Internship Report on Bank Alfalah ltd. 2011

 

                                                

                    

 

Submitted to:

 

Muhammad Shahzad Ghafoor

LecturerDepartment of Management Sciences

COMSATS Institute of Information Technology, Lahore

email: shahzadghafoor@ciitlahore.edu.pk

phone: 042 111 001 007

 

 

Submitted by:

Syed Junaid Ahmad Shah

FA10-MBA-092

01-10-2011

 

 

 

COMSATS Institute of Information TechnologyM. A. Jinnah Building Defence Road, Off Raiwind Road, Lahore

E-Mail: pro@ciitlahore.edu.pkTel: +92 (42) 111-001-007Fax: +92 (42) 99203100

 

 

 

Preface

 

nternship is an integral part of MBA programme. For the sake of internship the most initial thing is to have a practical experience. This effort may get a student to get a practical experience if right

organization is selected. During the internship, a student comes to particle knowledge. He/she learns what he has studied so far. As an MBA student I have also done my internship at Bank Alfalah Limited main branch Lodhran. Here I come to know a different and very interesting experience of learning and working with people. First of all I will tell you about Bank then operations of different department.

Acknowledgement 

am grateful to almighty Allah, the most Gracious, and the most merciful for enabling me to accomplish this task successfully. I feel much obliged to my parents, whose prayers and good wishes have enabled me to reach this stage. I am thankful to my teachers, for his help, advice, and guidance during studies. I would also like to say thanks to the staff and management of Alfalah bank ltd for their cooperation and help. I am also thankful to all other people who contributed their time & efforts in this regard.

Regards,

SYED JUNAID AHMAD

Dedication

To my loving Parents…

Table of Contents

Executive summary……………………………………………………………………. 7

I

I

Chapter 1

Evolution of banking…………………………………………………………………8

Banking in Pakistan………………………………………………………………..10

Introduction to bank Alfalah……………………………………………………….12

Management………………………………………………………………………..14

The vision……………………………………………………………………………15

The mission…………………………………………………………………………15

The philosophy……………………………………………………………………..16

Branch network…………………………………………………………………….18

The board……………………………………………………………………………21

Features…………………………………………………………………………….22

Chapter 2

Alfalah car…………………………………………………………………………..24

Account opening……………………………………………………………………25

Cash department……………………………………………..……………………36

Clearing department……………………………………………………………………………37

Remittance department…………………………….…………………..…………39

Accounts department………………………………………………………………43

Chapter 3

Swot analysis………………………………………………………………………45

Recommendations………………………………………………………………..46

Marketing practices……………………………………………………………….47

Conclusions……………………………………………………………………….48

Financial analysis…………………………………………………………………50

Executive Summary

This is the detailed report about Bank Alfalah where I did my internship for six weeks. In this report there is complete history of banking as well as bank Alfalah ltd. Bank Alfalah is a company backed by Abu Dhabi, it was formed in 1998. Now a day’s bank Alfalah is counted in Pakistan’s top 5 banks. It has also won brand of the year award in 2008. It has two types of banking conventional and Islamic banking. It has almost every department like cash, remittance, accounts, finance, agri finance, account opening, human resource, and car finance. In this report I have added swot analysis, recommendations, conclusions, and details of the departments which are present at that branch where I did internship.

Evolution of Banking

It has not so far been decided as to how the word ‘Bank’ originated. The explanation of this origin is attributed to the fact that the Jews in Lombardy transacted the business of money exchange on branches in the market place and when the business failed, the people destroyed the Bank. Incidentally, the word ‘bankrupt’ is said to have been evolved from this practice. The opponents of this opinion argue that it was so, then how is that the Italian moneychangers were never called ‘Banchierei’ in the Middle Ages?

Other authorities hold the opinion that the word ‘Bank’ is derived from the German word back which means joined stock fund. Then ‘Back’ was Italianize into ‘Bank’.

Early Growth

Banking in fact is as primitive as human society for ever since man came to realize the importance of money as a medium of exchange. Perhaps it was the Babylonians who developed banking system as early as 2000 B.C. It is evident that the Temples of Babylon were used as ‘Banks’ because of the prevalent respect and confidence in the clergy.

King Hamurabi (1728 – 1686 B.C), the founder of the Babylonian empire, drew up accede wherein he laid down standard rules of procedure for banking operations by temples and great landlords. He got his code inscribed on the block of diorite about 8 feet tall, containing about 150 paragraphs which deals with nearly all aspects of loans, interest, pledges, guarantees, natural accidents, loss, theft etc. Later on Sumerians, Babylonians, Hittites and Assyrians standardized the values of the goods in silver, copper and bronze.

In 1401 a German public bank was framed comprising the operations of discounting and transferring of money. By the 16th century, some more public banks were

Formed in Venice, Milan, Amsterdam, Hamburg and Nuremburg. In order to streamline Banking organizations and techniques, conferences were held in Nuremburg from 1548 to 1551 and it was agreed that the commercial interest of the time needed a bank with facilities of growth and

transfer but it should not be a bank run by private individuals. Ultimately in 1587, a State Bank under the name of banco DI rialto was formed in Genoa. Later the bank of Amsterdam was also formed in 1609. This Bank had a guarantee by the State and rendered valuable services to the Netherlands trader’s up to the year 1795.

Similarly in 1690, the Bank of Hamburg came into existence in Hamburg with the business of accepting deposits of fine silver or of foreign money and to run accounts on these deposits. This Bank rendered great service to the merchants as well as countries it dealt with until 1873, when it was merged with the Reich bank. By the year 1700, the bank of England was not only issuing notes but also conducting accounts for customers. Its directors were conducting the business like that of limited companies. The bank had the monopoly of issuing banking notes. Upto 1813 or there about in England, the main profit of bank was derived from the circulation of notes.

