Report on Bank Alfalah

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Internship Report: BANK ALFALAH LIMITED Submitted By: MAIDAH MASOOD Roll # 107 Section: “C” Morning B-Com (Hons) Session: 2005-2009 Hailey College of Commerce, University of the Punjab, Lahore. 1

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report on internship in al falah bank

Transcript of Report on Bank Alfalah

Page 1: Report on Bank Alfalah

Internship Report:

BANK ALFALAH LIMITED Submitted By:

MAIDAH MASOOD

Roll # 107Section: “C”

MorningB-Com (Hons)

Session: 2005-2009

Hailey College of Commerce,University of the Punjab, Lahore.

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The evolution of Bank Alfalah signifies a movement from concept to reality; a

reality to bring about a change in the banking industries of Pakistan; offering an

alternative way of banking; providing people an opportunity to practice beliefs in their

financial matters.

Following privatization, Bank Alfalah emerged as new identity of Habib Credit

and Exchange Bank with a revived purpose and commitment. Charged with the strength

of Abu Dhabi consortium and under the leadership of His Highness Sheikh Nahayan

Mabarak Al-Nayayan, the bank has already made significant contributions in building

and strengthening both corporate and retail banking sector in Pakistan.

At present the bank has expanded its operations across Pakistan in 74 cities with

189 operational branches. However, it has total 195 branches that include 23 Islamic

Banking branches, five overseas branches three in Bangladesh and two in Afghanistan

and one offshore banking unit in Bahrain. It is pertinent to note that all of its branches

commenced their operations in “Real Time Online Mode”. Today Bank Alfalah is the

fifth largest Banking operation in Pakistan. Since its inception, it has registered the fastest

growth rate ever witnessed by any Banking operation in Pakistan.

Bank Alfalah continues to grow in a robust manner amidst considerable volatility

in the banking industry. The bank is striving to prosper in terns of financial returns and

the value it continues to provide its shareholders especially when tighter spreads are

exercised and margin are compressed due to high interest rates as a tool to curb

inflationary pressures. The profit before provisions and taxation of your bank for the year

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2008 stood at Rs. 3.264 billion which was 10% higher than that of last year. The deposit

grew by 7.7% and stood at a figure of Rs. 239.509 billion while advance portfolio grew

by 26% and showed a figure of Rs. 149.999 billion.

.

The most valuable asset of any financial institution is its human resource. Bank

Alfalah has at present a dedicated and commendable workforce of around 6,543 staff

members other than outsourced. The training and development centre remains at the helm

of imparting training and related skills, not to only fresh recruits but also to existing

employees. Bank Alfalah has in place the state-of-the-art Training and Development

Center both in Lahore and Karachi for equipping the personnel of Bank Alfalah with

tools that help carve a brighter future. Its philosophy in this regard is that training is

indispensable in not only enhancing organizational effectiveness but also individual job

satisfaction.

Bank Alfalah has lined up a number of innovative products. These include

Alfalah credit cards, Alfalah Hilal cards, Bank Alfalah Car finance and Leasing, Alfalah

Milkiat finance, Alfalah Karobar finance, Bank Alfalah Home finance, Alfalah Zarie

sahulat, Money gram, Alfalah Phone banking and online baking. Designing the product

portfolio of bank in response to the customer’s preferences, the product like Royal Profit,

Alfalah kifayat scheme, are prime examples of quality and innovation providing timely

banking opportunities to the customers of bank. Being an active player in banking sector

in Pakistan, they are confident that with the commitment of their team they will be able to

gain the reputation of the fastest paced financial institution.

To make their banking solutions become accessible to more and more people,

they have embarked upon a rapid expansion program, aiming to provide a networking

that makes the services available to any of their customers in all the major urban centers

of Pakistan- with a view to go international in the near future.

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With their key indicators of progress already soaring to new heights, the bank is

committed to dedicate all its energies, resources and time to bring higher value and

satisfaction to their customers, employees and shareholders.

The graph of bank is going up and up every year. The ratio of profit is increasing

at good percentage. The bank is serving the people at high level of standard by going

according to the whishes of the customers.

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Internship is the basic requirement of all business programs in nearly all of the

business institutes and especially in Hailey College of Commerce, University of the

Punjab, Lahore. It is actually the basic requirement of the course of B-Com (Honors).

Firstly the purpose of internship period is to become familiar with the practical world that

what is actually happening in different national and multinational companies and how

different activities are performed over there. Secondly, to cope the theoretical knowledge

with the practical side that what is to be taught us in business institutes and how it is

implemented in different enterprises?

I have done my internship in Bank Alfalah Limited (Garden Town Branch,

Lahore) since 16th of July 2009 to 15th of September, 2009. I gained a lot from this

internship tenor under the kind supervision and guidance of my internship supervisor.

During my whole time I was visited through different cells of the bank and was

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

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

overlook of all the banking related matters.

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All praises, thanks and acknowledgements are for CREATOR; the ALMIGHTY

ALLAH Who has bestowed upon human being the crown of creation and has endowed

him with knowledge and wisdom. I offer thanks to the Holy PROPHET (PBUH) WHO

is the beacon of enlightment and the greatest benefactor the mankind ever had. Who

brought for us revelation and unlimited knowledge and civilized the barbarian human

being.

I would like to present a token of thanks for the staff members of Bank Alfalah

Limited Garden Town Branch, Lahore, who were cooperative to me in the completion of

this report and provide me their complete guidance. As banks are very much sensitive

about their secrecy, even then after taking an understanding, they let me handle their

delicate operations.

My special thanks to Mr. Gohar Irfan (branch manager), Mr. Raheel Yaqoob

(operations manager), Miss. Sara Dawood (HR manager), Mr. Ateeq-ur-Rehman Sidu

(credit manager), Mr. Saad Mahmood (Accounts officer), Mr. Ahmed Moin (officer

consumer finance), Mr. Naveed Khalid (Account opening officer), Mr. Irfan Siddique

(incharge of Remmittance department) Mr. Muhammad Hamid Bashir, Mr. Numan

Akram and Mr. Majid Sharif who gave me a horde of useful information and treated me

extraordinarily at each step of my learning over there.

Maidah Masood

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I would like to dedicate this accomplishment offline to my beloved and caring parents, and to my teachers with the support of whom I

am standing at this step of my life stairs.

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Table of ContentsIntroduction to Bank Alfalah Ltd……………………………………...…….……9

History & Present Status of BAL……………….…………………..…………….11

Mission Statement……………………………………………………………..…..16

Vision Statement…………………………….……………………………………..17

Company Management Systems………………………………………………….20

Organization’s Structure……………………………………………………...…..23

Fields and Activities…………………………………………………………….....25

Administrative/Management Styles……………………………………………...36

Work Done by Me……………………………………………………………...….41

Financial Highlights……………………………………………………………...101

Ratio Analysis………………………………………………………………….....103

Marketing Mix of BAL…………………………………………………………..148

Recommendations…………………………………………………………….….181

Conclusions……………………………………………………………………….183

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INTRODUCTION TO BANK ALFALAH

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

company, under the Companies Ordinance 1984. Its banking operations commenced   

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

commercial banking and related services as defined in the Banking Companies

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.

Management of Bank Alfalah accepted the challenge to transform this bank into

a highly professional, most efficient & service oriented institution. The management has

been successful in fulfilling the undertaken challenge. It has been successful in making a

significant contribution to both corporate and retail banking in Pakistan.

Over the years, its emphasis on growth has resulted in a strong entity capable of

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

business environment. Its strategy is to maximize the synergies of branch network

through an optimal allocation of financial resources in the face of dynamic challenges of

present financial environment.

Strengthened with the banking of the Abu Dhabi Group and driven by the

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

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

This facilitates their commitment to a culture of innovation and seeks out synergies

with clients and service providers to ensure uninterrupted services to its customers. 

The bank perceives the requirements of its customers and matches them with quality

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products and service solutions. During the past ten years, we have emerged as one

of the foremost financial institution in the region endeavoring to meet the needs of

tomorrow today.

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

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

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

confidence of all its clients. Within a short span of time the bank has carved a significant

niche for itself in the banking industry.

These achievements have been preceded by concerted effort to provide highest

levels of service and value to our customers. The bank aims to further enhance

performance standards through implementation of innovations in both products as well as

customer care, by discovering newer avenues of client benefit. This customer-focused

strategy has enabled Bank Alfalah Limited to evolve as a single source financial service

provider of corporate and retail banking services. Bank Alfalah reputation has been built

on its tradition of high quality and the expertise of its extremely motivated and qualified

staff. With strategic mergers and acquisition, Bank Alfalah has become a leading player

in the global banking arena.

The Bank Alfalah Limited team comprises of dedicated professionals equipped

with a diverse array of skills, vast experience and pro customer attitudes. The

management concentrates its energies on making informed economic decisions,

translating it into greater returns for our investors and customers. This prudent attitude

has created a synergistic organizational structure leading to improvements in profitability

and a sustainable competitive advantage for the bank.

A Highly Responsive Product Portfolio is not only comprehensive but also

customizable to match the needs and preferences of the customers. These characteristics

of the portfolio have helped Bank Alfalah Limited to face challenging economic

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conditions. The product lineup continues to fulfill and satisfy the banking requirements

of not just the conventional consumer, but the demanding financial needs of the corporate

sector as well. Today, as Pakistan moves into the 21st century with its ambitious

expansion and development programs, Bank Alfalah is here to join the efforts to help the

country meet its growth objectives. The bank offers an extensive range of financial

services specifically designed to cater to the needs of its successful associations with the

Government and Private Sector.

HISTORY AND PRESENT STATUS OF BANK ALFALAH

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 Bank

assumed the new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi

based bank as the family of H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan purchased

70% of its shares and 30% shares remained with Habib Bank on behalf of Government of

Pakistan. Since its inception, as the new identity of H.C.E.B after the privatization in

1997, the management of the bank has implemented strategies and policies to carve a

distinct position for the bank in the market place.

