Internship report hrmars[1] · Introduction of Bank Alfalah Limited (The Caring Bank): Bank Alfalah...

Directory of Management e-PublicationsAugust (2011) Vol.1, Issue 1

_____________________________________________________________________________________

1© HRMARS, Pakistan www.hrmars.com

Internship Report on BankAlfalah Limited

Author(s): Muhammad Rashid Badar

E-mail: [email protected]

Research Student, Department of Management Sciences, The Islamia Universityof Bahawalpur, Punjab, Pakistan

mailto:[email protected]


_____________________________________________________________________________________


Preface

Internship is the integral and basic requirement of all the business study programmes in all ofthe business study institutes as it is necessary and basic requirement of the BBA(Hons) degreeof the Department of Management Sciences The Islamia University of Bahawalpur. Because itis the practical implication of the theoretical knowledge which we have taught in our businesssubjects to gain further knowledge and experience about professional business activities. Itequips us with the necessary knowledge, skills and values of business culture which are basicrequirement of the business professional and which also helps new graduates to performprofessionally as they get first step in their practical professional life.

For this reason I was placed at Bank Alfalah Limited Circular Road Branch Bahawalpur where Ihave done my six weeks internship. During my internship tenure I have gained a lot ofknowledge about operations under the supervision and guidance of my Internship Supervisor.During my whole duration I was rotated in all the different departments of the bank and wasthoroughly briefed about the procedures of all the banking operations by the concerned staff.My internship report contains all the knowledge which I have learnt there. Dear readers thisreport is prepared in very simple, easy and understandable way so that common and ordinaryreaders who do not have banking knowledge can also take benefit from this report. I hope myreport will give you easy and deep overlook of all the banking operations to the readers.

Thank you

Muhammad Rashid Badar


_____________________________________________________________________________________


Acknowledgement

All praises are for Allah Almighty that has bestowed upon human being the crown of creationand has endowed him with knowledge and wisdom. After Allah, the last Prophet Mohammad(PBUH) Who brought for us revelation and unlimited knowledge and civilized the barbarianhuman being.

I am very thank full to Allah Almighty who gave me the courage to complete this complex taskand to my ever caring and loving parents whose prayers helped me to reach this stage of mylife.

Besides, there are many people who supported me in formulation of this report and withoutthe support of them I could never be able to complete this report successfully. In this respect Iam very thank full to Mr.Zeshan Mustafa (Branch Manager), Mr. Zeshan Naqvi (OperationsManager & Incharge Internship) and the qualified staff members of Bank Alfalah LimitedBahawalpur, who cooperated with me with their guidance at each step of my internship. Theyhave provided me a lot of important information and knowledge about the banking operationsin a very short period of time.

Last but not least, my very special thanks to Mr. Nazik Hussain (Incharge Internship &Placement) who provided me with his guidance and profitable knowledge whenever I needthat.

Thank you

Muhammad Rashid Badar


_____________________________________________________________________________________


Dedicated to:

My ever caring and loving Parents

&

Respectable Teachers


_____________________________________________________________________________________


Table of Contents

Executive Summary 06

Introduction of Organization 07

Banking History 07

Introduction of Bank Alfalah Limited 08

Mission, Vision of Organization 10

Objectives of Organization 11

Corporate, Business and Departmental Level Strategies 15

Organizational Structure 16

Performance of Bank Alfalah 17

Working of Various Divisions/Departments 20

Account Opening Department 20

Car Financing Department 25

Remittances Department 27

Credits 29

Trade Finance 31

Clearing 32

Financial Analysis 44

SWOT Analysis 59

Suggestions and Recommendations 60

Conclusion 60


_____________________________________________________________________________________


Executive Summary

Bank Alfalah is a private bank providing financial services to the customers under the chargeand ownership of Abu-Dahbi group under the leadership of His Highness Sheikh NahayanMabarak Al-Nayayan. Bank is engaged in corporate and retail banking.

Currently bank continues to strengthen its presence in market by the help of expansion plan. Bythe end of 2009 bank has 321 branches which includes 60 Islamic Banking branches with sevenforeign branches out of which five branches are in Bangladesh and two in Afghanistan and oneoffshore branch in Bahrain.

The Bank Alfalah is growing very impressively and making profits which growing higher day byday with the slogan of “The Caring Bank” making the wishes of people come true through thephilosophy of transferring concepts to reality. Bank is providing its financial services tocustomers with the help of his qualified human work force of 9,551, who is very energetic andhumble towards customers which is beneficial for the bank.

This report includes the introduction of banking, Introduction and history of the Bank Alfalah,the strategies, policies which they have implemented, about departments, products andcomplete overlook on the financial performance of the bank with SWOT analysis of the bank,some recommendations and suggestions with a full conclusion of the Bank Alfalah’s internshipreport.

Bank’s product portfolio includes such type of innovative products according to the needs andpreferences of the customers which are providing benefits to customers as well as addingprofits to the bank. These products includes Alfalah car financing, Alfalah credit cards, AlfalahHilal Cards, Alfalah Zarie Sahulat. Advances credits, Money Gram, Royal Profits, online bankingand Islamic Banking.

Bank’s growth graph is showing upward, positive and continuous trends and its profitpercentage is increasing every year. Last but not the least, this report almost includes each andevery aspect about Bank Alfalah which is very helpful for every reader.


_____________________________________________________________________________________


Introduction

History of Banking:

The word “Bank” is derived from the Italian word “Bancus or Banque” which means bench,desk or counter. Because in ancient times the benches were used by the Jews for the purposeof exchanging money. In ancient times the religious temples were used as the safest place forkeeping money and gold by people of that time under the supervision of the priests. Goldsmithsthen acted as the financial agents in exchange of gold and valuables which provided the basis ofmodern banking. Today’s modern banking system is the ultimate and step by step achievementof the ancient banking system of accepting deposits from those who have surplus and lendingto those who do not have it or have little.

Banking In Pakistan:

Prior to Independence British banks controlled the banking operation in Pakistan. Afterindependence there were no resources so that Pakistanis could start their own banking systemin a very short period of time. Then at that time it was decided that “Reserve Bank of India” willcontrol the banking operations in Pakistan. But this was not good for the best interest ofPakistan because British Government at that time distributed the reserves of the “Reserve Bankof India” between India and Pakistan with the share of 70% India and 30% Pakistan. It was avery big loss for Pakistan at that time as being a new nation with new country having fewresources for survival. Then “Quaid-e-Azam Muhammad Ali Jinnah” (The Governor General ofPakistan) at that time took a step ahead and inaugurated “The State Bank of Pakistan” on July1st , 1948 which then took control of all the banking operations of Pakistan.


_____________________________________________________________________________________


Introduction of Bank Alfalah Limited (The Caring Bank):

Bank Alfalah Limited was incorporated on June 21st, 1992 as a public limited company underthe Companies Ordinance 1984. Its banking operations commenced from November 1st ,1997.The bank is engaged in commercial banking and related services as defined in the Bankingcompanies ordinance, 1962. The Bank is currently operating through 195 branches in 74 cities,with the registered office at B.A.Building, I.I.Chundrigar, Karachi.

Since its inception, as the new identity of H.C.E.B after the privatization in 1997, themanagement of the bank has implemented strategies and policies to carve a distinct positionfor the bank in the market place.

Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set outby its board of management, the Bank has invested in revolutionary technology to have anextensive range of products and services.