Development of Modern Banking

In 1918 came into being eleven clearing banks of today. The effect of this historical development of banking in England has been fairly wide. First, emergence of a small number of large banks with wide network of branches. Second, increase in the popularity of bank accounts and a large-scale use of cheques.

In 1946, the labor government nationalized the bank of England and transferred the existing stock to the nominee of British treasury. In 1955, the British Banks made a departure from traditional banking by undertaking hire-purchase finance for companies buying industrial plants and machinery and took interest on hire-purchase finance.

Banking in Pakistan

At the time of independence, there were 631 offices of scheduled banks in Pakistan, of which 487 were located in West Pakistan alone.  As a new country without resources it was very difficult for Pakistan to run its own banking system immediately. Therefore, the expert committee recommended that the Reserve Bank of India should continue to function in Pakistan until 30th September 1948, so that problems of time and demand liability, coinage currencies, exchange etc. be settled between India and Pakistan.  The non-Muslims started transferring their funds and accounts to India.  By the end of June 1948 the number of officers of scheduled banks in Pakistan declined from 631 to 225.  There were 19 foreign banks with the status of small branch offices that were engaged solely in export of crop from Pakistan, while there were only two Pakistani institutions, Habib Bank of Pakistan and the Australasia Bank. The customers of the bank are not satisfied with the uncertain condition of banking. Similarly the Reserve Bank of India was not in the favour of Govt. of Pakistan. The Govt. of Pakistan decided to establish a full-fledge central bank. Consequently the Governor-general of Pakistan Quaid-E-Azam inaugurated the State Bank of Pakistan on July 1, 1948. Thus a landmark was made in the history of banking when the state bank of Pakistan assumed full control of banking and currency in Pakistan.

The banking structure in Pakistan comprises of the following types.

1)     State Bank of Pakistan.

2)     Commercial Bank of Pakistan.

3)     Saving banks.

4)     Co-operative banks

5)     Specialized credit institutions.

Up to December 31, 1973, there were 14 Pakistan commercial banks that functioned all over the country and in some foreign countries through a network of branches.  All these commercial banks were nationalized in January 1, 1974, and were recognized and merged into the following five banks:

1)     National Bank of Pakistan

2)     Muslim commercial bank limited

3)     Habib Bank Limited

4)     United Bank Limited

5)     Allied Bank of Pakistan

The state bank of Pakistan is the Central bank of the country and was established on July 1, 1948.  The separation of East Pakistan and its repercussion in the form of economic depression has caused a lot of difficulties to the banking system in Pakistan.  The network of bank branches now covers a very large segment of national economy.  The numbers of branches have increased appreciably and there is now on branch of bank for every 3000 heads of population approximately.  There is done reasonable growth in deposits from the establishment of Pakistan.  Besides this growth, specialized credit and financial institutions have also developed over the years.

The Government of Pakistan in the late 90’s introducing the need for the privatization of state owned banks and companies.  The private sector has accepted the challenge and most of the banks are privatized today. The State Bank of Pakistan issues the shares of these periodically.  Bank employees and other common peoples can also purchase these shares and earn profit.

Introduction to Bank Alfalah Ltd

Bank of Credit & Commerce International (BCCI) was a Pakistan based bank, established by Mr. Agha Hassan Abdi from UBL, in association with U.A.E and Europe. BCCI has its branches in 74 different countries of the world. It had its 3 branches in Pakistan. In 1991, the BCCI was banned, when was accused by European countries that the bank was involved in some illegal operations with Gulf countries. The major reason behind European accusation was that BCCI

was of Islamic mode. Therefore, the bank was closed due to international pressure. Then, its 3 Pakistani branches were taken over by the Government of Pakistan, which were named as Habib Credit and Exchange Bank (HCEB) and these were working as subsidiary of Habib Bank Limited.

Following the privatization in July 1997, Habib credit and Exchange Band assumed the new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based bank as the family of Sheikh Nahayan Mubarik Al-Nahayan purchased 70% of its shares and 30% shares remained with Habib Bank on behalf of Government of Pakistan.

Charged with the strength of Abu Dhabi consortium, and under the leadership of His Highness Sheikh Nahayan Mubarik Al-Nahayan, Minister of Higher Education and Scientific Research, Government of Abu Dhabi, and a prominent member of Royal Family, the bank is energized with the vision, envisaging the development of various sectors in Pakistan.

Since the inception of Bank Alfalah, by the grace of the Almighty, we have moved rapidly in expanding our branch network and deposit base, along with making profitable advances and increasing the range of products and services. We have made a break-through in providing premier services at an affordable cost to our customers.

Keeping in view our valued clients and the need for constant and effective communication of information, we have designed this website to be as user-friendly as possible.

As we pursue the path of excellence, customer satisfaction remains our priority. It is only when we know our customers better, can we deliver a higher quality of services, thereby adding synergy to our existing management expertise, financial strength and profitability.

This is yet another channel of communication for the delivery of quality products and services that enhance value to our stakeholders.

H.E.Sheikh Hamdan Bin Mubarak Al Nahayan

 

 

Management

 

Mr.Mohammad Saleem AkhtarChief  Executive Officer

           

Mr. Parvez A. ShahidExecutive Incharge

Mr. Sirajuddin AzizExecutive Incharge

Strategic Planning & Global Marketing

International &Treasury Division

Mr. Bakhtiar KhawajaExecutive Incharge

Human Resources Division

Mr. Asad JamilExecutive Incharge

IT Division

Mr. Mohammad YousufExecutive Incharge

Credit Division

Mr. Shakeel SadiqExecutive InchargeCorporate Banking &

Home Finance.