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Since 1997, the bank has made great strides towards growth and profitability.

BAL network has expanded from 3 in 1997 to 195 as on March 2009. The deposit base

moved from less than Rs.9 billion to over Rs. 227 billion, advance from 5.8 billion to 109

billion. Being a bank that is focused on financing of foreign trade, volume of foreign

trade business has grown from Rs. 5.8 billion to over Rs. 190 billion as on December

2008.

Charged with the strength of Abu Dhabi consortium, and under the leadership of

His Highness Sheikh Nahayan Mabarak 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.

Commercial Banking Scenario in

Pakistan

The function of commercial banking and application of the fundamental principle

of the depositor bank relationship have remind essentially the same since about 500 B.C.

bank operation methods and procedures, on the other hand , have undergone a constant

process of evaluation because of economic growth, the mounting volume of transaction

and greater use of banking feasibilities.

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

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

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

accordance with the provision of India independence Act of 1947, and expert committee

was appointed to study the issue. The committee recommended that the “Reserve bank of

India” should continue to function in Pakistan until 30th September 1948.

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It was also stipulated that Pakistan would take over the management of public

debt and exchange control “Reserve bank of India” on 1st April 1948. Then Indian notes

would continue to be legal ender in Pakistan till 30th September1948. By 30th June 1948,

the number of offices of scheduled banks in Pakistan decline from 487 to 195. In order to

establish a full-fledged control bank the Governor General of Pakistan Quaid-E-Azam

Muhammad Ali Jinnah, inaugurated the state bank of Pakistan on July1st, 1948. At the

time of independence in 1947, there were 38 scheduled banks with 195 offices in

“Pakistan” but by December 31, 1973, there were 14 scheduled Pakistani commercial

banks with 3,233 offices all over Pakistan & 74 offices in foreign countries.

Nationalization of Banks was not done 1st January 1974 under the Nationalization

act 1974, due to certain objectives. But it had negative effects on efficiency of the

banking sector afterwards a privatization Commission was set up on January 22, 1991,

the commission transferred many banks to the private sector i.e., MCB & ABL. The

government approved & permitted the establishment of 10 new private banks in 1991;

hence many new private banks have incorporated, since then, BANK ALFALAH in one

of the namely established private scheduled banks in Pakistan.

The fact show that the commercial banking has made tremendous progress and

achieve a phenomenal growth since independent and that commercial bank have duly

played a vital role as mobilize of people saving to constitute the most important source of

financing in country economy.

As the result of these contributing factors methods and practices necessary to

handle the increase volume of detail work have been developed while an other and

quicker method have been adopted in order to cope with the increase volume , much in

which has been accomplished without unduly increasing cost of doing business.

During to last 20 years we have experience a constant transaction from the old to

the new from manual to mechanical method and procedure, from old establish practices

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to current techniques and to a more scientific approach to the solution of the problems

brought about day to day changes in business practices.

Commercial banks operating in the country can be divided into four distinct

categories, private banks, foreign banks, privatized banks and nationalized commercial

banks (NCB’s). The number of private banks has remained almost constant ever since

they commenced operations in early nineties. However, ownership of a number of private

banks has changed over the years. Lately, with the take over of Prudential Bank and

Platinum Bank by the new sponsors their names were changed to Saudi Pak Commercial

Bank and KASB Bank respectively. Earlier, ownership of Union Bank and Schon

Commercial Bank changed. While the new sponsors of Union Bank preferred to continue

with the same name, the buyers of Schon Commercial Bank changed its name to PICIC

Commercial Bank.

Union Bank acquired the operation of Emirates Bank International (EBI) in

Pakistan. The scheme of amalgamation was notified by the central bank on September

03, 2002 and Union Bank settled the amalgamation price of US$ 37 million on

September 09, 2002. Union Bank had acquired Pakistan operations of Bank of America

in year 2000 and American Express credit card business in Pakistan in year 2001.

In the NCBs category two banks — Habib Bank and National Bank of Pakistan

— have been left after the privatization of United Bank. National Bank of Pakistan has

been listed at local stock exchanges and parts of its shares were off loaded. The GOP is

actively pursuing the privatization of Habib Bank, through sale of its 26% shares along

with transfer of management. The remaining shares of the GOP in Muslim Commercial

Bank and Bank Alfalah were also sold. The GOP sold majority shares of Allied Bank of

Pakistan in early nineties but has not been able to off load its remaining shares in

the bank.

United Bank's privatization demands specific mention for two reasons:

1) It was the largest transaction, and

2) A large part of sale proceeds was received in foreign exchange.

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The consortium comprising of Abu Dhabi Group and Bestway Group has

acquired 51% shares of the bank along with management control. Since October 2002 the

bank has been working under the new sponsors.

Meezan Bank was created as a result of merger of Al-Meezan Investment Bank

and Societe Generale. The first ever license to operate as a Scheduled Islamic

Commercial Bank was granted to Meezan Bank on January 31, 2002. Pakistan operations

of Societe Generale were amalgamated into Meezan Bank on May 01, 2002.

The number of foreign banks operating in Pakistan has been declining constantly

since the GOP decided to freeze foreign currency accounts in May 1998. The total

number of foreign banks in the country has reduced to half since the freezing of foreign

currency accounts. The positive point is that most of the foreign banks were able to sell

their Pakistan operations at attractive prices.

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To develop & deliver the most innovative

products, manage customer experience, deliver

quality services that contributes to brand strength,

establishes a competitive advantage and enhances

profitability, thus providing value to the stakeholders

of the bank“

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“To be the premier organizations operating locally

and internationally that provides the complete range

of financial Services to all segments under one roof.”

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OBJECTIVES OF BANK ALFALAH

The objectives of Bank Alfalah are as follows:

To please their customers by fulfilling the financial needs as best as possible, they

believe in placing the client at the center of business and all of the products and

services. For this the management has adopted the strategy of

“Caring for you… Our Customers”

To get maximum share of the market

To price the products optimally

To expand more the network of branches in several other cities of Pakistan as well

as in the other countries of the world.

To reinforce a corporate culture that fosters learning, creativity and flexibility.

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To invest further in banking innovations which include Islamic banking, SME,

Home Loans and other areas of product development to provide higher levels of

services and value to the clients.

Message From,  

H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan

 Chairman & Board of Director

Dear Colleagues

Bank Alfalah was launched on 25th February 1997 and with that we launched for

ourselves, the challenge to transform this bank into a highly professional, and most

efficient and service oriented institution. The-state-of the-art technology we plan to put in

place will be complemented and supported by the personal touch which we are

committed to add all spheres of our customer related services. Therefore necessity of

improving the quality of our human resource will remain on top of our priorities for all

times to come. We hope, you all will make the best use of this web site, which will

provide a medium for you to express your views on, different banking related subjects.

My greetings and best wishes to you all.

H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan

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COMPANY MANAGEMENT SYSTEM

Management means the administration and the governing body that is concerning the

whole organization. All the decision and strategies are been proposed and evaluated the

management of the organization. At Bank Alfalah, the management is pretty strong and

there is lot centralization in the whole network of the bank. The management at Bank

Alfalah has been divided into 3 major parts. i-e, Board of Directors, the Top

management, and the group of middle managers, supervisors and the employees.

The Board of Directors:

The upper most part of the management is the Board of Directors or the Executives. The

Board of Directors are responsible for the first phase of the management process, i-e,

planning. So, all the decisions and the strategies are being proposed and implemented

under the instructions and the supervision of the board of directors or the executives.

Also the policies and the overall objectives of the Bank are being proposed at this level of

the organization.

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The Top Management:

The top management involves the branch managers and the chief managers of the bank

including the operations managers as well. The major responsibilities include the strategy

formulating for the bank and supervising the whole staff at the branch. They define and

interpret the objectives and vision and then formulate policies for their completion.

The middle management, supervisors and the employees:

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

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

employees whose activities are monitored and controlled according to the desired

objectives.

THE OVERALL MANAGEMENT

BOARD OF DIRECTORS

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

Mr. Mohammad Saleem Akhtar - Chief Executive Officer

Mr. Abdullah Khalil Al-Mutawa - Director

Mr. Omar Z. Al-Askari - Director

Mr. Abdullah Naseer Hawaileel Al-Mansoori - Director

Mr. Nadeem Iqbal Sheikh - Director

Mr. Ikram Ul-Majeed Sehgal - Director

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THE CORE GROUP

Board Advisory Committee

Mr. Abdullah Khalil Al Mutawa

Mr. Khalid Mana Saeed Al Otaiba

Mr. Ganpat Singhvi

Mr. Bashir A. Tahir

Central Management Committee

Mr. Mohammad Saleem Akhtar (Chairman)

Mr. Pervaiz A. Shahid

Mr. Sirrajuddin Aziz

Mr. Mohammad Yousaf

Mr. Ijaz Farooq

Mr. Bakhtiar Khawaja

Mr. Arfa Waheed Maklik

Mr. Adil Rasheed

Mr. Shakeel Sadiq

Mr. Adnan Anwar Khan

Mr. Shahid M. Murtaza

Mr. Nadeemul Haq

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Corporate Information

Mr. Hamid Ashraf - Company Secretary

Mr. Zahid Ali H. Jamal - Chief Financial Officer

Taseer Hadi Khalid & Co. (Chartered Accountants) - Auditors

B A Building, - Head Office

I. I. Chundrigar Road,

P. O. Box 6773, Karachi.

www.bankalfalah.com

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ExecutiveIn charge

Chief Executive Officer

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Branch Setup

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Operations

Mng.Ops

Credit

MarketingAdmin Finance

Agri

Finance

Help Desk

Assistant

ConsumerCredit

Credit Card

Credit Audit International Banking

Marketing Finance

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FIELDS AND ACTIVITIES

A support functions Group, mainly responsible for development of systems and procedures, process-re-engineering, automaton and credit management. The Group is organized in three divisions i.e. Systems and Operations Division, Human Resource Division and the Credit Division.