This facilitates our commitment to a culture of innovation and seeks out synergies with clientsand service providers to ensure uninterrupted services to its customers. We perceive therequirements of our customers and match them with quality products and service solutions.During the past five years, we have emerged as one of the foremost financial institution in theregion endeavoring to meet the needs of tomorrow today.


_____________________________________________________________________________________


Board of Directors:

H.E. Sheikh Hamdan BinMubarak Al NahayanChairman

Mr. Abdulla NasserHawalileel Al-MansooriDirector

Mr. Abdull Khalil Al MutawaDirector

Mr.Khalid Mana Saeed AlOtaibaDirector

Mr. Ikram Ul-Majeed SehgalDirector

Mr. Nadeem Iqbal SheikhDirector

Mr. Sirajuddin AzizDirector & CEO


_____________________________________________________________________________________


Vision

To be the premier organizationoperating locally &internationality that providesthe complete range of financialservices to all segments underone roof.

Mission

To develop & deliver the mostinnovative products, managecustomer experience, deliverquality services that contributesto brand strength, establishes acompetitive advantage andenhances profitability, thusproviding value to thestakeholders of the bank.


_____________________________________________________________________________________


Human Resource Management:

As it’s a universal fact that the success of any organization lies in the hands of their humanresource or the employees working for that organization and the human resource is the mostvaluable asset of any organization. In this concern the management of Bank Afalah is well

Objectives

To create an efficient

system of banking in

Pakistan.

Maintain high profits.

Expanding Islamic banking.

Delivering every service

and product under one

roof.


_____________________________________________________________________________________


known for their hard work, innovative thinking and full dedication to satisfy and retain theclients of the Bank and keep the Bank on front row.

The employees of Bank Alfalah is well equiped with skills, knowledge and vast experience offinancial world which is required to keep the Bank on the way of modern banking with theobjective of gaining high profits. The core ideology of Bank Alfalah in respect of their humanresource selection is to hire multi talented and dedicated professionals, who can perform wellbest for the Bank with little external and in-house training to increase the efficiency andproductivity of the human resource. Although the head office of Human Resource Managementof Bank Alfalah is in Karachi but every branch is managing its employees on its own with thephilosophy of controlling every subordinate by his supervisor because these supervisors areworking according to the policies directed by the Head Office. In this way they are cooperatingwith one another and are achieving the goals and standards of the Bank set by the topmanagement.

Training and Development of the Human Resource:

After hiring the human resource, their training and development is essential and necessary tokeep them up to date about new methods of working and performing operations. In thisrespect Bank Alfalah conducts training programmes and conferences with the passage of timeand at regular intervals of the year at Head Office Karachi for increasing skills, knowledge andproductivity of human resource. This is essential for every employee to attend these trainingand development programmes and conferences once in a year. For this purpose Bank Alfalah isproviding training to their employees in following important areas,

Marketing

Credit administration/documentation

Consumer banking operations

Performance appraisal skills

Consumer banking operation.

Credit marketing and proposals.

Trade Finance

Time management

Products & Services:

Debit Card/ Hilal card

Car Financing

Money Gram

Agri Finance

Credit Cards


_____________________________________________________________________________________


Online Banking

1. Debit Card/ Hilal Card:

Alfalah debit or Hilal card gives you the immediate and easy access to your current or savingaccount anywhere and anytime with a simple swipe of your card at millions of ATM’S and retailshops. With the Visa Network Hilal card is acceptable at more than 1.2 million ATM’s and 29Million retail outlets around the world. If you have this facility then there is no need of dealingin physical cash withdrawal, just swipe your card and your transaction will be completed in notime.

2. Car Financing:

Bank Alfalah has introduced Car Financing in which you have two options, either you get thevehicle leased or financed.

There is no hidden charges

Minimum down payment

Quickest processing

Tenure period 1-5 years

3. Money Gram:

Bank Alfalah is providing the facility of Money gram which is the person to person transfer ofmoney that allows consumers to receive money in just few moments. Money Gram is availablein over 180 countries and territories and in more than 190,000 locations worldwide, and moneyis handled by quality agents linked through computers who makes it sure that your money issafely transferred to the desired place and person.

4. Agri Finance ( Alfalah Zarie Sahulat):

In view of importance of agriculture for the Pakistan economy and keeping in view the smallfarmers who have little resources for production for them, Bank Alfalah has designed “RuralFinance Programme” which is named as “Bank Alfalah Zarie Sahulat”This facility is available forshort, medium and long term durations.

Bank Alfalah has designed this facility to achieve following objectives

Provide reliable infrastructure for Agri customers.

Help farmers utilize funds efficiently and effectively.

Provide farmers an integrated package of credit, supervision and technical know-how.

5. Credit Cards:


_____________________________________________________________________________________


Alfalah credit card is globally accepted at all those locations which have the logo of VISA. It isaccepted at nearly 29 million locations in more than 200 countries around the world. and inPakistan also. It enables you to pay for shopping, travel, entertainment, meals and much more.The features which makes Alfalah Credit card as an important product for customers are,

No joining/ Annual / Renewal fee (except Platinum Card)

Electricity, Sui Gas, PTCL abd Warid bills payment through 24 hour Call Center and AutoDebit instructions.

SMS for card usage, mini statement, payment receipt confirmation, etc.

Cash withdrawal at all 1LINK ATMs

Special offer on Warid post paid connections.

6. Online Banking:

Bank is providing online banking services to its customers such as balance inquiries statementrequests through automated online telephone service and online ATM services anywhere andat every place where bank exists.

Corporate, Business and Departmental level Strategies:

Bank Alfalah is successfully completing its journey towards progress with the help of itsspecialized, skilled, highly qualified and professional management at all levels. Topmanagement formulates the strategies in accordance with the standards formulate to achievethe desired goals and objectives. As with the passage of time and it is fact that the externalbusiness environment is very dynamic in nature so these strategies keep on changing to keepthe Bank up to date. For this purpose the managerial policies which are adopted by the BankAlfalah are as under.

Corporate Level Strategies:

At the corporate/top level there is board of directors and executive committee, whocontrols such important functions as determining goals and objectives, formulations of businesspolicies and strategic planning. Corporate philosophy stresses the highest level of security,reliability and value for its client’s money which is the core strength of the bank.

Business Level Strategies:

Top management formulates the business level strategies. Chief Managers are also the part ofthis management level who formulates the strategies and technical planning which determinesthe methods of getting the best and in time completion of jobs from its human resource. Theydefine and interpret the objectives and goals and formulate policies to achieve them.

Departmental Level Strategies:


_____________________________________________________________________________________


At this level Head of the Departments formulate these strategies. Each and every branchmanager formulates the policies according to the branch setup and at each level of bankenvironment because he is directly responsible for the management and controlling theactivities of the employees. For implementation of these policies meeting are called with thepresence of Head of the Departments to get the best and efficient and desired goals behindthese formulated policies.


_____________________________________________________________________________________


Performance of Bank Alfalah:

Source: Bank Alfalah Annual Report 2009


_____________________________________________________________________________________




_____________________________________________________________________________________


Departments Worked During Internship

I did my internship at Bank Alfalah Limited Circular Road Bahawalpur. During my wholeduration of six months I have done work in the following departments.