Mr. Ather ShehabExecutive Incharge

Establishment & Administratration

Mr.Mahmood AshrafExecutive InchargeCredit Monitoring

Division

Mr. Shahid M. MurtazaExecutive Incharge

Business Development Division

S.A.M./ Car Finance/ Leasing

Mr. Hamid AshrafExecutive Incharge

Legal Affairs Division.

Mr. Mohammad Iqbal Saifee

Executive InchargeAudit & Inspection Division

Mr. Zahid Ali H. Jamall

Executive InchargeFinance Division

Mr. Adil RashidExecutive Incharge

Cards Division

Mr. Ijaz FarooqExecutive Incharge

Islamic Banking Division

The VisionOur 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 kour highly valued clients and stakeholders.

The MissionOur 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 & Innovation” will remain our key mission statement. We will continue to strengthen our position as the leading provider of quality financial services in Pakistan.

The PhilosophyExcellence in service

Quality performance Product innovations

Bank Alfalah’s Slogan

Let’s Look Ahead Towards A Brighter Future Together.

Bank Believes

Every door leads to our customers. The legacy of leadership stands as our guiding light.

The strength of chain relies on the strength of each link.

A keen ear is a key to understanding. Achievement is nothing without target.

Time is our most valuable asset.

Performance is nothing without the ability to measure it.

Every drop counts.

 

Present Status:

 

Despite adverse economic conditions of country, the year 2000 was a milestone for the bank, both in terms of growth and profitability. The bank’s pretax profit for the year grew by 12.96% to Pak Rupees 20.48 billion, an increase of 29.50 %, with a balance sheet footing of Pak Rupees 27.57 billion compared to previous year’s figure of Pak Rupees 21.02 billion.

After doing successful business in year 2000 to 2003, Bank Alfalah is now looking forward positively towards the future and its management is confident to build on the

gains realized during 2003. Currently bank is emphasizing on expanding its operations to meet client’s needs and for this purpose management has plans to add more branches to existing network in the coming years. Bank has already started its working to go internationally and its future target markets include UAE, Bahrain, Bangladesh and Sri Lanka.

Technological developments are opening up new vistas of solutions for distributing traditional financial products. Concurrently, rapid change in customer preferences has resulted in a major

shift from manual to automated services. Information Technology today, is all pervading in the corporate world. Bank Alfalah made heavy investments towards enhancing its capabilities in the area of automation and information technology. Information Technology department of bank has successfully developed an advanced computer program named BANK SMART.

Another success of bank is in the area of foreign trade. Bank has developed excellent business and correspondent relations with renowned banks of the world whose support in terms of lines of credit has enabled it to handle ever-growing trade volumes.

From above stated facts it is very clear that bank has made remarkable achievements within a short period of time despite being in the nascent stage. With its key indicators of progress already soaring to new heights, the bank is committed to put all its energies, resources and time to bring higher value and satisfaction of its customers, employees and shareholders.

 

Competitors

Despite notable economic uncertainties, the financial strength of Bank Alfalah Limited has greatly enhanced during the previous years. The successful expansion program proved their capability and commitment in comparison with the competition in the financial sector. The Banking structure in Pakistan comprises of:

v  Central Bank

v  Commercial Banks

v  Investment Banks

v  Development finance Institutions (DFIs)

v  Specialized Banks

v  Foreign Banks

Bank Alfalah is a private commercial bank so the major competitors of Bank Alfalah are the following:

v  Muslim Commercial Bank

v  Standard chartered

v  Soneri Bank Ltd

v  Prime Commercial bank

v  The bank of Punjab

v  Bank Al-Habib Ltd

v  ABL

v  Faysal Bank Ltd

v  NIB

v  Arif Habib Rupali Bank Ltd.

Branch Network

Bank Alfalah has near about 210 branches in Pakistan. Detail is as under:

Karachi Main branch, B.A. Building, I.I. Chundrigar Road Cloth market branch

Karachi Stock Exchange Branch

Clifton branch

Shahrah-e-Faisal Branch

P.E.C.H.S Branch

Timber Market Branch

Defense Housing Authority Branch

Gulshan-e-Iqbal Branch

Jodia Bazar branch

Korangi industrial area branch

M.A. Jinah Road Branch

North Napier Road Branch

S.I.T.E Branch

Paper market branch

North Karachi branch

Lahore Gulberg branch Defense branch

Circular road branch

Township branch

LDA Plaza branch

Badami bagh branch

Allama Iqbal Town Branch

Shah Alam Market Branch

Rawalpindi Mall road branch Satellite town branch

Peshawar City Branch

PeshawarØ  Peshawar Branch

 

Multan

Main Branch Abdali Road Hussain Agahi Branch

Vehari Road Brach

Chowk Shaheedan Branch

Other BranchesOther branches are in:

Hyderabad Sukhar

Rahim Yar Khan

Sialkot

Islamabad

Jehlum

Quetta

Mingora, Swat

Mian Channu

Faisalabad

Gujranwala

Sargodha

Bahawalpur

Dera Ghazi Khan

Gujrat

Sahiwal 0404456855

Sadiqabad branch

Mardan

Lodhran

Now, Bank Alfalah is going to establish its branches in some foreign countries.

The Board

The list of Board of Directors of Bank Alfalah Limited is as under:

H.E.Sheikh Hamdan Bin Mubarak Al Nahayan Mr. Abdullah Khalil Al-Mutawa.

Mr. Omar Z. Al-Askari.

Mr. Naeem Iqbal Sheikh.

Mr. Ikram-ul-Majeed Sehgal.

Mr. Muhammad Saleem Akhtar.

The Core Group

In the core group, there are 2 committees, i.e,

Board Advisory Committee. Executive Committee.

Board Advisory Committee

Mr. Omar Z. Al-Askari. Mr. Abdullah K. Al Mutawa.

Mr. Ganpat Singhvi.

