank Alfalah Limited enjoys in the market.

THE POLITICAL AND ECONOMIC LANDSCAPE:

President Musharraf’s government fulfilled its promise and a democratic

government was instituted in the country. The new government has presented a

very favorable agenda for the country, both in terms of economic and social

reforms. The State Bank of Pakistan revised down the interest rates in order to spur

economic development and investment activity in the country. This, coupled with an

impressive increase in foreign reserves of over $ 10 Billion, augurs well for the

country’s economic revival. The government is also committed to the concepts of

deregulation and privatization, which is a positive sign for the economy.

FINANCIAL HIGHLIGHTS:

The operating results show an impressive improvement compared to the last

financial year.

The bank earned a pretax profit of Rs. 894.65 Million, a significant growth of

70.68 % over the last year.

The improving Return on Assets (ROA) suggests the increasing operational

and administrative efficiency.

The Return on Equity (ROE) indicates that returns to investors have

continually improved signifying the overall enhancement in the bank’s

performance.


Deposit mobilization remained an area of key focus and the deposit base

stood at Rs. 51.68 Billion at the close of December 2002, which signifies an

increase of 71.10 %.

This improvement is, along with other factors, attributed to the bank’s high customer value product offerings in the form of branded deposit schemes and certificates.

The loan and advances portfolio too has increased by 45.59 % to Rs. 29.43

Billion.

The strategy in this arena has been one of revenue maximization coupled with well-managed and quality credit expansion.

BRANCH NETWORK:

Over the years, the bank’s emphasis on growth has resulted in a strong entity

capable of offering high quality services to a wide spectrum of clients, in a highly

challenging business environment. Bank Alfalah Limited’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. In the year 2001, the branch network increased to 32 branches,

making the reach to customers in 17 cities. Currently, the bank has successfully

opened 45 branches in 22 cities nation-wide.

CREDIT PORTFOLIO:

To capture good quality risk assets there is intense competition within the financial

industry, given the declining interest rate regime. Despite that, Bank Alfalah Limited

still follows a policy of prudent lending being mindful of the fact, that is not only a

custodian of its customers and well-wisher’s money, but also their trust.

It is a matter of great gratification that Bank Alfalah Limited’s non-performing

portfolio has decreased considerably since July 1997. While risks cannot be

mitigated entirely, formal credit approval process along with inbuilt system of

checks and balances has been put in place to achieve highest quality in the Loan

and Advances portfolio.


CONSUMER BANKING:

Bank Alfalah Limited continually strives to improve and add to the consumer

banking services. In the endeavor to provide best returns to the clients, an

impressive product portfolio has been designed to provide reasonable returns to

them, coupled with security of their capital.

AUTOMATION AND TECHNOLOGY:

Information technology and its optimum use greatly facilitate work and increase

performance potential. Bank Alfalah Limited is in the forefront of providing

customers online and timely services. For this, automated and technologically

sophisticated work flows and systems are a prerequisite.

Bank Alfalah Limited continually invests in upgrading these systems and similarly

training the human resource. The ultimate aim is to achieve both service and cost

optimization.

The in-house developed software BankSmart has been successfully installed in all

the branches and has been well received. Plans are underway for the installation of

ATMs and joining a Switch Group of other prominent banks.

FOREIGN TRADE AND CORRESPONDENT BANKING:

Bank Alfalah is a trade focused Bank. It places special emphasis on maintaining a

synergistic correspondent banking network, with a view to give customers, greater

global access. Bank Alfalah Limited works closely with its correspondents in the

areas of mutual interest and benefit. Today it enjoys mutually beneficial relationship

with over 170 correspondents reflecting favorably not only on its reputation

domestically but also globally. This network has facilitated in handling a trade

volume of RS. 66.93 billion in the year.

CREDIT RATING:

Pakistan Credit Rating Agency-the leading credit agency in the country-has rated

Bank Alfalah Limited very favorably. The bank has been awarded an AA- (double a


minus) and an A1+ (A one plus) in the long and short term respectively. These

ratings denote very high credit quality and very low expectation of credit risk.

The bank also issued Term Finance Certificates in the year 2002. These were very

well received in the market and were oversubscribed by 6 times. PACRA award an

A+ (A plus) rating to these certificates.

TRAINING AND DEVELOPMENT:

Bank Alfalah Limited is committed to the personal welfare and professional

development of all its team members. It realizes that proper training of human

resource is essential, not only for a more productive and satisfied work force but

also for a homogeneous corporate culture.

The bank continues to follow its strategy of hiring batches of young and energetic

management trainees who are sent to a Training and Development Center for

training in all areas of banking. The Training and Development Center is a state of

the art facility with an impressive faculty. At the same time short courses are

continually conducted for other team members to only enhance their skill levels but

also increase their performance potential.

FUTURE OUTLOOK:

The economic future for the country seems brighter with many key indicators

moving in a favorable direction. Investor’s confidence is recovering and

entrepreneurial activity has gained momentum. Amidst these positive

developments, Bank Alfalah Limited will continue to follow a strategy based on

business and deposit enhancement and network expansion.


C H A P T E R F O U R : A N I N S I G H T I N T O

B A N K I N G

B A N K

There are various viewpoints about the origin of the word ‘Bank’. One point of view

is that it is derived from the word ‘Banc us’ which means a bench. The other

viewpoint is that it has originated from the German word ‘bank’ which is called ban

co in Italian language. It is a German word and means a joint stock fund.

C O M M E R C I A L B A N K

A bank or banker is a dealer in credit or more properly a dealer in money. It is an

intermediate party between the borrower and the lender. It borrows from one party

and lends to another. The difference between the term on which it borrows and that

on which it lends forms the source of his profit. The bank therefore, can be called a

financial intermediary that operates for profit motive.

C L A S S I F I C A T I O N O F B A N K S

The commercial banks are classified into various types on the basis of their spheres

of activities, ownership, domicile etc. The main types of banks are: -

Classification on the basis of functions

Classification on the basis of ownership

CLASSIFICATION ON THE BASIS OF FUNCTIONS

Central Bank

Commercial Banks


Exchange Banks

Saving Banks

Agricultural Banks

Industrial Banks

CLASSIFICATION ON THE BASIS OF OWNERSHIP

Public sector banks

Private sector banks

Cooperative banks

CLASSIFICATION ON THE BASIS OF DOMICILE

Domestic Banks

Foreign Banks

F U N C T I O N S O F C O M M E R C I A L B A N K S

The functions of commercial banks are classified as:


FUNCTIONS

PRIMARY OR BASIC FUNCTIONS

SECONDARY OR SUBSIDIARY FUNCTIONS

Accepting DepositsMaking Loans &

Advances

Agency Functions &

ServicesUtility Functions

Fixed or time

deposits

Purchasing and

discounting of bills

Collection of

checks, bills,

interest etc

Foreign exchange

business

Saving deposits Drafts

Execution of standing Orders,

payment of Orders, payment of

Act as referee

Current deposits Cash creditsPurchase and sale

of securities

Issuance of

travelers checks

- Loans Transfer of fundsSupply of trade

information

- - Acting as trustee Export promotion


S E C T I O N T W O

C O R E P H I LO S O P H I E S

AT

B A N K A L FA L A H L I M I T E D


II N T R O D U C T I O NN T R O D U C T I O N

To succeed in today’s volatile, interconnected and ultra-competitive markets, banks

need rapid access to timely information, flexible financial solutions and their alert

execution. Bank Alfalah follows the core philosophy of satisfying its customers

through effective branch network, efficient human resource and economical

products.

Over the years, the management has succeeded in establishing an ideological base

for the employees to build the bank upon: customer loyalty, service with dedication

and development of a wide range of products for the customers to choose from.

Some of the Fundamental Philosophies followed at the bank are:

Excellence in Service

Quality Performance

Product Innovations

S P O T L I G H T O N T H E C U S T O M E R

The customers include small depositors to corporations who are at various stages of

development - from start-ups to multinationals working in Pakistan. The client

coverage and service structures preserve and build on strong customer

relationships.

As the bank continues to develop, internal processes and support system are being

upgraded and integrated to create seamless and efficient service for each

customer, regardless of how many different businesses; client subsidiaries or

locations are involved.

T H E “ K N O W Y O U R C U S T O M E R ” D R I V E

“Know Your Customer” (KYC) is very well known tern for its effectiveness in

marketing of financial services. It is also essential for prudent banking. The KYC

program is international in origin. Under KYC, at the inception of relationship with a


bank, a comprehensive identification of the customer is required and thereafter

transactions in the customer’s account are monitored. Anyone who does not provide

identification will not be allowed access to banking services. Its purpose is to

prevent and detect relationship with unscrupulous elements including prevention of

money laundering. For the purpose of keeping a database of the customer, special

forms have been distributed amongst the branches. The forms serve as a checklist

and allow the interviewer an opportunity to tactfully document all required

information from the customer regarding his source of funds.

B R O A D P R O D U C T C A P A B I L I T I E S

As the bank works with the clients to help them achieve their goals, it can offer all

the products and services they need to obtain appropriate liquidity, diversification

of funding sources, reduced capital costs and stronger balance sheets. Bank Alfalah

Limited is able to execute transactions of almost any size, of every level of

complexity and in multiple currencies. Products ranging from: The Royal Profit

Account to Car Financing, from Savings Certificates to Credit Cards, from On Line

Banking to a wide network of ATMs, and from Remittance Services to Monthly

Income Plans, Bank Alfalah has it all available under one roof.

C R E A T I O N O F A B R I G H T F U T U R E

Bank Alfalah Limited works for the attainment of the contentment of the society

through the satisfaction of its customers. It places high priority to the attainment of

the financial and social growth of the nation. Through this vision, the bank sees a

bright future for the nation and itself.

G R O W T H S T R A T E G Y

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

meet client’s needs so that it may better preserve its organizational culture,

efficiency, quality and image. The bank is well positioned and geographically

poised, to cater for increasing business demands, from its existing and potential

clientele. Presently the branches are spread all over Pakistan and they cover major


business centers and principle cities. Bank Alfalah Limited plans to add more

branches to its growing network in the ensuing years.

C O M M U N I C A T I O N A M O N G S T T H E

E M P L O Y E E S

A good deal of verbal interchange takes place in bank each day. It is a two-way

thoroughfare. The officers discuss rather than direct, listen as well as interact . The

bank makes the communication channel more effective by staff meetings that are

an extension of the conversational or discussion technique but embraces a larger

segment of the bank. Such meetings are regular features of the bank and take a

wide variety of forms, ranging from daily or weekly officers meetings to annual

weekend conferences.

The major portion of communication necessary for the day-to-day operations of a

bank consists of simple person-to-person conversation more complex ideas,

however, gain clarity if they are put in writing. Thus the bank is talented in the

ability to write clearly which is an invaluable management talent that needs

constant practice and development.

M E N T O R I N G P R O G R A M

A mentoring program has been implemented through out the bank. The initiative is

aimed at helping freshly inducted staff members in the bank to integrate and settle

down in their respective assignments as happy and productive employees. For this

purpose, 10 commandments of “Mentoring” have been laid down. They are:

Induction and orientation of the new employees

Coaching in basic workplace manners

Job description and career orientation

Identifying training and development needs

Sponsorship, projection and recognition

Explaining the appraisal process

Culture building and socialization


Guiding and coaching

Counseling

Systematic interaction with new joiners


“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 shareholders.”

TT H EH E V V I S I O NI S I O N


“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

TT H EH E M M I S S I O NI S S I O N


S E C T I O N T H R E E

M A N A G E M E N T S T R U C T U R E

O F



H. H. Sheikh Nahayan Mabarak Al-Nahayan

C H A P T E R O N E : I N T R O D U C T I O N

Bank Alfalah is proud of its Human Resource, as almost all the employees have

been hand picked by the management. However, in this section, I would discuss

those people who are responsible for hiring such a bright staff and establishing such

a magnificent bank. They are the higher management of Bank Alfalah Limited.

T H E C H A I R M A N ( O U T G O I N G )

H. H. Sheikh Nahayan Mabarak Al-Nahayan is an important and prominent member

of the ruling family of Abu Dhabi. After the culmination of his studies at Oxford, he

returned to shoulder important responsibilities in the state administration. In 1988,

he was appointed the President of the higher colleges of Technology comprising of

eight colleges throughout the UAE – a responsibility he fulfilled with distinction. In

1990, he was appointed Minister of Higher Education and Scientific Research.

Presently he also holds the presidency of the Society of the Natural History and

National Heritage. In 1992, he became the Chairman of the Union National Bank and

has since remained involved in strategic management of the institution.

T H E C H A I R M A N ( N E W )


H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan

T H E B O A R D O F D I R E C T O R S

H. H. Sheikh Nahayan Mabarak Al-Nahayan - Outgoing Chairman

H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan - New Chairman

Mr. Mohammad Saleem Akhtar - Chief Executive

Officer

Mr. Abdullah Khalil Al-Mutawa - Director

Mr. Omar Z. Al-Askari - Director

Mr. Abdullah Naseer Hawaileel Al-Mansoori - Director

Mr. Nadeem Iqbal Sheikh - Director

Mr. Ikram Ul-Majeed Sehgal - Director

B O A R D A D V I S O R Y C O M M I T T E E

Mr. Omar Z. Al-Askari

Mr. Abdullah Khalil Al-Mutawa

Mr. Ganpat Singhvi

Mr. Bashir A. Tahir


E X E C U T I V E C O M M I T T E E

Mr. Mohammad Saleem Akhtar - Chairman

Mr. Pervaiz A. Shahid

Mr. Ikram Ul-Majeed Sehgal

Mr. Mohammad Yousaf

Mr. Tanveer A. Khan

Mr. Sirajuddin Aziz

Mr. Mahmood Ashraf

C O R P O R A T E I N F O R M A T I O N

Mr. Hamid Ashraf - Company Secretary

A. F. Ferguson & Co. (Chartered Accountants) - Auditors

B A Building, - Head Office

I. I. Chundrigar Road,

P. O. Box 6773, Karachi.


C H A P T E R T W O : T O P M A N A G E M E N T

H I E R A R C H Y


C H A P T E R F O U R : M A N A G E M E N T

L E V E L S

Management must adopt some administrative style to get all the activities done

effectively and efficiently. As far as the management style at Bank Alfalah Limited

Township Branch is concerned, there is centralization to a certain extent and

decentralization in some other areas.

Administrative style of the Township Branch Manager Mr. Rizwan Ul-Haq was not at

all authoritative. His non-authoritative style was the requirement of the new branch.

For the implementation of strategies and getting all the activities to be done

properly with an organized environment, cooperation was the requirement of the

time. He used to take all important decisions after consulting the Manager

Operations Mr. Farooq Shehzad and the Manager Corporate Banking Mr. Osman

Latif.

Management refers to the universal process of effectively and efficiently getting

activities completed with and through other people. It is a process by which certain

basic functions, that are planning, organizing, leading and controlling, are

performed to achieve the desired objectives of the organization. These functions are

being performed at three levels in Bank Alfalah.

B O A R D O F D I R E C T O R S

At the top of the human resource hierarchy sits the Board of Directors and The

Executive Committee. The most important task of this level of management is

strategic planning, determining the goals and objectives and to formulate the

policies.


T O P M A N A G E M E N T

Top management mostly involves strategy formulation, technical planning,

determining how to best get the job done and control. Chief Managers and Branch

Managers are included in this level. They define and interpret the objectives and

vision and then formulate policies for their completion.

M I D D L E M A N A G E M E N T , S U P E R V I S O R S

A N D E M P L O Y E E S

Departmental heads constitute this level of management at Bank Alfalah. They are

directly responsible for planning and controlling the activities of officers. Finally, the

employees’ activities are monitored and controlled according to the desired

objectives.


C H A P T E R F I V E : S I G N I F I C A N T

M A N A G E M E N T P O L I C I E S

P O L I C Y F O R M U L A T I O N P R O C E S S

At Bank Alfalah Limited, polices are formulated at the top level. Board of Directors

and Executive Committee of the bank formulates policies keeping in view the

mission and the objectives of the bank. So far the policies formulated by the top

level have been very successful as indicated by the success pattern of the bank.

These policies are then implemented according to the guideline of top level of

hierarchy. Top management and middle management are given powers to carry out

the operations for the achievement of long-term objectives. They encourage the

views and suggestions of bank officers as well. It helps in the effective

implementation of the formulated strategies.

Meetings are regularly held weekly at the branch level. However in case of some

urgent problem or issue meeting is called as well. For the solution of a problem

suggestions are always welcomed. It has a healthy impact on the morale of

employees.

I N D U C T I O N

The human resource is the most expensive asset of any organization. This factor

can change the future outlook of any organization within months. The human

resource can either lift the organization through its hard work or destroy the image

of the organization through sluggishness and lethargy. The top management of

bank Alfalah Limited is very much aware of this fact and therefore has started an

MTO induction program. The Management Trainee Officers are chosen from

amongst the best management students from the country’s best institutions. The


Human Resource department conducts a test every year to choose this batch of

around 35 students.

T R A I N I N G

The batch of MTO’s selected every year has to go through a 6-month thorough

training period at the purpose built Training Institute at the bank’s Head Office in

Karachi. Bank Alfalah’s training academy is equipped with the latest audio-visual

training aids, which facilitate in the dissemination of knowledge and skills. This is

done to give an orientation to the employees about the bank and it’s working.

Another purpose of this training program is to upgrade the knowledge base of these

already bright students and to polish their abilities as good bankers so as to bring

their skills at par with those of international banks in developed countries.

P R O M O T I O N

Each year, the superior officer prepares a review of each employee and then,

instead of sending it directly to the Head Office, it is first discussed with the

employee. This is done to incorporate a sense of confidence between the senior and

junior employees. It is also done to give the employee a chance to know his

weaknesses so that he may work hard to improve his abilities and skills the next

year. On the basis of this report, the promotions are made and bonuses are given.

Sometimes other factors are considered such as length of service, education,

training courses completed, previous work history and the like.

S A L A R Y ( P A Y S C A L E S )

The principal criteria for a well-considered and reasonable salary policy are

First, the relationship of the bank’s salary scale to salaries paid for

comparable jobs in the community and the industry and,

Second, the relationship of the salary paid to one person to that paid to

others for jobs of comparable difficulty within the bank.


The salary management of Bank Alfalah Limited is reasonable as many factors

contribute towards the working conditions - job security, prestige and opportunity

for advancement - all enter into the competitive package.

Bank provides fringe benefits to or better than those offered in other industries.

Hospitalization and group life insurance are the rules prevailing in the bank. A more

effective incentive is well-designed bonuses plan with benefits that varies from year

to year and employee to employee in direct proportion to the financial success of

the bank’s operations.

M O T I V A T I O N L E V E L

Job design for motivation is another personnel approach that has been increasingly

emphasized in recent years. Job contents, methods and relationships are structured

not only to satisfy technological and organizational requirements but also to

accommodate human needs for meaningful and self-fulfilling work. Jobs are being

designed to fit the people who hold them in the hope that greater employee

motivation (which is essential to higher productivity) will result.

G R O W T H O P P O R T U N I T I E S

Bank Alfalah Limited provides growth opportunities to its employees and officers.

The bank has a huge number of clients of business class and allows certain relief

and incentives to its employees thus making job more efficient and effective.

J O B S A T I S F A C T I O N

During my internship program, I worked with different employees in different

departments. I observed their working and also their level of satisfaction regarding

their jobs and reward system.


Almost all the employees were satisfied with their jobs, as far as the quality of work

and rewards were concerned. All the employees were highly motivated and sincere

with their jobs. However, one common complaint was the quantity of work. Much

were overloaded with the huge work and even had to work till 9 or 10 pm.

I M P A C T O F M A N A G E M E N T S T Y L E S O N

E M P L O Y E E S ’

Motivation:Motivation: The term motive implies action to satisfy a need. Motivation can

be defined as a willingness to expend energy to achieve a goal or a reward.

The management styles adopted by the bank affect greatly, and employees

are motivated in order to enhance their performance and achieve the derived

goals.

Morale and Productivity:Morale and Productivity: The employees of the bank possess high morale,

and thus exhibit high productivity. The employees are happy and are also

productive workers. Job attitudes and morale are quite positive for two

reasons. Firstly employees gain social satisfaction from interactions at the

work place. Working conditions and supervision are good; secondly high

morale results from high motivation to produce. In other words we can say,

that management should put its eggs in the basket that creates a high-

motivated work force.


C H A P T E R O N E : T H E A C C O U N T S

D E P A R T M E N T

I started my endeavors from the Accounts Department at the Township Branch of

Bank Alfalah Limited. It is probably the only department in the entire bank where

there is almost no direct customer dealing. This department was composed of two

personnel

Manager Accounts - Mr. Tauseef Ahmed, and

Officer Accounts - Mr. Abdul Latif.

INTER-BRANCH ACCOUNTS

Like other commercial banks, Bank Alfalah Limited has a network of branches all

over the country. These branches in different cities are interlinked with each other

through their correspondent accounts in other branches.

In case, there are more than one braches of a bank in a city, the main branch deals

with other city branches through their correspondent accounts. The Head Office

Karachi has this responsibility. Similarly, in one city, all branches of a bank have

their corresponding accounts with each other. So, all payments from one branch to

another branch (in the same city or another) are made by debiting and crediting

these inter-branch accounts.

INTER-BANK ACCOUNTS

Like inter-branch accounts of a bank, different banks have correspondent accounts

with each other. Main branches of banks in a city maintain these inter-bank

accounts. So, money is transferred from one branch of a bank to another bank’s

branch through these inter-bank and inter-branch accounts.


A C T I V I T I E S

The accounts department deals with various routine activities for the bank. The

main activities performed by it are

Budgeting

Reporting

Maintenance & depreciation of fixed assets

Miscellaneous functions

BUDGETING

Accounts department of a bank, for a year makes budget of every branch. Fiscal

year of bank starts from January 01 and ends on December 31. The accounts

department starts preparing budget from October for the next year.

Procedure

The budget is based on forecasting through past performance

First of all, the bank reviews what are its sources of funds and where it

can utilize these funds?

The main sources of the bank are deposits, securities issued by the bank,

borrowing from other banks, borrowing from SBP, bank’s paid-up capital,

its reserve fund, profit generated by the bank.

The bank may employ these funds in lending to others at a high rate of

mark-up. Investment in securities, placement in inter-bank markets etc.

It also takes into account the income from other sources, cost of funds,

administrative expenses, and utilities expenses.

Then the budget is submitted to the head office for recommendation and

modification.

Monthly budget meeting is held by branch managers to analyze the

monthly performance. Budget and actual performances are employed

and variance is computed for analysis.


Variance can be negative or positive. Variance does not mean that it will

have positive effect on the overall profitability e.g. positive increase in

deposits is not always coupled with positive increase in advances.

The management will then drive the reasons for the variance and take

remedial measures to achieve the targets.

REPORTING

The accounts department, in the form of reports, clubs the details of various

departments together. Each and every minute detail is provided in weekly, monthly

and annual reports. The reports are submitted to head office, SBP and to the

government.

The accounts department prepares many reports, of which the most common are

Statement Of Affairs

Income & Expenditure

Foreign Currency Report

Royal Profit Report

Outstand Receipt Report

Subsidiary Statement

Currency Wise Deposits Report

Following are the reports that are prepared on the basis of reports granted from

mainframe. These are very important for proper analysis and feedback.

MAINTAINING OF FIXED ASSETS & THEIR DEPRECIATION

Accounts department maintains the record of all the assets and charges

depreciation on them. The bank normally uses the straight-line method to compute

the depreciation.