CREDIT DIVISION

Providing extensive support to branches for credit administration, control and monitoring, the Division has played a pivotal role in helping the Bank achieve a remarkable loan growth of with well-diversified risk exposure. Most of the loans are for short-term trade financing on a secure and self-liquidating basis. The Division has a special Assets Management team, which is responsible for ensuring low ratio of bad debts, effective monitoring of delinquent advances and close follow-up for recoveries. Bank’s Head Office Credit Committee (H.O.C.C) reviews the credit quality and

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CD Accounts Consumer

Banking

IT

Accounts Bkg/Ops/

Cust serv

CRO’S

Cash

Clearing/

Collection

Peons Guards DriverOthers

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pricing on regular basis not only to ensure healthy credit growth but also the management of Bank’s risk assets in a most prudent and profitable manner.

SYSTEMS and OPERATIONS DIVISION

This Division has been instrumental in developments of procedures and manuals for various operating requirements of the Bank. After careful mapping of existing process flow, the Division recommends automation and re-engineering requirements to improve transaction efficiencies. The Division is active in providing equipment procurement support and development of new branches. This Division, as a direct function also manages the protection of fixed assets of Bank.

Technological innovation:

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

Technology is rapidly changing the way we think, act and do business. Is has played pivotal role in enhancing customer expectation, particularly with respect to speed and quality of service.

Alfalah bank enjoys a strategic competitive advantage overall domestic players by virtue of its leadership in technological innovation. Phone banking service and Internet banking facility allows customer to enjoy routine banking services from anywhere in the world. 365 days a year, 24 hours a day.

CREDIT CARD DIVISION

The Bank’s product portfolio is designed to remain flexible and adapt itself to changing customer needs. Bank endeavor in this regard is to actively explore newer avenues of offering higher value to our clients, whom bank feel deserve nothing less. The Bank Alfalah Credit Card success story has made the institution proud. In acquiring business, we have signed over 15,959 merchants by 31st December 2008 posting a growth of 16.2% in the corresponding period over last year. Bank Alfalah has launched various unique credit card schemes to cater to numerous segments.

HUMAN RESOURCE DIVISION

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Strategically, perhaps the most important Division at the Head Office is responsible for human resource management, including recruitment, staff training and evaluation. This division is also handles matters relating top administration.

This Division operates on a future oriented strategy focusing on employee’s personal and professional growth.

Staff development activities are reared to enhance their capabilities for applying the knowledge and fats towards development of practical solutions. Under our Human Resource management policy, Alfalah develops and grooms the management personnel for position of greater responsibility analytical, interpersonal, and conceptual and specialization skills to enable them to understand the cause-and-effect relationships and to think logically.

The hiring philosophy is based upon meritocracy and selecting the right person for the right job. Alfalah laid great emphasis on the employee honesty and integrity besides technical competence and, candidates are selected through well defined & systematic selection procedure.

Dedicated Professionals:

“Unusual efforts on the part of the employees who are apparently ordinary workers is one of the key indicates of the superior enterprise”

Staff is the most valuable asset of any organization. The human resource philosophy at Alfalah bank focus on multi-talent hiring, professional grooming, requisite training and meritocracy based reward system. Staff welfare has been a priority.

Employee productivity enhancement is organized through in-house and external training programs. Bank continues to offer opportunity for people to develop their knowledge, skills and personalities, thus ensuring greater self-fulfillment and progression in the organization.

In short bank Alfalah team comprise of dedicated professionals equipped with a diverse array of skills and vast experience. The management concentrates its energies on making informed economic decisions, translating it into greater returns for our investors and customer. The prudent attitude has created a synergistic organizational structure leading to improvements in profitability and a sustainable competitive advantage for the bank.

Training & Development:

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Bank Alfalah is committed to the personal welfare and professional development of all our team members. Proper training of human resource is essential, not only for the more productive and satisfied work force but for also homogenous corporate culture.

The bank continuous to follow its strategy of hiring batches of young and energetic Management Trainees who are sent to our Training and Development Center for training in all areas of banking. Our Training and Development Center is a state of the art facility with an impressive faculty.

Ethical values:

“Professionalism without integrity is like a book without pages”

Because the right may not always be obvious, we must be guided in our every action by set of well-defined values, governing our decision. Alfalah bank understands that its commitment to satisfy customer needs must be fulfilled within in a professional and ethical framework.

FINANCE DIVISION

Finance Division is responsible for bookkeeping and accounts. This Division is the head office and manages all financial returns and the MIS through its Management Reporting Wing. The Division is actively involved in preparing market comparative analysis, consolidation of Bank’s budgets, monitoring and constant review of various financial indicators.

Financial Division works as the backbone for Bank’s operations. The Division, which reports directly to the President And Chief Executive of the Bank’s, has been instrumental in preparation of Bank’s business plans and future stratigies.the budgetary performances are constantly reviewed and trough a sophisticated “Monthly Performance Report” (MPR) which is a computer based program, the Division provides feedback to the senior management on strategic issues like reasons for budgetary variances and methods to arrest negative performance factors.

Preparing the Bank’s Annual Accounts and coordinating external audits is a direct function of the Finance Division. Through the dedicated efforts of staff at this division, the Bank has been winning various awards for the Best Presentation of its Annual Accounts and also the management has been able to monitor and review the Bank’s performance in procreative manner.

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AUDIT DIVISION

The Audit Division reports directly to the Board through the Executive Committee-which are also the Audit Committee.

The Audit Division acts completely independent of the management and is responsible for checking and reporting on the Management’s compliance with the Board’s policies and directives, as also the Prudential Regulations and other directives of the SBP. However, their role is not intended to be just that of fault- finding; but also guiding and assisting branches in improving their operations.

POLICY FORMULATION AND PROCESS MEETINGS

At Bank Alfalah, policies as mentioned earlier, are been formulated at the

Executive level of the organization. Policies for any organization constitute a major part

in the overall long term functioning of the bank. In short we can say that policies and the

objectives are the lifeblood of the organization in long run. Though policy formulation is

in the prescribed hands yet the policies formulated by the top level have been very

successful as indicated by the success pattern of the bank so far.

Then these policies are transformed into the hands of the top-level management.

The top management is been suggested to make the policies implemented keeping in

view the long-term objectives of the organization. Also the views from the middle

managers and employees are encouraged as well for the purpose of removing flaws form

the system. For these very purpose meetings arte held almost weekly at the branches level

and also in case of any contingent dispute resolving the meeting scan be called at any

time during the branch timings.

POLICIES OVERVIEW AT BANK

Since the inception of Bank Alfalah Limited in 1997, by the grace of almighty, the bank

has moved rapidly in expanding its branch network and deposit base, along with making

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profitable advances and increasing its range of products and services. It has made a

break-through in providing premier services at an affordable cost to our customers.

Managerial policies followed by the bank have a direct contribution in its success.

The Board and Management of the Bank have implemented strategies and policies to

carve a distinct position for the Bank in the market place. In a bid to satisfy Bank

Alfalah’s shareholders and valued clients, the management initiated the process of

realization of the Bank's vision by consolidating its financial position and creating a large

and diversified business base. Bank Alfalah has made notable progress in business

volume, efficiency, and profitability following its increased involvement in trade finance,

commercial lending, and foreign exchange and money market operation.

Major policies hat have been made and implemented at Bank Alfalah are: Consumer Banking Policy

Alfalah’s policy regarding consumer-banking policies includes the development

through the electronic consumer banking operations. Likewise, Bank Alfalah has created

a niche for itself in the marketplace. It is planning to introduce new consumer products

like credit cards, e-banking etc.

Lending Policy

Bank Alfalah pursues a conservative yet dynamic credit policy. This strategy has

enabled the bank to have a high quality risk portfolio. Bank prefers to finance exporters

because of less risk involved. Bank Alfalah manages the credit risk, liquidity risk, market

risk and other operational risks very efficiently. For this very purpose Bank Alfalah has

got an effective credit line proposals system to be sanctioned to the clients on demand.

Selection of Clients

Management is very selective of clients. All of the references are carefully

checked to learn about a potential client before establishing a relationship. References are

excellent sources of new accounts as they give an opportunity to learn about a potential

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client before establishing a relationship. This policy helps in protecting the integrity of

the bank. It ensures good relationship with the clients.

Services and Product Polices

Bank Alfalah provides a vast variety of services to its clients. Some of those policies are

discussed below:

i. Credit Facility

In this service the loans are provided to the customers by the bank to meet revenue

shortfalls.

ii. Stop Payment Instructions

It is one of the most important services provided by the bank to its clients. In case the

account holder has lost his/her cheque he can issue the stop payment instructions to

the bank. The bank till further instructions will not honor the cheque.

iii. Deposits

The bank offers different types of Deposits to its account holders.

a. Alfalah Musharakah Saving Account

b. Current Account

c. Musharakah Time Deposits On PLS Basis

iv. Drafts, Telephonic Transfers, Pay Orders

These are the facilities that the bank offers its customers and, at times, to the people

who do not maintain an account with the bank, that is, ordinary people.

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For offering these services the bank charges commission besides the government

taxes and duties.

Trade Department Policy

Bank Alfalah’s focus is on “Foreign Trade” as its primary market of business. It

maintains high emphasis on enlarging its Correspondent Banking network besides aiming

to enhance the scope and level of cooperation with existing correspondents. The Trade

finance department has efficiently done management of the changing trade policies by the

central bank over there.