Mr. Bashir A. Tahir.

Executive Committee

Mr. Mohammad Saleem Akhtar. Mr. Ikram-ul-Majeed Sehgal.

Mr. Parvez A. Shahid.

Mr. Tanveer A. Khan.

Mr. Mohammad Yousaf.

Mr. M. Waqas Mohsin.

Auditors

A.F. Ferguson & Co.

Chartered Accountants.

Features

Bank Alfalah Limited is well established bank. It has some special features with the help of those it is growing rapidly.

 

Good Work Environment

As the work environment plays a great role in this competition age, so the bank has good work environment. All the people work with cooperation; managers are so kind that each problem can be discussed with them.

Efficiency

Employees at Bank Al-Falah are quite efficient. As Lodhran branch is a new one, its employees have to bring their bank among the list of good banks. Therefore, they work more than their working hours and it is all according to their will. It also shows their loyalty, commitment to organization.

Customer Services

All the customers are entertained individually. Same kind of behavior and attention is given to all the customers.

Suggestions Asked From Customers

Getting ideas for improvement from customer side is a new idea and that is working very well in Bank Alfalah Ltd. All the customers are asked to fill a suggestion form and the standards of the bank are improved through them.

Employee Benefits

Employees are given the benefits like bonus, gratuity funds, loans, increments, house rent, medical and conveyance.

 

 

Computerized Working Environment

In bank, all the work is done on computers. All the entries are made in computer. Balance are fed into the computer. This increases efficiency of the bank. All the branches are centrally controlled through LAN settings. It helps them to co-ordinate more easily for making efficient and fastest consumer services.

Alfalah Car

It’s a scheme that enables one to own his desired car at easily affordable and flexible installments with a minimum down payment and insurance.

Salient Features

Lowest Financing cost available in the market Tenure of 1 to 5 years as per individual requirement

Quickest processing

Minimum processing charges: Rs. 3000 payable once

Down Payment requirement of 25%

Repayment through monthly installments

Lowest Insurance rates available from bank’s approved insurance companies

Account Opening Department

Borrowing funds from different sources has become an essential feature of today’s business enterprises. But in the case of bank borrowing funds from outside parties is more vital because the borrowed capital of a bank is much greater their own capital. Banks borrowing is mostly in the form of deposits. These deposits are lent out to different parties such deposit creation is done through open an account in the bank.

The Bank does not make payment of a cheques bearing a six-month or older date. If an account is not operated in six months, it is called Dormant Account.

Types of Account

¨      Current Account.

¨      Saving Account.

¨      Royal profit Account

¨      Alfalah Kifayat Account

¨      Alfalah Mahana Amdan plus

¨      Basic Bank Account (BBA)

¨      Alfalah Kamyab  Karobar

 

Procedure of opening Account

The procedure of opening the account is as given under:

1. Account Opening Form:

First of all, the customer fills the account opening form (AOF). Filling of account opening form includes type of account, currency of account, name, and address, signature of customer and signature of introducer and attach a photocopy of national identity card. He also signs an undertaking that he will follow the rules and regulations of the bank.

2. Introduction:

The signature and account number of the account holder introducing the account to the new person is obtained on the account opening form.

3. Specimen Signature Card:

The signature of the client is obtained on a specimen signature card (S.S Card). The card is obtained with two signatures from the customer. Every time a cheque is received for payment from the client, the signature on the cheque is verified by comparing it with S.S Card.

4. Requisition slip

A requisition slip for Cheque book is also given to the customer. The              customer fills it and gives it to the account opening Officer.

1. 5.    Know Your Customer Form

Every account holder fills this form.  The basic purpose of this form is to get some basic information about the customer’s business and source of incomes.

6. Account Number:

When all the formalities are completed, an account number is allotted to the customer and all the information is entered into the computer and register. Then that account number is written on S.S Card and account opening form.

7. Depositing of amount in account:

The client deposit cash in the account. For this purpose cash pay-in-slip is used. The minimum initial deposit is fixed for each account according to the nature of account. For example for PLS / saving account the minimum requirement is Rs.100 only.

8. Issuance of a Cheques Book:

After opening an account with the bank, the account holder makes a request in the name of the bank for the issuance of a Cheque book. Such a request is known as Requisition Slip. BAL issues Cheque books from 10 leaves to 50 leaves. When he used this book completely then he can apply for another known as subsequent Cheque Book. This process takes a day because the Cheque books come from the Karachi head office.

9. Entry of Cheques Book:

Before issuance of a Cheque book the bank stamp every leaf with the account number of the customer, enter it in the cheque book register and computer and issues the cheque book to the customer after his signature on the register.

10. Letter of Thanks:

A letter of thanks is prepared. One letter is for the customer and one for the introducer. One copy is send to the customer and the other copy is kept in the record along with other documents.

Amendments/Changes in Accounts:

BAL provides the facility of amendments in accounts, whenever required by the customers. Account holder gives an application along with necessary documents to the bank. Then the amendments are made in the account of the depositor.  These amendments can be made by filling certain application forms. These forms are as follows:

v  Change of Address Form

To change the address of the account holder

v  Change of signature form

To change the signatures of the customer.

v  Liability / Inquiry Form

This form is used if some person has acquired loan from the bank and he wants to close his current account, then he fills this form and this form is send to credit department.  When the credit department declares him free from any debt obligations then his account is closed.

v  Vernacular Form

This form is used when some person wants to sign in any language other than English.

v  Mandate To The Third Party To Operate The Account

This form is used to enable any third party to operate the account.

 

Closing of Accounts

The procedure of closing of account is as follows.

Ø First of all the customer gives the request to close the account. Ø His signatures are verified.

Ø He withdraws all his money from his account but in case of current account Rs. 150 is deducted as a charge of closing the account.