Accounts Opening

Car Finance

Remittances

Credits

Trade Finance

Clearing

Accounts Opening Department

Most important and front line department of bank which comes under the retail/ generalbanking. Following are the types of the accounts,

1. Current Account2. Saving Account

1. Current Account:

It is a non-interest bearing account. The minimum balance requirement for opening thisaccount is Rs.10,000. Furthermore there is no restriction of deposition and withdrawal ofmoney from this account at any point of time. All the current account holders receive a HilalDebit Card to get benefit from the ATM service of the bank. Following are the types of accountswhich come under the head of current account. They are

Basic Banking Account (BBA account)

Simple Current Account

Alfalah Kamyab Karobar Account

Thee detail on each is as under.

i).Basic Banking Account (BBA account)

This account is introduced for low income people like persons with 25,000 salary and forstudents who cannot maintain minimum balance of Rs.10,000 in their accounts because in thisaccount there is no requirement of minimum balance maintenance. This account is also calledas “Student Account”.

Features:


_____________________________________________________________________________________


Minimum Initial deposit of Rs. 1,000.

No service charges at all.

Facility of ATM.

Only 4 transactions through cheque are allowed in a month otherwise Rs.58 will becharged per month.

ii).Simple Current Account:

A minimum initial deposit of Rs.10,000 is required to open this account.

Average balance of Rs.10,000 should be maintained in this account otherwise Rs.58 willbe charged per month to account holder.

Online service is available (on customer demand)

No charges for online service.

iii).Alfalah Kamyab Karobar Account:

This account is especially for businessmen.

Initial deposit of Rs.5000 is required.

Average balance maintenance is according to the type of category in which thecustomer lies.

The category and average balance maintenance in respective category are

Silver Category Rs 5,000-50,000

Gold Category Rs.50, 000-100,000

Platinum Category above Rs.100, 000

2. Saving Account:

Saving account is an interest-bearing account. It has following types of accounts,

Simple saving account

Royal Profit Account

Kifayat Account.

Alfalah Mahan Amdan Account

Alfalah Mahan Amdan Plus(Term Deposit)

i).Simple Saving Account:

Initial deposit and average balance maintenance is Rs.5,000.


_____________________________________________________________________________________


Profit rate is 5 %

Profit is distributed on half yearly basis.

ii).Royal Profit Account:

Initial deposit and average balance maintenance is Rs.50,000 for this account.

Profit is distributed at rate of 5 % per year but its calculations are done on monthlybasis.

If there is not maintained a balance of Rs.50,000 then the account holder will not getany profit. For getting profit there must be above Rs.50,000 balance in account.

iii).Kifayat Account:

It is a type of saving account in which minimum initial deposit and average balancemaintenance of Rs.10,000 is required.

Maximum amount of deposit in this account is of Rs.1 million.

Profit is paid at the rate of 7% per annum. If balance falls from 10,000 then no profit willbe given to account holder.

Profit is given on Quarterly basis.

Only 3 debit transactions are allowed per month.

iv).Alfalah Mahan Amdan Account:

It’s a term deposit for three years.

Minimum balance of account is Rs.100,000 with an upper limit of Rs 1.5 million.

Profit rate is 10 % per annum and paid on monthly basis.

v).Alfalah Mahan Amdan Plus(Term Deposit):

In this account the amount is fixed for one year.

Minimum balance of account is of Rs.50,000 with no upper limit.

Profit rate is 10.5% on monthly basis.

Free insurance.

In case of withdrawn of your money before maturity date then the profit will be distributed asfollows,

If you withdraw your money within 6 months you will get a profit at 5% .

If you withdraw your money between 6-9 months you will get a profit at 8%.

If you withdraw your money between 9-12 months you will get a profit at 9%.


_____________________________________________________________________________________


Opening an Account:

For new customers who want to open an account at Bank Alfalah has to fill a “RelationshipContract”, which includes such information as follows

1. Title of Account.2. Personal information of applicant3. Next of Kin

This portion is important for securing the money of the customer in case of his/her death of orany incident with the account holder. By this thing the account holder specifies and provide theinformation and data of the person who will be the owner of his/her money after his/her deathor any serious incident with him/her. If account holder leaves it blank then bank will be theowner of his/her money.

Address for correspondence

4. Type of Entity Individual Joint sole proprietorship Public/Private Ltd Co. Partnership.

5. Nature of Account Current Account PLS Saving Account Royal Profit Account Saving Account Others

6. Currency of Accounts

Bank Alfalah deals in five currencies and account holder must have select from them. These arePKR, USD, GBP, Euro, and JPY

7. Zakat Deduction8. Details of other bank accounts9. Introduced by

Basic Requisites for Opening an Account for individuals/self employed personsare as follows

CNIC

Company letterhead or authorization (as required)

NTN certificate (optional)

Source of income (salary slip etc)


_____________________________________________________________________________________


The basic Requisites to open an account for a partnership: NTN certificate (optional)

Partnership Deed

Company Letterhead

Partners CNIC

The basic Requisites to open an account for companies: Article of Association

Directors CNIC

Memorandum of Association

NTN certificate (optional)

Company Letterhead

Car Financing DepartmentIn the age of today’s modern banking, car financing is one of the most important and sellingproduct of of all the banks including Bank Alfalah. Because it is very easy for the people to savethem from paying a huge sum of money that’s why people prefer to have finance their vehicles.

Features of Bank Alfalah’s Car Financing: Tenure period ranging from 1-5 years

Minimum down payment starting from 20 %

No hidden charges

Insurance facility

Premature termination charges should be paid by the customer according to the year inwhich he/she terminated the contract of payments on the remaining amount which are,

Year 1 2 3 4 5

Mark up 5% 4% 4% 3% 2%

Mark up rates of Bank Afalah for all presented vehicles for financing are,

Financing Product 1Yr 2Yr 3Yr 4Yr 5Yr

Car Loan for BrandNew Vehicles

17.50% 17.50% 18.00% 18.50% 18.50%

Car Loan for BrandNew ImportedVehicles

19.00% 19.00% 19.00% 19.00% 19.00%

Band New SemiCommercial Vehicles(locallymanufactured)

20.00% 20.00% 20.00% 20.00% 20.00%

Second HandVehicles

21.00% 21.00% 21.00% 21.00% 21.00%


_____________________________________________________________________________________


Source: Bank Alfalah Website

Procedure:The procedure of financing car starts when a person comes and asks for a vehicle to befinanced. First thing which that person have to do is to fill an application form stating the carwhich he wants to be financed, its color and two references with his complete personalinformation regarding his profession, source of income, age etc. This is all what is required fromthe customer. After this bank working starts.Bank verifies all the information provided by the customer along with the verification of tworeferences provided. After completing the verification process Bank generates the Credit LineProposal (CRP).This proposal then sent to the Area Office for approval.After the approval from the Area office the customer will sing a legal document of this deal withBank along with the down payment. When this process completes a quotation is sent to the cardealer for a stated car. Registration of car is carried out and Bank insured the car withcollaboration of Insurance Company and car handed over to customer. After the completion offinance tenure the Bank issues NOC to customer stating that there is no obligation left to befulfilled by the customer.

Remittances Department

Remittance means the transfer of funds form one account to another or one city to other city.

Instruments which are used for transfer of money are,

Demand Draft

Pay slip

Pay order (payment order

i).Demand Draft:

It’s a negotiable instrument

It’s a written order drawn by one branch of a bank upon another branch of the samebank or upon another bank under special arrangements to pay a certain sum of moneyaccording to the order by the customer.

DD is cannot be issued within the same city.