Marketing Policy

Bank Alfalah inverts heavily for the marketing policies and orientation, for the publicity

of its new products/services. It uses television advertisements, newspaper as well as

various promotional schemes to attract customers. The Bank sponsors a number of

sporting and community development initiatives to play its part as a responsible corporate

citizen

Promotion and Incentives

Bank hires officers in range 1. Then depending upon their job performance they are promoted to

next range. More facilities and increments are given along with promotion. The bank gives a car facility to

the officers of range 5. Bank’s policy is to give cash rewards and salary increments for increasing the

employees’ satisfaction. Also with the expansion of the branch network growth in the current era, more and

more opportunities have been provoked not only for the young generation but also for the employees of the

bank.

Accounting Policies

Bank Alfalah has adopted almost the same accounting procedures that other financial

institutions are adopting at this time. These accounting procedures or Accounting

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policies are made according to Generally Accepted Accounting Principles, the

GAAP. The process flow and the usage of the policies in the day wise routine are

mandatory for all the employees working in the specified departments at the branch.

Recruitment Policy

Hiring is mainly of two types i.e. direct hiring and promotion from lower levels.

Bank’s policy is to hire suitable candidates. By suitable candidates bank refers to

candidates having proper educational qualification, experience and background. It is the

policy of the bank that “President” of the bank will be the representative of major

stakeholders/owners. Board of Directors is representative of sponsors. Bank is reluctant

in making direct appointment of senior executives. EVPs are promoted from lower levels.

Every year Bank Alfalah opens its doors for about 30 fresh post-graduates to join the

prestigious ranks of Management Trainee officers with the Bank. The MTO scheme is a

highly competitive and sought after induction scheme, in which short-listed applicants

appear in a written test followed by a panel interview. Successful candidates then receive

comprehensive training in essential areas of branch banking at the Bank’s state-of-the-art

training facility at Lahore and Karachi, prior to their posting at various branch locations.

Preferred educational background for entry into the MTO scheme includes an MBA

degree, MA Economics or M.Com from reputable Pakistani or foreign institutions with

GPA of 3 plus, or equivalent. Strong personal character, as well as communication and

interpersonal skills are essential pre-requisites to succeed as an MTO.

Training and Development Policy

Bank Alfalah’s policy is to take special interest in recruitment and training. This

training is been given in two instances, i-e, the Off-job training and the On-job Training.

To impart technical skills to its staff “Training and Development Center” offers programs

in several skill areas. Its employees attend seminars and courses offered by “Institute of

Bankers”. Alfalah also offers various computer-training courses to its employees. It is

obligatory for each staff member of the bank to attend a minimum number of training

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courses during the course of a year. Wherever the Training Department is unable to

provide focused training for certain groups of staff, reputable external training providers

are invited to fill the gap

Quality assurance services

Service excellence is one of the priorities of Bank Alfalah. A separate quality

assurance department is to be established as well very soon for the removal of little flaws

that are still prevailing at some of the branches regarding facilities for the consumers. The

focus of the bank is to develop new areas of activities along with traditional banking

activities of resource mobilization and credit disbursement.

Growth Policy

Bank Alfalah emphasizes on growth along with providing best quality customer

service. Bank’s policy is to maximize the synergies of branch network through optimal

allocation of financial, human and other resources to compete in the marketplace.

Liquidity Policy

Bank Alfalah maintains positive and healthy liquidity. Bank’s policy is to keep

surplus liquidity in fixed income securities issued by the Federal Government of

Pakistan. If necessary it can be easily converted into cash.

Investments Policies

Bank Alfalah investment policies are based on federal and provincial securities,

debentures, and participation term certificates treasury bills and blue chip share of joint

stock companies.

Job Satisfaction

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Job satisfaction is the major important factor to be considered while evaluating any

organization. To evaluate an organization’s strength and repute in the industry, job

satisfaction is the key factor as well like that of growth and development in the monetary

terms.

During my internship program, I observed being in touch with most of the employees

over there, that all the employees are working with devotion that is the basis for job

satisfaction. In addition all the employees are satisfied with the working ambiance, with

the salaries and with the increments and promotions. Only thing to be mentioned out over

here is the workload and the employee timings for their job. Some of the employees are

over burdened with the work. But that does not impact the overall job satisfaction of the

organization. Bank takes much care of its employees because they are precious assets of

it. Bank celebrates birthdays of all employees, arrange trips and give them opportunity

for recreation and enjoyment.

Bank hires officers in range 1. Then depending upon their job performance they

are promoted to next range. More facilities and increments are given along with

promotion. The bank gives a car facility to the officers of range 5. Bank’s policy is to

give cash rewards and salary increments for increasing the employees’ satisfaction. Also

with the expansion of the branch network growth in the current era, more and more

opportunities have been provoked not only for the young generation but also for the

employees of the bank. At Bank Alfalah the employees are very much satisfied with the

job and the overall working conditions of the bank, so in due response, the bank is

enjoying high efficiency in managing the time delays in reporting and working

operations.

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ADMINISTRATIVE/MANAGEMENT STYLES

Management at Bank Alfalah Ltd. is very much keen towards maintaining the

decorum of the cooperative culture within the organization and also with the clients of the

bank. The way managers treat the employees and an operative is outstanding at bank

Alfalah. This is the reason why each and every employee is pretty much satisfied with the

job.

MANAGEMENT STYLES

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

to be done effectively and efficiently. As far as the management styles at Alfalah Bank

are concerned, there is both centralization and decentralization to some extent.

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

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

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

decentralization in some other areas.

Management refers to the universal process of effectively and efficiently getting

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

functions, that are planning, organizing, leading and controlling, are performed to

achieve the desired objectives of the organization. These functions are being performed at

three levels in Bank Alfalah.

Managerial level

Administrative style of Branch Manager is authoritative. His authoritative style is

the requirement of administration. For the implementation of strategies and

getting all the activities to be done properly with an organized environment, unity

of command was the requirement of the time. In his absence, I observed the

environment of uncertainty and deregulation in the bank to a little extent.

Department Head level

Department heads are responsible for the overall operations of the department

assigned. There is a sign of good delegation of authority for decision-making in

Alfalah Bank at this level. Department managers always ask his subordinates

before referring the solution to a problem to the Branch Manager. So at this level

employees are very much contended to their work.

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Staff level

At the staff level, as employees are satisfied to the work assigned and authority

structure, so management at this level is concerned to the decisions of the

department heads level.

IMPACT OF MANAGEMENT STYLE ON EMPLOYEES

Management styles have a great impact on the overall working of an organization.

The key issues, which can arise due to strong authoritative actions by the management,

can be of the following nature:

o Absenteeism

o Irresponsible behavior

o Coordination

o Reporting time delays

o Turnover

But at Bank Alfalah Ltd. these issues have never been provoked till now. This is due to

the fact that employees have been given equal importance as been given to high level

operatives. The following important aspects need consideration.

MotivationMotivation

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

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

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

motivated in order to enhance their performance and achieve the derived goals.

Morale and ProductivityMorale and Productivity

The employees of the bank possess high morale, and thus exhibit high

productivity. The employees are happy and are also productive workers. Job

attitudes and morale are quite positive for two reasons. Firstly employees gain

social satisfaction from interactions at the work place. Working conditions and

supervision are good; secondly high morale results from high motivation to

produce. In other words we can say that management should put its eggs in the

basket that creates a high-motivated work force.

Job efficiency and satisfaction

Consequently the overall impact of the well-equipped management styled

organization is the job efficiency and job satisfaction. At Bank Alfalah the

employees are very much satisfied with the job and the overall working

conditions of the bank, so in due response, the bank is enjoying high efficiency in

managing the time delays in reporting and working operations.

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THE STRATEGICAL HIERARCHY

The Strategic management model provides a conceptual basis for applying strategic

management. Alternate strategies that an enterprise could pursue can be categorized into

4 actions:

Integration Strategies

Intensive Strategies

Diversification Strategies

Defensive Strategies

Integration Strategies:

Forward integration, backward integration, and horizontal integration are

sometimes collectively referred to as vertical integration strategies. Vertical integration

strategies allow a firm to gain control over distributors, suppliers, and/or competitors.

Intensive Strategies:

Market penetration, market development, and product development are sometimes

referred to as “intensive strategies” because they require intensive efforts to improve a

firm’s competitive position with existing products.

Diversification Strategies:

Concentric, horizontal and conglomerate are some of the strategies, which are

inculcated under the head of diversification strategies. Overall, diversification strategies

are becoming less and less popular as organizations are finding it more and more difficult

to manage diverse business activities.

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Defensive Strategies:

Another way to pursue strategies is through the defensive way, which includes

joint venture, retrenchment, divestiture and liquidation strategies.

WORK DONE BY ME

I was been assigned by our department, Bank Alfalah Ltd, Garden Town Branch,

Lahore as my internship organization. There I worked for about eight weeks.

I worked in three departments. I started up with account opening (operations),

where I worked for about three weeks and learned about different types of accounts, and

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how to open a new account, etc. I was working under the supervision of the Manager

Operations, Mr. Raheel Yaqoob at my internship in that department.

After working in Operations, I was moved to Credits, where I learned that how

finance is advanced to the clients and different types of facilities the bank is providing to

its customers. There I worked for about two weeks with Mr. Ateeq-ur-Rehman Sidu

officer of CAD Department Mr. Ahmed Moin Lodhi officer of car Finance Department

and under supervision and training of the employees working as the finance officers as

well.

Garden Town Branch has got a wide range of excellent services departments been

supervised under the best ambiance and a very well educated staff. The following list is

showing the main departments at Garden Town Branch

Operations Department

Agri Finance Department

Car Finance Department

Accounts Department

IT Department

The Credit Administration Department

Now, I am going to discuss the six departments with which I was in touch during my

internship program. That is, the Account Opening department, the Remittance department

the car finance department, the Accounts department and the Credits department.

THE 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.

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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 department that is responsible for opening and closing an account assumes

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

Account opening department was the very first experience of my practical life being

working with a bank, during my internship with Bank Alfalah Ltd.