Ø A liability form is send to the credit department if he has taken a loan from the bank.  If he is cleared from all the liabilities then further proceeds are taken.

Ø Permission is granted by the authorized person (the manager).

Ø Account is closed in the computer system.

Ø His specimen signature card is attached with the account opening form and marked closed.

Ø  

Types of accounts

Current Account

There is no interest on these accounts. It is only for transaction purposes. They paid on demand. Where a banker accepts, paying all checks drawn against him to extend of the balance in the accounts. As there is no profit paid on this account, it is also called checking account because cheque can be drawn on it. Current account is mostly opened for business. The minimum balance requirement for opening the current account is Rs. 5000.

PLS Saving Account

The purpose of this account is to introduce the habit of saving individuals in the neighborhood. The profit on saving accounts is paid on the basis of profit and loss sharing at 5 % p.a. The minimum balance requirement for opening the account is Rs.100.

Term Deposit

A term deposit is a deposit that is made of a certain period of time. At the end of specific period the customer is allowed to with draw the principal amount. The rate of return of this account varies from 8 % to 13 %. The term deposit account varies from one month to 5 years and the minimum balance requirement is Rs. 5000.

Profit Calculation Methods

Daily Product Basis

Deposited Amount × Rate of return/.

365 (No. of days in a year)

Average Balance

Sum of daily end Balance

× Rate of return

No. of days in month

Account Opening Procedure

For opening of an account, there are different types of account holders are required for all these types. The operation/procedure requirement that is needed for “Individual Account” differs greatly from the “Joint Accounts” proprietorship A/C, Partnership A/C, Private Limited Company A/C and Public Limited Company A/C.

Individual’s Account

When a single man or woman opens an account in his or her own name and has the right to operate, it is called individual A/C.

Documentation

Copy of National Identity Card. Proof of Income

Proper Identification (Introduction).

Operations

The person place in the type of account and type of operation required in the account opening form.

He/she fills in part 1 of the form, a fix his/her either two of four similar signature ( or thumb expression in the signature space ) and get it introduced and signed by a person who already has an account with the bank and write his account number in the specific rows in a specific space.

The person fills his or her father, mother, husband/wife or any other relative’s name, his/her address, phone number, his or her sign to certify this requirement. This requirement is needed because in his/her absence bank can have correspondence with a specific person.

The person deposits the initial amount for opening account onto the cash counter. The person put his signature on form on two places in “authorized Signature” and fills in the “Title of Account” space by writing his name.

If the person put his signature in Urdu or any other language other than English, he signed a “Vernacular Form”.

If the person has changed its signature then he must have to sign the “signature change undertaking”.

The next step is entering in compute r because the centralized account opening structure and generation of account number.

Joint Account

When two or more persons neither partners nor, trustees, open an account in their name is joint account.

Documentation

Copy of N.I.C card. Income proof of both account holders

Identification (Introduction).

Operations

The person checks the type of account and type of operation required in the respective box on the form.

The person fills the Part-1 and Part-II

Signature of box or all persons are obtained on the formed in the area specified for signature.

In the title of account space names of all persons maintained.

Account holders specified in the form that they will operate the form singly or jointly.

Proprietorship Account

When the owner of the firm operates singly, account is opened in his firm name.

Documentation

Copy of N.I.C. Status of the firm.

Copy of Sole Proprietorship Declaration.

NTN certificate

Proof of Business

Operations

All operation remains the same, except that the firm name is written in “title of account” area and Signature of the proprietor in the specified area.

Partnership Account

The account is opened in the firm name and all partners designate one or two persons to act behalf of the partnership firm all acts of the firm jointly and severely.

Documentation

Copy of N.I.C of all partners. Status of the firm ( In case of registered firm ).

The attested copy of Partnership Deed (in case of registered firm ).

Operation of the A/C (as per deed).

Partnership mandate

Letter showing the authority of one or more partners to act on.

Form C for the registered firms

Þ    Next of kin is not allowable in that type of accounts.

Operations

All other requirements are same except that all partners dully sign the form, cards are signed by all of those partners who will act on behalf of the firm.

Operating instruction is very important for the described case that who will be operating the account.

Private Limited Company Account Documentation

N.I.C of all partners. Certificate of incorporation

Certificate of commencement of business

Articles and Memorandum of association.

List of directors.

Corporate mandate duly signed by the directors

Copy of NTN certificate

Form (A) showing the changes in share capital and share holders

Account opening Request on letter head of the organization

Resolution of Board of directors

Power of attorney if any.

Certificate of Incorporation Form 29 (B) (Lasted Copy).

Company’s letter head

Embossed seal

Company secretary will certify all these copies.

Operations

The person authorized in the resolution of the board of directors put their signature on the S.S Card.

Next of Kin requirement is not need in a case of Private Limited Company. Other procedure is same.

After completing each and every formalities are signed by all partners who will act on behalf of the firm.

Public Limited Company Account Documentation

Copy of N.I.C of all partners. Articles and Memorandum of association.

List of directors.

Resolution of Board of Directors.

Certificate of commencement of Business.

Operations

Operation is same as Private Limited Company

 

Alfalah Kamyab Karobar

This account is mainly used for business purposes. It is just like current account the difference is if average balance is maintained at Rs. 25000 then remittance, online, and all next cheque books are free.

Cheque Book Issuance

When the account is opened then within one week you will receive letter of thanks from bank after this you will go to the bank and they will issue a cheque book. Without letter of thanks bank will never issue you cheque book.

Bank Alfalah Issues the Following Cheque book Denominations:

¨         10 leaves

¨          25 leaves

¨          50 leaves

.