There are two ways in which a demand draft can be used for transfer of money,

Outward DD:

When money is transferred from Bank Alfalah to other city on the demand of the customer it’sknown as outward DD. The procedure foe this is that the customer will fill the DD applicationform and present the cash he wants to transfer through DD. After checking all the provideddetails the bank officer will make a DD and pass the following entries for this transaction,


_____________________________________________________________________________________


For Cash Sundry Account (Dr)

Head Office (Cr)

For Cheque:

Customer Account (Dr)

Head Office (Cr)

Inward DD:

When the issuing branch of the DD send advice in the form of the copy of the instrument or DDthen following entries are passed,

Head office (Dr)

DD payable account (Cr)

When the Bank Alfalah’s account holder comes with DD to receive money then followingentries are passed

DD payable Account (Dr)

Customer Account (Cr)

When the customer comes with DD who is not the account holder of Bank Alfalah thenfollowing entries are passed

DD payable Account (Dr)

Cash (Cr)

Charges for making DD are Rs.58 including 16 % federal excise duty.

ii).Pay Slip:

This is Bank’s cheque book, used for the payment of the branch expenses. This is also called astrue banker cheque. The entries for the payments are passed as,


_____________________________________________________________________________________


Expenses Account (Dr)

Pay Slip (Cr)

iii).Pay order (Payment order):

Pay order is the way of transferring money within the same city. It is issued, paid andmaintained by the same branch. It is also called as Banker Cheque or Manager Cheque. It iscleared in 5-6 days and it is crossed by default.

Procedure:

The customer fills the application form for pay order along with his details and cash or cheque.Usually cheque is used for transfer of money through pay order. After paying the charges formaking pay order the pay order is issue to the customer. The entry for the issuance of pay orderis,

Customer Account (Dr)

Pay order Payable (Cr)

Charges for making Pay Order are Rs.58 including 16 % federal excise duty (FED).

When the customer comes to get the money through pay order then following entry is passedby the bank,

Pay order Payable (Dr)

Customer Account (Cr)

Credits Department

Credits department advances loans to needy and eligible customers and this department adds abig share of profit to overall profit of the Bank Alfalah. These loans are sanctioned by the HeadOffice at Karachi. Bank Alfalah’s credit department works both with Retail and middle marketgroup and corporate groups.

Types of Credit line Facilities:

Bank Alfalah is providing two types of credit line facilities,

i. Fundedii. Non-Funded

1. Funded Credit Line Facility:


_____________________________________________________________________________________


In funded facility the amount of loan is physically dispersed to the customer. The productswhich comes under credit line facility are as follows,

Running/Current Finance

Cash Finance

Term finance

Lease Finance

i).Running/Current Finance:

Current finance is provided to the companies for supporting their operations for a short timeperiod of one year. Bank provides funds against some securities like mortgage securities. AndBank advances funds up to 60% of the given securities. This credit facility is very attractive forthe companies in managing their working capital because mark up is charged by the bank onlyon the utilized part of the funds.

ii).Cash Financing:

Cash financing is also a short term credit facility of one year. This is basically a stock financingfor those small businessmen who can run their business very smoothly if they get credit fromthe bank which they can’t perform well otherwise. Financing is done on the basis of analysis ofthe business.

iii).Term Finance:

Term finance is a long term credit facility of 2, 3, and 5 years. It is also known as projectfinancing. The important point in this credit facility is, mark up is charged by the bank on thewhole amount of funds either customer utilized the sanction limit or not. Repayment is done ininstallments.

iv).Lease Finance:

It is also a long term credit facility provided by Bank Alfalah. It is also known as equipmentfinancing. Actually financing is done for the equipment. In this credit facility, the ownership ison the name of bank first, after repayment of funds the ownership is transferred to thecustomer.

2.Non Funded Credit Line Facility:

It’s a commissioned based financing. In this credit facility funds are not transferred to thecustomer directly. This credit facility has two products,

Letter of Credit

Letter of Guarantee/Bank Guarantee


_____________________________________________________________________________________


i).Letter of Credit:

This is used for the purpose of foreign trade. It is actually a written undertaking by the issuingbank for the payment a sum of money during a specified duration of time on the request ofapplicant (buyer) to the beneficiary (seller). It will be discussed in detail in department of“Trade Finance.”

ii).Letter of Guarantee/Bank Guarantee:

It is a written guarantee by the bank on the behalf of the customer which bank gives to thespecific company because it is usually used in bidding and tenders filling. It will be discussed indetail in department of “Trade Finance.

Trade Finance Department

This department controls the trade which occurs across the borders from Pakistan to othercountries or in short foreign trade which includes imports and exports. For this purpose “Letterof Credit” is issued by the issuing bank to facilitate the trade between two traders of thedifferent countries. It provides security and safety for the payment of a sum of money involvesin trading to the applicant and beneficiary who are doing imports or exports.

Letter of Credit:

As it is stated earlier in non funded credit facility in “Credit Department” that Letter of Credit isactually a written undertaking by the issuing bank for the payment of a sum of money during aspecified duration of time on the request of applicant (buyer) to the beneficiary (seller). It isissued against some securities like mortgage properties, pledge of stocks etc.

Types of LC’s:

There are two types of LC’s

i. Site LCii. Usance LC

i).Site LC:

Site LC is the form of LC in which the bank honors the beneficiary against the documents andthe material stated in the LC at the place which is stated by the mutual consent of the applicantand beneficiary. Receiving of shipment and payment occurs at the same time.

ii).Usance LC:


_____________________________________________________________________________________


In this type of LC payment is made against the acceptance of the items stated in the LC withstated conditions. Payment is done after some time.

Documents/Requirements for LC:

Applicant will provide the following things for a LC,

i. LC application requestii. Sale Contract/Performa Invoice

iii. LC application formiv. Customer Portfolio

Beneficiary will provide the following things,

i. LC amountii. Quantity of imports (Weight, units)

iii. Partail shipment allowed or not allowediv. Certificate of Originv. Bill of Lending

vi. Airway Billvii. Truck Receipts

viii. Packing Listix. Performa Invoice

After verification of securities and details provided by the application, a credit line proposal ismade which is sent to the Area Office. After Area Office approval the LC is issued to thecustomer.

Clearing Department

Clearing means the transfer of funds within the same bank or to other banks. It is the part ofthe Remittances Department. Clearing is done for cross cheques only. Clearing can be done infollowing ways,

Inward Clearing

Outward Clearing

Inward Clearing:

When a customer comes who has his account in Bank Alfalah and he presents a cheque which isalso of Bank Alfalah then transferring of funds in this case through cheque from one account toanother is termed as inward clearing.

Outward Clearing:


_____________________________________________________________________________________


When a person with his account in Bank Alfalah comes and presents a cheque of the bank otherthan Bank Alfalah then transferring of funds in this case through cheque from one account ofthe other bank to another account of Bank Alfalah is termed as outward clearing. Usually ittakes 4-5 days for clearing a cheque.

Same day clearing:

Clearing of cheques which occurs in one day is called same day clearing. Presentation andclearing of cheques is carried out in the same day. But there is a condition under which acustomer can use the facility of same day clearing and that is, cheque should be above thanRs.200,000 otherwise a person can’t use the facility of same day clearing.

The process of clearing is done in a clearing house of the State Bank. National InstitutionalFacilitator Technologies (NIFT) is used for this purpose. The NIFT employees come daily andtake all the cheques from the bank for clearing purpose and deliver them to State Bank. In thisway the process of clearing is done by The Bank Alfalah.