The accounts department prepares asset purchase report and asset sale report

after every 6 months that helps in changing the depreciation. It is calculated on

monthly basis and charged yearly. Bank not only depreciates the existing assets but

also the assets but also the assets transferred in and transferred out.


MISCELLANEOUS FUNCTIONS

The accounts department also performs some other miscellaneous functions like

Reconciliation Statements

Test Keys

Closing Entries

Foreign Exchange Forward Transaction

Reconciliation statements

The bank prepares reconciliation statement with head office and SBP.

Head Office

Reconciliation with head office is done in reconciliation department. The

branches send their reports to the head office. They check the posting of all

the entries if outstanding, which has not been posted by branch or head office.

The reconciliation is carried out in the head office and accounts department

handles quarries.

State Bank of Pakistan

The SBP keeps the record of every scheduled bank. The bank statements and

statements of SBP are reconciled on daily basis. Reconciliation is basically

setting of outstanding entries. The reconciliation statement contains two sides.

One contains entries originated from bank but not responded by SBP and on

the other side entries originated by SBP but not responded by bank.

Test Keys

Test keys are used to authenticate and secure the transaction. These keys are used

for both inward and outward transactions. In local transfer double coding is used

while in foreign transaction single coding is used. Each bank to arrive at the code

uses separate test keys. The basic purpose of test is to secure the transaction. Four

things must be carefully checked because code is based these four items

Branch name

Date

Currency

Amount

Closing Entries


Accounts department also passes the closing entries on monthly, 6 monthly and

yearly bases to calculate the profit and analyze the overall performance for a

certain period.

Foreign Exchange Forward Transaction

In the past, the banks had to keep their foreign exchange with SBP on the

agreement that SBP will purchase the foreign exchange on book rate and charge a

fee for covering the risk. This whole transaction was known as foreign transaction.

Now this facility is not available.

Now banks can avail it by renewing their limit on old accounts with SBP.

Bank carries out this transaction through Treasury has two options but it is up to

treasury where to invest foreign exchange.

They can invest foreign exchange in the international market but they will

have to pay high-risk fee.

They can also deposit with SBP that will offer 3.15% on these new foreign

currency accounts. The bank offers 2.25% to its customers; net saving by

the bank is almost 0.9%.

S T A T E M E N T S

The predominant functions performed by the accounts department can be

categorized into two broad categories.

Daily Activity Checking

Report Generation

DAILY ACTIVITY CHECKING

All the operations performed in various departments of Bank Alfalah Limited

Township branch are computerized. The functions are performed through the

customized software of the bank called Bank Smart. In order to facilitate double-

checking of all the transactions done, every concerned official also passes vouchers

manually. At the day end all the vouchers passed by various officers working in

different departments are given to Mr. Abdul Latif in the Accounts Department.


Furthermore the I.T. department also gives a very bulky report to Mr. Latif which

constitutes of the computer print outs of all the transactions / entries which have

been fed into the computer system of the branch that day. When both of these

things are at the desk of Mr. Latif, he performs the job of tallying the daily activity

report with all the corresponding vouchers, in order to track down any discrepancy.

REPORT GENERATION

The exact number of reports generated by the accounts department on a daily,

weekly, monthly, bi-yearly and yearly basis is somewhere in the bracket of 500. It is

neither necessary nor possible to get acquainted by all of these reports in a short

period of time. Some of the common reports are

Daily Advance And Deposit Position

Daily Exchange Position

Daily Fund Management

Closing Reports

Monthly Assets & Liabilities

Monthly Budget Review Report

Monthly Monitory Statement

Monthly Performance Review Report

Schedule Of Maturity Distribution

From these statements, five reports carry extreme importance. Mr. Tauseef Ahmed

helped me understand the purpose and method of preparation of these reports. The

five reports are

Daily position of advances and deposits

Statement of affairs

Daily exchange position report

Fixed assets statement

Month review of performance.

Now I shall explain each of these reports separately.


DAILY POSITION OF ADVANCES AND DEPOSITS:

This particular report gives put forth a detailed break up of the Advances and

Deposits on a daily basis. The report covers all the heads of advances and deposits

so that the reader must be able to ascertain as to increase or decrease in which

head(s) has caused the over all increase or decrease.

The various heads of deposits covered by this particular report are as under

Foreign currency deposits – old accounts.

Foreign currency deposits – new accounts.

Local currency deposits.

The various heads of advances covered by this repot are as under

Foreign bills purchased

Export refinance

Export related advances

Import related advances

Alfalah car finance

Foreign currency advances

Other advances

Staff finances

An enlisting of the columns against these heads would give the reader a fair idea of

the amount of information generated by this report on a daily basis. The various

columns included in this particular report are position at the end of previous year,

expected at the end of month, yesterday’s position, present day’s position, and the

variance in the yesterday’s and present day’s position. The basic purpose of

generating this report is to manage the available funds in a proper

manner and also to maintain a healthy liquidity position.

All commercial banks are supposed to maintain 5% of their time and demand

liabilities with SBP. When all the branches of Bank Alfalah Limited send this report to

the head office head office consolidates the reports of all the branches and sends

the consolidated report to SBP. SBP, after analyzing the deposit position of the bank


checks whether the amount deposited with it is sufficient to meet the 5%

requirement or not. Head office after sending the report to SBP also calculates the

5% requirement amount for every branch separately; if a branch is contributing an

amount which is in excess of what is required of that branch the head office gives

an interest to that branch on the excess amount, and if a branch is short of the its

required amount then that branch has to pay interest on the shortage to the head

office. The second predominant purpose of this report is to have a bird’s

eye view of the advances position on a daily basis.

STATEMENT OF AFFAIRS:STATEMENT OF AFFAIRS:

Statement of affairs is basically the balance sheet of BAL, Township Branch that is

generated by the accounts department on a daily basis. But when we take into

consideration the standard contents of a balance sheet we have to make an

exception in connection with this statement as their no head such as EQUITY in this

statement. Apart from this, the statement gives the complete detail of all the

assets and liabilities on a daily basis. When head office gets this statement

from all the branches it consolidates these statements in order to have a picture of

assets and liabilities of the bank on a daily basis and this is precisely the purpose

this report fulfills.

DAILY EXCHANGE POSITION:

This particular statement is basically aimed towards ascertaining as to how much do

we own in terms of foreign currency and how much do we owe in terms of foreign

currency at a particular date. In simple terms, this statement gives us an overview

of the fact as to what are our assets and liabilities in terms of foreign currencies at a

particular point in time. Moreover this statement also gives us the local equivalents

of the assets and liabilities.

FIXED ASSETS STATEMENT:

This particular statement is generated on periodic basis and contains information

regarding the following items

Furniture

Equipment


Vehicles

Real estate

Moreover this statement also contains information regarding the nature of fixed

assets, particulars of items purchased during the period, date of purchase, the

purchasing price, and name of the supplier. The total amount of fixed assets

purchased must tally with the total amount reported in the Statement of Affairs.

MONTHLY REVIEW OF PERFORMANCE STATEMENT:

This particular six-page statement is generated on a monthly basis. The statement

includes a detailed overview of assets and liabilities of the branch. In order to

facilitate comparison for complete understanding of events and affairs, this

statement also includes the figures for the previous month.

The basic utility / purpose of this statement is that it provides us with the cost of

deposits (the average total interest Township Branch is paying on its deposits),

and administrative cost as a percentage of deposits. When we add the cost of

deposits and the administrative cost we get the cost of funds.

Another predominant utility of this statement is that it provides the reader with the

percentage return on funds that Township Branch is receiving either from the head

office or from its clients. At this point it is relevant to mention that return on funds is

only for the fund-based facilities, the return on non-fund based facilities is

separately calculated and then is added into the return on fund-based facilities in

order to arrive at the total return on funds. If we subtract the cost of funds from

the total return on funds we get the monthly profit generated by Township Branch

as a percentage of deposits.


C H A P T E R T W O : T H E A C C O U N T

O P E N I N G D E P A R T M E N T

The department that is responsible for opening and closing an account assumes

immense significance and holds a central place in the basic banking operations. The

Account opening department was the second department that I was rotated to

during my internship at Bank Alfalah Limited, Township Branch Lahore.

I really enjoyed my stay at this department as I got to interact with the customers

directly for the first time. I was given a desk on the ground floor next to the desk of

Ms. Sadia Kalsoom, who was a Customer Services Officer (CSO) and Officer

Accounts Opening. During my stay at this department I got to fill the forms of

individuals who wanted to get their accounts opened at Bank Alfalah Limited, fill the

cheques and deposit slips of customers who were not literate enough or needed

instructions, and I also got the opportunity to give advice to the customers

regarding the requirements of account opening and the benefits of opening an

account with Bank Alfalah Limited.

The incharge of Account Opening department was Mr. Ammar Raza, who was a

Business Development Officer (BDO). He also provided his full support towards me

during my stay at this department.

The main document in this department is, of course, the Account Opening Form.

D E T A I L S O F T H E A C C O U N T O P E N I N G

F O R M

In the account opening form the client is required to provide the following

information. The first part establishes the currency in which the account is to be

maintained/operated. The currencies include

Pakistani rupee.


U.S. dollar

Pound sterling

Euro

The second part then establishes the preference regarding the type of account to

be maintained. The various choices offered are

Profit and loss sharing/Savings account

Current account

Royal profit account. (Own product of Bank Alfalah.)

D I S T I N C T I V E F E A T U R E S O F T H E

V A R I O U S T Y P E S O F A C C O U N T S

Individuals who wish to earn profit/interest on their investment normally maintain

the profit and loss sharing account but in order to earn interest the client is required

to keep his/her deposits with the bank for some time. In theory there are some

restrictions on withdrawal of money from a Profit and Loss Sharing account but in

general banking practice there is no restriction on any with drawl from a Profit and

Loss Sharing account. The interest/profit is paid half yearly.

The current account is the most common account and the most preferred amongst

business concerns. The theoretical explanation for this would be that they can

function more efficiently but since in reality there are no restrictions on any with

drawl the only reason we could think of is that current account facilitates online

banking which saves time (which in this ultra competitive business world the most

precious resource) to a considerable extent. In case of a current account the client

does not earn any interest. Current account enables the client to do cash

transactions in a more efficient manner.

Royal profit is an original product of Bank Alfalah. The minimum amount to be

maintained in a Royal Profit account is Rs.50,000. Various types of Royal profit

accounts and available. The slab rates offered at the opening of such an account

are:


ROYAL PROFIT (PROFIT BEARING CURRENT ACCOUNT)

Projected profit rates (per annum)

(For the period from 1st May’ 2002 to 30th June’ 2002)

Amount Profit*

From Rs.50, 000 to 999, 999 6.00%

From Rs.1, 000, 000 to 9, 999, 999 6.50%

From Rs.10, 000, 000 to 49, 999, 999 6.75%

From Rs.50, 000, 0000 to 149, 999,999 7.50%

From Rs.150, 000,000 & above To be quoted by treasury

* Profit is paid monthly.

ROYAL PATRIOT (SPECIAL TERM DEPOSIT)

Projected profit rates (per annum)

(For the period from 1st Feb’ 2002 to 30th June’ 2002)

Tenure 1Month 3 Month 6 Month 12 Month 24

Months

Amount (Rs.)

25,000 – 999,999

1000000-

4999,9999

5,000,000 &

above

The information to be provided in the account opening form is as follows

Title of the account is to be written in block letters. By title of an account we

mean the name (either of the individual or of the business concern) with

which the account is to be opened and operated.


6.00% 7.00% 7.50% 8.00% 8.00%

6.10% 7.10% 7.60% 8.10% 8.25%

6.20% 7.20% 7.70% 8.20% 8.50%

5 7

The client is supposed to provide the information whether the account would

be maintained singly (only one person operates the account) or jointly (two or

more than two persons maintain the account).

Name of the person who intends to operate the account is to be provided.

Provision of either Father’s or the Husband’s name is also a pre-requisite.

Occupation of the prospective account holder is also to be written.

Name and complete address of the employer is to be written.

Nationality is to be provided.

Country of residence is to be specified.

Telephone number is must.

The national identity card, of course is an integral part of the account

opening application.

Passport number, if the prospective client has got one.

Another requirement is the date and place of issue of the national identity

card.

The prospective client also has to provide the name, address and relationship

of any one of his/her close relatives in order to facilitate the communication

problem. The clients often have a misconception that there next of kin might,

if some peculiar circumstances arise, get the profit out of his account but this

is not the case. The name and address of a close relative is only recorded in

order to undertake necessary communication when needed.

In case of a business concern there are two more things that are to be

provided by the business.

Type of organization. The various types of organization which are present in

Pakistan at present are

Limited company

» Public

» Private

Partnership

Association/Club/Society

Sole-Proprietorship

The business concerns also have to give their full name, brief description of

the business, date of incorporation, place of incorporation, national tax

number, telephone number and fax number.


The choice of either the deduction or non-deduction of zakat also needs to be

highlighted. Zakat is deducted out of a Profit and Loss Sharing account and a

Royal Profit account maintained in Pak Rupee and not out of any account

maintained in any other currency. Moreover exemption from zakat would only

be granted if proper proof of exemption under a law presently enforced in

Pakistan is provided.

Details of other account/s maintained with other branches of BAL or other

banks are also to be given.

The name, signatures, and account number of the introducer is a very

essential prerequisite in order to facilitate the opening of an account. The

introducer is a person who already has an account in the same branch. It can

also be a person from the staff of the branch as well.

Then the client also has to put forth the instructions regarding as to whether

the account would be maintained on the basis of ‘either or survivor’, ‘jointly’

or ‘any one of us’.

After this three signatures of the client are needed and if it is an account of a

business concern then the rubber stamp of the company/organization is also

needed below the three signatures.

In case of a joint account all the persons unanimously might give the right to

operate the account to one person. This right is also termed as mandate for

joint account. If the mandate is given to a person all join account holders

must sign as an evidence of their approval.

In case of account opened by a business concern there are some documents that

are needed to be attached with the account opening form. The details of these

documents are given below.

LIMITED COMPANY:

Copy of certificate of incorporation

Memorandum of Association

List of Director’s

Copy of board resolution

Certificate of Commencement of Business

Copies of NIC of Director’s

Latest copy of Form-29


PARTNERSHIP:

Partnership deed certified copy

NIC photocopies of all partners.

Partnership mandate for account signed by all the partners

A letter duly signed by all the partners containing the operating

instructions of the account also has to be taken.

CLUB/SOCIETY/ASSOCIATION:

Copy of rules/ by-laws

Copy of registration (if applicable)

List of Executive member management committee/management board

etc

Certified copy of Resolution

NIC of all members of the management body

SOLE PROPRIETORSHIP / INDIVIDUAL:

NIC/ Passport photocopy

Letter from Proprietor confirming “sole proprietorship”

There are two things that always accompany an account opening form;

Signature Specimen Card.

Cheque Book Requisition.

Signature specimen card basically contains information that is basically a repertoire

of information given in the account opening form, but in this card the client vividly

puts his signatures as a specimen, which are scanned and stored in an intelligent

terminal for future use and reference.

Cheque Book requisition basically serves as an application to issue a Cheque book.

The client also fills it up and submits it along with the account opening form as a

result of which he is issued a Cheque book once his account is approved. As regards

the Cheque book one of the most important entries in a Cheque book requisition is

the series number of Cheques that correspond with the numbers of the cheques

contained in the Cheque book issued to the client.


P R O C E D U R E O F O P E N I N G A N A C C O U N T

Step 1-The Account Opening Form:

When a client comes to the bank, and makes a request for opening of an A/C. The

officer says that first fill up a prescribed application form. If he/she wants to open a

PLS A/C, then he/she has to fill a form according to the account.

Step II-Completion of The Form:

The name, occupation, and complete address of the person opening the account are

written in the columns are provided in the form. One signature of the person is

taken on the face of the form and one is taken on the backside. These signatures

should be usual signatures and he would operate the account with them future.

Step III-Introduction:

The introduction of a current account holder is accepted for the opening of either a

current account or a solving account. The introduction of saving bank account is

accepted only for saving bank accounts. The signature of the account-holder

introducing the account is obtained at the place provided for in the account opening

form.

Step IV: Specimen Signature Card (S. S. Card):

The signatures of the client are obtained on a specimen Signature card. These cards

are obtained in duplicate with two signatures on each card from the customer.

Every time a cheque is received for a payment from the client, the signature on the

cheque are verified by comparing them with the S.S. Card.

Step V-Account Number:

When all the formalities are completed then the final approval of account has to be

taken from the Branch Manager. After obtaining approval of the branch manager an

account number is allotted to the customer all the information is entered into the

computer. Then that account number is printed on the Cheque Book, S. S. cards and

account opening form.


Step VI- Issuance Of A Cheque book:

After opening an A/C with the bank, the A/C holder once again makes a request in

the name of bank for the issuance of a cheque book. The A/C holder mentions title

of A/C, A/C number, sign it properly and mentions the no of leaves he requires.

Normally BAL issues a cheque book having at least 25 leaves. Every cheque book

also contains one leaf that is used for another issue of a cheque book.

Step-VII Entry Of A cheque book:

Before issuance of a cheque book, the employee performs certain functions. They

include:

Stamping every leaf with specific A/C number.

Enters it in the cheque book issue register.

Check whether or not a senior officer has verified the signatures, if no

then first he gets them verified.

After entry in the manual register, the employee issues the cheque book to the A/C

holder after his/her signature on the register.

Step-VIII Filling Of Account Opening Forms:

For current and saving account, separate files are maintained in which the forms

are pasted or punched in numerical order and kept under lock and key in fireproof

steel or safe. This is because these forms are the basic documents of the contract

with the customer.

Step-IX Maintaining the Computer Record:

After opening of account, all information regarding the account is entered into the

computer. Currently, a program named Bank Smart is being used for this purpose.

Record of all the transactions regarding the account of a customer is kept updated

in the computer.

P R O C E D U R E F O L L O W E D I N O R D E R T O

C L O S E A N A C C O U N T


The procedure followed for the purpose of closure of an account is described in the

following steps

The client who wishes to close an account first has to give an application,

duly signed on the pre-printed application of the bank. The client has to

attach this application with the liability form (explained below). The client can

also give an application on a plain paper, but correct signatures are very

necessary.

Then it has to be made sure that if the account to be closed is a Saving,

Royal Profit, or Foreign Currency Account then the account balance before

closing should be zero. In case of these three types of accounts the bank

does not take any closing charges. If a client wishes to close a current

account then the bank charges Rs.150, so at the time of closing the balance

should be Rs.150.

Along with the application to close the account client’s Cheque book is also

received from him and then it is destroyed in order to prevent any misuse in

the future.

A liability form is filled and sent to the Trade Finance Department and Credit

Department in order to Cheque that the customer does not owe the bank a

single penny in any regard. A debit voucher and a credit voucher are also

attached to the liability form.

When both of these departments approve that the customer does not owe

any money to the bank and the form is returned to the account opening

department then the original account opening form pasted in the ledger

when the account was opened is marked ‘account closed’ along with the date

on which it is so marked. One thing has to be taken into immediate

consideration that the account number allotted to the client (who has closed

his account), after closure of the account becomes useless and is not allotted

to any one in the future.

After approval of the liability form, it is sent to either the Foreign Currency

Accounts Departments or the Cash Department, as the case may be so that

the officer who scanned it in the first place could return the specimen

signature card to the account-opening department.

Once the S. S. Card is received back from the concerned official then the

liability form, the client’s application along with the specimen signature card


is pasted in the ledger right along side the original account opening form. The

form has to be pasted with the original account opening form even if the

account was opened a decade ago. In the computer as well all the entries and

records related to that particular account are permanently deleted by using

the ‘close account’ option.

V A R I O U S T R I B U L A T I O N S T H A T M A Y

A R I S E

If client’s signatures are not mature enough

In this particular case in order to facilitate proper recognition of the client a picture

account is opened and two pictures of the client are taken; one is affixed on the top

left of the account opening form and the other is affixed on the Specimen Signature

card. The stamping of such an account opening form is also somewhat different. On

every picture a round stamp of Bank Alfalah Limited is affixed. The stamp is put in

such a manner that it covers both the picture and the account opening form or the

specimen signature card whatever may be the case. Another stamp is put on the

account opening form that says all cheques to be signed in the presence of the

bank officer.

If a client wants to change his/her signatures

In this specific situation the staff of the account opening form has to ask the client

to give an application requesting a change in the operating signatures. This

application should contain the old signatures which function as a proof that this is

the very client and no one else is changing the signatures on his behalf. The

application should also contain the new signatures with which the account would be

operated in the future. The staff after verifying the old signatures from the

computer gets a new Specimen Signature card signed by the client (the client puts

his new signatures on the S. S. Card). The new signatures are approved, admitted,

scanned and properly stored for future reference.

The account of a minor.


In case a minor wants to open an account with the bank then a relatively different

procedure is followed, reason being that the minors do not possess their National

Identity Card. So, the staff of account opening department requires the national

identity card of the father / guardian. Along with the national identity card of the

minor the bank staff will also require the minor’s form-B. The guardian would sign

the account opening form, he would also give his signatures in the specimen

signature card, and he would also sign the Cheque book requisition i.e. the bank

would first admit and later on verify the signatures of the guardian and not the

minor. The cheques would be cashed with the signatures of the guardian. In the title

of the account first the name of the minor would be written and then the name of

the guardian will follow. Thus practically the account would be run / maintained by

the guardian. But there is a provision that when the minor becomes a major and

gets hold of his N.I.C. then, upon his application the account could be transferred in

his name.

Issuance of a cheque book.

Cheque book issuance is of considerable significance as it is through cheques that

the withdrawal of money becomes possible. When a prospective client is handed

over the account opening form, he is also given the cheque book requisition. A

Cheque book requisition basically serves as a request performa, in which the client

asks for the issuance of a new Cheque book, writes the account title, gives the

account number and also specifies as to whether he requires a Cheque book

consisting of twenty five, fifty, or hundred leaves.

File update.

All the entries, which the staff of the account-opening department makes in the

computer system, are corresponded to them the next day in printed form by the

computer department. The entries, which the staff of the account-opening

department makes, are namely

Entries related to opening of a new account.

Entries related to issuance of a Cheque book.

Entries necessary to record any alterations which may take place in the

clients data.


This feedback is given to the account-opening department so that they could

scrutinize the data fed by them for any possible mistake. For example the there

could be some mistakes in the spellings or there could be some mistakes in the

addresses of the clients or the telephone number might be missing etc. If the print

outs show any mistake that is corrected and if every thing is satisfactory then these

print outs are filed for future records and reference.

O T H E R T Y P E S O F A C C O U N T S

TERM DEPOSIT ACCOUNTS:

Term deposit account is essentially a fixed deposit account. It is opened if a

customer is willing to deposit his funds with the bank for a period within which he

cannot withdraw his money. In case a customer withdraws his amount then he is

given no interest at all on the principal. Normally people tend to fix their deposits

with the bank for a relatively longer period of time (3 years, 5 years etc.) although

the facility of opening a term deposit account is also offered for short tenors like 7

days, 30 days etc. reason being that as there is a positive relationship between the

tenor and the rate of interest i.e. longer the tenor higher would be the rate of

interest. Customers benefit by opening a fixed/term deposit account as they earn a

higher rate of interest which cannot be earned if you are operating, say for example

a savings account. At this point one thing must be taken into immediate

consideration that only those people will fix their money that do not face any

problem regarding liquidity, people having one would feel contend with a lower rate

of interest but would certainly go for some other account like royal profit or savings

account. Banks benefit by opening a term deposit account as funds are placed with

them for a longer period of time and the bank can earn a lot by advancing these

funds more than once, specifically if the advancing is short or medium term.