This department is the best way to start with the banking career or training. This is

because the ways you deal with the customers give a lot exposure to you for the coming

days in banking because the bankers are always in contact with customers as customers

are the biggest source of assets for the bank. I really enjoyed my stay at this department

as I got to interact with the customers directly for the first time. I was given under the

supervision of Mr. Naveed Khalid, who is the Incharge of Accounts Opening.

During my stay at this department I got to fill the forms of individuals who

wanted to get their accounts opened at Bank Alfalah Limited, fill the cheque and deposit

slips of customers who were not literate enough or needed instructions, and I also got the

opportunity to give advice to the customers regarding the requirements of account

opening and the benefits of opening an account with Bank Alfalah Limited.

Working with the Accounts opening department gave me a lot of courage as it

taught me the way that you should deal with the customers of the bank. Now coming

towards the documentations, stuff requirement at this department for the accounts

opening process.

Types of Account

Current Account.

Saving Account.

Notice Deposit.

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Term Deposit.

Current Account

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

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

more efficiently but since in reality there are no restrictions on any withdrawal. The only

reason we can think of is that current account facilitates online banking which saves time

to a considerable extent. No interest is being credited to the customer’s accounts that are

maintaining the current accounts with the bank. Current account enables the client to do

cash transactions in a more efficient manner.

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.

10,000.

BASIC BANKING ACCOUNT:

Initial deposit for account opening is Rs. 1,000 with no minimum balance

requirement.

Non interest bearing checking account.

Maximum 2 deposits & 2 withdrawals through cheque are allowed.

Free debit card can be used to withdraw cash and make purchases at thousands of

outlets across Pakistan which provides access to funds 24 hours a day.

No restriction on ATM withdrawal.

The PLS Savings Account:

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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 2 % per month. The minimum balance requirement for opening the account is

Rs.5000.

The PLS savings Account is meant for those people who have got an aptitude

towards earning some profit on their amount deposited for sometime with the bank.

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

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

his/her deposits with the bank for some time. For this purpose, there are some restrictions

on withdrawal of money from a Profit and Loss sharing account but in general banking

practice there is no restriction on any with drawl from a Profit and Loss sharing account.

The interest/profit is paid half yearly.

NOTICE DEPOSITS

Notice Deposits are kind of fixed deposits. The minimum balance requirement for

opening the account is Rs. 5000 and payment is drawn on maturity of the specific period.

NOTICE DEPOSIT IS OF TWO TYPES.

One for which a prior notice of 30 days and is required from the customer before

withdrawing deposited amount and for which rate return is 4.00%.

Second for which a prior notice of 30 days and above is required from the customer

before withdrawing deposited amount and for which the rate of return is 4.50 %.

TERM DEPOSIT

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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 3.25 % to 6.50 %. The term deposit account varies

from one month to 3 years and the minimum balance requirement is Rs. 50,000.

PROFIT CALCULATION METHODS

DAILY PRODUCT BASIS

Deposited Amount × Rate of return

365 (No. of days in a year)

AVERAGE MONTH BALANCE

Sum of daily end Balance × Rate of return

No. of days in month

MINIMUM MONTH BALANCE

Any minimum balance during the month is taken for calculating profit

SAVING A/C (05 DAYS _ MINIMUM MONTHLY BALANCE).

Minimum Balance of first 5 days is compared to the minimum balance of the

minimum balance of remaining 25 days. Less balance is calculated for profit.

The amount of profit is given to deposits in three ways:

Cash payment (only in case of term Deposits). Or as per customer requirement.

By sending bank draft to depositor’s home address or officers or whichever is

specified as mailing address.

The depositor’s account is credited at maturity.

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Amount of Deposits & Other Accounts in 2008

Fixed Deposits…………………………………. Rs.88.851 billion

Saving Deposits………………………………... Rs78.893 billion

Current Accounts. ………………………………Rs58.234 billion

Others……………………………………………Rs. 3.616 billion

Financial institutions

Remunerative Deposits…………………………. Rs. 9.892 billion

Non-Remunerative Deposits……………………..Rs. 0.021 billion

Particulars of Deposits & Other Accounts

In Local Currency………………………………… Rs. 214.824 billion

In Foreign Currencies……………………………. Rs. 24.685 billion

Total Deposits………………………………… Rs. 239.509 billion

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

Particulars at the Account Opening Form:

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

The first part establishes the currency in which the account is to be maintained / operated.

The currencies include

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o Pakistani rupee.

o U.S. dollar

o Pound sterling

o Euro

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

maintained. The various choices offered are

o Savings account

o Current account.

o Royal profit

For the chequing account, there are different types of account holders are required for all

these types of account holders. 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.

Now, during my internship at the Account Opening department at Bank Alfalah Ltd.

Garden Town Branch, I found out the following documentation and writings are required

in order to open an account with us:

The first thing mentioned at the account opening form is the Title of the

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

account we mean the name (either of the individual or of the business

concern) with which the account is to be opened and operated.

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

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

more than two persons maintain the account).

The name of the person who intends to operate the account.

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

Occupation of the prospective account holder.

The name and complete address of the employer.

Nationality of the Account opener

Country of residence is to be specified.

Contact numbers both the cellular and the landline numbers are to be provided

in addition to the segregation of the residential and the office phone as well.

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

application.

Passport number, if the prospective client has got one.

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

card.

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

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

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

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

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

order to undertake necessary communication when needed.

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

by the business.

Type of organization

The various types of organization which are present in Pakistan at present are:

Public Limited Company

Private Limited Company

Partnership

Association/Club/Society

Sole-Proprietorship

Some special documentation is also required like the certifications regarding

the incorporation and commencement of business and the Form 29. The

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

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

number, telephone number and fax number.

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

highlighted. Zakat is deducted out of a Musharakah savings account and not in

the case f the current accounts...

Details of other accounts maintained with other branches of Bank Alfalah Ltd.

or other banks are also to be given.

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

prerequisite in order to facilitate the opening of an account. The introducer is a

person who already has an account in the same branch. It can also be a person

from the staff of the branch as well. This introduction is the mandatory

requirement in order to open an account in order to trace out the defaulter in

case of defaults.

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

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

‘jointly’ or ‘any one of us’.

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

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

needed below the three signatures.

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

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

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

must sign as an evidence of their approval. The names of persons are written

on the title of A/C and on S.S. card.

INDIVIDUAL ACCOUNT

Any individual or proprietor of business can open an individual account at BAL.

PLS (profit and loss sharing) saving accounts can be opened with the minimum balance

Rs. 5000/- with expected profit rate is 2% on Rs. 25,000 or above. Following

requirements has to be fulfilled for this account.

Signature of customer on back of AOF.

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Mention next of kin (nominee)

Name and A/C # of introducer.

Verified sign of introducer.

Customer signature admitted by officer.

N.I.C photocopy attached.

Letter of thanks.

JOINT ACCOUNT

When different people want to or need to share a single account it is called joint account.

The names of persons are written on the title of A/C and on S.S. card.

Joint A/C cannot be opened by single person. Both persons have to sign on cheque. When

two or more person neither partner nor trustee open account in their name is joint

account.

REQUIREMENTS

Sign of both customers on back of AOF

Sign on joint A/C # mandate

Name and A/C # of introducer

NIC copies of both members.

Mode of operation.

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

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

given below.

Limited Company:

Copy of certificate of incorporation

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Memorandum and Articles of Association

List of Director’s

Copy of the board resolution

Certificate of Commencement of Business

Copies of CNICs of Director’s

Latest copy of Form-29

Partnership:

Partnership deed certified copy

NIC photocopies of all partners.

Partnership mandate for account signed by all the partners

A letter duly signed by all the partners containing the operating instructions of the

account also has to be taken.

Club/Society/Association:

Copy of rules/ by-laws

Copy of registration (if applicable)

List of Executive member management committee/management board etc

Certified copy of Resolution

NIC of all members of the management body

Sole Proprietorship / Individual:

NIC/ Passport photocopy

Letter from Proprietor confirming “sole proprietorship”

Term and Conditions Governing the Account

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Account

(I) Each Account will be allotted a distinctive number, which should be quoted in all

correspondence with the bank relating to the account.

(II) The account should be subject to the applicable laws of Pakistan and prevailing

rules, regulations and directives of the State Bank of Pakistan.

Minimum Balance

Subject to the regulations of State Bank of Pakistan, the customer should maintain a

minimum credit balance in the account as may be prescribed by Bank from time to time.

The bank reserves the right to close the account after giving 14 days notice if the

customer fails to maintain the required minimum balance in the account.

Deposits

(I) All deposits in the account should be accompanied by pay in slip showing the correct

title & account number to be credited.

(II) If the amount indicated on the deposit slip differs from that “later cash account” the

banks count shall be final and conclusive.

(III) Proceeds of a cheque deposited in the account for collection will be value dated after

receipt of the proceeds thereof.

(IV) In receiving cheque/instruments the bank acts only a collective agent of the

customer & assumes no responsibility for the realization of such cheques/instruments.

The bank may refuse to accept such cheques/instruments drawn in favor of third party.

The customer shall not draw against unclear cheques/instruments though credited.

(V) The bank shall recover return cheque charges at the rate fixed by the bank by

dividing the account on every cheque deposited for collection and return unpaid.

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(VI) The bank is realizes the services of other bank, customer do so for account and the

sole risk of the customer. The bank assumes no liability should the instruction is

transmits is not carried by such banks.

(VII) The bank shall not be responsible for the delay or loss in transit of any cheque not

for any act, omission, neglect, default, and failure of any correspondent bank, agent or

sub agent or for any reason beyond the control of the bank.

Withdrawals

(I) Withdrawals from the account shall only be made by using cheque books supplied

by the bank at the request of the customer. The bank reserves the right to withdraw

cheque book facility without notice if in the opinion of the bank the account is not being

maintained or operated in accordance with these terms and conditions or for any other

reason.