_____________________________________________________________________________________


Financial Analysis


_____________________________________________________________________________________


Balance Sheet As At December 31, 2009 & December 31, 2008


_____________________________________________________________________________________


Source: Bank Alfalah Limited Annual Report 2009 (with little editing according to requirement)

Balance Sheet As At December 31, 2007 & December 31, 2006



_____________________________________________________________________________________


Balance Sheet As At December 31, 2005



_____________________________________________________________________________________


Profit and Loss Account For the Year Ended December 31, 2009 & December 31,2008



_____________________________________________________________________________________


Profit and Loss Account For the Year Ended December 31, 2007& December 31,2006


Profit and Loss Account For the Year Ended December 31, 2005


_____________________________________________________________________________________




_____________________________________________________________________________________


Source: Bank Alfalah Limited Annual Report 2009


_____________________________________________________________________________________


Financial Ratios

1. Total Assets Turnover:

This ratio measures that how much turnover is generated by the total assets of theorganization. This is calculated by the given formula,

Total Assets Turnover = Annual Sales or Total Income/Average Total Assets

Year 2009 2008 2007 2006 2005

TAT 3.88% 3.46% 4.24% 3.23% 3.42%

Interpretation:

This ratio should be high which is better for the business but, Bank Alfalah’s total assetsturnover showing a mixed trend of increase and decrease in past five years. In 2009 it is high at3.88% as compare to 2008 at 3.46% but is even less of the highest value of 4.24% in 2007.


_____________________________________________________________________________________


2. Return on Investment:

This ratio is calculated by dividing Op profit by the average of operating assets as shown by theformula,

Return on Investment = Op Profit/Average Operating Assets

Year 2009 2008 2007 2006 2005

ROI 0.324% 0.623% 1.75% 1.14% 1.48%

Interpretation:

The answer of this ratio should be high or should be shown a positive increasing trend forbetter and favorable results. Bank Alfalah’s ROI showing a decreasing trend over the past fiveyears with lowest in 2009 that is 0.324% and highest as 1.75% in 2007 which is not favorable forthe bank.

3. Return on Deposits:

This ratio measures the return on deposits by the total deposits of the organization obtained bydividing net income after taxes to total deposits as shown by the formula,

Return on Deposits = Net Income After Tax/Total Deposits

Year 2009 2008 2007 2006 2005

ROD 0.276% 0.432% 1.14% 0.735% 0.765%


_____________________________________________________________________________________


Interpretation:

As this ratio shows the total return which business gains from the total deposits, so it should behigh which will be better for the business but it is showing a continuous decreasing trend from2005 to 2009 except a highest value in 2007 which is 1.14% with lowest value as 0.276% in 2009which is not good for the Bank Alfalah.

4. Fixed Assets Turnover:

This ratio measures the efficiency of using fixed assets in generating income or sales. It is theratio of annual sales to total fixed assets as given by the formula,

Fixed Assets Turnover = Annual Sales or Total Income/Total Fixed Assets

Year 2009 2008 2007 2006 2005

FAT 82.92% 85.32% 107.56% 24.43% 38.72%

Interpretation:


_____________________________________________________________________________________


The result of this ratio should always be high for favorable business environment because highratio shows that business is investing more efficiently and effectively in fixed assets forgenerating sales. It is showing a very ambiguous trend, as it was high in 2005 then decreased in2006 then increases in 2007 to a very high level and onward there is a continuous decreasingtrend which is not good for the bank.

5. Current Ratio:

Current ratio indicates the liquidity position of the business that whether business can fulfill itsobligation or not. It is the ratio of current assets to current liabilities as,

Current Ratio = Current Assets/ Current Liabilities

Year 2009 2008 2007 2006 2005

CR 2.97 3.35 2.02 4.61 6.42

Interpretation:

The current ratio should be in reasonable range. It should not be too high or too low, bothconditions are not favorable. In this case of Bank Alfalah, it is showing a decreasing trend whichis not favorable for the business because it may pose difficulty for the bank to fulfill its currentobligations.


_____________________________________________________________________________________


6. Dividend Payout Ratio:

This ratio tells about the relationship between earnings and dividend that whether earnings aresupporting dividend payments or not. It is calculated by dividing dividend per share to earningsper share (EPS) as shown by the given formula,

Dividend Payout Ratio = Dividend per share/EPS

Year 2009 2008 2007 2006 2005

DPR 112.67% 86.52% Nil Nil Nil

Interpretation:

Usually higher dividend payout ratio is favorable and it is high for Bank Alfalah in 2009 which isfavorable.

7. Debt Equity Ratio:

This ratio tells about the financial leverage of the organization that what proportion of debt andwhat proportion of equity is being used by the organization for financing its available assets. Itis calculated by dividing long term debt to total capitalization as shown by the given formula,

Debt Equity Ratio = Long Term Debt/ Total Capitalization


_____________________________________________________________________________________


Year 2009 2008 2007 2006 2005

DER 25.93% 14.02% 22.09% 29.58% 33.18%

Interpretation:

A higher value of debt equity ratio is much favorable for the business as its high value tellsabout the efficiency of the business to using its available debt for financing. Bank Alfalah’s debtequity ratio is showing a decreasing trend over the past five years but as compare to 2008 it isincreased in 2009 from 14.02% in 2008 to 25.93% in 2009 but it is still lower as compare tohighest level of 33.18% in 2005.

Ratio Analysis

Profitability Ratios:

These ratios tells about the profitability of the business and is consists of the following ratiosfrom which we can assess the profitability of the business.

i). Net Profit Margin:


_____________________________________________________________________________________


This ratio is mostly used for the internal comparison. This ratio shows the percentage of netprofit after tax to the total income/revenue. A higher profit margin ratio indicates a highermargin safety and lower risk for the organization and vice versa. It is calculated by the formula,

Year 2009 2008 2007 2006 2005

Net ProfitMargin

7.46% 11.07% 24.40% 20.77% 24.64%

Interpretation:

It is showing a mixed trend from 2005 to 2007 but onward showing a decreasing trend which isnot better for the business. It is indicating a greater risk and low margin safety for the business.

ii). Operating Profit Margin:

This ratio tells us about the percentage of operating profit to total income. It is calculated bythe following formula


_____________________________________________________________________________________


Year 2009 2008 2007 2006 2005

Op-margin 8.45% 15.27% 35.36% 30.24% 37.10%

Interpretation:

Its high value is favorable for the business. It is overall showing a decreasing trend from 2005 to2009 except an increase in 2007 as compare to 2006 which is even then low as compare to2005 results. It is not favorable for the business.

Iii). Return on Total Assets (ROTA):

This ratio tells about the percentage of net profit/earnings which business is attaining by usingits total available assets. It is calculated by dividing net profit to total assets as shown by thegiven formula,

Return on Total Assets = Net Profit/Total Assets

Year 2009 2008 2007 2006 2005

ROTA 0.230% 0.372% 0.951% 0.639% 0.685%


_____________________________________________________________________________________


Interpretation:

Higher ROTA is favorable for the business which shows better use of asstes by the business forgenerating profits. Bank Afalah’s ROTA is showing a decreasing trend over past five years exceptin 2007 with a highest value of 0.951%.

iv).Return on Equity:

This ratio shows a relationship between net income after taxes and shareholder’s equity, andmeasures the efficiency of the organization of generating profits by using shareholder’s equity.It is calculated by dividing net income after taxes to shareholder’s equity as shown by the givenformula,

Year 2009 2008 2007 2006 2005

ROE 4.05% 7.63% 19.30% 14.40% 22.80%


_____________________________________________________________________________________


Interpretation:

It should be high for favorable results. This ratio of Bank Alfalah is showing a decreasing trendexcept in 2005 and 2007 over past five years.