Cash Department

Mr. Shahzad helped me in learning about Cash Department. Cash Department performs two main functions and other subsidiary functions:

¨         Cash Deposits

¨         Cash Payments

¨         Online Cash Receipts & Payments

Cash Deposits

Cash receiving officer receives cash along with pay-in slip from the customer. He checks if the deposit slip is properly filled up containing title of account, account number, date and amount in word and figures. He also verifies signature. Detail on both counter file and cash receipt voucher should be the same. Cash is received by the cash receiving officer, twice counted and matched with the deposit slip. The cash details are written on the back of the deposit slip and are also entered in cash receiving register. Cash received stamp is affixed on the face of the deposit slip along with the signature of the cash receiving officer.

Deposit slip and cash receiving register is given to the officer in cash department. Again proper scrutiny is made by the officer cash department both on cash receipt and cash receiving register. Officer cash department signs both the deposit slip and register; Deposit slip is credited and posted in the concerned account in the system.

Payment of Cheques

The process for payment of cheques for local and foreign currency is same. First the customer presents the Cheque or holder to branch and the particulars of cheques are properly filled in.

Signature of the holder is taken on the back of the cheques. Cheque handed over to the officer cash department for scrutiny where officer checks the date, amount in words and amount in figures, payee’s name crossing if any, account number, cheque serial number, any material alterations, endorsements and signature of the customer. Account is debited and then the officer cancels cheque. It is posted in the system and posting stamp and number is affixed on it. Cheque is handed over to the cash payment officer for payment. One more signature on the back of the cheque is taken from the holder to match with the first one, and then cash is paid to the payee. Cash detail is written on the back of the cheque. Cash paid stamp is affixed on the face of the cheque. Entry is passed in the cash payment register.

If the payment is of Rs. 50000 the cashier can make it on its own. If the amount is greater than Rs. 50000 the cashier and cash deposit Incharge will verify the check and will sing it. Then the payment will be made. Otherwise the payment will not be made.

Clearing Department

In clearing, Mr. Tahir proved so helpful. The clearing process majority involves receiving the cheques and making payments. This process can be inward or outward.

Clearing Process (Inward/Outward)

Here the local Cheques are received that are drawn on BAF. All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheques and account harder. Counter folio of paying slip is handed over to the customer by putting stamp for #cheque received for collection for Bank Alfalah’ on it duly signed by officer. These Cheques are scrutinized and cheques for local clearing are separated from OBC. These are then entered in clearing register and cheques for collection, are entered in OBC register and handed over the Bills Department for collection.

Clearing officer checks and verifies title of all the cheques deposited by the customers to confirm the good title of the cheques. Cheques are scrutinized properly and paying slips are separated from cheques. Special crossing, endorsement and clearing stamps are affixed on the cheques. Cheques of each bank are sorted and arranged branch wise. All the cheques are then entered into the clearing system of the bank. Print out of the clearing is taken and details are attached with the cheques of each bank. Details of these banks are then entered into the clearing schedule containing number of cheques presented and their total amount against the name of each bank. Then total number of cheques presented to all banks and their total amount is written on the foot of that schedule, which is tallied with the clearing register.

Next morning, these cheques are delivered to the respective banks through NIFT in clearing house of State Bank of Pakistan between 9:00 to 9:30AM. In the same manner, other banks present their clearing drawn on Bank Alfalah. Total number of cheques and their amount delivered to other banks and received from them are written on the Clearing House schedule branch for their payment. After proper scrutiny of cheques, verification of signatures and confirmation of balance in the account, the Officer Cash Department pays these cheques by canceling and posting them in the system.

If any cheque is not passed due to insufficient balance or any other reason, Officer clearing Department returns the same cheque by attaching a cheque return memo containing reason for return. This cheque is entered into the cheque returned register and bank charges are deducted according to the schedule of charges.

Second clearing is called at 2:30PM to check the fate of the cheques presented to other banks in the morning.  If any cheque is to return, that is delivered to the same bank in second clearing.  In the same manner, if any cheque presented by Bank Alfalah in first clearing is returned, they receive it and once again give schedule of clearing figure to the Officer Clearing House SBP containing number of cheques and their amount delivered and received unpaid.

Remittances Department

The need of remittances is commonly felt in today’s business. The main function of remittance department in a bank is the transfer of funds.

Mr. Tahir in Bank Alfalah is the officer for Remittances Department.  In remittances, following banking instruments are used:

Pay order Demand draft

Online transfer

Call deposit receipts

Traveling cheque

The procedure for dealing with all these under local as well as foreign currency in BAL is as under.

Pay Order

A pay order is a written order issued by a bank, drawn upon & payable by itself, to pay a specified sum of money to or to the order of a specified person.

Procedure for Pay Order

Application form is given to the customer to fill.  Two signatures are taken on the form one for request and other for receiving the instrument. All the particulars of application form are checked and bank commission charges and withholding tax is written on the top of the application form.  If the customer is maintaining his account with the branch, he can give cheque for total amount of instrument plus bank charges.  Cheque and application from is then given to the officer Cash Department for the payment of cheque.  After proper scrutiny, Officer Cash Department posts the cheque and signs the application form in token of payment received.  If the customer wants to pay cash, then cash is deposited by the customer along with the bank charges and withholding tax.

Application form is then given to the Remittances In charge for issuance of instrument.  He enters all the particulars of the application form in the system and computer gives an Auto Control Number to the instrument.  Printout is taken on the block of payment Order.  Two authorized officers of the branch then sign it.  Instrument is then protecting graphed, and given to the customer.

When instrument is presented for payment, it is posted in the system and canceled by the Remittances In charge after proper scrutiny.

Demand Draft

A Demand Draft (DD) is an instrument, which is drawn by one bank upon another bank for a specific sum of money payable on demand. It is made by the bank, given to the purchaser against cash or cheque.