At Bank Alfalah Limited, fix deposit accounts can be categorized into two types;

Classic PLS deposits.

Royal Patriot (Special Term Deposits).


The nature of both of these accounts is similar i.e. both are fixed deposit accounts,

but the only difference is regarding the rate of interest. In case of Classic PLS

deposit accounts the rate of interest that is offered is not related to the magnitude

of the amount that is being deposited rate of interest is only correlated with the

tenor for which the amount is being deposited.

CALL DEPOSIT RECEIPT:

Issuance of call deposit receipts is basically a free of cost facility offered by Bank

Alfalah Limited not only to its own customer’s but also to walk in clients. When

government organizations, or for that matter non government organizations float

tenders for execution of a particular task, they require that the organizations who

are participating in that tender i.e. organizations who have applied for the tender

should, along with other documents, also submit a monetary guarantee certifying

that they will definitely perform the required task upon acceptance of their offer.

This requirement is basically put forth in order to safeguard the government

organization from facing a situation in which the participants show inability or

inadequacy to perform the required task after acceptance is granted in their favor.

Such a situation generally is not desirable as the government organizations have to

under go the procedural steps of floating and accepting the offers and in the

process they have to incur additional costs. For this purpose the call deposit

receipts is issued which is a monetary guarantee that if the organization

does not work as per the tender requirements the government

organization can en-cash the call deposit receipt and recover its losses.

S O M E I M P O R T A N T D O C U M E N T S U S E D I N

T H E A C C O U N T O P E N I N G D E P A R T M E N T

Liability Form

This particular form is used when an account is to be closed. The staff of account

opening department, after filling in the name and account number of the client

forwards this form to the credit department and the trade finance department who

upon receipt of such liability form make required scrutiny so as to check whether or

not the customer owes some money to the bank or not.


Account Statement Request Form

This small form is used to request for the account statement for the desired period.

The client gets this Performa from the account-opening department and then, after

filling it up, gives it to the computer section that gives the statement to the client in

printed form.

Vernacular Form

This form basically functions as a thank you letter (and also as a request) on behalf

of the customer if he wants to operate his account by doing signatures in a

language other than that of English. In this particular form the client gives his

assurance in writing that he would indemnify the branch against any loss that may

be caused by reason of his signing in a language other than that of English.

Issuance Requisition

This requisition is used by the staff to order for any thing (e.g. stationary) they

need. They write the type and quantity of the stationary they need, get it signed by

the Manager Operations, give it to the person in-charge of issuance of stationary

who on receipt of this requisition (duly signed) issues the stationary.

Debit And Credit Vouchers

These two vouchers are basically used when an account has to be closed. The debit

voucher shows as to how much amount has to be taken from the client’s account

and the credit voucher shows as to hoe much amount has to be credited as Bank’s

income, in order to facilitate the account closing process.

Application To Close The Account

This is a pre printed application of the bank in which the client fills in the account

number, the title of the account and the type of account and requests the branch

manager to close his account with the Bank.

Application To Change The Address

This is again a pre printed request form in which the client fills in his name, account

number, telephone number/s and the new address so that he could communicate


with the bank and receive all the notices, statements and other necessary

document which the bank might send through mail depending upon the

circumstances.

Mandate Form Used By An Individual To Enable A Third Party To Operate The

Account

An individual to enable another individual to operate hi/her account without

changing the title of the account uses this form. In this form the account holder

certifies that the person to whom he is giving the mandate shall be fully authorized

to embark upon all possible transactions with regard to this account unless and until

otherwise specified. The original account holder writes his account number, the title

of the account, and puts his signatures. The signature specimen card to be filled by

the person who is being given the mandate is attached with this form. That

individual fills it up and his signatures are also scanned and entered into the

computer system for future reference in similar fashion as the signatures of a new

client are scanned and entered into the computer system.


CHAPTER FOUR: THE COLLECTIONS

DEPARTMENT

When cheques and other negotiable instruments drawn upon other banks outside

the city (Lahore) are presented in Bank Alfalah Limited, Township Branch, Lahore to

deposit in payee’s accounts, then instead of clearing, these instruments are lodged

in collection and constitute outward bills for collection.

Cheques of cities, where Bank Alfalah Limited branch exists (e.g. Islamabad,

Faisalabad etc.) are sent to that branch where these cheques are lodged in outward

clearing. Otherwise, they are directly sent to the drawee bank. Postage & other

charges are deducted on account of payee according to Schedule of Charges.

As Bank Alfalah Limited, Township Branch, Lahore did not have enough workload,

Mr. Mersab Ahmed was given the task of accepting the outward bills for collection.


C H A P T E R F I V E : T H E C L E A R I N G

D E P A R T M E N T

One of the basic economic function of commercial banks is to receive deposits and

to honor cheques drawn upon them. So, cheque is a most commonly used

instrument for making payments by account holders. Along with the cheques, there

are some other negotiable instruments that are used for making payments and are

drawn upon a bank. But cheque holds prime importance in banking.

Now the question arises that how these cheques & other negotiable instruments

drawn on one bank are deposited in other banks and money is transferred from one

bank to another. Clearing House has provided this facility. Clearing house

facilitates different banks to get their cheques drawn upon other banks to be

cleared.

Cheques lodged in clearing constitute two types of clearing

Outward Clearing

Inward Clearing

OO U T W A R DU T W A R D C C L E A R I N GL E A R I N G

When cheques and other negotiable instruments drawn upon other banks like MCB,

ABN-AMRO of the same city (as Lahore) are presented in Bank Alfalah Limited to

deposit them in the respective payee’s accounts, these instruments are lodged in

outward clearing of Bank Alfalah limited.


S T A M P S P U T O N T H E C H E Q U E S

When the cheques are presented in BAL to be deposited in their respective payee’s

accounts, different stamps are put on cheques before their lodgment in outward

clearing.

CROSSING THE CHEQUES

Crossing means two parallel transverse lines, drawn across the face of the cheques

with or without words written in between them. Crossing may be general or special.

In clearing, cheques are crossed specially. Cheques are stamped with bank’s name

between two transverse parallel lines to constitute special crossing. After the

cheques have been crossed specially, the holder cannot receive payment except

through the banker named on the cheque. Basic advantage of crossing is to save

the instrument to go it from illegal hands. If, a crossed cheque is lost or stolen,

there is no risk of wrong payment. So it is an effective means of minimizing the risk

of loss or forgery.

CLEARING STAMP

After the cheques have been crossed specially, clearing stamp is put on the

cheques and other instruments, with the following day’s date, as these cheques

would have to be presented in their concerned drawee banks on the subsequent

day.

ENDORSEMENT STAMP

The word endorsement is derived from Latin word ‘indorsum’ that means ‘on the

back’. Ordinarily, it means anything written or printed upon the back of an

instrument. So, at the end, the cheques are endorsed in full (endorsed specially) by

putting the stamp with words describing “ Payee’s account Credited in Bank Alfalah

Limited, Township Branch, Lahore”.

After putting these three stamps on cheques & other negotiable instruments, they

are sent to NIFT (National Institutional Facilitation Authority) with Add List.

NIFT after segregating the cheques of different banks delivers them to their

concerned banks, which constitute the inward clearing for those (drawee) banks.


II N W A R DN W A R D C C L E A R I N GL E A R I N G

Cheques and other negotiable instruments (PO, DD, PS, CDR etc.) drawn Bank

Alfalah Limited, Township Branch, Lahore, sent by other banks, constitutes the

inward clearing of Bank Alfalah Limited. After having all the stamps and dates of

cheques confirmed, the concerned drawer’s accounts are debited (in Bank Alfalah

Limited, Township Branch, Lahore) and main branch’s account is credited by the

total amount.

R E T U R N I N I N W A R D C L E A R I N G

In case of cheques dishonored (returned) due to some deficiencies, the main

branch’s account is debited by the amount of cheques returned.


C H A P T E R S I X : O N L I N E

T R A N S A C T I O N S

During my rotation to the Remittances department, I used to spend some time in

the evening with Mr. Muhammad Jahangzeb, who was the incharge of the online

transactions. He was an M. Com. graduate of Hailey College of The University of the

Punjab and, as we were University fellows, helped me understand the functioning of

the Online Transactions between branches of Bank Alfalah Limited.

Online transaction is a facility which is being provided to those account holders of

Bank Alfalah Limited who maintain a current account with he bank and also

maintain a minimum balance of Rs.100,000 at all times. If a person fulfills these two

conditions then he has to fill up a request form in which he requests that his name

should be added in the list of clients to whom this facility is presently being

extended. He also gives his account number, and the branch or branches with which

they want to initiate online transaction. With the help of online facility it is possible

for clients that they can get cash from their account in e.g. Islamabad while

standing at the counter of Lahore Branch or they can deposit money in a person’s

account in Main Branch Karachi to whom they have to make a payment, while

standing at the counter of Multan Branch. All this has been possible due to the use

of centralized MIS system and Bank Smart Software, along with a network of highly

sophisticated servers at all branches through out the country.

The very first thing the concerned official does, when he receives a request by the

customer, is that he verifies the client’s signature by comparing them with the

signatures which are there in the bank’s records. If there is nothing wrong with the

signatures then the case has to be approved by the manager. After his approval the

officer writes a letter addressing the branch (supposing that the person wanted

online facility with only one branch), requesting the branch to add that person in

their online client’s list. In this letter we would mention the person’s name and

account number. Suppose the branch with which the client wanted to have online

transactions was Bank Alfalah Limited, Multan Branch. Now if some person (who has


his account in Multan Branch) has to make a payment to our client who has his

account in Bank Alfalah Limited, Township Branch, Lahore, he would present the

Cheque at Multan Branch and direct them to deposit it in account # ____ at

Township Branch, Lahore through online transaction.

Multan Branch would inform Township Branch, Lahore through an I.B.C.A. (Inter

Branch Credit Advice) that would be faxed to Township Branch, Lahore.

Before I go any further it would be pertinent to mention here that the amount with

which online transaction is being done should be greater than Rs.50,000 in order to

make the transaction cost free. If the amount is less than Rs.50,000 then Rs.100

would be deducted as charges from the account which is being credited as a

consequence of the online transaction. Moreover another pre requisite of online

transaction is that all the cheques involved in an online transaction have to be cash

cheques.

Now suppose the Cheque is of Township Branch, Lahore and the person wants to

get it en-cashed at Faisalabad Branch. He would hand over the cheque to the

concerned official at Faisalabad Branch and direct him that he wants the cash

through an online transaction. The concerned official would fill a request form the

contents of which are; date on which the request form is being filled, date which is

written on the Cheque handed over to him, the title of the account, the account

number and the Cheque number. After filling in the online transaction request form

they would paste the Cheque at the request form and fax it to Township Branch,

Lahore. The concerned official upon receipt of this fax would first of all verify the

person’s signatures on the Cheque (as his account is with Township Branch,

Lahore).

When the official does this, the computer system would generate an IBCA that will

be faxed to the Faisalabad Branch. Faisalabad Branch would make sure that the

dates; the amount and the Cheque number are the same as in the request form and

Cheque faxed by them. Two officers holding power of attorney would also sign the

IBCA sent by Lahore Branch. Faisalabad Branch would verify the signatures of the


two officers by comparing them with the signatures in Bank Alfalah’s Specimen

Signature Book.

After crediting the party’s account the concerned official would again debit that

account and would hand over cash to the person who initiated the online

transaction (i.e. he would credit cash).

At day end the online personnel of every branch has to make two separate lists of

all the debits and all the credits which were executed as a result of various online

transactions. Both of these statements are faxed to the reconciliation department of

Head Office that very evening or the next morning. The contents of these lists are;

serial number, IBCA number, city with which online transaction was done, amount,

date, and whether the branch was the Originating Branch or the Responding

Branch.


C H A P T E R S E V E N : A L F A L A H C A R

F I N A N C I N G

After the remittances department, Mr. Farooq Shehzad handed me over to Mr.

Osman Latif, who was the Manager Credits of the Township Branch. Mr. Osman,

after consultation with me, decided to let me spend some time in the Car Finance

Department. Two officers of this department, namely Mr. Abdul Khaliq and Mr.

Farrukh Naeem sat on the first floor of the branch building.

Although the Township Branch was a small and emerging branch, still the demand

for financed cars through Bank Alfalah lead this department to prosper a lot. This

department handles a large number of customers daily and, without overstatement;

this department is the second “busiest” department after the Account Opening

Department. It requires constant customer interaction and requires high level of

intelligence to screen the validity of the customers.

Where as sound marketing skills are required to actually force the walk-in customer

to select Alfalah Car Financing, still stronger skills are needed to scan the incoming

customer for validity and long-term liquidity. This is because the client has to pay

only 20 % of the actual price of the car (minimum) where as the bank has to put in

the rest 80 %. He rate charged by Bank Alfalah for the car financing is 17% (this

rate was one of the lowest in June – August 2002, where as most recently the rate

has been reduced steadily to 8.9 % and 9.5 % for Pak- Suzuki manufactured cars

and for all other brand cars respectively). Another thing to note here is that Bank

Alfalah Limited only finances brand-new cars. It does not finance second hand

cars because of the concern of exploitation or improper ownership at the time of

sale.

I spent only 2 – 3 days in this department. This time period was quite enough to get

the knowledge of the working of this department. Although there are some points

where my knowledge is limited, in most of the instances I have tried to give an all-

inclusive outlook of the department.


The procedure followed to finance a car is briefly discussed in the following lines:

STEP ONE: THE CLIENT SUBMITS APPLICATION AND

REQUIRED DOCUMENTS

The very first thing the client has to do is that he has to give an application

requesting the bank for financing of a car. Along with the application the client is

suppose to attach some documents which are

Copy of N.I.C

Copy of Utility Bill(s)

Bank Statement for last six months (from the date of application)

Signature Verification Form

Proof of Proprietorship/Partnership

The application form along with the personal data also contains the home address,

the address of the place of business (if the client is a business man), and two

references. These three things are of immense significance for the verification

officers. Moreover in the application form the client has to mention how much down

payment he is going to make. It is a policy matter of Bank Alfalah that the minimum

percentage of down payment is 20 % i.e. the client must at least pay 20 % of the

sale price as the down payment. If a client feels like paying a higher percentage as

down payment than there is no higher limit; he can pay as much he wants to,

provided that after he pays his down payment the amount to be financed by the

bank does not go below Rs.200,000. The down payment apart from 20% (minimum)

of sale price also includes

Processing charges

Advance first month’s installment (this is not included if the client opts for

deferred installment)

First year’s insurance premium

Registration charges


The I.R.R. (internal rate of return) Bank Alfalah offers is one of the minimum in the

market at this point in time i.e. 17%. A list of IRR’s offered by various banks is as

under;


ORGANIZATIONMARKUP

(JUNE – AUGUST 2002)

City Bank 18%--19%

Askari Bank 18%--19%

Standard Chartered Bank 18%

Faysal Bank 16%--18%

Union Bank 17%

Another important thing that is relevant to mention is that Bank Alfalah provides the

facility to the clients that they can get a package of loan repayment period of any

thing in between one year and five years.

STEP TWO: VERIFICATION PROCESS BY THE VERIFICATION

OFFICERS

This step embodies immense significance as the results of this very step reveal

whether the client is genuine and trustworthy and whether all the details provided

by him are true or not. What the verification officers do is that they first visit the

house of the client and certify that the client has provided the bank with the correct

residential address. Then they inquire about the conduct, character, behavior,

occupation, and other activities of the client from at least two of his/her neighbors.

After being satisfied the verification officers visit the place of business (if the client

is a business man). There they first make sure that the said business actually exists

and the factory/organization/company actually is situated at the said place. The

verification officer also makes sure of the following things

A satisfactory number of workers are there at the place of business

A satisfactory number of machines are there in working condition

The covered area is in logical compliance with the nature of business


Then the verification officers either visit or call any one or both of the references

given by the client in the application form. Questions of similar nature are put forth

to these individuals. When all aspects of the verification process are complete then

what the verification officers do is that they prepare four reports namely

Business office verification report

Residence verification report

Reference verification report

Telephone verification report

These reports are than filed in the proposal file and these constitute an integral part

of the proposal.

STEP THREE: PREPARATION OF THE PROPOSAL FILE

Once the customer’s credibility is verified then the file is prepared for

acceptance/approval by the branch Credit Committee and subsequently by the

Head Office. This preparation calls for attachment of certain documents apart from

those that were provided by the client along with the application. These documents

are

Borrower’s Basic Fact Sheet

The Proposal Sheet

A Check List

Credit Information Bureau Report

Verification Reports

Printed Statement of Customer Inquiry Generated by the System

STEP FOUR: EXECUTION OF LEGAL DOCUMENTS

After the approval stage the client is called to the branch and the process of legal

documentation is under taken. For this purpose the operations personnel gets the

signatures of the client on all the legal documents including the offer letter which is

of prime importance. The list of legal documents the client has to sign is as follows;


The account opening form as a result of which the client (if he wants a

current or PLS account with Bank Alfalah) could give the post-dated cheques

for payment of installments

The letter in which the client acknowledges the Finance Limit that has been

provided to him by the bank

The agreement for financing the motor vehicle on Morabaha Basis

The schedule to Morabaha agreement

Letter of hypothecation of motor vehicle

Irrecoverable power of attorney

Letter of authorization to take possession of motor vehicle

Bill of exchange without recourse to the drawer

Delivery acceptance form

Transfer letter

Promissory note

Letter of hypothecation of movables

Apart from these legal documents one of the most important documents is the

offer letter. The offer letter basically consists of a brief description of the

following;

Amount Of Finance Facility

Mode Of Financing

Period Of Finance Facility

Purchase Price Payable

Markup / Pricing

Payment Schedule Of Purchase Price

Insurance Premium

Prepayment

Documentation

Down Payment

Administration Fee / Processing Fee

Availability

Cancellation

Purchase Of Motor Vehicle


Disbursement Of Purchase Price

STEP FIVE: RECEIPT OF DOWN PAYMENT AND POST DATED

CHEQUES

When all the legal documents are properly signed then the customer is asked that

his share of financing (the down payment) is required. As I mentioned above that

the down payment apart from 20% of the sale price also includes the processing

charges, the registration fee, the insurance premium of first year, and Advance first

month’s installment (if the client opts for advance installment). The customer

comes to the bank deposits this amount and also gives the bank post dated

cheques, duly signed. These cheques are of the amount of installment due to the

customer on monthly basis.

STEP SIX: GETTING THE CAR INSURED

Now comes the step to insure the car for which the financing is done. The bank has

to get the car insured, as it is a part of the car financing agreement that the car has

to be fully insured. What the bank does is that it issues a letter addressing the

insurance company specifying all the details of the car to be insured and also

communicates this to the insurance company as to which show room the insurance

inspector will have to go to locate the said car. The inspector goes to that particular

show room and, after duly inspecting the car makes an inspection report. The

preparation of inspection report serves as an informal guarantee of the preparation

of the insurance policy. After two or three days of the preparation of the inspection

report the representative of the insurance company comes and hands over the

insurance policy to the bank. This insurance policy is in the name of the respective

client, but care of Bank Alfalah Limited is vividly marked.

STEP SEVEN: ESTABLISHMENT OF DELIVERY ORDER AND

DEMAND DRAFT (IN THE NAME OF THE MANUFACTURER)

When bank has got physical possession of the insurance policy the car dealer is

suppose to send the bank a quotation of the car being sold, on his official letter

head. On the basis of that quotation we make the delivery order, which contains the

instructions for the dealer that now he, should hand over that car to the customer.


The bank will not pay to the dealer the bank would make a Demand Draft in the

name of the manufacturer and hand it over to the dealer and the dealer would give

it to the manufacturer. Now the question arises as to why the bank not makes a

demand draft in the name of the dealer. If we are issuing a demand draft in the

name of the manufacturer it serves as a guarantee that we are buying a new zero

meter car of 2002 model as manufacturers have no car with them other than the

latest version. Moreover it is a policy matter of the bank that no demand draft of car

financing department would be issued to a person/organization other than the

manufacturer.

STEP EIGHT: GETTING THE VEHICLE REGISTERED

When the manufacturer gets the payment against the demand draft then he sends

the Invoice to the bank. This invoice contains all the details of the vehicle namely;

price, customer name, bank name, color of the vehicle, mode of payment etc. If the

car is completely ready for the delivery this invoice will also contain the engine

number and the chassis number, but if the car is not ready for delivery i.e. it is in

the booking process than the invoice will not contain these two items. The bank

gets the vehicle registered with the help of its private agents on the basis of this

invoice. The agents get Rs.1100 per car they get registered.

STEP NINE: RECEIPT OF MONTHLY INSTALLMENT

Now when the car is with the customer and he is fully enjoying it what the staff of

car financing has to do is that it has to present the pre-signed post dated cheques

on monthly basis, and if a Cheque bounces the recovery staff has to get the money

from the customer. If three cheques of a particular client bounce on a trot and the

client also does not bother to make payment through cash or via issuance of

Cheque of another account then Bank Alfalah, as per the signed legal documents

has the right to repossess the car, which it does.


C H A P T E R E I G H T : C R E D I T S

D E P A R T M E N T

Credits Department is one of the most important departments of any commercial

bank. Credits Department is the department where the top-notch officers perform

their duties in every bank.

The last part of my internship rotated me to the Credits Department, where I spent

almost three weeks. It constituted of only one officer in the beginning but, as the

branch was expanding at a very healthy rate, the branch manager requested the

appointment of a Manager Credits. Thus Mr. Osman Latif was appointed as

Manager Credits (Corporate and Consumer) to help out Mr. Zubair Baig (Officer

Corporate & Consumer Banking). Mr. Zubair was working in the branch from its

initial days and had seen the branch go through good and bad days.

Every fresh inductee of any commercial bank dreams of starting his career as a

credit officer. Certainly, the effectiveness and efficiency of credit officers also

directly impacts the income generating capacity of a commercial bank. This is

because these individuals earn the income for the bank. The deposits that a bank

receives are its liabilities and on that it has to pay a certain amount of profit as

return. Whereas, the advances that a bank makes through the credit department

are its assets and it receives certain return on them. This is the main income of any

commercial bank. The bank receives money on lower rates and advances them on

considerably higher rates, thus keeping the spread for itself as its income.

C R E D I T P O L I C Y O F T H E B A N K

The credit policy of any banking institution is the combination of certain globally

and locally accepted time standards and other dynamic factors dictated by realities

in ever-challenging market and industry.


“The extension of a credit facility should add value to the bank’s assets” should be

borne by the bankers. For this purpose the bank takes special care for judging the

Ability to repay

Willingness to pay

Ability to pay

The ability of a client to repay can be judged by the financial statements of the

customer’s company. To avoid the danger of fake statements the SBP has put on

some regulations on all the banks, which are called as prudential regulations. Every

financial institution is bound to follow these rules in advancing loans, e.g. all the

credit institutions is bound to lend the customers having current ratio of their assets

equal to minimum 1:1.

Willingness to repay

The willingness to repay can be determined by verbal discussion with him or CIB

(Credit Information Bureau) report.

B A S I C P H I L O S O P H Y O F B A N K A L F A L A H

L I M I T E D

The basic philosophy followed by the Credits Department at Bank Alfalah Limited is

TT H EH E E E X T E N S I O NX T E N S I O N O O FF A C A C R E D I TR E D I T F F A C I L I T YA C I L I T Y S S H O U L DH O U L D

AA D DD D V V A L U EA L U E T T OO T T H EH E B B A N KA N K ’’ SS A A S S E T SS S E T S

Defining items like

Extending credit facilities for trade finance and construction / contractor

financing for short term to medium term and on self liquidating basis,

supported by cash flows and acceptable collateral


Providing finance for working capital in the fields of manufacturing, assembly

and processing of goods and commodities for domestic and / or export

markets, provided it is adequately secured

Well established traders dealing in particular products range with established

market presence, experience and track record

Highly valued Multi-National Companies and local Corporate Group

Joint ventures of established local groups and reputed foreign companies

During the time of my internship (June – August 2002), Bank Alfalah Limited was

only indulged in Corporate Credits and did not provide Consumer Financing.