2. Efficiency Ratios:

These ratios tells about the efficient use of the assets and liabilities of the business which iscalculated by the following ratios,

i).Investment to Total Assets Ratio (ITA):

This ratio tells about the percentage of investment to assets calculated by dividing investmentto assets as shown by the following formula,

Investment to Total Assets Ratio = Investment/Assets

Year 2009 2008 2007 2006 2005

ITA 25.48% 21.76% 26.90% 20.5% 23.12%

Interpretation:

This ratio should be in high figures for favorable results of the business. Bank Alfalah’s ITA isshowing a mixed trend of increasing and decreasing over the past five years. In 2009 it is high at25.48% as compare to 2008 at 21.76% which is favorable. But bank should try to keep it high bymaking better policies.


_____________________________________________________________________________________


ii).Deposits to Total Liabilities:

It is calculated by dividing total deposits to total liabilities as shown by the given formula,

Deposits to Total Liabilities = Total Deposits/Total Liabilities

Year 2009 2008 2007 2006 2005

DTL 88.50% 90.6% 87.36% 90.91% 92.31%

Interpretation:

It is showing a mixed trend of increase and decrease over past five years. As it is decreased in2009 to 88.50% from 90.6% in 2008 which is not favorable.


_____________________________________________________________________________________


3. Capital Adequacy Ratios:

i).Equity to deposits ratio:

This is the ratio of total shareholder’s equity to total deposits and is calculated by the followingformula,

Equity to deposits ratio = Total Shareholder’s Equity/ Total Deposits

Year 2009 2008 2007 2006 2005

ED 6.81% 4.88% 5.93% 5.11% 3.35%

Interpretation:

It is showing an average increasing trend over the past five years which is favorable.


_____________________________________________________________________________________


ii).Equity to Assets Ratio:

This is the ratio of total shareholder’s equity to total assets and is calculated by the followingformula,

Equity to Assets Ratio = Total Shareholder’s Equity/Total Assets

Year 2009 2008 2007 2006 2005

ETA 5.69% 4..88% 4.93% 4.44% 3.00%

Interpretation:

It is showing an increasing trend except in 2008 decreased trend but overall it is increasingwhich is favorable for the business.


_____________________________________________________________________________________


4. Regulatory Ratios:

i).Cash to Deposit Ratio:

This ratio tells about the percentage of cash available as compare to the deposits. It iscalculated by dividing cash on hand and with other banks to total deposits as shown by thegiven formula,

Cash to Deposit Ratio = Cash on hand and with other Banks/ Total Deposits

Year 2009 2008 2007 2006 2005

CTD 17.79% 18.04% 17.50% 16.94% 15.52%

Interpretation:

As this ratio tells about the liquidity status of the bank. It is showing an increasing trend from2005 to 2008 and in 2009 it becomes lower.


_____________________________________________________________________________________


ii). Advances to Deposits Ratio:

This is the ratio of advances to deposits which shows the percentage of advances as compare todeposits and is calculated by the given formula,

Advances to Deposits Ratio = Advances/Deposits

Year 2009 2008 2007 2006 2005

AD 57.90% 63.77% 62.67% 62.62% 53.45%

Interpretation:

This ratio tells about the status and measure of the level for advancing loans. It is showing anincreasing trend from 2005 t0 2008 but it lowers in 2009 which shows that bank is notadvancing loans as much as it was in previous four years from 2005 to 2008.

SWOT Analysis


_____________________________________________________________________________________


Strengths:

Very attractive Brand name

Continuous and Phenomenal growth in profitability as its age is increasing

The support of the Pakistani Government

Workforce is very energetic because most of the workforce consists of the youngemployees

Highly trained, skilled and professional HR

Branch location is very ideal

Attractive buildings of bank

Less cost of funds as compare to competitors

Training schedule of employees is better than other banks

Weaknesses:

Inexperienced workforce

Small age of bank

Lack huge foreign network

Work overload on employees

Less banking experience

Lack of professionally trained staff at head quarters

Opportunities:

Increasing demand of consumer banking

Increasing branch network in Pakistan

Increasing branch network at International level

Growing Islamic Banking branch network

Increased rate of interest

Threats:

Adverse economic conditions

Privatization of banks

Terrorism

Government policies are very much inconsistent

Lack of experienced workforce

Trend of banks merging.

Suggestions and Recommendations:


_____________________________________________________________________________________


During my internship I found some of the faults and lack of some of the facilities in bank’soperations. Here are some of the suggestions which I recommend to the Bank Alfalah.

The advertising of bank and bank’s products is not so much good and exposed topeople. So, Bank should hire some of the skilled marketers who can design creative andattractive advertisements and advertising campaigns by using all possible medias tomake every person aware of the bank’s updates about old and new products andservices.

Bank is using token system to avoid difficulties for the customers to withdraw or paydeposits. But uneducated and some of the educated customers do not know that whichtoken should they get from the machine. So there must be a bank employee for theguidance of customers.

Training sessions of bank employees of all over the country are conducted by bank atHead Office Karachi which is very expensive for the bank to bear the accommodationand meal charges of the employees. So bank should expand and establish some moretraining centers in other cities of the country in order to reduce these expenses.

Bank is somewhat slow in launching new products. So bank should review its policies oflaunching new products in short and reasonable time.

Foreign branch network should be increased in order to capture profits from all over theworld.

There should be a communication link between executives and top level management. Incentives and award system should be introduced for the employees for their

motivation. Employees should not be overloaded with work, this helps in relaxation of employees

and will increase job satisfaction of employees which is in best interest of the bank.

Conclusion

The “bank” is actually an institution which accepts or collects the money or deposits from thosewho have surplus of it and lend it to those who have in need of it or have capital in deficit, itactually acts as a financial intermediary which connects persons with surplus money to thosewho have shortage of money. In this process banks earn profit or commission for connectingthese people. The word “bank” originates from the Italian word “ banque or bancus” and noone is sure about its true origin. In the past times the people used religious temples as a placefor keeping their money, savings and gold with precious metals as well because the peoplethought that their money and gold is safe there. Goldsmiths of that time started the exchangeof money and gold and they acted as bank agents between the people, that was the time whichstarted the concepts and need of proper system of banks. But today’s modern banking systemis much different from that system.

The history of banking in Pakistan is very interesting because at the time of independence therewas no bank in Pakistan which could perform the banking operations for this area of the world.Till the end of June,1948 the financial operations of Pakistan was governed by the “Reserve


_____________________________________________________________________________________


bank of India” but that casted a loss to Pakistan in a sense that British Government distributedthe 70% of reserves to India and Pakistan got just 30%. After this Quaid-e-Azam laid down thefoundation of “The State Bank of Pakistan” in July 1st, 1948.

In Paksitan there are a number of commercial banks which are accepting deposits andadvancing loans to customers with a lot of other facilities of providing financial services andproducts to customers like car financing, home loans, debit and credit cards, agricultural loansand a lot of other products.

Bank Alfalah is one of the most important, emerging and profitable bank in Pakistan which isowned by the Abu Dahbi Group and is governed by His Highness Sheikh Nahayan Mabarak Al-Nayayan. It was incorporated on June 21st, 1992 and started its banking operations fromNovember 1st ,1997. In its 13 years of age it showed a remarkable performance andimprovement with huge profits which is becoming high and high. But do not forget about the“Global Economic Crisis 2008” which affected all the banks including all the businesses.