(II) The customer shall exercise care when drawing cheques and agree that cheques

will not be drawn in a manner which may enable a cheque to be altered in a manner

which is not readily detectable.

(III) The customer shall ensure safe keeping of the cheque book and shall not allow

access to the cheque book to any unauthorized person. In case of loss or theft of the

chequebook or any cheque leaf, the customer will inform the bank, if he will not then he

will be himself responsible for any loss.

Minor’s Account

In respect of an account opened in the name of a minor, the bank shall be entitled to act

on the instructions received from the guardian name on the account opening form,

irrespective of whether the minor account holder continues to be a minor or not unless the

bank receives written instructions from the guardian or a notice to the contrary from an

appropriate authority.

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Statement of Account

The bank shall quarterly or at such other interval as it may deem fit send to the

customer statement of account and the customer shall check the entries made therein. In

case of any discrepancy or error in the statement of account, the customer will notify the

bank within 14 days of receipt of the statement.

Hold Mail Facility

Upon written request of the customer, the bank may in its sole discretion provide

a hold mail facility. The customer hereby waives his right to question any detail

appearing in the hold mail communication or statement of account irrespective of their

actual receipt. The customer accepts all risks and responsibilities in this regard.

Stop Payment Instructions

The bank may, in its absolute discretion, accept stop payment instructions from customer

if a cheque is reported lost or stolen, provided the necessary details of the lost/stolen

cheque given by the customer.

Death of a Customer

In case of death of individual customer, the bank will permit no withdrawal from that

account after receiving notice of customer’s death, except on production of a succession

certificate or other court order from a court of competent jurisdiction.

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Now, there are some documents that are always there with the account opening

forms. These things need to be filled in by the customers efficiently and carefully. These

are:

Signature Specimen Card.

Cheque Book Requisition.

The Signature specimen card basically contains information that is basically a

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

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

terminal for future use and reference.

The Cheque Book requisition basically serves as an application to issue a

Chequebook. The client also fills it up and submits it along with the account opening

form as a result of which he is issued a Chequebook once his account is approved. As

regards the Chequebook one of the most important entries in a Chequebook requisition is

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

in the Chequebook issued to the client

Procedure of Opening an Account

The Account Opening Form:

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

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

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

Completion of The Form:

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

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

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

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

Introduction:

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

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

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

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

opening form.

Specimen Signature Card (S. S. Card):

It is card on which specimen of applicant’s signature are taken for future

reference. Every time a cheque is presented for payment, the signature on the

cheque is verified by comparing it with S.S Card. In case of joint account two

applicants can sign on one SS card. In case of more than two joint account holders

more than one SS card are required.

Account Number:

As now a days Bank Alfalah has acquired centralized banking system where all

the branches are directly connected to Head office. When customers give all the

information about him, this information is entered into centralized data base.

When this procedure is completed, the system automatically generated the

account number of that customer. Due to this system the process of account

opening becomes fast and also there is no chance of any mistake.

The account numbers of various accounts start with the following series

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Account title Account number

Current account 01Saving account 02Royal profit account 029Term deposit account 03Car finance account 0191Agri finance account 0141

Issuance Of Cheque book:

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

in the name of bank for the issuance of a chequebook. The A/C holder mentions

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

requires. Normally BAL issues a chequebook having at least 25 leaves. Every

chequebook also contains one leaf that is used for another issue of a Chequebook

Bank Alfalah issues the following chequebooks.

o Saving account - 25 leaves

o Current account - 50 leaves

o Current account - 25 leaves

o Foreign currency $ - 10 leaves

o Foreign currency £ - 10 leaves

Loose cheques are also issued in some cases.

Entry Of cheque book:

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

include:

o Stamping every leaf with specific A/C number.

o Enters it in the chequebook issue register.

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

first he gets them verified.

o If the check book is of photo account then be sure that each and every leaf of

cheque book should carry photo account stamp

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

holder after his/her signature on the register.

Filling Of Account Opening Forms:

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

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

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

with the customer.

Maintaining the Computer Record:

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

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

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

in the computer.

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Procedure Followed In Order To Close An Account:

Now, coming towards the procedure for the closing of an account at Bank Alfalah,

the following steps will be followed.

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

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

application with the liability form (explained below). The client can also give

an application on a plain paper, but correct signatures are very necessary.

Then it has to be made sure that if the account to be closed is a saving or

Royal Profit then the account balance before closing should be zero. In case of

these two types of accounts the bank does not take any closing charges. If a

client wishes to close a current account then the bank charges Rs.150, so at the

time of closing the balance should be Rs.150.

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

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

the future.

A liability form is filled and sent to the Credit Department in order to Cheque

that the customer does not owe the bank a single penny in any regard. A debit

voucher and a credit voucher are also attached to the liability form.

When the Credit department approves that the customer does not owe any

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

then the original account opening form pasted in the ledger when the account

was opened is marked ‘account closed’ along with the date on which it is so

marked. One thing has to be taken into immediate consideration that the

account number allotted to the client (who has closed his account), after

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closure of the account becomes useless and is not allotted to any one in the

future.

After approval of the liability form, it is sent to the Cash Department so that

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

signature card to the account-opening department.

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

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

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

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

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

records related to that particular account is permanently deleted by using the

‘close account’ option.

Important Documents Used In the Account Opening Department

Liability Form

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

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

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

department who upon receipt of such liability form make required scrutiny so

as to check whether or not the customer owes some money to the bank or not.

Account Statement Request Form

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

period. The client gets this Performa from the account-opening department

and then, after filling it up, gives it to the computer section that gives the

statement to the client in printed form.

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Vernacular Form

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

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

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

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

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

Issuance Requisition

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

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

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

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

Debit And Credit Vouchers

These two vouchers are basically used when an account has to be closed. The

debit voucher shows as to how much amount has to be taken from the client’s

account and the credit voucher shows as to how much amount has to be credited

as Bank’s income, in order to facilitate the account closing process.

Application To Close The Account

This is a pre printed application of the bank in which the client fills in the account

number, the title of the account and the type of account and requests the branch

manager to close his account with the Bank.

Application To Change The Address

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This is again a pre printed request form in which the client fills in his name,

account number, telephone number/s and the new address so that he could

communicate with the bank and receives all the notices, statements and other

necessary document which the bank might send through mail depending upon the

circumstances.

Discrepancies:

If there is fond any discrepancy in any of the following particulars then the form will not

be entertained:

1. Date of account opening 13. Hold Mail

2. Account opening Approval 14.Either or Survivor Instructions

3. Customer Name 15. Next of Kin Information

4. Joint Name (in case of joint account)16. Proof of Guardianship in case of

Minor’s Account

5. Mailing Address 17. Thirty Party Mandate

6. Alternate Mailing Address 18. Specimen Signature Card

7. Telephone Number 19. Check Book Ordered

8. Nationality20. Introducer’s Name and Account

number

9. NIC / Passport 21. Introducer’s Signature Verification

10. Currency of Account 22. Segment Code mentioned

11. Related Account Information23. Signature on Bank’s Terms and

Conditions

12.Zakat Deduction Authorization 24.Account Type

My experiences during internship in Accounts Opening Department:

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During my internship at Bank Alfalah Ltd, Garden Town Branch, my experience was

very good while working in the said department that is the Accounts Opening

Department. This was the first ever experience of my life regarding working in any

professional environment with practical people working around.

Mr. Naveed Khalid (Incharge of Account Opening) was very much keen in telling me

all the details of all the workings of that accounts opening department. I was being

supervised by sir Naveed at that critical time who was a very ebullient person and make

me lighten up to a greater extant. Being a former PU student, university fellow and

admirer of Hailey College of Commerce, he went very supportive to me. He was also

very hardworking and supportive type of a colleague to me. He taught me each and every

thing that can happen in the accounts opening department also direct me about the

procedures of other banks dealings. Whenever he was busy in doing a work regarding the

accounts opening things he never forgot to tell me what he is doing and what is the

purpose of doing that thing.

During my stay at the accounts opening department, I got a chance to open some

accounts after the approval and due verification from my supervisor Mr. Naveed Khalid.

He told all the stamps, which have to be incorporated in the account opening form, to me.

I did mistakes as well while opening of accounts regarding stamping at the correct place

and writing account titles. But he never ever said a word to me regarding that. This is the

thing, which I observed that employees at Bank Alfalah are very cooperative and

supportive. This is the reason why the customer satisfactions provoking all along in the

branches of the bank.

Remittance Department

Remittance department comes under the category of the ‘Domestic Banking’. By

remittance we mean transfer of money from one city to another. Hence this department

deals with the transfer of money using different mode from one place to another.

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PARTIES TO A REMITTANCE

REMITTER

One who make a remittance. He comes to the issuing or originating branch, ask for a

remittance to be made, and deposits the money to be remitted. The bank charges

him for the remittance. He may or not be the bank’s customer.

REMITEE

Also sometimes called the beneficiary, or the payee (the person to whom the

remittance is made/ the one who receives the payment.)

ISSUING BANK

The bank that affect the remittances, through the Demand Drafts, Telegraphic

Transfer, or Mail Transfer.

PAYING BANK

Also known as the drawee branch (The branch on which the instrument is drawn. It

has to make the payment). Usually located in a different city or country.

PRINCIPAL DUTIES: -

The principal duties this department is performing are as follows

1. Pay Slips

2. Pay orders

3. Demand Drafts (DD)

4. Rupee Travelers Cheque (RTC)

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5. Money Gram

DEMAND DRAFTS

Demand Drafts (DD) are a bill of exchange. It is an instrument in writing signed by the

banker containing an unconditional order to pay certain amount to or to the order of

certain person for payment on demand or otherwise as future determinant time. If it is

made through cheque than it is necessary that person must be account holder while in

case of cash any person can make. It consists of four copies.