Recently, Bank Alfalah Limited has started Consumer Financing as well. It is

providing financing for items like

Televisions

Music Systems

VCD Players

DVD Players

Monitors

Refrigerators

Deep Freezers

Microwave Owens

Washing Machines

Ceiling Fans

Pedestal Fans

Room Coolers, etc.

The consumer financing facility is available for products of companies like Philips

Haier

Super Asia, etc

D E P A R T M E N T A L I Z A T I O N


Credits department at developed branches of Bank Alfalah Limited is usually

segregated into

Credit marketing

Credit administration

CREDIT MARKETING

The principal responsibility of credit marketing is to attract good customers to avail

credit facility from Bank Alfalah limited. The people who constitute the credit-

marketing segment of the credits department are termed as the credit officers.

Credit Officers are supposed to be really good at assessing and determining the

financial soundness of a company or an individual.

CREDIT ADMINISTRATION

The major responsibility of the people working in the credit administration is to

issue Guarantees, monitor the periodic disbursement of Pledged Commodities, and

perform the job of providing finance against Imported Merchandise and finance

against Trust Receipt.

Due to the small amount of work of the Township Branch as compared to the

established branches in Lahore like the LDA Plaza Branch and the Gulberg Branch,

no distinction was made between the officers for Credit Marketing or Credit

Administration.

T Y P E S O F B O R R O W E R S

Before a bank starts lending, it has to classify its target customers in to groups of

similar ones in order to simplify the provision of credit to them. Bank Alfalah Limited

has divided its clients into the following heads

Individuals

Existing account holders

Staff members


Close relatives of staff members

Business sponsored by staff members

Employees of other banks

Joint accounts

Business entities

Sole proprietorship

Partnership

Limited liability company

Joint venture

Group accounts

Others

Clubs and associations

Federal, provincial and local government bodies

Traders

Contractors / construction companies

Transport, storage and warehousing

Property dealers

Manufactures

K I N D S O F C R E D I T – G E N E R A L

O V E R V I E W

Now I shall discuss the basic kinds of credit offered at commercial banks. Bankers

do not decide about the time span for which he amount is going to outstand. The

time span is related to the purpose for which the loan is taken for, and the rate of

interest charged is in turn related to the time span. The three basic kinds of credit

have been transformed in to various credit facilities/products by commercial banks.

The main kinds of credits are


SHORT TERM CREDIT

Short-term credit is that type of credit that is to be repaid with in a time span of

one year. Short-term credit requirement is usually seasonal in nature. There are

four predominant purposes for which short term credit is availed. These purposes

are

Creation of current assets

Meeting of working capital requirement

Purchase of raw material

Repayment of current liabilities

Short-term credit secured by 100% cash margin is considered to be the ideal way to

extend this type of credit.

MEDIUM TERM CREDIT

In this age of contemporary banking, it really is very difficult to separate medium

term credit from long term credit when we talk with respect from the view point of

the purposes these two kinds of credits fulfill. Medium term credit is a credit facility

that is usually extended for a time span of some where between one to three

years. Business concerns normally utilize this type of credit for the purposes of

purchase of furniture, fixtures, and small-scale machinery.

LONG TERM CREDIT

Long term credit, theoretically speaking, is a type of credit that is extended for a

relatively long time (which may extend to ten years), but practically speaking long-

term credit facility is extended for a time span of not more than five years. The

purposes for which long term credit is availed are

Capital Expenditure / Expansion of plant

Balancing, Modernization, and Replacement (BMR)

Purchase of Fixed Assets


K I N D S O F C R E D I T O F F E R E D B Y B A N K

A L F A L A H L I M I T E D

OVER DRAFT (OD)

Over Draft is a credit facility which functions with the help of the ‘debit and credit

mechanism’ of the respective customer’s account. A particular customer on the

basis of his individual track record is assigned a particular limit, which is termed as

an Over Draft limit. Now by virtue of sanction of OD limit the customer can with

draw a particular amount from his account even in excess of the credit

balance in his account. This excess with-drawl allowed is the real facility. But the

extent of excess with-drawl cannot exceed the amount of the OD Limit approved. As

long as the excess amount remains in the debit balance (i.e. as long as customer

utilizes that amount), interest is charged on the outstanding amount on daily

product basis. When the amount is returned charge of interest is ceased. If over

draft credit is a guaranteed one than interest is charged on the entire amount

approved as OD limit, whether utilized or not.

CASH FINANCE (CF)

Cash finance is a very popular form of short-term credit. The predominant purpose

for this kind of a credit, as has been discussed above, is fulfillment of the

working capital requirement. Preferably bankers love to extend this kind of

credit facility if secured against hundred percent cash margin. But this fact certainly

does not mean that cash finance is not extended against pledge of goods or

hypothecation of machinery etc. It all depends on the credibility of the customer. In

case of cash finance a certain limit is approved and the customer is allowed

to avail the amount whether all at once or as and when needed . One basic

reason for the popularity of cash finance is that interest is charged only on he

utilized amount not on the entire amount which has been approved for use.

LETTER OF CREDIT (L/C)

Letter of credit is a short-term non-fund based finance facility. LC is a bank’s

written undertaking given to the exporter for payment of a certain sum of

money on behalf of the importer, provided the exporter tenders to the bank,


or its overseas agents, the specified documents within a specified period in

accordance with the terms of the undertaking.

LETTER OF GUARANTEE (L/G)

Apart from letter of credit Bank Alfalah Limited also extends another non-fund

based credit facility for its customers i.e. Letter of Guarantee or more commonly

known as Guarantees. The basic difference between a letter of credit and a letter of

guarantee is that in case of L/G the liability has to be retired four or five days before

the actual date of maturity, but in case of L/C the customer can retire his liability

after maturity after paying some amount as interest. The various types of

guarantees given are Bid Bonds, Performance Bonds, and Shipping Guarantee etc.

FINANCE AGAINST IMPORTED MERCHANDISE (F I M)

In case of finance against imported merchandise, the importer gives the imported

goods into the effective pledge of the bank and avails the credit facility against the

pledged goods. There is a slight technical difference between ‘pledge’ and ‘effective

pledge’. In case of pledge the imported goods come under the banks ownership

when they reach the desired godown that is under the supervision of the

Muqadams, appointed by the bank. But on the other hand in case of ‘effective

pledge’ the goods are under the ownership of the bank even when they are being

transported from the port to the godown. So, in case of effective pledge the bank

must make sure that the goods are comprehensively insured.

FINANCE AGAINST TRUST RECEIPT (F A T R)

The mechanism with which Finance Against Trust Receipt works is identical to that

of Hypothecation. The logical rationale behind FATR is that all the imported goods

cannot, by nature, be given to the effective pledge of the bank; imported goods

could be of perishable nature or they could be of central importance for the

operations of the business concern. In such a case the goods are hypothecated and

finance is extended.


LOCAL BILLS PURCHASED --- DOCUMENTARY (L B P – D)

This particular type of credit is again aimed toward helping out business concerns

with their working capital requirement. Suppose company A sells goods to company

B on a credit of 90 days. Now the remuneration for these goods is going to be

received after a time span of 90 days, and during these 90 days company A needs

money for its working capital. What company A does is that it draws a bill on

company B negotiates that bill with the bank i.e. Bank Alfalah Limited purchases

that bill and receives the amount, after 90 days from the company B. This kind of a

credit facility is LBP – D for company A.

C R E D I T P R O P O S A L

In order to avail any of the credit facilities a proposal (case) has to be made, and

also approved, by the Branch Credit Committee and then subsequently by the

Credit Division at the Head Office. The credit proposal can be categorized in to two

types

CREDIT LINE PROPOSAL (C L P)

A credit line proposal is made for those clients whose credit limit has been approved

by the banks’ credit department.

ONE TIME TRANSACTION (O T T)

An OTT is prepared for a client who has no approved credit limit, but the bank is

doing business with that client on a one-time basis.

L E N D I N G P R I N C I P L E S

PRINCIPLES

The principles laid down by the Credit Division at the Head Office are as under

Know your customer

Know the purpose of the facility


Know the profitability of the applicant

Know the source of repayment

Asses the securities

Tenor of facility

SBP REGULATIONS

The state bank of Pakistan has laid down some principles in regards the lending of

credit to customers. Prudential regulations form the backbone of such regulations.

Prudential regulations forbid the banks to take up exposure to a single borrower or

a group of related borrowers in excess of 30 % of the bank’s equity base of which

Fund Based (Cash Finance or Term Finance) should not exceed 20 % of the

bank’s equity

Non Fund Based (e.g. Letters of Credit, guarantees) can be allowed to any

extent within the parameter of 30 %.

A T T R I B U T E S O F A G O O D / T A N G I B L E

S E C U R I T Y

I would like to put forth a detailed analysis of the major kind securities as follows

that are kept while extending loans i.e. banker’s lien, pledge, hypothecation,

and mortgage. A good banking security should have most, if not all of the

following attributes

Transferability

Ascertain ability of value

Stability of value

Marketability

Liability

Storability

Durability

Transportability

Superior yield


SECURITY ANALYSES

Sound bank lending is based on the understanding that the borrower is willing and

able to repay the advance within a reasonable time from trading receipts and

profits or from other sources. Nevertheless, because the bank is lending its

depositors’ funds, prudence demands that security should be taken so that the bank

may realize them to liquidate the advance in case through unforeseen difficulties,

repayment from normal sources is not forthcoming. There are several methods by

which a charge may be created on an asset by the borrower in favor of a lender,

both formal and informal.

BANKER’S LIEN

Lien is the right of a creditor, who is in actual or constructive possession of his

debtor’s property, to retain such property until the debt due to him has been repaid.

The borrower is still the owner of the property, but the lender has possession of the

property.

A lien may be either

A particular lien, which arises from the particular transaction, connected with

property subject to lien e.g. a carrier’s lien for his charges on goods carried.

General lien, which arises out of general dealings between the two parties

e.g., bank’s lien.

A banker’s lien is a general lien on all goods and securities that come in to his

possession as a banker, unless there is an express or implied contract inconsistent

with a lien. To be subject to lien the property must come in to the hands of the

banker to be dealt with in his ordinary course of business as a banker. Securities

deposited with a banker for safe custody are not subject to lien. Where the holder of

a bill has a lien on it he is deemed to be a holder for value to the extent of the sum

which he has lien, and in such circumstances the banker could sue on the bill in his

own name A banker has lien on all bills, cheques and notes sent to him by a

customer for collection, where the customer is indebted to the banker. A banker’s

lien has been defined as an implied pledge, whereas ordinary lien does not imply a


power of sale, a pledge does. Accordingly a banker has a power of sale over such

securities on which he has a lien, subject to reasonable notice to his customer.

P R O C E S S I N G O F L O A N A P P L I C A T I O N

Whatever money the banker holds is that of his customers who have entrusted the

bank only because they have full confidence in the expert handling of money by

their banker. Therefore, the banker must be very careful and ensure that his

depositors’ money is advanced to safe hands where the risk of loss does not exist.

So, when a customer requests his banker to facilitate him with different credit

facilities. The banker, first, assess the credibility of customer and the market

conditions. The elements of character, capacity, capital and market conditions help

a banker in arriving at a conclusion regarding the safety of advances.

Character

It is the most important factor in determining the safety of advances, for there

is no substitute for character. A borrower’s character can indicate his intention

to repay the advance, since his honesty and integrity is of primary importance.

If the past record of the borrower shows that his integrity has been

questionable then the bakers usually try to avoid such a customer.

Capacity

This is the management ability factor, which tells how successful a business

has been in the past, and what are the future possibilities are. Before

advancing loan a banker must be satisfied with the sources of the repayment

of the funds.

Capital

The bankers also check the property capital of the borrower. This property can

be kept as a security of loan. In other words if the businessman’s financial

condition is sound then can be given certain amount of credit, otherwise not.

CIB Report


Bank cannot sanction any credit to a customer, unless it gets Credit report

from CIB (Credit Information Bureau, SBP). Before making any decision about

the client, bank needs a CIB report. Therefore, first of all, the banker requests

CIB to provide him the credit report of client. This report indicates all the credit

facilities (outstanding) availed by the client. It is to be obtained compulsarily

whenever the amount of loan exceeds Rs. 500,000.

S T E P O N E : I D E N T I F I C A T I O N O F R I S K S

The first and foremost procedural step in the loan processing process is

identification of various kinds of risks. The essential responsibility of a Credit Officer

is ‘Safe Placement Of Funds’ and in order to serve this purpose all sorts of risks

are to be first identified, which by no means a easy job to do, and then after

identification if not all majority of these risks should be minimized to such a level

that bank’s basic purpose is fulfilled i.e. timely repayment of the entire principle

amount along with the interest.

For risk analyses I would like to include in my internship report an extract from a

article written by Mr. Ahmed Nauman (Course Coordinator, Staff College, MCB-

Published in the Journal of Institute of Bankers Pakistan, April 2002), which was

circulated by Bank Alfalah’s Head Office in the Credit Department of all of its

branches at the time I was in the Credits Department at Township Branch, bank

Alfalah limited, Lahore.

“The General Risk Equation Encompasses The Combination Of One

Or All Of The Following Risks”

Business Risk

Organizational Risk

Financial Risk

Collateral Risk

Documentation Risk


One dominant risk factor may disturb the overall credit risk management matrix

and in the assessment of the general risk, each factor requires an in depth analysis.

BUSINESS RISK

This essentially translates into industry risk, market risk and supplier risk.

Industry Risk

Concentration of sales on any one industry enhances risk.

Product life cycle the shorter it is, the higher is the risk.

Existing and anticipated Government Policies / restrictions may increase

or reduce risks in a given sector.

Current levels of competition can result in reduction of existing profit

margins.

Planning of any big international or national player may change the whole

scene.

Market Risk

Concentration of sales on a single geographical area.

Single buyer focused sales.

Reputation of buyers.

Supplier’s Risk

Calculation of real costs from each supplier includes freight and handling

charges, length of time in transit, working capital and space tied up in

inventory because of large minimum order required to obtain a good

quotation or time to assure delivery on recorders and all other carrying

charges, ought to be considered in comparing suppliers.

Are there any discounts for cash? What is firm’s policy on issue?

Concentration of purchases from single geographic location.

Concentration of purchase from a single supplier. A breakdown or strike

in a supplier’s plant could force to major operational disturbance.

Single currency exposure in respect of purchase.

Reputation of key supplier (s).

Ranking of suppliers in competition.

Seasonality of products.

Volume of sales wholesaler / retailer details.


Borrower’s market share.

Borrower’s marketing strategies of products.

Details of distribution channels.

ORGANIZATIONAL RISK

Management

The quality of management and shareholders

Is the management professionally sound

Is the management academically qualified enough to identify and handle

problems.

Attitude of the management, is it conservation, aggressive or speculative.

Previous experience of the management in the same business, if any.

HRM analysis of the firm. Sometimes, due to one-man show, the most

performing individual may leave the organization that may adversely

affect the repayment capacity of the borrower.

Are directors resident, a non-resident director may easily walk away from

commitment?

Shareholders commitment to fund expansion of business. A continuous

high dividend policy is a danger signal.

Relationship with the Bank

Their track record indifferent lines of business.

Any default history? With the bank/other banks?

Length of relationship with the bank?

Major historical changes or problems?

Product acceptability/demand in the market?

The experience of other banks with the client sister concerns?

Evaluate existence of any un-due reliance on key individuals. Would

succession management be easy? Key questions include: is the

organization a one-man show? Or does a team of profession run it?

The existence and quality of internal control system.

Poor control systems re reflected in over stocking invoicing which can

lead to both errors and frauds.


FINANCIAL RISK

What will be the initial costs for plant & equipment, materials & supplies,

insurance, fees, tax depots, installation costs, organization expenses etc.

investment Vs future income forecasting, scale of operations are also to be

looked upon.

Who will bear the cost/taxes of imported equipment? Component of FCY/LCY

in imported machinery?

How much additional cash or credit will be required to carry the business until

cash receipt equal or exceed cash outlays? This involves both an amount and

a time calculation of working capital flowing thought the following sequences:

a) Material, wages, operating supplies and expenses (b) work in process, (c)

finished product (d) sales (e) collections, which return cash to be placed back

into the system.

In addition, contractual payments on mortgage or any other loan and on

equipment purchases coupled with such things as contingent liabilities have

to be calculated. There may be drain on cash until collections equal outlays.

Interest and exchange rate sensitivity analysis to both assets and liabilities.

Balance sheet and capital structure. Examine closely gearing i.e. debt equity

ratio. Is the borrower seeking to borrow all for the operational needs of the

business OR only a portion.

The firms should be supported by substantial capital to bear any external

shocks. Insufficient capital to absorb marker shocks may be a negative signal

as in case of any adverse change the firm may collapse.

In relation to industry standards, following ratios need to be analyzed.

Stock turnover

Debtor’s turnover

Current ratio

Liquidity ratio

Profitability ratios

Quality of fixed assets and their ageing status

Contingent liabilities

C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 0

Analyze quality of the financial data. Quality may be assessed by a number of

variables such as rating of the auditor’s firm examining accounting standards

and practices and availability.

Purpose of finance: Matching principle? Working capital fund put to LT assets

buying use? Many a times, due to mere mismatching of assets and liabilities,

firm goes bankrupt. Long terms assets should preferably be financed by long

term liabilities and short term financing needs should be met only through

creation of short term liabilities.

Financial discipline standards within the company to ensure maximum

judicious use of funds employed.

Is the firm in the process or plans of acquiring any international rating or

standards like ISO-9000 certification?

Does the company possess any room for contingencies. Some analysis argue

additional allowance for at least one major blunder during first two years of

operations of a newly established firm.

Tax Policy: is the firm paying taxes regularly or concealing. Taxes? If

concealing To what an extent?

Failure to control budget expenditures. Does any planning or forecasting,

(even rough estimates) exist? In absence of strategic planning, there are

increased risks of financing mismanagement and frequent (EOL) excess over

limits requests.

COLLATERAL RISK

Owing to a multiple dimensional problems of suitable foreclosure laws, it is

imperative to identify collateral risk to its fullest extent. Following queries will

assist the credit manager.

Way-out analysis: Would the borrower be able to meet payment schedule

Primary Security: Hypothecator/pledge of stocks

Real ownership to be ascertained.

Stock turnover to be assessed.

Inventory control management system to be closely reviewed. Are there

any inventory control system is place? If yes compare with the prevailing

market standards?


Marketability of the pledged stocks? Who is the customer, what are the

profit margins? The credit manger to avoid a significant loss, in case of

forced sale negotiating the transaction, may also ascertain competition,

outlets available, distributor’s margin etc.

Collateral security

Clear title is to be ascertained.

Title to be preferably in the name of the borrower.

Value reasonable to cover our exposure.

Locality of the security to be preferably urban.

DOCUMENTATION RISK

Blank documents invite trouble.

Incomplete or wrongly filled documents have no legal remedy.

Documents not properly witnessed are considered complete.

Documents not legally vetted by the internal/external legal counsel/auditor

may carry some flaws.

Check whether borrowing powers are in order and in accordance with

comp[any laws.

Any condition(s) of security mentioned by the approving authority at the time

of last approval has bee met fully.

S T E P T W O : E A R L Y W A R N I N G S I G N A L S

Second most important phase of credit risk management begins after the

disbursement of finance. For convenience of monitoring at the branch levels,

monitoring may be segmented further into five distinct sections enabling the credit

manager to continuously monitor the health of the asset portfolio. They include

Internally colleted account status signal

Externally received business status signals

Security review

Stock review

Monitoring of behavior vis-à-vis branch and the client. Do they extent

favor beyond the established norms and defined boundaries?


Like speed breakers, continuous monitoring provides us some red signals to stop

further lending and review the entire relationship with the client. Following addition

swings may further augment credit manger’s resolve to monitor the loan account

prudently. Another exhaustive list is list is also followed identifying the deficiencies

commonly observed at the branch level resulting into classification of finances.

Cash Position Of The Company

A downward cyclical trend in cash position may be considered OK but a sudden

fall may be a harbinger of severe cash flow problem. The sponsor, in order to

meet cash requirements elsewhere, will default on payments of due principal

and markup.

Receivable Collection Period

If cash collected against receivable is slow, the loan repayment is going to get

slow. The sponsor may justify this trend by showing them in his assets but

some of the accounts receivable may never recover.

Inventory Turnover

A slowdown in inventory turn over is a cause for serious concern. It reflects

poorly on management of the company and its operations. It may also imply

too much concentration of funds being stuck in the obsolete inventory.

Non Current Assets

A sudden jump in the amount of non-current assets, such as notes receivable,

machinery and equipment, land, advances to subsidiaries, etc, should be

noticed as this is going to lead to cash problems in near future.

Current Liabilities

Credit Manager should be alert to sudden jumps in current debts and notice if

these debts are financing non-current assets. It also holds true in spirits of

matching principle whereby short-term lending needs are met by short-term

assets.

Worsening Ratios

Debt/Equity ratio, current ratio, gross profit margin ratio, various inventory

ratios etc indicate the financial health of the firm.

Uneven Patterns Of Borrowing


This situation specially applies to working capital finance. A player in the

beverage industry seeking loan in winter may be utilizing it for some other

purpose other than meeting his short term financing needs. Similarly, an

agricultural loan requested in off-season may be skeptical.

Some Other Key Warning Signs

In addition, there are certain non-financial symptoms of a problem project.

Credit officers should keep their eyes open for the following additional signals.

Evidence of any legal action and income tax enquiry

Information of utility bills default, deferred payments

Deteriorating relationship with trade suppliers

Sudden rise in request for NOCs

Notice of insurance cancellation or failure to pay premiums on time

Turnover of key performing employees

Inability to obtain financial statements timely

Personal/family problems of directors/sponsors

Failure to furnish the requested information

Changes in communication habits (telephone and letters)

S T E P T H R E E : P R E P A R A T I O N O F T H E

C R E D I T P R O P O S A L

Credit proposals can be classified into two categories

Credit line proposal (CLP)

One Time Transaction (OTT)

A Credit Line Proposal is made for those customers for whom the bank has

approved a regular credit line, and OTT is made for those customers with whom the

bank is doing business on a one-time basis and they have no regular credit line

approved with the bank.

CREDIT LINE PROPOSAL (CLP)

In a CLP, all information regarding the client and his business is stipulated as:


Total existing facilities (limit), their outstanding value and the securities

that were provided against these facilities

Total proposed limit of credit and the securities provided against it. The

credit officer does the analysis and verification of these securities

Documents (reports) attached with proposal

For having the complete information regarding the client, his business and the

securities offered for advances, different documents are prepared by the Credit

Officers. All these documents are attached with the proposal to get approval. These

documents are as follows:

GRADE APPROVAL SHEET

Grade Approval Sheet forms an integral part of a Credit Line Proposal (CLP). Its

purposes are to segment bank loans by way of their risk profile, to bring to

attention of credit officers & senior management specific accounts in which

adverse features or deviations from established standards (industry trend)

have been noted so as to propose remedial measures, and to report in

aggregate the resulting amount and degree of risk in bank’s existing portfolio.

Accounts may be categorized in 5 different grades assigned on the basis of net

worth (from 1A to 1E on the basis of decreasing net worth). Accounts that do

not have audited financials are placed in Grade 2 and those with irregularities

in the past (like over dues, etc) are placed in Grade 3.