Parties Involved In DD:

¨         Purchaser

¨         Issuing Branch

¨         Drawee Branch

¨         Payee

Procedure for Issuing DD

Issuance procedure of Demand Draft is same as of pay Order.

Procedure for Demand Draft Payable

When DD advice is received, signatures of both signatory on the DD are verified.  All the particulars of the DD payable are entered in the system.  Prints out of vouchers (DD payable) are taken.  When instrument is presented for payment, signatures of the attorneys are verified on DD and after proper scrutiny; it is posted in the system and canceled by the Remittances Incharge.

Online Transfer

Sometimes, when the remittance is urgently required by the remitter, online Transfer is made.

Collection

All the cheques under collection are called cheques under Collection in Bank Alfalah Limited.  There are two types of bills for collection:

Outward Bills for Collection

Inward Bills for collection

Outwards Bills for Collection

Al the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheques and account holder.  Counter folio of paying slip is handed over to the customer by putting stamp for “cheque received for collection for Bank Alfalah” on it duly signed by officer.  These cheques are scrutinized and cheques for local clearing are separated from OBCs.  Cheques for local clearing are entered in Clearing Register, whereas cheques for collection are entered in OBC register and handed over to the Bills Department for collection.  OBC number is allotted to the cheque from OBC register.  Special crossing and bank endorsement stamps are affixed on the cheque.

OBC schedule is attached with the cheque and dispatched to the main branch of that city for collection.  If they do not have any branch in that city, then cheque will be sent to the Collecting Agent of Bank Alfalah for that city, and if they do not have any collecting agent even, then cheque can be sent directly to the drawing branch.  Instructions are given on the OBC schedule for the payment of that cheque.  Contra-liability vouchers are also posted in the system.  When OBC is realized, collection bank pays the amount through IBCA if it is the same bank or through DD if it is another bank. If DD is received against OBC, it is presented in the clearing for collection.  If IBCA is received from the branch for the payment of OBC, certain vouchers are posted in the system.

Inward Bills for Collection

If any other bank sends a cheque of Bank Alfalah Limited, it is Inward Bill for Collection. Bank Alfalah remits money after checking the balance of the customer account.

The process of collection starts when the cheques of Bank Alfalah Ltd. are received from other banks.  Then these cheques are sent to the Head Office Karachi, which sends the cheques to SBP for clearing and get the confirmation of cheque and credit advice.  Main activity of clearing is performed by Head Office, which contacts other banks through SBP.

Accounts Department

Most important department of bank as it is concerned with:

Revenue Expenses

Assets

Liabilities

These are the pillars of any business.  This department is supervised by Mr. Muhammad Asif in this department; all the vouchers that are posted during one day are sent to the Account Department next day.  These vouchers are already posted to computer by the concerned

department.  So computer also sends a report to the Accounts Department. The accounts Department have to tell that all the vouchers are posted under the right head.  Amount, date, stamps, signatures all the requirements for cheques and vouchers are fully checked.

If any kind of renovation or construction or rebuilding is done, all is paid from the Accounts Department.  Like petrol for the car of EVP and VP, stationery charges, medical allowance, etc. are all paid by this department.

Daily Customer Movement List

All the changes that are made in accounts of customer are shown in the daily customer movement list.  By using this list, people of Accounts Department can prepare the vouchers.

Following activities are performed by Account Department:

Voucher preparation Preparation of daily, weekly, monthly, and annual statement.

Budgeting and fixed assets

Employer’s benefit

Expenditure approval.

SWOT Analysis

Strengths

Bank has a belief in customer service Backed by strong Abu Dhabi Consortium

Customer give suggestion for the improvement of bank and these    suggestions are listened carefully.

Manager& EVP Mr. Najam-ul-Hassan Qazi has good coordination with staff members.

Environment is friendly.

Products are excellent

Expansion is consistent

Modernized banking (online + Internet)

Fully computerized, each department has to own PC.

Weaknesses:

Mixed Culture New Setup

Staff is lesser.

Electronic funds transfer is only available from Alfalah to Alfalah only

Opportunities:

Information Technology. Internet and mobile banking

Establishing Foreign Branches

Local Setup Expand

Threats:

Competition by the settled bank like MCB and others There is a possibility that in future the customers are too many to be handled by the so

small number of the employees.

Governmental policies may pose unpleasant role

Global issues  like America Iran war and terrorism

Recommendations

Finally, there are some suggestions for Bank Alfalah Limited.  These suggestions are based on experience with the bank.

This is a routine practice that in order to give personalized services to the customer, bank staff tries to fill all the columns of AOF with their own handwriting, which is wrong.  AOF must be filled in by the customers.  Bankers should avoid filling in the AOF because it can create problem if the address, title of account or any other information provided by the customer has not been written properly. Customer may be affected or he may claim that this information was not provided by him, but if AOF is filled by the customer then banker cannot be held responsible for any incorrect information provided by the customer.

Under no circumstances cheque book should be given to the customer if the account formalities are incomplete.

Audit should be held internally.  Rather there should be an Audit Department in the branch to make audit on daily basis.  This can become as helpful as different banks are having this department of their own.

Marketing Practices Adopted By Bank

Nowadays marketing of products is of prime importance for any organization.  In this dynamic environment, every organization has its own Marketing Department, which is responsible for creating the demand of its goods and services.

Nowadays banks also have their marketing departments, which are responsible for creating demand of their products, i.e., their deposit schemes and increasing the deposit of the bank.

Bank Alfalah has its own full marketing Department at the Head Office, Karachi. This department prepares different deposit schemes for its customers, time to time, in order to increase the business of the bank.  At branch level, the Operations Department follows marketing practices.  At each branch of bank, officers are available to provide marketing activities of their products.

They make customer calls and personally visit the potential customer to convince them to invest.  They make phone calls to customers and inform them about their schemes, profit rates.