1) Original copy which is given to account holder.

2) DD advice is sent to the central branch.

3) Third copy is for reconciliation.

4) Last copy is sent to head office for reconciliation.

PURPOSE: -

AS THE NAME SUBJECTS DD IS MADE ON THE REQUEST OF THE CUSTOMER (WHICH MAY

OR MAY NOT BE THE ACCOUNTHOLDER OF THE BANK) IN FAVOR OF ANOTHER CUSTOMER

OR PARTY IN SOME OTHER CITY. THUS IT IS A MODE OF PAYMENT USED BY ONE CUSTOMER

TO PAY ANOTHER WHO MUST BE RESIDING IN SOME OTHER CITY.

PAYMENT

PAYMENT OF DD CAN BE MADE THROUGH ALL MODES I.E. TRANSFER, CASH, CHEQUE

COLLECTION (ALL BRANCHES IN PAKISTAN) ETC.

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RECORD

No manual record of the demand draft is kept; only the record is saved in the computer at

the time of making the demand draft.

DD APPLICATION SLIP

On the DD application slip enter the

Date

Branch name draft no. (which is entered after the computer entry)

In favor of (the name of the person or party)

Drawn on (the city name and the branch code of BAL )

Amount in words as well as in figures

Commission charged is entered

Signatures of the applicant are taken

Then it is signed by the in charge remittance and the customer deposits the money

against this slip.

The DD slip is available with the attached forms.

Scrutiny Of application Form:

There should be our bank’s branch at the place where payment is desired to be made.

Full name of the payee should be mentioned.

Amount in words and figure should not differ.

Purchaser’s name address and telephone numbers are complete.

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COMPUTER ENTRY

In the system enter into the ‘DD’ section then enter the

Name of the person who is being favored

Branch code at which draft will be drawn

Bank code of that branch

Name of the person to whom the draft is being issued

The account no of the issues (if he/she has an account with our branch)

The total amount of the demand draft is entered

The commission charged is entered (computer usually perform this job

automatically)

Entry of DD:

Entry in BAL GTN branch

Yellow slip

DD Payable credit

H.off debit

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

Entry in H.off Karachi branch

H.off debit

DD credit

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

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Issuance Pink Slip

H.off credit

DD debit

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

Entry when customer will draw amount from DD

DD payable debit

Customer credit

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

-----

The DD number appears at the end which is entered on the ‘demand draft application

form for record purpose.

Now press yes for the print of DD, which is in two, parts both are given to the customer.

When the computer record has been saved now the advices are made in the favor of the

bank on which DD will be drawn. The advices for BAL branches are sent directly to that

branch through mail.

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PAY ORDER

Pay order is also a bank instrument a bill of exchange. The pay orders are usually used

for the payment within the city. The pay orders issued from one branch of bank can only

be drawn at the same branch, that’s why it is generally referred to as Banker’s cheque.

There is a separate slip for the pay order application. All the procedures for the pay

orders are similar to the demand drafts except the charges and the record keeping which

are given below

RECORD KEEPING:

The record of the pay orders is kept in both the computers and manually in registers. The

computer record keeping system is similar to that of the demand drafts. Where as in

register you enter the

Date on which the pay order is issued.

Pay order number.

Payee, to whom the pay order is being issued.

Amount of pay order is entered then the officer signs it.

Date of the payment and the remarks are taken.

Entry of issuance “pay order”

Customer debit

Pay order credit

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

-

Entry when customer get amount from “pay order”

Pay order debit

Customer credit

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

Following are the parties to a pay order:

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

ii) Issuing / paying branch: this issues / pays on presentation.

iii) Payee: is a person named therein.

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PAY SLIPS

The bank for the settlement of its own payment uses this instrument.

There are no charges for the pay slips. They are used to meet the miscellaneous expenses of the bank. The

pay slips can only be drawn on the same branch of the bank. No manual or computer record of the pay slips

is kept. Only the record of the counter file of the slip is maintained as a record at the bank of which two

signatures of the beneficiary are taken.

On the pay slip

Enter the name of the party as ‘Messrs’

The reasons of payment i.e. repair, releases of security etc are written as ‘on account

of’.

Signs and stamp of the beneficiary are taken.

The payment of the pay slips can be made through any of clearing, transfer (same city branches), cheque,

and cash. Collection (all branches within Pakistan) the pay slips can issue to both minors and majors. On

the slip the signatures of two authorized bank officials are must.

RUPEE TRAVELERS CHEQUES

These are the banks instruments issued to only major account holders of the bank. TC’s

are issued to the facilities the customers during the travel.

There are the three copies of the travels cheque application. The white copy, which is

also known as ‘agreement’, remains with the customer with the agreement at the back of

it. This copy is must to be shown lost for the reimbursment. The yellow copy is for the

record and the blue one is for the head office.

According to the government policies only the RTC’s of rupees 10,000 & 5,000 are being

offered to the customers .The amount in the RTC (the application for rupee travelers

cheque) is entered in multiples of 10000 as per request of the customer but separate

cheque are issued against it each of RS. 10,000 or in multiples of 5,000 as per request of

the customer but separate cheque are issued against it each of RS. 5,000.

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All the travelers’ cheque is credited by the head office ‘HO’ accounts. The payment

mode used for the traveler’s cheque can be cash. Transfer, authority letters, collection (all

branches in Pakistan), the president of the bank and it already signs cheque is also signed

by an authorized person at the bank.

ISSUING BRANCH

The branch that is issuing the TC will take the signs of the customer on upper part of the

cheque.

The issuing bank send one copy of RTC application to head office and keeps other with it

after entering all the account opening conditions i.e. NIC.no, NTC.no, address, phone no,

name etc into the system.

PAYING BRANCH: -

On the next date when the cheque is presented in the paying branch (any BAL branch in

PK) same signatures on the lower part of the cheque are taken and the bank officer

cheque whether they match or not.

MONEY GRAM

Bank Alfalah Limited, in collaboration with money gram offer remittance services to Pakistan.“It’s basically a person to person money transfer service that allows consumer to receive money in just a few minutes.”

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PROCEDURE

Person must have reference no. Person must tell reference no. and compute the simple form. Person has to show NIC and tell compute introduction after that he can obtain

money.

THE CREDITS DEPARTMENT

The sum of money that a bank makes available to client in excess of any deposit. Credit means belief or trust. “The quality of being credible or trustworthy”. Another words we can define credit as “trust in one’s integrity in money matters and ones ability to meet payment when due”.

Purpose of Credits

Earnings of a bank are dependent on CREDITS, because:

A bank receives (borrows) deposits. It pays cost on these deposits.

On the other hand bank lends the deposits to borrowers and charges interest on the

lending. This function is performed by CREDITS in any bank

Credit philosophy at BAL

“Banking is an art of striking between risk and revenue”

“The extension of a credit facility should add value to the bank’s assets.”

Importance of Credits

CREDITS are the most important department of a bank. Performance of all other

departments is dependent upon “Credits”. It attracts corporate accounts, as a company

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prefers to do import and export business from the banks from where it is availing limit

(credit) facilities.

Risks involved in Lending

Though lending is main source of earnings for any bank but it is risky as

well. Whenever money is advanced to any customer there is always a risk

involved of default. To minimize the risk involved BAL gives loans to credible

customers.

Sub Division of Credits

CREDITS are further sub divided into two sections:

Credits Marketing

Credits Administration

The above-mentioned two sections perform the overall activities of credits. Role of each

section is discussed below:

Credits Marketing:

Marketing personnel is responsible for attracting customers to bank for advancement

of loan facilities. They must have complete information of trends in the industry.

However several precautions are followed to give loans to only credible customers, as

the aim of bank is to recover the money at time and through earnings of the client and

through liquidation of securities.

Bank Alfalah Ltd. always prefers to give loans to credible customers. For this BAL

requires information about:

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Basic “Cs” of a Credit:

Character

Who is the borrower (company)? What is its reputation for honesty, integrity and

willingness to pay?

Capacity

How is the business managed? What are its strength weaknesses? What is the business

capacity to generate the funds to repay?

Capital

How solid are its financial and human resources? Are financial resources matched with

adequate human resources?

Conditions

What is the condition of company within the economic cycle? Will the economic and

business conditions impact the borrower’s ability to repay?

Collateral

What is the real liquidation value of the collateral? If the creditor is forced to use thee

collateral as payment, what value will be realized at liquidation?

Carelessness

While evaluating, disbursing and monitoring of the credit, professional standards and

tools are not exercised.

Complacence

When the information and data base on which decisions are to be made, are accepted

without any critical evaluation

Connivance

While certain adverse aspects observed in the operating performance, financial position,

debt servicing, etc. are not accounted for which tacit understanding of favoring the client.

Concealment

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When certain important facts are deliberately and willfully conceal from the management

which could have undermined security, credit recovery and bilateral relationship with

borrower.

Collusion

When a bank officer and borrower willfully join their hands for achieving some ulterior

motives

Corruption

When official matters are dealt with for financial and non- financial benefits at the cost

of the lender

Credit Line Proposal:

A CLP is prepared on the basis of above facts. It is forwarded to HEAD OFFICE. If

HO is satisfied then it gives a “CREDIT ADVICE”.

Offer Letter:

On the basis of credit advice the branch prepares an “offer letter”. This letter

gives a detail of the terms and conditions such as duration of facility, securities, mark up

etc.

After fulfilling the entire formalities loan is advanced.

After the disbursement of loan marketing personnel keeps track of every activity

of the party. They continuously observe the financial statements of the customer.

Detail of credit line proposal prepared by marketing personnel is given below:

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Credit Administration

It is the second section of CREDITS. It performs very important functions for the

bank. After the approval of CREDIT LINE PROPOSAL, it comes to Administration

section. The Administration decides the terms and conditions regarding securities offered

against the facility given to a client. It is a highly responsible task because in case of

default liquidation of securities is an important source for bank for recovery of loan

amount. Other important functions such as adjustment of loans are also handled by

administration section.