BASIC FACT SHEET

Basic fact sheet is a document that is aimed towards listing down all the fact

regarding the customer, his business, his corporate status, his taxation

number and every thing that is there to be known about the person and the

business. The format of basic fact sheet, which is given to all the commercial

banks by State Bank of Pakistan, gives a clear-cut idea as to what other

information is there to be recorded in the Basic Fact Sheet. The format in given

in annexure one of this report.

VALUATION SURVEY REPORT

This report contains the fact about the judgment of the credit officer after the

property / an independent valuator has valued security.


PROPERTY VISIT REPORT

Every credit officer writes this report after he visits the client’s residence and /

or place of business.

SECURITY ANALYSIS REPORT

Security analysis report views the security structure (offered by the client)

against which the limits are collateralized, after applying SBP margins, like in

case of cash (near cash) security this margin is 25%. PS analyzes the overall

profitability from the transaction; this includes return from average facility

utilization, reciprocal business (like imports, LGs, etc), spread on cash

securities (if any), etc.

RISK INDEX LEVEL (RIL)

BAL Risk Index is based on a scale of 1 to 10, where 1 represents a lower and

10 a higher percentage of observed Business Failures. Ownership structure,

position in the industry, experience, liquidity & profitability ratios, account

history, etc contribute to the points, where an account can have a maximum of

100 points and a minimum of 10 points; accordingly RIL is awarded.

PRUDENTIAL REGULATIONS CHECKLIST (PRC)

Bank Alfalah Limited’s PRC comprises of various SBP’s prudential regulation.

Where SBP prudential regulations are quite detailed, Bank Alfalah Limited’s

credit PRC includes lending related regulations whose compliance is

compulsory. These regulations include financial ratios requirements, limit of

Bank Alfalah Limited’s exposure on clients on the basis on Bank Alfalah

Limited’s net worth & client’s net worth, etc.

STATEMENT OF ACCOUNTS

This refers to clients past bank account statements.

FINANCIAL STATEMENTS

This refers to audited financial statement of the corporate entity.

When all of these documents are attached to the credit line proposal / OTT the file is

presented to the Branch Credit Committee of Bank Alfalah Limited, Township

Branch, Lahore. This committee consists of the Branch Manager, Manager

Operations, Manager Credits Department, and the Manager of the Accounts

Department. When the branch Credit Committee approves the proposal the

proposal is sent to the credit division functioning in the Head Office. When they


approve the proposal the customer is made to sign the offer letter and

disbursement is made.

O T H E R F U N C T I O N S P E R F O R M E D B Y T H E

C R E D I T S D E P A R T M E N T

The predominant functions performed are

Extension of Finance Against Imported Merchandise

Extension of Finance Against Trust Receipt

Purchase of Local Bills – Documentary

Issuance of Guarantees on behalf of customers

FINANCE AGAINST IMPORTED MERCHANDISE

When the imported goods come to the importer’s country (Pakistan) he might no be

in a position to provide the required amount of money to his bank so that his bank

could pay to the exporter. Under these circumstances the importer might give the

imported goods into effective pledge of the bank, and then the importer’s bank

pays to the advising bank or the reimbursing bank on behalf of the importer, but the

importer is suppose to get the goods released and pay his bank (Bank Alfalah

Limited) the required amount along with the interest as the bank’s funds have been

involved for a specific time span. This kind of a facility is basically a post L/C

financing for meeting working capital requirement.

When the goods reach the godown the Muqadams are suppose to send Bank Alfalah

Limited a stock report the predominant contents of this stock report are

The description of commodity

Quantity of that commodity received

The date on which the Muqadam received the consignment.

The name of the premises at which the goods were received


Once the goods come under the effective pledge of the bank, the customer is

suppose to get the goods released after making the due payment in the specified

time period. FIM is normally extended for a time span of 30, 60, 90, or 120 days.

The mechanism through which the goods are released

At this point it is pertinent to give an overview of the mechanism through which the

goods are released. When the facility of FIM is extended the concerned official at

Bank Alfalah Limited, Township Branch gives a certain quantity of Delivery Orders to

the client. These delivery orders are used to get the goods released. Delivery order

basically is a performa that contains the following information

Date

Description of goods

Quantity which is to be released

The per unit rate of the commodity and also the total value

The L/C number under which the transaction is done

The FIM number

Accounting transactions regarding the entire FIM transaction

Lodgment of FIM

Debit: Finance Against Imported Merchandise Account

Credit: Payment Against Documents Account

When customer (importer) repays the amount.

Debit: Importer’s Account

Credit: Finance Against Imported Merchandise Account

For receiving interest payment following entry is passed

Debit: Importer’s Account.

Credit: Interest Earnings on Finance Against Imported

Merchandise Account.


S E C T I O N F O U R

F I N A N C I A L A N A LY S I S

O F



A ) F I N A N C I A L S T A T E M E N T S

B A L A N C E S H E E T

ASSETS

1998 1999 2000 2001 2002

Liquid Assets

Cash in hand / Cash at Banks 721,285 1,687,256 2,044,825 3,885,612 4,540,486

Government securities (net) 3,224,044 4,759,913 4,578,08010,930,33

5

20,463,56

9

Marketable securities (net) 34,970 32,512 219,680 441,836 1,524,990

Balances with other banks 386,211 1,161,434 1,797,986 1,081,208 232,728

Lending to financial institutions 248,000 100,000 2,260,315 1,698,969 4,634,398

Total liquid assets 4,641,510 7,741,11510,900,88

6

18,037,96

0

31,396,17

1

Financing / Advances

Government /Public - 747,089 841,748 2,460,626 1,680,100

Private - 9,580,23514,400,56

9

16,870,86

8

26,639,30

1

Total Advances-Net of Provisions 7,767,70810, 327,

324

15,242,31

7

19,131,49

4

28,319,40

1

Other Securities

Term Finance Certificates-

Unquoted 147, 500 200,610 71,215 18,720 12,475

Other Investments (Shares of Pakistan Export finance)

5, 725 5, 725 5,725

Total other securities 147,500 200,610 76,940 24, 445 18,200

Operating Fixed Assets 263,760 1,153,607 1,287,355 1,424,883 17,607,74

Other Assets 1,537,629 1,596,652 1,347,134 1,436,991 9,848,47

Total Assets14,321,10

7

21,019,60

8

28,854,63

2

40, 098,

095

65,167,03

1


LIABILITIES AND EQUITY

Deposits

Demand Deposits 7,528,67310,392,62

4

13,735,56

8

22,472,08

4

40,601,05

7

Time Deposits 4,349,548 5,427,849 6,746,000 7,735,24011,083,92

7

Total Deposits11,878,22

1

15,820,47

3

20,481,

568

30,207,32

4

51,684,98

4

Borrowings from Financial

Institutions1,348,313 2,972,240 5,916,603 6,709,054 60,375,76

Bills Payable 51,737 120,868 106,353 305,558 758,961

Other Liabilities 184,030 379,747 632,006 716,475 11,963,42

Total Liabilities13,462,30

1

19,293,32

8

27,136,53

0

37,938,41

1

61,514,36

4

Net Assets 858,806 1,726,280 1,718,102 2,159,684 36,526,67

Represented By

Share Capital 600,000 600,000 600,000 750,000 1,000,000

Reserves 255,094 286,399 299,469 361,591 365,727

Unappropriated Profit 3,712 8,931 1,211 249,701 250,050

Share Holder’s Equity 858,806 895,330 900,680 1,361,292 16,157,77

Surplus/(Deficit) On Revaluation of Assets

- 830,950 817,422 798,392 2,036,890

Total 858,806 1,726, 280 1,718,102 2,159,684 3,652,667

Contingencies and Commitments

Contingencies 1,302,022 2,711,578 8,108,694 7,126,53614,570,72

5

Commitments 3,770,381 2,199,48210,532,12

6

15,976,73

9

15,548,67

4


I N C O M E S T A T E M E N T

1998 1999 2000 2001 2002

Mark up / return / Interest earned 1628697 1905908 2261828 3391935 4630494

Mark up / return / Interest expensed 1313564 1474343 1724041 2515074 3112313

Net Mark up/ Interest income 315133 431565 537787 872303151818

1

Provision against non performing loans (94756) 136076 103950 13705 (53619)

Provision For diminution in the value of Investment

- - - - -

Bad Debts written off directly (175) - - (1447)

(94756) 143870 103950 13705 (55066)

Net Mark up / Interest income after provision

220377 567466 641737 890566 1463115

Non mark-up interest income

Fee, Commission, Brokerage Income 39438 58043 103838 147277 316368

Dividend Income - - 8951 41910 62077

Income from dealing in foreign currency 121754 77925 69195 113923 95165

Other Income 23614 53540 87504 74756 141808

Total Non Mark-up Income 184806 189508 269488 377866 615418

Total 405183 477103 911225 1268432 2078533

Non Mark-up / Interest expense

Administrative Expenses 337447 402559 503028 743602 1182887

Other provisions/ written offs - - 7619 - -

Other charges - - 228 666 993

Total Non Mark-up / Interest expense 337447 402559 510875 744268118388

0

Extra ordinary unusual items - - - - -

Profit Before Taxation 67736 354415 400350 524164 894653


Taxation Expense (77629)(197891

)

(185000

)(213552) (448974)

Profit After Tax 145365 156524 215350 310612 445679

Unappropriated Profit brought forward 2420 3712 8931 1211 249701

Profit available for appropriation 147785 160236 224281 311823 839186

Appropriations

Transfer to statutory reserve (29073) (31305) (43070) (62122) (89136)

Transfer from revenue reserve(115000

)- 30000 - -

Issue of Bonus Shares – Interim @ 33.33 % (In 2002)

- - - - (250000)

Dividend (@ 25 % In 2002) -(120000

)

(210000

)- (250000)

Unappropriated Profit Carried Forward 3712 8931 1211 249701 250050

Basic & Diluted EPS 2.42 2.61 3.59 3.65 4.46


B ) RB ) R A T I O SA T I O S

1 9 9 8 - 2 0 0 21 9 9 8 - 2 0 0 2

SR.

NO.RATIOS 1998 1999 2000 2001 2002

1 Net Income/Capital 16.9% 9.1% 12% 14%12.21

%

2 Net Income/Total Assets 1.0% 0.7% 0.7% 0.8% 0.68%

3 Net Income/Risk Assets 1.87% 1.52% 1.41% 1.62% 1.57%

4 Operating Expenses/Revenue20.72

%

21.12

%

22.59

%

21.97

%

25.57

%

5 Quick Assets/Total Deposit38.85

%

48.93

%

53.22

%

59.71

%??? %

6 Total Financing/(Deposits + Borrowed Funds)

60.53

%

55.49

%

63.88

%

56.43

%

57.10

%

7 Total Financing/Total Deposits67.40

%

65.91

%

85.46

%

68.96

%

63.76

%

8 Due To Banks/Total Deposits11.35

%

18.79

%

28.89

%

22.21

%

11.68

%

9Borrowed Funds/Total

Financing

16.84

%

28.50

%

33.80

%

32.21

%

18.32

%

10 Due From Banks/Total Assets 0.43% 6%14.06

%6.93% 7.47%

11Due From Banks/Due To

Banks

47.03

%

42.44

%

68.59

%

41.43

%

80.61

%

12 Capital Funds/Total Assets 5.99% 8.21% 5.95% 5.39% 5.61%

13 Capital Funds/Risk Assets11.07

%

16.72

%

11.27

%

11.29

%

12.90

%

14 Capital Funds/Total Financing10.73

%

16.56

%9.82%

10.38

%

11.08

%


15Demand Deposit/Total

Deposits

63.38

%

65.69

%

67.06

%

74.39

%

78.55

%

16 Time Deposit/Total Deposits36.62

%

34.30

%

32.94

%

25.61

%

21.44

%

17 Cost Of Funds12.48

%10% 8.87% 8.82% 7.44%

18 Return On Investments10.19

%8.08% 6.92% 7.00% 6.26%


C ) FC ) F I N A N C I A LI N A N C I A L R R A T I O SA T I O S A A N A LY S I SN A LY S I S

1 9 9 8 - 2 0 0 21 9 9 8 - 2 0 0 2

N E T I N C O M E / C A P I T A L

This rat io shows the relat ionship between income earned

and the owners’ capital that is how much the bank has

earned by using i ts own resources.

I t is the return earned on owners’ investment.

The rat io s ignif ies as to how eff ic ient ly are we using our

capital to earn net income.

By looking at the ratios calculated for the years 1998 – to - 2002 it is clear that the

ratio has had a normal growth over the years from 1999 to 2001, while it declined in

2002 to 12.21 %.

One of the reasons for the decline in the ratio in the year 2002 was that although

there is an increase in the net income but the increase is less in terms of the total

capital used when compared to the previous year i.e. this year Bank Alfalah Limited

used comparatively more capital to earn comparatively less income, although there

is a increase in net income in absolute terms.

Another reason of the decline in Net Income/Capital in the year 2002 was instable

situation of the whole country. The shift towards democracy has had an immediate

effect on the country’s financial sector.


A gradual increase in the ratio would show that Bank Alfalah Limited is efficient in

use of its capital for the generation of net income. A downward trend would show

otherwise.

N E T I N C O M E / T O T A L A S S E T S

This rat io shows the relat ionship between income earned

and the total assets.

This rat io portrays net income as a percentage of total

assets.

For the calculation of this ratio total assets figure is taken which includes all of the

resources.

The ratios calculated for the year 1998-2002 show a handsomely positive trend. It is

a healthy sign and shows how effectively bank is utilizing its assets. Bank has

employed all of its assets in an appropriate way. These assets are contributing to

the profitability of the bank.

There is a direct relationship between the net income and the total assets. In case

of a bank the total assets figure is greater than the capital figure as most of the

assets created are by using the borrowed finance (mostly deposits). Even though

bank recently started its operations after privatization but still it is able to increase

this ratio. This shows the efficiency of the new management of the bank.

Slight fluctuations in this ratio (e.g. from 0.8 % in 2001 to .068 %) do not show that

the bank has performed badly because it is not the matter of thousands but millions

and for a bank, slight changes do not matter much.

N E T I N C O M E / R I S K A S S E T S


This rat io shows how wel l the bank is using i ts r isk assets.

For the calculation of the risk assets, all the advances given to private sector are

included and banks and government sector is excluded.

A bank’s risk assets are its advances; the money it has lent to various classes of

borrowers. This ratio can be understood from two dimensions.

The first dimension is that this ratio portrays as to how efficient is the lending

mechanism in connection to generation of net income.

The second dimension is as to what extent the ‘spread’ contributing to net

income. Here by spread I mean the difference between the cost of funds (the

rate of interest the bank has to pay to the depositors) and the interest rate

the bank is charging to the lenders.

If this ratio is improving this means that the bank’s management is using the

advances mechanism very efficiently as regards generation of net income, which in

turn means that the percentage of spread in the net income is improving.

Alfalah started its operations in the year 1997 and during the initial stage of its

business it had to face unstable economic situations. Banking Companies suffered

the most due to “Nuclear Tests” in May 1997. The economic activity in the country

slowed down as a result the interest on lending was also lowered. Another

contributor to the less efficient utilization of risk assets was the non-performing

loans, which Alfalah took over along with other things at the time of privatization. As

a result of high provisioning income of the bank fell. However the new management

made efforts to recover the loans and to put the bank on the right track. It had been

successful in its efforts. Their non-performing loans have decreased to 8% in the

year 2001 from 23% as at the time of privatization. As a result of following

conservative credit policy the ratio has improved in year 2002 to 1.57%.

O P E R A T I N G E X P E N S E S / R E V E N U E


This rat io gives the percentage of the total revenue spent

on operat ing expenses.

This rat io basical ly is geared towards assessing the

effect iveness of the cost control mechanism of Bank Alfalah

Limited

These operating expenses include both administration costs such as salaries, rent,

stationery etc and Selling and Marketing costs. This ratio depicts the operating

expenses as a percentage of the total revenue.

By looking at the trend of this ratio over the last five years we find that percentage

of operating costs to revenues has been increasing with the exception in the year

1999 especially in the year 2002, it has increased tremendously to 25.57 %. But still

the trends portrayed by this ratio can be termed as satisfactory to a marked extent

The increase in this ratio in year 1998 is understandable as the increase was

expected because of initial period of privatization. Huge costs were incurred as

administration expenses which around 20.72% of the earned mark-up.

However the decrease in this ratio by 6.27% in the year 1999 shows the efficiency

of the new management. Bank was able to control its costs in the third year of its

operations. Another reason of the improvement in this ratio is the increase in the

profit in the year 1999.

The ratio showed an upward trend during the years 2000 to 2002 and was 22.59%,

21.97% and 25.57 % respectively. This increase was due to the expansion programs

of the bank. Its branch network increased to 44 branches by the end of year 2002.

Due to the increase in the branch network the increase in operating costs was

unavoidable.

The costs incurred today wi l l contr ibute towards long-term

prof itabi l i ty of the bank.


Q U I C K A S S E T S / T O T A L

D E P O S I T S ? ? ? ? ? ?

This ratio shows the liquidity position of the bank. It shows how well bank can meet

its liquidity requirements and fulfills the cash demands of its customers.

This ratio shows what percentage of total deposits the bank keeps as liquid assets.

Alfalah’s Quick asset/total deposit ratio has showed a positive trend over the years.

It was 38.85% in the year 1998 and 59.71% in the year 2001. The high percentage

of total deposits kept as liquid assets for the year 2001 is justifiable for the reason

that out of the total deposits about 74% are demand deposits. These depositors can

ask for their money at any point of time without giving any notice to the bank. To

avoid risk and maintain a satisfactory liquidity level bank has opted to maintain

59.71% as liquid assets. According to prudential regulations at least 20% of the

total deposits should be in the form of quick assets. The bank has followed this in

the last 4 years. However to increase profitability bank can lend some percentage of

the liquid assets as 30 to 35% of deposits invested in liquid assets is satisfactory for

any bank.

T O T A L F I N A N C I N G / ( D E P O S I T S &

B O R R O W E D F U N D S )

This rat io shows the total f inancing as the percentage of

deposits and borrowed funds. This rat io s ignif ies how wel l a

bank is ut i l iz ing i ts avai lable funds. Therefore this rat io

should have a posit ive trend over the years.

Deposits plus the borrowed funds are the total pool of funds at the disposal of

a commercial bank.

Borrowed funds primarily consist of borrowings from financial institutions.

Total financing depicts that amount, which we have lent out of our total pool

of funds.


For the past four years the government has been trying to give a real boast to the

economy, but the economy has not responded with the desirable results. As a

consequence total loans advanced by banking sector have been increasing at a

decreasing rate, as people are not investing with great deal of zeal.

On the other hand as savings are increasing the deposit portfolio is increasing at a

decreasing rate. This is the reason a considerable magnitude of funds is being

directed toward liquid securities / investments rather than hard-core lending to

clients.

For Alfalah there have been ups and downs in this ratio. It fell in the year 1999 from

60.53% to 55.49%. Many factors were responsible for this decrease. Bank was in

the establishment stage. Management was new and was trying to control the

situation. Along with other difficulties faced by the management, bank had to

survive under the unstable economic situation.

Banks were severely hit by the incident of Atomic tests of May 1998. After these

tests Government froze the foreign currency accounts and public lost confidence in

banks. There was a depression in the economy. Due to slow business activity the

overall demand for advances declined.

Moreover new management followed a conservative credit policy as it already had

huge non-performing loans portfolios, which were, inherited, by the bank after

privatization. As a result although the advances are increasing over the years but

the percentage increase in advances/financing is less than the percentage increase

in total deposits and borrowed funds.

In the year 2000 the ratio improved. One of the reasons for rise was the

improvement in the economic situation in the country. Because of take over of

Government by President Musharraf public was hopeful and there was a positive

impact on the economic activity.


By the end of year 2001 the ratio again declined, as expectations of business sector

were not met and no major changes took place.

The decl ine in this rat io is not a healthy s ign as i t reduces

the prof itabi l i ty of the bank as i t indicates ineffect ive use

of the avai lable funds.

But in the presence of unstable political and economic situation and increased

competition among the banks it is a little difficult for the bank to improve this ratio.

Currently, in the year 2002, the ratio has shown an improvement as it has increased

from the past year to 57.10 %. It is hoped that the bank will be able to maintain this

increasing trend as the economy and the management has settled down.

T O T A L F I N A N C I N G / T O T A L D E P O S I T S

This rat io indicates the total f inancing as the percentage of

total deposits. I t shows the effect iveness of bank in using

i ts avai lable deposits.

Through this rat io we are able to analyze the fact as to how

eff ic ient ly is Bank Alfalah Limited is lending the funds i t

receives direct ly from its c l ients apart from the funds i t

receives from f inancial inst itut ions.

The trend of this ratio over the years has been similar to that of the total

deposits/deposits and borrowed funds. Advances have shown a slow positive trend

over the years. This increase in advances has contributed to the total revenue of

the bank. However the percentage increase in advances has been less than the

percentage increase in total deposits.

The ratio has had more of a steady tour so far. Other that the year 2000, when it

increased considerably, it has had a steady course so far till the year 2002.


D U E T O B A N K S / T O T A L D E P O S I T S

This rat io shows “due to banks” as the percentage of the

total deposits.

Due to banks represent the borrowings from the financial institutions. Preferably

due to banks should be less than total deposits.

I t is preferred that this rat io should decrease or should be

consistent.

When it comes to the total pool of funds for commercial banks there are two

predominant constituents

Deposits

Money market

Money market is the place where banks lend to each other, and in this market the

bank that is in need of funds is assessed as a credit client by the bank that is to

advance a particular sum of amount.

In this regard the foreign banks functioning in Pakistan are reckoned as A+ credit

clients. Bank Alfalah Limited’s credit rating in the money market was, naturally not

that established at its inception but, as time passed, Bank Alfalah Limited’s massive

growth made the Corporate sector realize the fact that this particular bank could be

dealt with as a trust worthy credit client. This fact as been evidently shown by this

ratio, as it has been quite consistent over the past five years

B O R R O W E D F U N D S / T O T A L F I N A N C I N G

This part icular rat io is basical ly geared towards assessing

the fact as to how eff ic ient ly Bank Alfalah Limited is

advancing the funds that i t has received from sources other

than i ts depositors


By this rat io we can f ind out the percentage of total

f inancing done by borrowed funds

An increase in this rat io would depict that Bank Alfalah

Limited is quite eff ic ient in lending i ts borrowed funds and

covering the interest rate i t is paying on the borrowed

funds.

This ratio has a positive trend over the years till the year 2002, when it dropped

considerably. An increase in this ratio is a positive sign because cost of funds

borrowed from other financial institutions is less than the cost paid on the deposits.

The increase in the percentage of borrowed funds used in financing results has

increased the profit of the bank reducing its costs.

For Bank Alfalah Limited, the ratio has dropped to an almost record low. This is

because the borrowed funds have actually declined from the past year whereas the

total financing has increased tremendously. Bank Alfalah Limited has adopted the

policy to utilize its own funds and reserves instead of borrowing from the market.

Bank Alfalah Limited has also issued share in the year and thus has financed the

lending through the equity instead of borrowing from the financial institutions.

D U E F R O M B A N K S / T O T A L A S S E T S

Due from banks represents that amount of money that Bank

Alfalah Limited has lent to other commercial banks.

This rat io shows the percentage of total assets that bank

has lent to other f inancial inst itut ions.

It is a secure advance but it results in the lower rates of returns because lending to

financial institutions is done at lower rates as compared to other advances. Due

from banks includes balances with other banks and lending to financial institutions.