Conclusion

BANK ALFALAH ( BAL ) under the leadership of Sheikh Nahayan Mabarak Al-Nahayan has made significant in building of strengthening both the corporate and retail banking sectors in Pakistan.

BANK ALFALAH views specialization and service excellence as the cornerstone of its strategy. The people of bank innovation, creativity, reliability, customized services and their execution are the key ingredients for their future growth. Based on this approach, their Treasury Division and the Structured Finance Unit have been geared to provide specialized services to the Corporate customers. Revenues from these activities have started yielding dividends and they expect significant growth in these areas in the coming years. While building on their in-depth familiarity with their customers’ needs and anticipated developments in the banking industry, the Retail and Corporate areas of their operations will continue to provide a strong and stable base to the business of the Bank.

They are aware that they have stepped into the 21st century and they must meet its challenges by acquiring the highest levels of Technology. They will thus be accelerating their enable them distribute their products and services through most efficient and high-tech means. They say that they will invest in the modern tools and substantial allocation of resources will be made to achieve this objective during the current year. Their programme to launch real time – on line Banking Services and introduction of ATMs at strategic locations have been firmed up and it will be fully operational during the year 2001.

Their focus would be to constantly seek out growth opportunities through increased quality assets and by offering a wider range of products and services to their esteemed customers. There are significant growth opportunities for BANK ALFALAH and they are confident in their ability to grasp them. They are committed to enhancing the shareholder’s value and look forward with greater optimism to a prosperous future for BANK ALFALAH

Based on the profit of Rs.354 million, the Board has proposed that a cash dividend at a rate of Rs. 2.00 per share i.e. 20% of share capital be distributed among the shareholders.

 

FINANCIAL ANALYSIS

 

BANK ALFALAH LIMITED

BALANCE SHEET HORIZONTAL ANALYSIS

AS ON DEC 31, 2010 (RS. In 000)

Particulars 2010 2009 CHANE

Assets

Cash and balances with treasury

Balances with other banks

Investments Net

Lending to FI,s

Advances- net

Other assets

Fixed assets

Deferred tax Assets

Total Assets

Liabilities

Bills payable

Borrowing from other banks, agents etc.

Deposits & other accounts

Sub-ordinated loans

Liabilities against assets Lease

Other liabilities

Deferred tax liabilities

Total Liabilities

Net Assets

Presented by

Share capital

Reserve fund, other reserves

Unappropriated profit

Surplus/(deficit) on

Revaluation of assets Net of Tax

 

 

41,197,841

16,179,255

113,425,861

6,497,556

207,152,546

12,826,225

14,204,555

–

411,483,839

 

4,521,533

13,700,124

 

354,015,311

7,567,192

–

9,258,216

115,919

389,178,295

22,305,544

13,491,563

3,819,133

2,415,860

19,726,556

2,578,988

 

 

35,056,012

22,722,639

99,159,957

14,947,435

188,042,438

14,649,380

14,492,197

–

389,070,055

 

3,766,144

20,653,921

324,759,752

7,570,181

–

10,006,786

179,851

366,936,635

22,133,420

13,491,563

3,587,969

2,690,728

19,770,260

2,363,160

 

 

 

 

6,141,829

2557040

 

6599600

39715280

1673851

1488878

–

55882035

1025000

(403924)

53016569

1249740

38590

(37176)

 54878799

     503236

500000

218398

397258

(112420)

BANK ALFALAH LIMITED

PROFIT AND LOSS ACCOUNT HORIZONTAL ANALYSIS

AS ON DEC 31, 2010   (RS. In 000)

Particulars 2010 2009 2010

Mark-up/return/interest earned

Mark-up/return/interest expensed

Net mark-up internets income

Provision against loans and advances-net

Provision for diminution in value of investments

Bad debts written off directly

Net mark-up/interest income after provision

NONMARK-UP/INTEREST INCOME

Fee, commission and brokerage income

Dividend income

Income from dealing in foreign currencies

Gain onSaleof Securities Net

Unrealized Gain on Revaluation of Invst

Other income

Total non-mark up/interest income

NON MAR-UP/INTEREST EXPENSES

Administrative expenses

Provision against off-balance sheet obligations

Provision against other assets

Other charges

Total non-mark up/interest expenses

Extraordinary/unusual items

PROFIT BEFORE TAXATION

Taxation

-Current

-Deferred

– Prior Years

 

PROFIT AFTER TAXATION

Unappropriated profit brought forward

Transfer from surplus on revaluation of fixed assets-net of tax

Profit available for appropriation

 

37,530,256

23,855,448

13,674,808

 

2,243,687

1,991,192

25,504

9,414,425

1,986,470

204,425

1,133,544

77,609

3,300

1,302,813

4,708,161

14,122,586

 

12,578,080

 

6,056

93,040

76,665

12,753,841

1,368,745

–

1,368,745

842,232

(370,883)

(71,056)

400,293

968,452

2,690,728

29,695

3,688,875

 

35,561,312

24,654,180

10,907,132

 

3,694,546

317,164

59,817

6,835,605

1,913,004

248,217

1,019,732

688,924

2,849

1,309,527

5,182,253

12,017,858

 

10,923,507

 

(1,419)

–

79,454

11,001,542

1,016,316

–

1,016,316

1,066,301

(767,346)

(179,674)

119,281

897,035

3,447,467

24,696

4,369,198

 

37,530,256

23,855,448

13,674,808

 

2,243,687

1,991,192

25,504

9,414,425

1,986,470

204,425

1,133,544

77,609

3,300

1,302,813

4,708,161

14,122,586

 

12,578,080

 

6,056

93,040

76,665

12,753,841

1,368,745

–

1,368,745

842,232

(370,883)

(71,056)

400,293

968,452

2,690,728

29,695

3,688,875

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