Bank Alfalah has aimed to provide the customers all those financial services which is better forthem and to become the leading bank of Pakistan. The mission of the bank is complement andto the services which the bank is providing to the customers. The mission of the bank is,

“To develop & deliver the most innovative products, manage customer experience, deliverquality services that contributes to brand strength, establishes a competitive advantage andenhances profitability, thus providing value to the stakeholders of the bank”.

The existing state of bank shows that the bank management is skilled enough because they areproviding innovative products to customers and are delivering quality services which hasstrengthened the brand name of the bank and are getting high profits which is shown by theirmission statement. So the bank is on its way to achieve its missions and objectives veryenthusiastically and energetically in this age of high and tough business environment with thepassage of time.

It is very interesting to know that at the time of its inception there were only three branches ofBank Alfalah which faced a number of problems to start with and had no experience at thatparticular time of its working but now at this time of modern banking Bank Alfalah is operatingthrough 321 branches including 60 Islamic Banking branches with seven foreign branches out ofwhich five branches are in Bangladesh and two in Afghanistan and one offshore branch inBahrain which is providing its financial services to customers. This is showing that it is one ofthe emerging and fast growing banks of Pakistan.

Bank is engaged in such activities which are helpful for the bank to be premier bankinginstitution of the Pakistan, although it is very difficult and challenging goal but is realistic forachieving.


_____________________________________________________________________________________


Strategic planning continuously reviewed by the bank so their policies and planning remainsrelevant to the diverse business environment. And this is helpful for the bank for handling thedifficult situations.

Despite the fact of Global Finacial Crisis the performance of the bank is very appreciable andremarkable at the end of 2008 but we it affected its growth in 2009 because at the end of 2009the financial performance was not like that of 2008. Bank is more committed towards achievingthe standards which are set by the top management of BAL. It has grown its branch network alot not only at national level but also in Bangladesh, Afghanistan and Bahrain, and has anexpansion plan for spreading its branches all over the globe.

The BAL has the products like, Alfalah debit or Hilal card which gives you the immediate andeasy access to your current or saving account anywhere and anytime with a simple swap ofyour card at millions of ATM’S and retail shops. With the Visa Network Hilal card is acceptableat more than 1.2 million ATM’s and 29 Million retail outlets around the world. If you have thisfacility then there is no need of dealing in physical cash withdrawal, just swipe your card andyour transaction will be completed in no time.

Bank Alfalah is providing the facility of Money gram which is the person to person transfer ofmoney that allows consumers to receive money in just few moments. Money Gram is availablein over 180 countries and territories and in more than 190,000 locations worldwide, and moneyis handled by quality agents linked through computers who makes it sure that your money issafely transferred to the desired place and person.

In view of importance of agriculture for the Pakistan economy and keeping in view the smallfarmers who have little resources for production for them, Bank Alfalah has designed “RuralFinance Programme” which is named as “Bank Alfalah Zarie Sahulat”This facility is available forshort, medium and long term durations. Bank Alfalah has designed this facility to achieve theobjectives like Providing reliable infrastructure for Agri customers,helping farmers utilizing funds efficiently and effectively.and providing farmers an integrated package of credit, supervision and technical know-how.

Alfalah credit card is globally accepted at all those locations which have the logo of VISA. It isaccepted at nearly 29 million locations in more than 200 countries around the world. and inPakistan also. It enables you to pay for shopping, travel, entertainment, meals and much more.The features which makes Alfalah Credit card as an important product for customers are, nojoning/ Annual / Renewal fee (except Platinum Card) ,electricity, Sui Gas, PTCL abd Warid billspayment through 24 hour Call Center and Auto Debit instructions. ,SMS for card usage, ministatement, payment receipt confirmation, etc, cash withdrawal at all 1LINK ATMs ,Special offeron Warid post paid connections.

From the very beginning the BAL has focused on the concept of excellence and precision inproviding financial services to customers. The management of BAL is working on the providinghighest level of satisfaction, value, safety, security and reliability to clients and their money.


_____________________________________________________________________________________


There are numerous departments in BAL which is performing their jobs according to thepolicies implanted by the top management. The staff of BAL is very skilled, experienced,energetic and enthusiastic which is very friendly towards the customers which is in a sense acompetitive edge for the BAL. Similarly the human resource department of the BAL is veryskilled and experienced who is recruiting only those candidates who have the ability, capability,skills and power for the required jobs. The staff members are also very satisfied and feel proudas a part of the BAL the fastest growing banks in Pakistan.

The departments of BAL includes accounts opening department, accounts department,remittances department, foreign trade department, car financing department, creditsdepartment, clearing department, credit cards department and agri finance department. Allthe departments are working together with cooperation.

The accounts opening department have working of opening different accounts according to theneed and will of the customer and to maintain them, either to communicate with the accountholder in any situation or which account has to close or not.A customer has to sing a“relationship contract” which includes the complete detail of the customer who is willing toopen an account in BAL. Bank Alfalah deals in five types of the currencies and a person canopen his account only in those currencies. A number of documents are required for opening anaccount with two authenticated referrals which introduced the customer. His verification alongwith two referrals is necessary for opening an account.

Remittances department transfer funds from person to person. Foreign trade departmentdeals in imports, exports, letter of credits and letter of guarantees. Car financing departmentadvances vehicle loans while credits department advances loans for businesses while agrifinance department advances loans for agricultural purposes. Clearing department perform thefunction of transfer of funds and a part of remittances department.

The BAL’s culture is very strong, cooperative and is in collaboration with stakeholders for betterbank and customer relationship development by using the ethical business practices. Themembers of the staff are very committed to their jobs and have developed the sense ofownership amongst the employees which is very helful for the motivation of the employees.

After analysis and careful examination, BAL has developed the product portfolio according tothe needs of the customers. BAL’s products are meeting the diverse demands of customers. Theproduct portfolio of BAL consists of agricultural loans, business loans, home loans, Hilal cards,money gram, online banking and many more. Royal profit and Royal Pariot are the examples ofthe innovative products of the bank.

As BAL has developed innovative products for their valued customers, so it is not enough todevelop products unless there exists a proper marketing plan for this. As in today’s age ofdiverse, competitive, globalized and changing business environment marketing is veryimportant for attracting targeted customers. For meeting these standards and businessenvironment every bank has a marketing department now. Similarly BAL has its own marketingdepartment at Head Office Karachi as well as at branch levels which is responsible for makingpeople aware of the products of the bank and creating demand for that. The marketing staff


_____________________________________________________________________________________


personally meets customers and if required make calls to customers and solve their problemsand queries and tell them about bank’s products and their benefits as compare to the otherbanks.

Bank Alfalah also deals in Islamic banking. Its branches are located at many cities of Pakistan.

Bank Alfalah’s Islamic banking policies are made according to the “SHARIA”. The products whichare launched by Islamic banking of Bank Alfalah are according to the “SHARIA”.

Online banking of Bank Alfalah is meeting the demand and needs of the customers all over thebranch setups and availability. ATM’s are available, merchant machines are available and thereis now no need to go bank and have withdraw your money through cheque and then makepayment to a shopkeeper or a business trader. There is no need to have physical cash in yourpocket. Just swap your card through merchant machine and have complete your transaction.Funds are automatically transferd to the shopkeeper’s or business trader’s account throughonline facility. By using online facility you can transfer your money to other cities and countriesin no time.

In today’s age of modern banking and business environment no one can deny the importanceof technology and it is almost impossible to control the banking operations without moderntechnology thats why Bank Alfalah gave much importance to the use of technology in theirbanking operations. And bank is acting as a technological leader in the market because it isengaged in adopting new technologies and implementing them in business to meet thechallenges of the diverse business environment.