Now the question arises as to whether or not a relatively rising trend in this

ratio is good or not. The answer is yes, as the rise in this ratio represents that

after extending loan to A+ clients Bank Alfalah Limited did not move towards clients

of a lesser degree, rather it directed its funds towards the money market.

Alfalah’s position is satisfactory in this case. The bank is maintaining a reasonable

level of lending to other financial institutions. Bank also maintains a large

percentage of total assets as invested in government securities, which is a secured

way of earning returns. The percentage of other advances is much greater than

percentage of “due from banks”. It has a positive impact on the bank’s profitability.

D U E F R O M B A N K S / D U E T O B A N K S

This part icular rat io is geared towards assessing the fact as

to what percentage of money is Bank Alfalah Limited

lending to other banks out of the amount i t has borrowed

from some other f inancial inst itut ions or even the same

commercial banks

This ratio shows whether the bank has to receive more from the other banks or pay

more to the other banks. Every bank has to maintain a balance between the

numerator and denominator. Increase in “due to banks“ if properly used for

financing increases the profitability by reducing the cost. But again bank has to

maintain a balance between total deposits and borrowings from financial

institutions. Similarly although the amount “due from banks” is secured but it is less

profitable as the returns on money advanced to financial institution are low.

There is again no hard and fast rule, as to whether ‘due

from banks’ should be greater than ‘due to banks’ or v ice

versa. I t a l l depends upon the prevalent c ircumstances and

the management pol ic ies of the commercial bank under

considerat ion


Alfalah is maintaining a right level of both “due to banks” and “due from banks”

although the ratio has reached a very high level. This is because, as explained

earlier, Bank Alfalah Limited has not borrowed much from the financial institutions

but has advanced a big amount to them. The “due to banks” figure has declined

whereas the “due from banks” figure has almost doubled depicting that Bank

Alfalah Limited enjoys good credibility in the financial sector as banks prefer to

borrow funds from it.

C A P I T A L F U N D S / T O T A L A S S E T S

I t s imply shows the percentage of assets that are equity

f inanced i .e. the percentage contr ibution of equity in

creat ion of total assets

This rat io shows the percentage of owners’ money used in

the creat ion of assets.

Usually a commercial bank’s equity is quite small as compared to its assets figure,

as most of thee assets are created through the deposits (a liability) a commercial

bank generates. So equity’s role is predominantly limited to creation of operating

fixed assets. That is why thee values assumed by this ratio are quite small.

Although the percentage fluctuated between 5% and 8% but the increase in the

capital in absolute terms gives a sense of satisfaction to the financial analyst.

C A P I T A L F U N D S / R I S K A S S E T S

This rat io shows the percentage of owners’ money invested

in r isk assets.

This rat io depicts as to what percentage of advances

consists of equity (owner’s money) i .e. what percentage of

equity has been given to credit c l ients over the years.


Naturally this percentage would assume smaller values, as banking is not about

accumulating money (i.e. creation of huge piles of equity finance); rather it is about

management of money (i.e. getting money from one class of individuals /

companies (depositors) and extending it to the other class (investors) and earning a

margin in between).

Nevertheless the values assumed by this ratio are considerably healthy, especially

when equity is increasing manifold every year. Lending to private entities is risky

therefore bank prefers to lend out of the deposits and borrowing from other

financial institution instead of its own capital. For last four years this ratio has been

around 11 – 13 %.

C A P I T A L F U N D S / T O T A L F I N A N C I N G

This rat io shows the percentage of capital funds in the total

f inancing

This ratio would assume smaller values, the rationale being that the bank would

be least interested in lending out its equity, it would love to lend its deposits, it

would love to lend the amount received from other commercial banks, but it would

expose a very less percentage of its equity to credit clients, and this is adequately

depicted by the values this ratio assumed for the past five years.

The ratios calculated for the last five years from 1998 to 2002 shows that to avoid

risk bank prefers to lend out of the depositors’ money and borrowing from other

financial institutions. This ratio has been around 10 – 12 % for Bank Alfalah Limited.

It is recommended that bank should increase its capital by increasing its reserves.

In this way it will also obtain the trust of its creditors.

D E M A N D D E P O S I T S / T O T A L D E P O S I T S


This rat io shows the percentage of demand deposits in the

total deposits. With the help of this rat io bank determines

the required level of l iquidity. Higher is this percentage

more wi l l be the l iquidity required.

Demand deposits are those liabilities of a commercial bank which are payable to the

customer / whenever he demands it. On the contrary time liabilities of a commercial

bank mean those deposits which are to be paid back after the lapse of a pre-

decided time period. Now there is no hard and fast rule as to whether time liabilities

should have a greater proportion in the total deposit pool or demand liabilities

should have a greater proportion.

Bank prefers demand deposits because they result in decrease in the cost as no

return is given on current assets and rates of return on saving accounts are less

than that of long-term accounts. Moreover banks prefer to give short-term advances

therefore they prefer demand deposits.

From the year 1998 to the year 2000 there had been a massive increase in the total

deposits, but only a consistent 2% increase in the ratio. This meant that the

contribution of time liabilities towards the build up of the total deposit pool was

greater than the contribution of demand deposits. This was basically a result of

massive expansion and a policy to even welcome high cost deposits.

But in the year 2001 policy was changed, high cost deposits were shred, and as a

consequence the ratio had a great improvement of 7%, specially when there was a

great increase in the deposit pool itself. The year 2002 saw a similar trend when the

ratio improved further to 78.55 %.

T I M E D E P O S I T S / T O T A L D E P O S I T S

This rat io shows the percentage of t ime deposits in the total

deposits.


The time deposits are less as compared to the demand deposits. This is because of

the reasons mentioned in the previous ratio. Greater the time deposits more will be

the cost of funds.

C O S T O F F U N D S

I t shows the cost that bank has to incur on the f inancing

from various sources i .e. the depositors money as wel l as

borrowings from other banks.

It is the over all cost incurred by the bank. The cost of funds has been decreasing

for the last 5 years. This shows the efficiency of the management. Management has

been able to control the cost by recovering the non-performing loans in the year

1999 and 2000. Moreover the rates of return on saving and term accounts have

declined lowering the cost of funds. As a result bank has more leverage available for

lending. The rate has achieved a record low point of 7.44 % in 2002.

R E T U R N O F I N V E S T M E N T ( R O I )

This rat io shows the return earned by the investors

Bank Alfalah Limited has shown a slight decline in the ROI as it decreased from

10.19 % in the year 1998 to 6.26 %in the year 2002. The fall in the ROI is due to

the increase in total liabilities. It should be greater than cost of funds but here it

is less than the cost of funds. It is due to the increase in bank’s borrowings. This

needs attention of the management.


A C C O U N T I N G P O L I C I E SA C C O U N T I N G P O L I C I E S

STATUS AND NATURE OF BUSINESS

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

under the Companies’ Ordinance, 1984. It commenced banking operations from

November 1, 1992. The bank is operating through 44 branches with the registered

office at B. A. building I. I. Chundrigar Road, Karachi

BASIS OF PRESENTATION

In accordance with the directives of the federal government regarding shifting of

the banking system to Islamic modes, the state bank of Pakistan (SBP) has issued

various circulars from time to time. Permissible forms of trade related modes of

financing include purchase of goods by the banks from their customers and

immediate resale to them at appropriate mark-up in price on deferred payment

basis. The purchase and sale arising under these arrangements are not reflected in

these accounts as such but are restricted to the amount of facility actually utilized

and the appropriate portion of mark-up thereon.

STATEMENT OF COMPLIANCE

The financial accounts have been prepared in accordance with the directives issued

by SBP, the requirements of the banking companies ordinance, 1962 companies

ordinance, 1984 and the accounting standards issued by the international

accounting standards committee (IASC) and interpretations committee of the IASC,

as adopted in Pakistan.

BASIS OF MEASUREMENT

These accounts have been prepared under the historical cost convention, except

that certain investments and fixed assets have been included at revalued amounts


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash And Cash Equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise

balances with less than 90 days maturity including:

Cash and balances with treasury banks

Balances with other banks

Call lending

Revenue Recognition

Mark-up/return on advances and investments are recognized on accrual basis. Fee,

commission and brokerage except income from guarantees are accounted for on

receipt basis.

Advances

These are stated at cost less provision for bad and doubtful debts. The provision for

bad and doubtful debts is made in accordance with the requirements of the

prudential regulations issued by SBP.

Investments

The investments of the bank are classified in to the following three categories:

Securities Held For Trading

These are investments acquired principally for the purpose of generating

profits from short-term fluctuations in price or dealers margin.

Securities Held To Maturity

These are investments with fixed or determinable payments and fixed maturity

and the bank has the positive intent and ability to hold them till maturity.

Available For Sale

These are investments that do not fall under the trading or held to maturity

categories. In accordance with the requirements of SBP quoted securities are

valued at market values and surplus/deficit arising thereon is kept in a

separate account shown in the balance sheet below equity. Unquoted

securities are stated at cost less provision for impairment. Gains or losses on

disposals during the year are taken to profit and loss account.


Operating Fixed Assets And Depreciation

Capital Work In Progress

Capital work in progress is stated at cost.

Property And Equipment

Office premises are shown at cost/revalued amount less accumulated

depreciation. All other assets are stated at cost less accumulated depreciation.

Depreciation is charged to income applying the straight-line method.

Maintenance and normal repairs are charged to income as and when incurred.

Major renewals and improvements are capitalized. Gains or losses on disposal

of fixed assets are taken to profit and loss account.

Intangible assets

Intangible assets are stated at cost less accumulated amortization. The assets

are amortized using the straight-line method over their useful lives.

Taxation

Taxation charge in the accounts is based on the taxable income at the current rates

of taxation. The bank accounts for deferred taxation on timing differences using the

liability method.

STAFF RETIREMENT BENEFITS

Defined Benefit Plan

The bank operates an approved funded gratuity scheme for officers and executives.

Contributions to the fund are made on the basis if actuarial valuation. Actuarial

valuation of the scheme was carried out as at January 1, 1999 using the projected

unit credit method. The fair values of the funds assets and liabilities as at that date

were Rs. 15.00 million and Rs. 28.88 million respectively. The bank is recognizing

the transitional obligation of Rs. 13.88 million over a period of five years beginning

from 1999 on a straight-line basis. The bank also operates an unapproved unfunded

gratuity scheme for its clerical staff that have completed the qualifying period of

service under the scheme.


Defined Contribution Plan

The bank operates a recognized provident fund for all its permanent employees to

which equal monthly contributions are made by both the bank and the employees

at the rate of 8.33% of basic salary

FOREIGN CURRENCIES

Assets and liabilities in foreign currencies are translated in to Pak rupee at the rates

of exchange approximating those prevailing at the balance sheet date. Foreign

currency transactions are converted at the rates prevailing on the transaction date.

Forward contracts other than contracts with SBP relating to foreign currency

deposits are valued at forward rates applicable to the respective maturities of the

relevant foreign exchange contract. Forward purchase contracts with SBP relating to

foreign currency deposits are valued at the spot rate prevailing on the balance

sheet date. The forward cover fee payable on such contracts is amortized over the

term of the contracts. Exchange gains and losses are included in income currently.

DEFERRED COSTS

These are amortized over a maximum period of five years commencing from the

year in which these are incurred.


S E C T I O N F I V E

M A R K E T I N G M I X

O F



M A R K E T I N G M I X

Marketing Mix can be defined as the set of marketing tools that the firm uses

to pursue its marketing objectives in the target market.

Two basic pillars of this basic concept are:

Target Market

Bank Alfalah Limited’s target market consists of individual clients as well as a

number of business organizations. Due to different market segments, Bank Alfalah

Limited’s different branches have their target markets. Due to specialized services

provided by Bank Alfalah Limited and its highly competitive foreign exchange rates,

most of the major importers in this area deal with Bank Alfalah Limited.

Consumer Needs

Assessment of the needs and wants of consumers is an on going process at Bank

Alfalah Limited that helps it to continually develop new products and services. At

Bank Alfalah Limited, the philosophy is that the bank should go to all possible limits

to satisfy the customer needs. The officers of the Import Department, for

example, try to get the minimum possible exchange rates for their clients. Those in

Cash Department do not look at the clock while honoring the cheques.

The bank is continuously formulating new products and services for the growing and

diversified needs of its ever-expanding client base. The bank’s commitment to its

customers is evident from its mission statement:

“To provide innovative and high quality products to its customers at

the lowest possible rates. To achieve all set goals regarding service,

performance and goodwill.”

T H E F O U R P S O F M A R K E T I N G M I X


The major task of marketing management is to utilize the marketing mix

variables properly. These variables are the product that is to be marketed, its

price, the channel of distribution that is to be used to get the product to the

consumer (place) and its communication to the consumer in the form of

promotion. These are called as the four P’s of marketing. These variables

represent the decisions over which the marketing manager can exercise the most

control. Infact these are the controllable marketing variables.

Bank Alfalah Limited recognizes the importance of all of these variables in their

environment and thus has accordingly formulated a number of strategies. Bank

Alfalah Limited believes that training and development, both personal and

professional, are crucial to their organization. They are proud to offer exceptional

training programs, a wide variety of career path options, and a work environment

that emphasizes coaching as a basis for learning and growth. They hire talented

individuals who take pride and ownership in the business by striving to be the best.

They hire the Team members who believe the Company’s success is in their hands.

To encourage development, Bank Alfalah Limited has defined the skills, knowledge

and training required for each position and this information is communicated to

each employee through specific and thorough job maps. Every employee has the

opportunity to advance based upon his or her performance and potential. Their

program includes annual performance appraisals designed to let employees know

exactly what the expectations are and what opportunities exist for improving.

They have created a progressive banking career path with career opportunities

designed to enable each employee to achieve his or her personal best. Many of the

Senior Management began their careers as small level officers in BCCI. These

opportunities also include unique developmental assignments in field training,

staffing, marketing, facilities management, and in operations positions at Bank

Alfalah Limited.

In the rapidly changing world of today, product innovation is necessary. Consumers’

needs and wants change rapidly. Technological advancements make product

changes possible. A big factor in forcing the organizations to innovate is the


constant innovations in competitor products, thus making the organization exposed

to the fact of loss of customers. The process of new product development consists

of a number of steps. Bank Alfalah Limited constantly strives to improve its

products, and thus giving its valuable customers value for their money. Bank Alfalah

Limited management has always strived to attain the highest level of satisfaction

amongst its customers. In addition, this property has made them less vulnerable to

sudden changes in consumer trends and tastes.

C O R E P H I L O S O P H Y - B A N K I N G O N

C O N S U M E R S

As Bank Alfalah Limited threads its ropes to be the leader in Consumer Banking in

Pakistan, its operating strategy has been aligned with key consumer need highest

value and expert service. As custodians of financial services, Bank Alfalah Limited

feels duty bound to do more than conventional banking services. As an extra step

towards financial security and freedom for the consumers, Bank Alfalah Limited

constantly devises safety management regimes to maximize returns on hard

earned savings and investments. These values form a prime directive that is

evident in its responsive teams, present at their nationwide branches, ready to

provide all the clients timely assistance.

Cognizant of the continually changing customer need environment, Bank Alfalah

Limited has devised a product portfolio to stay ahead of the emerging consumer

patterns.

M A R K E T I N G G U I D E L I N E S

The marketing management has made some core policies for better service and

consumer satisfaction. They can be summarized as

Identification of consumers wants and needs through marketing research

Development and management of these wants and needs


Promotion of the products developed for the customers

Establishment and maintenance of the meaningful relations with the

customers and special groups

Coordination of the marketing as an integral part of all the banking activities

It is the function of the organization to keep the constant touch with the consumers,

their needs, develop products, that meet their needs and build the aim which

express organization purpose. Thus the customers, employees and investors fall

into the category of bank’s market. Marketing means making exchange of

goods and services possible. Once a banker identifies its prospective customers,

his marketing strategy becomes easy. The next step to find out the banking

requirements. Bankers also try to locate there past customers for offering the more

facilities to them.

M A R K E T I N G P R I N C I P L E S E V O L V E D B Y

B A N K A L F A L A H L I M I T E D

For providing marketing services to the clients, Bank Alfalah Limited has formulated

certain principles. Bank Alfalah’s target market consists of individual clients as well

as a number of business organizations. Due to different market segments, Bank

Alfalah Limited’s different branches have their target markets. The principles are

We should have full knowledge about the business background, behavior and

the life style of our clients.

We should have full knowledge about our self and about the bank where we

work

Make maximum use of the information provided by the management

information systems and once a contact is established with the client, always

try to pursue on the call of the client any time, the approach of the marketer

should be friendly rather than a business like.

We should frame a definite program about the areas to be covered.

We should know what is going around us. Who are our competitors, what

product and services they are offering and at what rates


We should have a sound knowledge about our profession, current rates of

interest and market trends.

We should try to work with team spirit

We should not be too internally focused view on unlimited prospects but to

widen our perspective.

We should render quick, efficient, and personalized service to our customers.

Be always ready to react and readjust to a change in the market and

customer’s attitudes

Assessment of the needs and wants of consumers is an on going process at Bank

Alfalah Limited, which helps it to continually develop new products and services. At

Bank Alfalah Limited, the philosophy is that the bank should go to all possible

limits to satisfy the customer needs.

THE FOUR PS OF MARKETING WITH REGARDS BANKS ARE

Product – Products and Services Provided by a Bank

Price - Commission and Bank Charges Received

Promotion - Promotion of products and Services

Place - Placement of Services i.e. Network of branches


PP R O D U C T SR O D U C T S & S & S E R V I C E SE R V I C E S

A Product or a service creates a bundle of form, possession, time, place,

information and image utilities that have potential need-satisfying capabilities

for individual and organizational customers.

True to its strategy of becoming a highly effective financial supermarket, Bank

Alfalah Limited provides a complete range of products to its customers; the

corporate clients, commercial enterprises and the small consumers. At Bank Alfalah

Limited, the primary commitment is to understand and support its client’s business

objectives and financial needs. All this is ensured through constant R & D focus and

training & development of staff. Bank Alfalah Limited provides a wide range of

products/ services to its customers, which can be compared with any foreign, or

national bank in terms of quality and reliability.

The products and services Bank Alfalah Limited is presently offering come under

four main heads i.e. Corporate Banking, Consumer Banking, Consumer

Finance and Electronic Banking. The various items that fall under these four

heads can be summarized as

CORPORATE BANKING

Current Account (Pak Rupees)

Foreign Currency Accounts

Clearing And Fund Transfer

Trade Services

Overdraft Facilities

Term Loans

Project Financing

CONSUMER BANKING


PLS Account

Royal Profit Account (Pak Rupees)


Royal Patriot Account

Anmol Deposit Certificates

Monthly Income Account

Money Gram

Rupee Traveler Cheques

Saving Deposit Lockers

CONSUMER FINANCE


Car Finance

Personal Loans

Housing Finance

Monthly Income Account

Foreign Currency Account

Money Gram

Rupee Traveler Cheques

E-BANKING

ATMs

Online Banking

Phone Banking

Internet Banking

A C C O U N T S O F F E R E D B Y B A N K A L F A L A H

L I M I T E D

One of the basic functions of a commercial bank is to receive deposits and to honor

cheques. Accounts offered by the banks for the deposits of customers constitute the

basis of their operations and develop the basic relationship between a banker and

customer. Bank Alfalah Limited has formulated a number of accounts for the

deposits of customers, with unique features, to facilitate them. These are:


ROYAL GROUP

Royal Group is a joint investment account that provides a way to the customers to

have their joint accounts directing them towards more benefit. Minimum number of

people required to form a group is just 2. So, in this way, two or more people get

their joint account in the bank and can earn higher rates of return. Profit is

calculated on daily basis and disbursed monthly. It also provides an opportunity to

employees to get their salary disbursed through this account as it provides better

arrangements for secured collection of cash/ checks. The Important Features are

It is a joint investment plan

Minimum group Bank Alfalah Limited balance required is Rs. 100,000.

Minimum number of members required to form a group is 2

Profit is calculated on daily basis

Profit is disbursed on monthly basis

Each member of the group is assigned a PLS savings account

Each member is provided with a separate checkbook

ROYAL PROFIT

Royal Profit is a profit bearing current account. In Royal Profit account, a customer

enjoys a higher rate of return that increases with savings. Account holder has the

comfort of unlimited transactions and there is no restrictions regarding the

withdrawals, which mean all time accessibility to the account.

It gives two advantages

Access to the funds at all times

Lucrative profit rates that increase with savings

The Important Features are

Optimum Daily Balance

With Royal Profit you earn optimum profit on your daily balance.


Higher Savings

Incorporating a slab system, Royal Profit gives higher savings.

Convenience Of Current Account

Royal Profit provides the convenience of current account.

Unlimited Transactions

There are no restrictions on the number of transactions and withdrawal

can be made without any notice.

Disbursement Of Profit On Monthly Basis

Low Min Balance

For availing the above benefits a minimum balance is to be maintained.

Every individual has to maintain balance of Rs. 50,000.

Companies have to maintain a minimum balance of Rs. 250,000.

ROYAL PATRIOT

Royal Patriot is a special term deposit account offering attracting profit rates that

improve with tenure and amount. Customer has a choice to deposit his amount for

terms of 1, 3, 6, 9, 12 & 24 months with a minimum Bank Alfalah Limited balance of

Rs. 25,000 only. There is no penalty in case of premature encashment (Profit will be

calculated according to the last tenure completed), & moreover, no prior notice is

required before withdrawals. The Important Features are

It is a special term deposit


From 150,000,000 & Above

7.00From 50,000,000 To

149,999,999

6.75From 10,000,000 To

49,999,999

6.50From 1,000,000 To 9,999,999

6.00From 50,000 To 999,999

RATE (P.A.) %AMOUNT

1 4 3

Choice of terms 1, 3, 6, 9, 12 and 24

Profit on 1 and 2 year deposits is paid on half yearly basis

No penalty in case of premature encashment

No prior notice is required before withdrawal

Minimum Bank Alfalah Limited balance of only Rs. 25,000 is required

ANMOL DEPOSIT CERTIFICATES

The Important Features are

These certificates are available in the denominations of Rs. 10,000, Rs.

25,000, Rs. 50,000, Rs. 100,000, and Rs. 500,000.

Profit up to 18 % per annum is offered on these deposit certificates, thus the

amount gets doubled in six years.

Profit is calculated on daily basis. So in case of encashment, the customer

can get the profit of the number of days the certificate has been held.

The certificates can be en cashed prematurely without any penalty.

These certificates can also be purchased in the name of a minor.

Short-term loans are also granted against these certificates.

OTHER CLASSIC PLS DEPOSITS

Along with the above stated special Royal accounts and Anmol Deposit Certificates,

the bank also have formulized the Classic PLS Deposits. They are

Current Account

Savings Account


8.508.258.002 year

8.208.108.001 year

7.707.607.506 months

7.207.107.003 months

6.206.106.001 month

5,000,000 &

ABOVE

1,000,000-

4,999,999

25,000-

999,999

TENURE

1 4 4

9.25PLS Term Deposit Five Years

9.00PLS Term Deposit Four Years

8.50PLS Term Deposit Three Years

8.00PLS Term Deposit Two Years

7.50PLS Term Deposit One Year

7.00PLS Term Deposit 6 Months

6.00PLS Term Deposit 3 Months

6.00PLS Term Deposit 1 Month

4.60PLS 30 Days Notice Deposits

6.50PLS 7-29 Days Notice

Deposits

Deposit Rate (P. A)%PLS Saving Deposits

Notice Deposit

Term Deposit

Foreign Currency Accounts

The key features of these accounts are as under:

Current Account

No profit is paid on this account.

Amount can be withdrawn at any time without any prior notice.

A very low minimum Bank Alfalah Limited balance is required.

This account can be opened in other currencies also, i.e. in Euro, Pound

Sterling, U.S. Dollar and Euro.

This account can be opened with PKR 10,000.

Savings Account

Minimum Bank Alfalah Limited balance required is Rs. 7000.

Profit is paid on half-yearly basis.

The profit rate offered and paid half-yearly is 8.00 %.


Savings account can be opened in other currencies also, i.e. in Euro,

Pound Sterling, U.S. Dollar and Euro.

Account can be opened with PKR 25,000.

Notice Deposit

These are the short-term deposits of customers.

Interest is paid on daily basis.

Notice has to be given to the bank prior to the withdrawal of the amount.

Term Deposit

It is a fixed PLS account.

Profit Rates are given in the following table

1 Month 7.50 %

3 Months 8.50 %

6 Months 9.00 %

1 Year 9.50 %

3 Years 10.50 %

5 Years 11.00 %

Foreign Currency Accounts:

Due to the increasing globalization, all leading commercial banks have been

offering foreign currency accounts to their customers. Bank Alfalah Limited has

done it by facilitating its customers to have their foreign currency accounts opened

in the bank. At present, Bank Alfalah Limited offers US Dollar, UK Pound and EURO

accounts.

O T H E R C O N S U M E R P R O D U C T S A N D

S E R V I C E S O F F E R E D B Y B A N K A L F A L A H

L I M I T E D


ON-LINE BANKING

Bank Alfalah provides on-line services to its customers. At present, this service

facilitates the customers to deposit and transfer their amounts from one branch to

another of Bank Alfalah Limited. It is being planned to launch a universal account to

update this facility and make it more extensive.

ALFALAH CAR FINANCING

Alfalah Car is a consumer-financing scheme that enables a customer to own his

desired car at easily affordable and flexible installation with minimum down

payment and insurance. All businessmen, Corporate

Employees, Salaried and self-employed professionals

having net take home income in excess of three times

the monthly installment are eligible to take the

advantage of this scheme. The salient features of this

scheme are

Lowest Financing cost available in the market

Tenure of 1 to 5 years as per requirement of customer

Quickest processing

Minimum documentation required

Down payment requirement of 20%

Repayment through monthly installments

Lowest insurance rates available from bank’s approved insurance companies

On of the lowest markup in the market i.e. 19 % (this has been reduced to 8.9

% and 9.5 % in 2003 for Suzuki brand cars and other brand cars respectively)

RUPEE TRAVELER CHEQUES (RTCs)

Bank Alfalah Limited issued its own rupee travelers Cheques with highest

denominations, during the course of my internship with the bank. Bank Alfalah

Limited TCs have been presented with ultimate combination of features, which

allows the customers the best way to make and accept payments (as it is called

safe cash), or to save in a rewarding way. The salient features are


Features Of Rupee Traveler Cheques

Highest Denominations Available

Bank Alfalah Limited offers Rs. 5000

and Rs. 200,000 RTCs.

Widest Range:

Bank Alfalah Limited offers RTCs

following denominations

Rs. 1000

Rs. 5000

Rs. 10,000

Rs. 20, 000

Rs. 50,000

Rs. 100,000

Rs. 200,000

Rs. 500,000

Rewards

Customers can earn daily points and win great gifts.

Encashment Commission

A commission of 0.15% is given on encashment of RTCs at any branch of

Bank Alfalah Limited.

Security Features

The special embossed printing in UK, Alfalah security thread and Bank

Alfalah Limited watermark are some of the features that make RTCs

secure.

Easily Refundable

RTCs can be refunded without any penalty or loss.

Transferable And Endorsable

They can be transferred and endorsed to anyone.

Unlimited Validity:

Bank Alfalah Limited RTCs will always remain en-cashable.

No Account Needed


One does not have to be an account holder to get the benefit of Bank

Alfalah Limited RTCs.

ALFALAH LOCKERS

The client can also avail the facility of rent-free safe deposit lockers for their

valuables. The distinguishing features of these lockers are:

Highly effective security system

Fully refundable security deposit

Convenient locations

Flexible operating hours

BANK ALFALAH LIMITED HOME LOANS

Alfalah Home Loan is specially designed for those NRIs

in UAE whose families live in Pakistan. Bank Alfalah

Limited provides following types of Home Loans:

To purchase a new house

To renovate the existing house

To construct a house

ANMOL SAVING CERTIFICATES

Anmol saving certificates is a special product of Bank Alfalah Limited. It gives Sky

High Profits from the date of purchase.

Denominations

Rs. 10,000

Rs. 25,000

Rs. 50,000

Rs. 100,000

Rs. 500,000

Encashment


Anmol Certificates can be en-cashed any time without paying any penalty. It means

they can be en-cashed before maturity. Profit is earned till the last day. It gives the

flexibility to save short and long term and the profit continues to grow every day.

Security

ANMOL deposit certificates are fully secured by Bank Alfalah Limited. In case of loss

of certificates Bank Alfalah Limited re-issues them without any cost. The bank also

provides free custodial service.

MONTHLY INCOME ACCOUNT

Bank Alfalah Limited’s Monthly Income Account offers more profit and ensures a

steady stream of monthly income for the customers.

It gives monthly profit of Rs. 855.

The variable terms are 1, 2, and 3 years.

Profit is directly credited to the customer’s

account.

A minimum deposit of Rs. 25,000 is required.

Loan facility is also provided on the basis on this account.

TENOR OF DEPOSIT MONTHLY PROFIT PAYMENTS ON RS. 100,000

One Year Rs. 650/- @ 7.80%

Two Years Rs. 670/- @ 8.04%

Three Years Rs. 730/- @ 8.76%

MONEY GRAM

Bank Alfalah Limited in collaboration with

MONEYGRAM offers remittance service to Pakistan. It is

a person-to-person money transfer service that allows

consumers to receive money in just a few minutes.


Security

Money Gram service is already being used all over the world because of the secured

and quick transfer of money, which is possible through an extensive network of

quality agents, linked by computer.

Convenience Of Customers

It is available in over 154 countries and in more than 40,000 locations worldwide.

Therefore money is transferred immediately and arrives at the receiving end within

10 minutes. One does not have to be an account holder neither needs a credit card

to avail this facility.

Free Message Service

A 10 words message can be received from the sender with every transaction

without any extra cost.

L E N D I N G P R O D U C T S O F F E R E D B Y B A N K


Bank Alfalah offers many lending products to its customer. They can get running

finance for their working capital requirements as well as trade finance for importing

their merchandise. The complete detail of all of these lending products is given in

the Credits section of this report. Some of the major lending products of Bank

Alfalah Limited are:

Overdraft

Cash Finance

Finance Against Trust Receipt

Finance Against Imported Merchandise

Export Bills Discounting

Letter Of Credit

Local Bills Purchased


C O N S U M E R F I N A N C I N G A T B A N K


During the time of my internship (June – August 2002), Bank Alfalah Limited was

only indulged in Corporate Credits and did not provide Consumer Financing.

Recently, Bank Alfalah Limited has started Consumer Financing as well. It is

providing financing for items like

Televisions

Music Systems

VCD Players

DVD Players

Monitors

Refrigerators

Deep Freezers

Microwave Owens

Washing Machines

Ceiling Fans

Pedestal Fans

Room Coolers, etc.

The consumer financing facility is available for products of companies like

Philips

Haier

Super Asia, etc

E L E C T R O N I C B A N K I N G A T B A N K



ALFALAH ATMs

Bank Alfalah Limited also provides the facility of ATMs to its customers. Using this

facility customer can withdraw cash at any time avoiding the lengthy procedure of

cash withdrawal.

ONLINE BANKING

Bank Alfalah Limited is one of the few banks in Pakistan that offers On-line Banking

facilities. Customers have the convenience of walking into the nearest branch of

Bank Alfalah in any of the 22 cities of Pakistan and operate their accounts.

PHONE BANKING

Bank Alfalah Limited is planning to introduce Mobile banking facilities to its

customers in near future.

E-BANKING

Bank Alfalah Limited is also going to introduce e-banking to facilitate its valued

customers.


PP R I C ER I C E

“The amount of money the customers pay for the product of a

company”.

Bank Alfalah Limited provides different products and services to its customers,

which have been discussed in previous section. Pricing of products means the

commission to be paid by the customer in return of services provided by

the bank. The price paid for the services mainly include:

Mark Up/ Interest

Bank Charges

Fees and Bank Commission etc.

These charges and commissions are prescribed on Schedule of Bank Charges

(SOC) and keep on changing from time-to-time, and are issued by the bank

periodically (generally after six months). The price charged for all the products and

all the services is given in complete detail in the schedule of bank charges that is

given below.

SCHEDULE OF BANK CHARGES

FOR THE PERIOD JAN 01, 2001 TO JUNE 30, 2001

D O M E S T I C B A N K I N G

REMITTANCES (DOMESTIC)

Pay Order (A/c Debit) Rs. 10 (flat)

Pay Order (Against Cash) Rs. 10 (flat)

Cancellation of Pay Order Rs. 100 (flat)


Issuance of Duplicate Pay Order Rs. 100 (flat)

Issuance of Drafts, MTs, & TTs

Up to Rs. 10,000

From Rs. 10,001 to Rs. 100,000

From Rs. 100,001 to Rs. 1,000,000

From Rs. 1,000,001 to Rs. 2,000,000

Over Rs. 2,000,000

0.25% Minimum Rs. 25



0.075% Minimum Rs.

1000

0.060% Minimum Rs.

2000

If a Party is Maintaining Average Balance of Rs.

100,000 in Current Account then charges will be

deducted for the issuance of PO and DD, drawn on any

Bank Alfalah’s branch.

Cancellation of DDs / TTsRs. 100 (flat) per

cancellation

Issuance of Duplicated DD Rs. 100 (flat) per item

Issuance of SBP Cheque (if permissible by SBP) Rs. 500 per Cheque

MISCELLANEOUS CHARGES - COMMUNICATION

Courier Charges

Inland

Foreign

Rs. 150

Rs. 1250 or actual

whichever is higher

E-mail charges Rs. 50 per e-mail

Internet access charges Rs. 50 per hour

Fax charges

Inland

Foreign

Rs. 150 or Actual, which

ever is higher

Rs. 250 or Actual, which

ever is higher

Telex charges


InlandRs. 200 or Actual

whichever is higher

Foreign Rs. 500 or Actual

whichever is higher

Postage Charges

Inland Rs. 100

Foreign Rs. 200

OTHER CHARGES

Account Closing Rs. 150 (Except PLS.

Saving Account)

Out of pocket Expenses (not covered by Schedule of

Charges)Actual

Standing Instructions Rs. 100 per instruction

Online Cash transactions (not maintaining minimum

balance)Rs. 300

FINANCES / ADVANCES

ADVANCES

Charges for Advances in Addition to Mark-up/Profit on

Investment

Project examination fee (where applicable) 1.00% of project facility

requested

Interim Review / Processing Fee Rs. 1000 (flat) Where

applicable

Renewal of facility / New Facility Initiation (where

applicable)

Commercial borrower

Individual / non-commercial borrower

Rs. 2,500 (flat)

Rs. 750 (flat)

Commitment Fee / up-front fees (where applicable)0.50% - 1.00% (on sanction/

renewal)


Legal & Administrative fee 0.50% Minimum Rs. 1000

Miscellaneous Charges (documents, evaluation of

security, and maintenance there to)Actual

Replacement of securities (interim) Rs. 1000 (flat)

To mark lien on securities not issued by us Rs. 250 (Services Charges)

Registration of Charge with Registrar of Joint Stock

Companies Rs. 500 plus Actual

Charges for Advances Against Pledge/Hypothecation

Godown Rent Actual

Staff Salaries Actual

Godown Inspection Charges (where applicable)

Within municipality limit or within a radius of 5km

from Branch

Out side, District limits

a) Rs. 500 up to Rs.

10M Facility

b) Rs. 1000 over Rs.

10M Facility

Rs. 1000 + Traveling

Expenses (outside

municipality)

Other incidental expenditure, e.g. insurance, legal,

etcActual

Collection of coupon (on Government certificates

issued by other bank/saving centers under lien to

us)

Rs. 250 per coupon

Issuance of Delivery Orders against Finance

against Imported Merchandise, Cash Credit and all

goods under pledge.

Rs. 500

Issuance of NOC (customer’s request) on request

of customers/clients for creating additional / pari-

passu charge/second charge on their fixed assets

for acquiring further project finance from other

Rs. 5000


Banks/Financial Institutions.

Service Charges on over due amount (where

customer fails to pan obligation on agreed / due

date) including Payment Against Documents /

Finance against Imported Merchandise / F.T.R /

Acceptances & Mark-up Advances

0.50% of overdue amount in

addition to the mark-up

Business Commitment & Compensatory

Commission

If a party fails to pass on

committed business in

writing while getting the

credit Line sanctioned in its

favor, the bank reserves the

right to recover

compensatory commission

maximum at the rate of

5.00%, to the extent of

shortfall in business so

committed to be routed

through us.

GUARANTEES

Guarantees issued to shipping companies in

lieu of Bills of Lading, Airways Bill and Railway

receipt

Rs. 800 (flat)

Guarantees issued to Collector of Customs in

lieu of payment of Export duty, which remains

valid for 6 months

0.50% per quarter or part

thereof Minimum Rs. 1000

Guarantees secured against Cash 0.20% per quarter or part there

of Minimum Rs. 500

Other Guarantees: Where total value of Guarantee

business of a customer during a

period of limit or calendar year


Up to Rs. 3M

Above Rs. 3M to Rs. 5M





Above Rs. 100M

0.50% per quarter Minimum Rs.

750


thereof


thereof


thereof


thereof


thereof

Subject to negotiation while

confirming with SBP directives

Issued at Other Bank’s request in Pakistan 0.25% per quarter or part

thereof Min Rs. 750

Against Foreign Bank’s Guarantees 0.25% per quarter or part

thereof Min US$ 15

Amendments of Guarantees

Increase in amount and or Extension in period

Rs. 300 per amendment

Commission as per item 1.d)

above

Administrative fee (expired guarantees)

Rs. 75 per quarter until the

original guarantee is returned to

the bank (not to be charged if

100% collateral is held)


C O N S U M E R B A N K I N G

SALE/PURCHASE OF SECURITIES, SAFE CUSTODY,

ARTICLES IN SAFE DEPOSITS AND SAFE DEPOSIT

LOCKERS

SAFE DEPOSIT LOCKER

Fee for safe deposit lookers (to be recovered

in advance or at commencement of the

period yearly/half yearly/quarterly as the

case may be)

Small

Medium

Large 1

Large 2

Extra Large

Rs. 150

Rs. 1250 or actual whichever is

higher

Rent

Rs. 1000 per annum.

Rs. 1500 per annum.

Rs. 2500 per annum.

Rs. 3000 per annum.

Rs. 3500 per annum.

Locker fee will be waived if an interest free

Deposits as mentioned is maintained during

the tenancy of lockers with a minimum

period of one year.

Small

Medium

Large 1

Large 2

Extra Large

Deposits

Rs. 10000

Rs. 15000

Rs. 25000

Rs. 30000

Rs. 35000

Key Deposit (in advance to be refunded on Rs. 1000 per locker


termination)

Breaking Rs. 2500 per Locker

Late Fee (Locker Rental)

Small

Medium

Large 1

Large 2

Extra Large

Rs. 20 per month

Rs. 30 per month

Rs. 50 per month

Rs. 60 per month

Rs. 70 per month

Locker facility for staff of Bank Alfalah Ltd. At 50% discount on rates & no key

deposits

SALE / PURCHASE OF SECURITIES

Sale / Purchase of shares

0.125% on the first Rs. 10,000 of

purchase price or cost thereof.

Minimum Rs. 50 and 0.10% on

amount exceeding Rs. 10,000 or

Minimum Rs.75

Withdrawal fee

Withdrawal fee on shares/securities held in

safe custody (to be recovered at time of

withdrawal)

Withdrawal fee on Govt. securities where

shares and/or securities sold are from

against item 2.a) OR

Withdrawal fee, as shown against item (2b)

(i) and (ii) whichever is higher, will be

charged.

0.50% on the first Rs.10,000 of the

paid up value Minimum Rs. 50 and

0.15% on amount exceeding

Rs.10,000 Minimum Rs. 100

Rs. 5 per scrip

Collection of profit/return and dividend 0.5% on the amount of interest/

return/dividend collected/paid

including deposit certificate Issued

by Government agencies Minimum


Rs. 50

Handling charges for (conversing

renewal/consideration/subdivision of Govt.

Securities).

Rs. 25 per scrip. Rs. 50 (flat) in

case of Deposit Certificate issued

by Government agencies

ARTICLES IN SAFE CUSTODY

Share custodial services of Central

Depository Company of Pakistan Ltd.

Actual charges charged by CDC,

plus 1.0% of share value on the

first of every month or Ps. 5 per

share each month, which ever is

higher (payable up-front, in

advance)

Boxes & Packages

Rs. 1.00 per 100 cube inches or

any part thereof with a Minimum of

Rs.200

Envelopes

Rs. 0.50 per 25 square inches or

any part thereof with a minimum of

Rs. 100

ISSUANCE OF CERTIFICATE FOR SAFE ITEMS

Issuance of Duplicate Securities Rs. 1000 (flat)

INWARD / OUT WARD REMITTANCE AND CHEQUE

PURCHASE

Outward T.T. through Debit of Account

Against Surrender of Foreign Currency notes

US$ 15 or equivalent PKR

US$ 15 Plus 0.50% Minimum $ 5 or

equivalent PKR

(Also applicable if the Foreign Currency

Account is funded with cash for onward

remittance)

Demand Draft through Debit of Account

Against surrender of Foreign Currency notes

US$ 5 or equivalent PKR

US$ Plus 0.5% Minimum US$ or

equivalent PKR


(Also applicable if the Foreign Currency

Account is funded with cash for onward

remittance)

Issuance of duplicate FDD

Cancellation of FDD/FTT/FMT

Rs. 200 plus Actual Fax, Telex and

Postage charges

Rs. 200 plus Actual Telex and Postage

charges.

Inward:

If proceeds are credited to an account

maintained with us

Others

Nil

US$ 5 or equivalent

Received from abroad or local bank’s branches

& where payment is demanded in Foreign

Currency

Minimum US $3 – Maximum US $6 plus

Actual Postage / Telex charges are

recoverable from collecting bank.

Home Remittance Nil, if proceeds are credited to an

account with us

Other Rs. 10 plus Money order / Telegram

charges

FOREIGN BILLS PURCHASED / COLLECTION

Purchase (Short Tem Receivable) 0.5% Min Rs. 300

Encashment 0.4% Min Rs. 300

Issuance 1%

FCY Cheques / Drafts / TC ’s sent on collection 0.20% plus postage @ Rs. 50/-

(correspondent bank charges will be

extra, if any)

Foreign Exchange Permits

Family Maintenance Rs. 1000 per transaction

Studies Abroad Rs. 1000 per transaction

SBP approvals for capital transfers, dividends, Rs. 1500 per transaction


freight

Other Approvals from SBP Rs. 1500 per transaction

OTHER

Unpaid Items RS. 200 or US $5

Correspondence Charges Actual (if any will be recovered

Foreign Currency (cash handling services)

under FE-25 (SBP) 0.5% on cash deposit

Postage Rs. 150 or Actual, whichever is higher.

Counter Service Rs. 1250 or Actual, whichever is higher

Long Telex per Swift Rs. 1500 or Actual, whichever is higher

Short Telex per Swift Rs. 500 or Actual, whichever is higher

INLAND LETTERS OF CREDIT

Issuance

Annual Letter of Credit volume up to Rs. 25M.

Annual Letter of Credit volume up to Rs. 50M.

Annual Letter of Credit volume in excess of Rs. 50M

First Quarter Subsequent Quarter

Minimum

(or part there of ) (of Part thereof) Rs.

1000

060% 030%

050% 0.25%

040% 0.20%

Amendments

Amendment involving increase in amount and or

extension in period of dispatch / delivery /

negotiation.

Rs. 400 (flat) per amendment

Rs. 400 per amendment plus commission as

per item number. 1a) above

Acceptance Commission

a) Rs. 500 (flat) per Bill charged at the time of

retirement of bill

b) In addition commission at the rate of

0.1245% per month for any period beyond the

validity of Letter of credit Minimum Rs. 150

Confirmation 0.25% per quarter of part thereof Minimum Rs.

300

Collection

Documentary

Through branches of our bank




Clean (including cheques)




Purchase of Bills other than those drawn against

Letter of Credit


0.35% Minimum Rs. 150 plus Mark up (From

date of purchase to date of realization)

0.25% Minimum Rs. 100 plus Mark – Up

(From date of purchase to date of realization)

Purchase of usance Draft under usance

Letter of Credit

Mark up if retired up to 21st day

Mark up if retired during next 210 days

0.30% Minimum Rs. 100 plus mark-up

Ps. 51/1000/day

Ps. 52/1000/day

Dividend Warrants etc. 0.60% Minimum Rs. 50

Negotiation at Sight

Collection Charges for Usance Bill

Minimum Rs. 300


Unpaid

Returning Charges:

Documentary Bills

Clean Bills

Rs. 100 per bill

Rs. 50 per bill

Other charges

Collection agent charges Actual

Postage Rs. 100

Telex Rs. 500 (full)

Storage charges Rs. 50 per pack per day

I N T E R N A T I O N A L B A N K I N G

IMPORTS

Registration with EPD

Registration of New import Registration Rs. 1200 application

Processing of new import Registration Rs. 500 per application

Renewal of category pass book and Rs. 300 per application


supply

Endorsement on category pass book

(transfer of photocopy) thereof

NOC/Transfer of pass book to other banks

Holding Expired category pass book

Rs. 200 (flat)

Rs. 1000 (flat)

Rs. 500 per annum

Import on Consignment Banks

Handling Charges 0.25% (flat) of value Minimum Rs. 750

OTHER CHARGES

Postage Rs. 150 or actual whichever is higher

Courier Service Rs. 1250 per application

Telex Messages

Full Telex of Letters of Credit

Brief Telex of Letters of Credit

Brie Telex / Fax amendment of LC’s

Rs. 1500 or Actual whichever is higher.

Rs. 500 or Actual which ever is higher.

Rs. 500 or actual which ever is higher

Obtaining credit reports on suppler Rs. 500 per report

Correspondence Charges, if any will be

recovered. Actual

Service charges against import

transactions i.e. import bill (PAD), Usance

bills under Letter of Credits, collection and

condiment basis

0.10 (flat) Minimum Rs. 300

Handing of discrepant documents

presented under L/C US$ 25 (to be recovered from presenting bank)


PP R O M O T I O NR O M O T I O N

“All activities that a company undertakes to communicate and

promote its products”

This is an age of competition. Numerous organizations are providing financial

services to the customer. These days every one is facing pressure of competitors. In

this world of growing competition, the only way to survive and grow, for an

organization, in the market place is the proper marketing and promotion of its

products.

It is the case with Banking Companies. There is large number of foreign and local

banks working in the country and it has been noticed that they are emphasizing

much on their marketing strategies. In this scenario, the key for a bank to succeed

and attract its customers is adequate promotion of its products &services.

The bank can attract and retain its customers through:

Sales Promotion

Advertisement

Direct Marketing

Public Relations

Bank Alfalah Limited does not carry out aggressive marketing for any of its

products. Its promotional tactics are designed for to be beneficial to the bank on the

whole than to any specific section or product of Bank Alfalah Limited. Bank Alfalah

has adopted different approaches for the accomplishment of this purpose. Along

with the advertisement, the bank is providing personal services to its clients with

maximum security as other banks provide. Bank also encourages the public relation

policy of marketing. Some brochures and promotional material has been printed but

it is distributed mainly through the clients who visit the branch for their day-to-day


business or through the customers who come to get information about new

schemes launched by the bank.