As it’s a universal fact that the success of any organization lies in the hands of their humanresource or the employees working for that organization and the human resource is the mostvaluable asset of any organization. In this concern the management of Bank Afalah is wellknown for their hard work, innovative thinking and full dedication to satisfy and retain theclients of the Bank and keep the Bank on front row.

The employees of Bank Alfalah is well equipped with skills, knowledge and vast experienceof financial world which is required to keep the Bank on the way of modern banking

with the objective of gaining high profits. The core ideology of Bank Alfalah in respect of theirhuman resource selection is to hire multi talented and dedicated professionals, who canperform well best for the Bank with little external and in-house training to increase theefficiency and productivity of the human resource. Although the head office of HumanResource Management of Bank Alfalah is in Karachi but every branch is managing its employeeson its own with the philosophy of controlling every subordinate by his supervisor because thesesupervisors are working according to the policies directed by the Head Office. In this way theyare cooperating with one another and are achieving the goals and standards of the Bank set bythe top management.

Man power or human resource is a very important part for any organization whether it isbanking organization, education organization or any production company. No one can


_____________________________________________________________________________________


underestimate the importance of human resource. As mentioned earlier that human resourcepower of the Bank Alfalah is very skilled and experience as its human resource department, butto meet the changing needs and requirements of the business environment the training ofhuman resource is very important and essential. To meet these requirements the bank has atraining department at Head Office which arranges seminars and workshops at time to timesand train existing staff members about the new business dealing behaviors, new ways ofworking and dealing customers, about competitors and many more. Human resourcedepartment hires 30 fresh post graduates as MTO’s (management training officers) who trainstaff of the bank.

Bank Alfalah is successfully completing its journey towards progress with the help of itsspecialized, skilled , highly qualified and professional management at all levels. Topmanagement formulates the strategies in accordance with the standards formulate to achievethe desired goals and objectives. As with the passage of time and it is fact that the externalbusiness environment is very dynamic in nature so these strategies keep on changing to keepthe Bank up to date. For this purpose bank adopted corporate, business and departmental levelstrategies which helps the bank perform well.

At the corporate/top level there is board of directors and executive committee, whocontrols such important functions as determining goals and objectives, formulations ofbusiness policies and strategic planning. Corporate philosophy stresses the highest level ofsecurity, reliability and value for its client’s money which is the core strength of the bank.

Top management formulates the business level strategies. Chief Managers are also the part ofthis management level who formulates the strategies and technical planning which determinesthe methods of getting the best and in time completion of jobs from its human resource. Theydefine and interpret the objectives and goals and formulate policies to achieve them

Department strategies are formulated at the department level and are formulated by the Headof the Department.. Each and every branch manager formulates the policies according to thebranch setup and at each level of bank environment because he is directly responsible for themanagement and controlling the activities of the employees. For implementation of thesepolicies meeting are called with the presence of Head of the Departments to get the best andefficient and desired goals behind these formulated policies.

Bank Alfalah is the fastest growing and expanding bank in Pakistan. It is establishing itsbranches all over the Pakistan not just in urban areas but also near some rural areas so thatevery person can have access to the bank. Simelarly bank is aimed to expand at internationallevel to serve the customers as its vision statement shows,

“To be the premier organization operating locally & internationality that provides the completerange of financial services to all segments under one roof”.

The bank’s primary and foremost priority is to find and support clients’ financial needs. At BankAlfalah all is ensured through constant restraining regimes, they are going towards professionaldevelopment, advanced banking solutions and information technology.


_____________________________________________________________________________________


For the satisfaction of the valued customers and the shareholders the management of bankimplemented some of the new and modern ways of doing work and policies which aimed atconsolidated the bank’s financial position and creating a very big, strong, consisten anddiversified business base.

Despite the fact that the economic condition n of the country as well as of the world is notfavorable, even then the performance of the bank over the years remained very good andprogressing. And this is the result of the highly prioritized product portfolio, specifically tailoredto suit discerning needs and preferences of highly valued customers.

Bank Alfalah is aimed at maintaining quality banking, profit performance and reliable customerservice and these things will make it a responsible corporate citizen. The key mission is theemphasis on innovation and quality both in products and services as well as the quality ofhuman resource. At this time bank has maintained its positions as a quality financial institution.The success of every business depends upon the good clientele. Bank Alfalah is very good at itspolicy of selecting clients which will retain for a long time and will provide profits to the bank.

The bank checks all the particular and required things and references about the clients beforefinal selection. Bank confirms and verifies all the provided detail and referrals before finalselection of the client and having a relationship with the customer. This bank’s policy helps andprotects the integrity of the bank and a long term relationship with the customer.

The marketing department of the bank works on the philosophy that the customer is thecentral focus of the bank’s business because without customer there is no existence of thabank.

Products are launched by placing the customer at the centre of the business, and each service isdeveloped for the satisfaction and fulfillment of the customer needs as best as possible.

Bank ALfalah’s culture is service excellence oriented. Bank is working on the enrichment anddevelopment of the quality services which will distinguish it from other banks and provides it acompetitive advantage by developing new areas of activities.

Bank Alfalah has made a remarkable progress in the areas of consumer banking as a niche areafor the bank and earned a lot of profit from it. Like car financing and debit and credits cards.The bank has developed a system for internal control and monitoring for measuring risks whichcan be arise from the consumer banking and developed automated, electronic andcomputerized environment to control this.

Bank has great strengths which its competitors do not have as it has a vaery attractive brandname with a slogan of “The Caring Bank” which is somewhat emotional touchy for the personswho seeks for care. The HR of the bank are very trained, professional and skilled which iscontributing towards the profits of the bank and bank in this way going towards attainingcontinuous profits. The workforce of the bank is very young and energetic and working is being


_____________________________________________________________________________________


done on standard basis. Pkiatan government is supporting the bank because it is the foreigninvestment bank which is acting as FDI for Pakistan.

The graph of the bank’s performance is going in upward position which is a very good sign forthe bank. It was possible for the bank because the bank has given a lot of importance andattention to its customers and made the product portfolio according to the needs and wants ofthe customers. Because bank is using the continuous process of assessing the needs andpreferences of the customers which is very helpful in making new products and for providingthe desired services to the customers.

In 2009 the bank was able to attained 2nd position in respect of the size of the balance sheet. Inthat year bank maintained the capital adequacy ratio of over 13 %.

As in the portion of financial analysis I have calculated a number of financial ratios for BAL forpast five years which are clearly showing that the performance of the bank is very good withlittle variations in the profit but realistically the growth has fallen in 2009 because of the affectsof Global Financial Crisis of 2008 which affected not only the performance of BAL but also ofthe other businesses as well. Similarly the economic and political condition of the Pakistan isnot very good for the bank because changing political situations, terrorism and changinggovernment policies affecting the performance of the bank very badly.

Last but not the least; Bank Alfalah has all the capabilities for coping with the changing businessenvironment, bad economic conditions and political condition of the bank. If the bank will keepon moving on its way like this with the help of their unique business policies then the time isnear when The Bank Alfalah The Caring Bank will be at the top of all the banks.

Internship report hrmars[1] · Introduction of Bank Alfalah Limited (The Caring Bank): Bank Alfalah...

Documents

Transcript of Internship report hrmars[1] · Introduction of Bank Alfalah Limited (The Caring Bank): Bank Alfalah...