P R O M I N E N T T A C T I C S / C A M P A I G N S

ADVERTISEMENTS IN THE PRESS

Once in a while, Bank Alfalah Limited gives advertisements for its products and

services in some of the leading newspapers. Advertisements for Job Opportunities

are also placed in the daily newspapers and magazines.

Also, some fascinating advertisements have been printed on Daewoo City Busses,

which serves as a dynamic source of marketing

Nowadays we see that Bank Alfalah Limited has sponsored a sports news program

on Ten Sports that is aired a few times daily.

BILLBOARDS

A large number of billboards have been affixed on the light poles around the city.

According to their promotional policy, billboards are placed in places where they are

most likely to gain attention of potential businesses and customers.

The marketing company of Bank Alfalah Limited after consultation with the officials

has also placed small “mopies” (signboards) that are light from the inside on the

green belts on roads on different parts of the city.

For example on the way to the New Airport, you can see the signboards of Bank

Alfalah Limited on the light poles.

BANK ALFALAH SQUARE


Due to Bank Alfalah’s assistance for the construction of fountain in Liberty

Market Square, it is named as Bank Alfalah Square.

Bank Alfalah Square, for being situated in such a business and commercial area and

in the heart of the most posh and frequently visited area of Lahore has its unusual

importance and has resulted in successful promotion of Bank Alfalah Limited.

ALFALAH MINI GOLF

Lahories are a fun loving clique. They thrive on good sources of entertainment and

Bank Alfalah Limited has made it possible by formation of Alfalah Mini Golf near

Gulberg. It not only provides a source of recreation to the people but it serves as a

major source of marketing for the bank.

SPONSORSHIP OF EVENTS

Bank Alfalah Limited regularly sponsors various functions and events and

tournaments, which bring much good name to the bank.

Recently Bank Alfalah Limited sponsored Gymkhana Golf Tournament held in

Lahore. Some time ago Bank Alfalah Limited sponsored an International Squash

Tournament held in Lahore.

Bank Alfalah Limited has also on numerous occasions sponsored various fund

raising campaigns and concerts.

WEBSITE

Keeping abreast of the need of the day, Bank Alfalah Limited maintains a very

informative website. The website is updated regularly and provides information on

all aspects of the bank and its products.


SHAAH DIN MANZIL

Construction of Shaahdin Manzil as the Main Branch Lahore is going to be the

revolutionary step for Bank Alfalah Limited. It would not serve just as a main branch

only, but it would also be a great source of ever growing marking and promotion of

bank. This is because it is located on the Sharah-e-Jinnah (The Mall Road) that is the

hub of business activity in the city.

M I N O R D R A W B A C K S

One drawback or shortcoming is that, Bank Alfalah Limited has formulized a lot of

products and services for its customers, even more than other commercial banks,

but any advertisement on electronic media has not been seen.

Bank Alfalah Limited’s major competitor Union Bank Limited has started large

media campaign, so keeping in view these threats, Bank Alfalah should emphasize

more on its advertisement.


PROPOSED MAIN BRANCH, LAHORE – SHAAH DIN

MANZIL

PP L A C EL A C E

“The activities a bank undertakes to make products and services

easily available or accessible to the customers”.

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

clients’ needs. The bank is well positioned and geographically poised, to cater for

increased business demands, from its existing potential clientele. During last year

under review, Bank Alfalah Limited opened eleven new branches and has thirty-

five branches, spread all over Pakistan covering major business centers and

principle cities. Bank Alfalah Limited plans to add more branches to his growing

network in the subsequent years.

At present, Bank Alfalah Limited has opened all its branches at commercial and

business areas or near to commercial areas so that the customers or clients face no

problem in reaching the bank.

The cities in which Bank Alfalah has penetrated to date is presented in alphabetical

order


Bahawalpur

D.G. Khan

Fisalabad

Gujranwala

Gujrat

Hyderabad

Islamabad

Jehlum

Karachi

Lahore

Manshria

Mardan

Mingora Sawat

Multan

Peshawar

Quetta

Rawalpindi

Rahim-yar-Khan

Sahiwal

Sialkot

Sargoda

Sukkar

P R O M I N E N T B R A N C H E S

BAHAWALPUR


Branch Code 0085

Branch Address B-v/912, Circular Road Bahawalpur

Telephone Number 0621-889871-2,889922-5

Fax Number 889874

E-mail [email protected]

1 7 2

DERA GHAZI KHAN

Branch Code 0641

Branch Address Liaquat Road Dera Ghazi Khan

Telephone Number 0641-468105

FAISALABAD

Branch Code 0036

Branch Address Statelife Building Liaquat Road Faisalabad

Telephone Number 041-617433,617436-9

Fax Number 041-617432


GUJRNWALA

Branch Code 0053

Branch Address B-XII-75-145 Karishan Nagar G.T. Road Gujranwala

Telephone Number 0431-255516-255556



GUJRAT

Branch Code 0081

Branch Address 15/231, Circular Road Opposite Rampiari Mahal Gujrat

Telephone Number 0433-530068-530072-530219



HYDERABAD

Branch Code 0045


Branch Address Near Hotel Faran Saddar, Hyderabad

P. O. Box 10123

Telephone Number 0221-786020-2 & 786881



ISLAMABAD

Branch Code 0035

Branch Address 1-B, Awan Arcade Jinnah Avenue, Blue Area Islamabad




KARACHI

Cloth Market

Branch Code 0027

Branch Address Laxmidas Street Cloth Market Karachi

P. O. Box 13342

Telex No 021-29257




Gulshan-E-Iqbal

Branch Code 0011


Branch Address Plot No. SB-15/I, II, III, Block-13-B Gulshan-E-Iqbal

Karachi

Telephone Number 4984904 & 4984937

Fax Number 4984971


Jodia Bazar

Branch Code 0026

Branch Address Gulzar Manzil, NP/12/49-50, Mohammad Shah Street,

Jodia Bazar, Karachi

Telex No 021-7532483-4


Fax Number 7532485


Korangi

Branch Code 0023

Branch Address Aiwan-e-Sanat,ST-4/2 Korangi Industrial Area Karachi-

P. O. Box 74900

Telephone Number 021-5065702-5050387-5050968-5050653-505096-4

Fax Number 5050623


M.A. Jinnah

Branch Code 0015

Branch Address Plot No.23/1, Zelin Palace M.A.Jinnah Road Karachi

Telephone Number 021-7750627-7750628-7750630

Fax Number 7750629


I. I. Chundrigar

Branch Code 0005


Branch Address B. A. Building I. I Chundrigar Road Karachi

P. O. Box 6773

Telex No 29823 FALAH-PK

Telephone Number 021-2414030 to 39



Main Branch

Branch Code 0005

Branch Address B. A. Building I. I Chundrigar Road Karachi

P. O. Box 6773

Telex No 29823 FALAH-PK

Telephone Number 021-2414030 to 39



North Karachi Industrial Area

Branch Code 0009

Branch Address Plot No. SA-1 (ST 1/1) Sector 12-b, Gabol Town North

Karachi

Telex No 021-6987690

Telephone Number 021-6987644 &051



North Napier Road Karachi

Branch Code 0003

Branch Address A/26/5, North Napier Road Karachi

Telephone Number (021) 7540065

Fax Number (021) 7540066 & (021) 7540067-68, 7544021-24

E-mail


Paper Market Branch

Branch Code 0018

Branch Address S.R. 7 / 23, Campbell Street Paper Market Karachi.

Telephone Number 021-2211357-8,2211242-2211242-3,2211353

Fax Number 2626891


S. I. T. E. Karachi

Branch Code 0019

Branch Address D-38, Habib Oil Mills Compound Near Siemens Chowrangi S.I.T.E. Karachi

Telephone Number 021-2582114-to 16 &2582990-2

Fax Number 2582113


Shahrah-E-Faisal

Branch Code 0030

Branch Address 43-11 A, P. E. C. H. S. Block-6 Main Shahrah-e-Faisal

Karachi

Telex No 021-4313536-8 & 021-4522460-4

Telephone Number 021-4313536 – 7



Stock Exchange

Branch Code 0012

LAHORE

Allama Iqbal Town

Branch Code 0042

Branch Address 36 College Block Allama Iqbal Town



Fax Number 5432960

E-mail

Badami Bagh Lahore

Branch Code 0041

Branch Address 110- Grain Market, Peco Road Badami Bagh Lahore


Manager

Name Mr.Sardar Ahmed

Tele Phone Number 042-7722274

Circular Road

Branch Code 0037

Branch Address 43-A Main Circular Road UPP:Mazar Hazrat Snan Manammad Ghous Lahore




Manager

Name Mr.Malik Riazul Haque


Defence Branch

Branch Code 0033

Branch Address 9-G, Commercial Area LCCHS, Phase-I Lahore Cantt

Lahore




Manager

Name Mr.Saleem Javed Mirza


Tele Phone Number 042-5729722/26

Gulberg Branch

Branch Code 0028

Branch Address 125-E/5, Gulberg-III Main Boulevard Lahore

P. O. Box 10123

Telephone Number 042-5877800-6 & 5757793-95

Fax Number 5754900


Manager

Name Mr. Arfa Waheed Malik


LDA Plaza Branch

Branch Code 0006

Branch Address Ground Floor Kashmir Road Lahore



E-mail [email protected] and [email protected]

Manager

Name Mr. A. Zaheer Piracha


Township Branch

Branch Code 0039

Branch Address 47-B-1, Block-10 Akbar Chowk, Township Lahore

Telephone Number 042-5114722-5114733 & 5152831-5152833



Manager

Name Mr. Rizwan–Ul-Haq


S E C T I O N S I X

S W O T A N A LY S I S &

R E C O M M E N D AT I O N S


C H A P T E R O N E : S W O T A N A L Y S I S

Bank Alfalah Limited is one of the most thriving commercial banks at present in

Pakistan. The organization is in the process of building itself into a force to consider.

The bank is doing all sorts of new things in order to accumulate a set of distinctive

competencies that could later on be transformed into a competitive advantage of

considerable value. In this process of developing, striving, facing minor set backs

and striving with even more zeal, the bank enjoys some strengths, needs to

improve upon some weaknesses, can exploit some opportunities and is hampered

by few threats.

This SWOT analysis of Bank Alfalah Limited takes into consideration the external as

well as the internal environmental structure of the bank.

S T R E N G T H S

The predominant strengths of Bank Alfalah Limited are

Humble Management

Strength And Commitment Of Sponsors

Efficiency

Phenomenal Growth

Vastly Experienced Management

Highly Professional Human Resource Department

Crucial Location Of Branches

Image Building Activities

Bank is financially strong and has a huge deposit reserve

Its cost of funds is less as compared to many of its competitors

Personnel of Alfalah are well trained and highly skilled. Majority of employees

has many years of experience in banking sector and are an asset for the bank

Bank Alfalah has a wide network of branches at the ideal locations, catering

the financial needs of its clients


Foreign Trade is the focus of bank. It has become an ideal bank for the

importers and exporters

W E A K N E S S E S

The chief weaknesses are

Small Size

Less Efficient Computer And I. T. System

Disproportionate Presence Of Old Staff In The Upper Management Hierarchy

Skill Set Of Employees Is Not Up to The Mark As There Is No Job Rotation

Foreign Banks Still Are A Little More Prestigious

Bank Alfalah Limited Does Not Possess Foreign Network

No Advertising In Electronic Media

It is a step behind in using new technology as compared to other banks

Most of the employees are overloaded with work. There is uneven distribution

of work and promotions are not very timely

It is slow in the introduction of new services

O P P O R T U N I T I E S

The opportunities on which bank Alfalah can capitalize upon are

Extension of local branch network

Establishing foreign branch network

Capitalizing on information technology

Unexplored market of multinational corporations

Growth in textile sector

Adopt E-banking

T H R E A T S


The predominant threats Bank Alfalah is facing at the moment are discussed in the

following lines.

Private sector banks

Heavy reliability on only one market segment i.e. Textile.

Network expansion by foreign banks

If Pakistani banks (especially state owned banks), backed by huge network

improve the service they give and their employee skill set

Terrorist image of the country

Inconsistency in government policies


C H A P T E R T W O :

R E C O M M E N D A T I O N S

In the light of above given SWOT analysis, in the following lines I shall put forth

some of the measures Bank Alfalah Limited should necessarily take in the near

future. The following recommendations include short term as well as long-term

issues.

Bank Alfalah Limited should continue to expand its business, by increasing its

deposit portfolio through aggressive market penetration strategies.

Bank Alfalah Limited needs to use more marketing channels to make the

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

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

Bank Alfalah Limited should immediately improve its Information Technology

System. The soft wares currently in use should be made error free, online

banking should be launched as soon as possible, as it is the need of the hour,

and integrated data interchange should be inculcated to enable top

management to monitor all activities going about in all branches through

generation of special purpose reports.

Management should distribute work equally among different employees.

Some of the employees are overburdened while some sections are

overstaffed.

There are a disproportionate number of seasoned bankers in the top

management who have the responsibility of making strategic decisions. This

think tank should also include a reasonable proportion of young bankers

whose mindsets teem with new creative ideas, which might prove to be

invaluable for Bank Alfalah Limited.


The top management should immediately start thinking in terms of rotating

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

human capital. If a particular individual keeps on employing his / her efforts

in one sphere of banking it would not only create a sense of monotony and

boredom, but also not help improving the skill set of Bank Alfalah Limited

employees.

Bank Alfalah Limited should embark upon an even more aggressive

management strategy of expansion of branch network not only in the local

market (Pakistan), but also in foreign markets because that is a huge

untapped opportunity for Bank Alfalah Limited.

Bank Alfalah Limited needs to introduce new products like credit cards for its

customers. It should also avail the facilities of E-Banking.

One of the most pressing needs of the time is to advertise Bank Alfalah

Limited in the electronic media. Bank Alfalah Limited has not, till date,

employed advertisement in electronic media as a full fledge marketing tool. I

think it is high time that BAL does this.

Bank Alfalah Limited needs to improve its website. More information relating

to financial performance of the bank should be available on the website.

Bank Alfalah Limited should evolve a very serious management policy to

attract multi national corporations as its clients. This action, if actualized,

would not only prove to be highly profit generating, but it would also

contribute a lot towards Bank Alfalah Limited’s image building.

The number of women hired by Bank Alfalah Limited is very less. Bank Alfalah

Limited should employ more women. Moreover it should also recruit women

for working in “Credits”

Presently, like most of the commercial banks working in Pakistan, a high

percentage of Bank Alfalah’s credit client hail from two or three industrial


sectors. In the near future the management of Bank Alfalah Limited should

try its level best to diversify as regards the mix of its advances; reason being

over reliability on one sector of the economy could hurt the financial

soundness of the bank if any adverse change in the external environment

takes place.

Bank Alfalah should make makes work teams in Credits like other banks such

as ABN AMRO and City Bank. It will have a positive impact on the morale of

employees. Their performance will improve as a result of distribution of work

and responsibility. And it will also enable the bank to hire talented women in

the Credits as well.


A N N E X U R E S


A N N E X U R E O N E : B O R R O W E R S ’

B A S I C F A C T S H E E T - F O R

C O R P O R A T E

Date of Request_______________

(TO BE COMPLETED IN CAPITAL LETTERS OR TYPE WRITTEN)

1 BORROWER’S PROFILE:Name Address

Phone # Fax # E-mail AddressOffice Res.National Identity Card # National Tax # Sales Tax #

Import Registration #

Export Registration #

Date of:

Establishment Opening of A/c

2. DETAILS OF DIRECTORS/OWNER/PARTNERS:Name Address

Phone # Fax # E-mail AddressOffice Res.National Identity Card # National Tax #

Share holding Amount % of Shareholding

Name Address



Name Address




Name Address



3. MANAGEMENT: A) EXECUTIVE DIRECTORS/PARTNERSName Address NIC # Phone #12B) NON-EXECUTIVE DIRECTORS/PARTNERSName Address NIC # Phone #12

4. CORPORATE STATUS:Sole Proprietorship Partnership Public/Private Limited

Company

5. NATURE OF BUSINESSIndustrial Commercial Agricultural Services Any Other

6. REQUESTED LIMITSAmount Tenor

Fund BasedNon-Fund Based

7. BUSINESS HANDLED/EFFECTED WITH ALL FINANCIAL INSTITUTIONS DURING THE LAST ACCOUNTING YEAR:

Imports Exports Remittances effected (if any)

8. EXISTING LIMITS AND STATUS:Amount Expiry Date Status

Regular Amount Overdue (if any)

Fund BasedNon-Fund


Based

9. ANY WRITE-OFF, RESCHEDULING/RESTRUCTURING AVAILED DURING THE LAST THREE YEARS:

Name of Financial Institution

Amount During 1st

YearAmount During 1st

YearAmount During 1st Year

Write-off Rescheduled/Restructured

Write-off Rescheduled/Restructured

Write-off

Rescheduled/Restructured

10. DETAILS OF PRIME SECURITIES MORTGAGED/PLEDGED:A) AGAINST EXISTING FACILITIES Name of Financial Institution

Nature of Security

Total Amount Rank of Charge

Net Realizable Value

B) AGAINST REQUESTED/FRESH/ADDITIONAL FACILITIES Name of Financial Institution

Nature of Security

Total Amount Net Realizable Value

11. DETAILS OF SECONDARY COLLATERAL MORTGAGED/PLEDGED:

A) AGAINST EXISTING FACILITIES Name of Financial Institution

Nature of Security

Total Amount Rank of Charge

Net Realizable Value

B) AGAINST REQUESTED/FRESH/ADDITIONAL FACILITIES Name of Financial Institution

Nature of Security

Total Amount Net Realizable Value

12. CREDIT RATING (WHERE APPLICABLE)Name of Rating Agency Rating

13. DETAILS OF ASSOCIATED CONCERNS (AS DEFINED IN COMPANIES ORDINANCE, 1984):

Name of Concern Name of Directors

Shareholding % of Total Share Capital


14. FACILITIES TO ASSOCIATED CONCERNS BY THE CONCERNED FI: Name of Concern

Nature & Amount of Limit

Outstanding as on _________

Nature & Value of Securities

Over dues Defaults

15. DETAILS OF PERSONAL GUARANTEES PROVIDED BY THE DIRECTORS/PARTNERS ETC TO SECURE CREDIT:

Name of the Guarantors

Institutions/ persons to whom Guarantee given

Amount of Guarantee

Validity Period

NIC # NTN Net-worth

16. DIVIDEND DECLARED (AMOUNT) DURING THE LAST THREE YEARS:

During 1st Year During 2nd Year During 3rd Year

17. SHARE PRICES OF THE BORROWING ENTITY:Listed Company Break-up Value of the Shares in

case of (Pvt.) Limited CompanyCurrent Price Preceding 12 Month

Average

18. NET WORTH PARTICULARS OF ASSETS OWNED IN THEIR OWN NAMES BY THE DIRECTORS/PARTNERS/PROPRIETORS):

Owner’s Name Particulars of Assets

Market Value Particulars of Liabilities

19. DETAILS OF ALL OVER DUES (IF OVER 90 DAYS): Name of Financial Institution Amount

20. Details of payment schedule if term loan sought.

21. Latest Audited Financial Statements as per requirements of Prudential Regulation-IV/NBFIs Rule 7 to be submitted with the Loan application form

22. Memorandum and Articles of Association, by laws etc, to be submitted by the borrower along with the request.


I certify and undertake that the information furnished above is true to the best of my knowledge

COUNTERSIGNED BY:____________________________________

CHIEF EXECUTIVE’S/BORROWER’SSIGNATURE & STAMP

___________________________________________

AUTHORIZED SIGNATURE & STAMP(BANK/NBFI OFFICER)


BIBLIOGRAPHYBOOKS

Principles of marketing by Kotlar Armstrong 9th Edition

Chapter 2nd.

Strategic Management by Fred R David

Principles of Marketing by Bober 9th Edition Chapter 2nd.

Research Methodology Eztel Walker Stanton 11th edition

chapter no 3.

REPORTS

Consumer and Market Trend Report by Bank Al-Falah.

Data integration reports by Bank Al-Falah.

Bank Al-Falah Home scans Asia Pacific.

INTERNET

http://www.bal.com/home

http://www. bal .com/ history

http://www. bal .com/products

http://www.bal/services

http://www.bal.com/branches

www. cfdccariboo.com/stretegies.htm

http://www.google.com.pk/url?sa=X&start=0&oi=define&q=http://cfdccariboo.com/glossary.htm

http://www.bal.com/branches

http://www.bal/services

http://www.ACNielsen.com/

http://www.bal.com/home

www.crfonline.org/orc/swot/m.html

abacus.bates.edu/admin/offices/career/webx/field_def.html

www.ump.kiev.ua/eng/gloss.html

www.indiainfoline.com/bisc/jmfm.html

www.marketconscious.com/dict3.htm

www.en.wikipedia.org/wiki/Qualitative_marketing_research

www.en.wikipedia.org/wiki/Quantitative_marketing_research

http://www.research.com

http://www.thenews.com/articles

http://www.articles.com/marketingforces .html

http://www.worldaffairs.com/conceptandcases.html

http://www.smeda.com/casestudies/marketingresearch.html

http://www.smeda.com/casestudies/markettrends.pdf

PDF RESEARCH FILES

2003_privatelable by Bank Al-Falah

2005_june_ap_insight by Bank Al-Falah

2005_q2_ci_trendwatch by Bank Al-Falah

2005_q3_ci_000 Bank Al-Falah

VISITS

Visit personally Bank Al-Falah at Shahdin Manzil The Mall

Lahore Lahore.

http://www.smeda.com/casestudies/marketingresearch.html

http://www.worldaffairs.com/conceptandcases.html

http://www.articles.com/marketingforces

http://www.thenews.com/articles

http://www.hkbstores.com/

http://www.google.com.pk/url?sa=X&start=0&oi=define&q=http://en.wikipedia.org/wiki/Quantitative_marketing_research

http://www.google.com.pk/url?sa=X&start=0&oi=define&q=http://en.wikipedia.org/wiki/Qualitative_marketing_research

http://www.google.com.pk/url?sa=X&start=5&oi=define&q=http://www.marketconscious.com/dict3.htm

http://www.google.com.pk/url?sa=X&start=4&oi=define&q=http://www.indiainfoline.com/bisc/jmfm.html

http://www.google.com.pk/url?sa=X&start=3&oi=define&q=http://www.ump.kiev.ua/eng/gloss.html

http://www.google.com.pk/url?sa=X&start=2&oi=define&q=http://abacus.bates.edu/admin/offices/career/webx/field_def.html

http://www.crfonline.org/orc/swot/m.html

Visit at Bank Al-Falah at barket market main boulevard

Lahore.

Visit for collecting information about market research of

Bank Al-Falah and compare with other banks.

THE INSTITUTES AS BELOW

MCB Bank Lahore.

Askari Bank at Barkat Market Lahore market main

boulevard Lahore.

Bank Al-Habib at Barkat Market Lahore.

BRUSHERS

Collecting brushers from Bank Al-Falah.

Collecting brushers about products and history from

Bank Al-Falah.

Collecting products information from Bank Al-Falah

Barkat Market.

Collecting banking information from MCB Bank.

1,5,7,8,9,10,11,15,19,34,35,144,145,147,148,149,169,170

Final File MBA Project

Documents

Transcript of Final File MBA Project