Nature of the Risk Exposed To a Bank

Credibility of the sponsors

Financial standing

Professional capability

Willful management

Credibility of credentials, data and information

Reliability of the basis assumptions underlying business and financial projections

misappropriation

Unauthorized advances to sister concern, affiliates undertaking

Agent transactions

Product obsoleteness, waning market and threatening market environment

Inconsistent and ineffective marketing plans and business strategies

Obsolescence of the technology and lack of adaptability

High interest rates

Liquidity risk

Inconsistent government tariff policies and their impact on the selling price, cost

of production, profitability etc

International environment and inter-country business risk

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Currency exchange rates deterioration

Credibility and poor performance of Muccadams

Credibility of surveyors, evaluators, pre-delivery inspectors

Over capitalization

Credibility of the auditing firms

.

Types of borrowers

Individuals

Existing account holders staff members

Close relatives of staff members

Business sponsored by staff members

Employees of other banks

Joint accounts

Businesses Entities

Sole proprietorship

Partnership

Limited liabilities Company

Joint venture

Group account\s

Others

Clubs and associates

Government bodies

Traders

Contractors

Transport, storage and warehousing

Property dealers

Manufacturers

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

following things.

1. COMPANY:

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

record following information:

The certificate of incorporation

The memorandum and articles of association

The certificate of commencement of business and

The last annual report containing accounts and balance sheet, to ensure that the

company is legally qualified to do business.

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

Credit officer should check with the registrar of joint stock companies, and

request the borrower to furnish certified-

List of shareholders (current)

List of directors

With public limited company verify its existence and standing on the stock

Exchange.

It is important that the borrowing company and its directors should have requisite

authorization and power to borrow which should be reflected in the memorandum

and article of association

Also see “corporate resolution to borrow”.

2. PARTNERSHIP

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

following documents;

Original partnership agreement/deed and the original certificate of registration

which will contain the name of the partners and the date of their joining the

partnership.

An individual financial statement from each partner

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along these, also obtain the following document:

normal loan documents signed by all partners

continuing guarantee duly signed by all partners

Resolution/authorization to borrow and execute loan documents, signed by all

partners.

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

the firm

Certified copy of the partnership deed and certification of registration.

3. INDIVIDUAL

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

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

A continuing guarantee.

The decision of extending credit to an individual borrower is necessarily a

decision for the officer concerned based on the reputation and credit standing as a

client. Depending on the amount advanced, the loan should be secured by a

pledge, hypothecation, or mortgage.

4. GOVERNMENT

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

documents of indebtedness are signed by an officer of the government who is duly

authorized in writing and or by the rules of business. Legal counsel’s opinion should be

taken in these cases.

Credit Line Proposal (CLP):

A CLP contains and takes into consideration following information:

Types of Proposal:

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o New

o Renewal

o Revision

o Single transaction

Names of owners and their shareholding

Nature of business

Existing and proposed limit for funded and non-funded facility

Group Exposure for both funded and non-funded facility

Purpose of each facility and Repayment

Security both existing and proposed

Customer Profile:

LEGAL STATUS: It specifies legal status such as:

o Individual

o Proprietor

o Partnership

o Limited liability company

Date if Incorporation

Date of Account opening and Account Number

History of Relationships with Bank

History of Borrowing Relationship

Information of whether account opening formalities are complete or not

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Line of Business/Main Products:

Following information is required in this regard

Sales break-up in various cities

Market share

Competitive brands

Industry Profile and Market Position

Summary of key Financials:

It includes following ratios:

Sales/Revenue, Net Profit

Total Assets, Liabilities

Working Capital, Current Ratio

Paid-up Capital, Reserves, Net Worth

ROE, Debt-to-Equity Ratio

Days Receivables, Days Payables, Days Inventory

Details of Allied Accounts

Background of Directors

Management

Central Risk (as reported by CIB)

Liability Details:

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It includes liabilities with Allied Concerns and with other banks both funded and

non-funded.

Performance during Last One Year:

Following questions are considered:

Are acceptance paid on due date

Are all the instruments of TFs paid as per schedule

Audit exceptions related to credit matters only

Are checks returned due to lack of funds

Account Statistics for the previous year:

It shows:

Maximum balance

Minimum balance

Date of latest adjustment of CF

Branch Comments and Recommendations:

Based on all of the above facts and information branch gives its comments and

recommends different suitable facilities.

Credit Division Comments and Recommendations:

Based on all of the above facts and information, credit division gives its comments and

recommends different facilities.

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Prudential Regulations Compliance Checklist pertaining to Credit:

Following matters are to be checked:

Limit of bank’s exposure to a single person

Limit of bank’s exposure against clean facilities

Linkage between a borrower’s equity and total borrowing from bank

Maintenance of debt-to-equity ratio

Opening of Account:

It’s required that every reasonable effort is to be made for determining the true

character of every would-be account holder.

Weight age to Credit Report:

Due weight age is to be given to the credit report relating to the borrower and his

group. Latest report is obtained from CIB of SBP for funds and non-fund facility

provided.

Minimum information of the borrower:

For this purpose bank asks for BASIC FACT SHEET.

Financial Summary

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It contains:

Balance Sheet

Income Statement

Cash Flow Statement

Security Analysis Sheet

It contains analysis of the security offered for availing the facility.

Industry Overview

It provides an overview of the industry in which a company is operating.

Financial Analysis

Sales & Profitability ratios, Activity Ratios, Leverage Ratios and Liquidity Ratios

are calculated. More over utilization of the plant capacity over the years is also

calculated

TYPES OF FACILITIES

These facilities are either:

Fund Based

Non-Fund Based

Various types of funded and non-funded facilities are given below:

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Fund Based Facilities:

Funded facility is that facility in which the bank funds are physically involved.

Cash Finance/Running Finance

Cash Finance/Running Finance:

It is a short-term facility given to companies for working capital requirements

(raw material, WIP, finished goods, receivables). It is a revolving limit. In this facility a

specific limit is given to the customer. He is given withdrawing right up to that limit. He

can avail the facility by playing within that limit. Mark-up is charged on the outstanding

amount. Marketing personnel keeps a check that whether or not a party is adjusting the

limit and then withdrawing the amount or not. If not then there is something wrong and

the facility availed is being misused.

Non fund based facilities:

It is a facility in which funds of bank are not involved. However a non-funded

facility can become funded at any time.

Letter of guarantee

Letter of Guarantee:

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It is a non-fund based facility hence no funds from the bank side are

involved in it.

Parties involved:

Three parties are involved:

Principal: to whom bank is giving guarantee on beneficiary’s behalf.

Beneficiary: in whose favor guarantee is given.

Guarantor: it is the bank that is giving the guarantee.

In this facility bank guarantees the payment of loan amount if the beneficiary fails

to perform his or her duty at the settled time.

SECURITIES:

Lending is very risky for any bank. Bank covers the risk involved in lending by keeping a

suitable security, which can be tangible as well as intangible. Bank always prefers a

security that is marketable as well as sustains its value (not perishable).

Types of Securities:

Following are various types of securities

Pledge

Hypothecation

Mortgage

1. Pledge:

It is the bailment of delivery of goods from one person to another for some

specific purpose. Two parties are involved:

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Pledger i.e. the borrower/customer

Pledgee i.e. the bank

Possession is with the bank. Bank keeps the goods in its go downs. Mucaddams

are responsible for the security of the pledged goods.

Borrower is entitled to get back the goods after the repayment of loan.

In case of non-payment bank has the right to sell the goods.

Surplus on sale is paid back to the pledger.

In case of deficit after the sale, bank always has the recourse to the court of law to

recover the deficit.

Documents required for C.F. Pledge

Legal stamps documents required:

Agreement of finance

Promissory note

Letter of guarantee

Memorandum of deposit of title deed

Letter of hypothecation

Letter of continuity

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Letters without Stamp:

Letter of arrangement

Letter of disbursement

Letter of authority

SBP regulation undertaking

Margin:

Bank keeps a margin or cushion for every facility advanced. The margin differs

from case to case depending upon several other factors.

Precautions:

Following are some of the precautions, which are taken by the bank:

Banker looks closely at the NATURE OF COMMODITY. The

commodity should not be perishable. It should be marketable.

Banker should have complete knowledge about the market value of the

commodity pledged. Price should not fluctuate.

Banker must take store the pledged commodity in proper go downs under

suitable conditions

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Banker must take precautions in valuing the commodity. There are

approved valuers for this purpose. The commodity should not be over valued

because it will lead to difficulty in the recovery of loan amount at the time of

liquidation.

2. Hypothecation:

It is an agreement to give charge on goods or documents of title to these goods

without conferring possession to the lender.

Lender neither has possession nor ownership.

Security is created through a letter of hypothecation, which contains information

such as description of goods, and value of goods.

Documents required for C.F. Hypothecation

Legal stamp documents required:

Promissory note

Letter of Hypothecation

Letter of guarantee

Letter of continuity

Agreement of finance

Letters without Stamp:

Letter of arrangement

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Letter of disbursement

Letter of authority

SBP regulation undertaking

Periodical Stock Reports:

Bank requires periodical stock reports from the borrower.

Stop Orders:

The bank can issue “stop orders” against the trading of hypothecated stock.

Precautions:

Lender/bank should go for surprise visits to check stocks.

Stock should be insured against all possible risks such as theft, fire etc.

Lender should put the nameplate, which signifies that stock has been

hypothecated.

Before lending bank should make sure that stocks have not been already

hypothecated with any other bank. It can be confirmed from the registrar.

3. Mortgage:

It is the transfer of specific right in an immovable property for securing a

payment of money advanced or to be advanced as a loan or for the performance of an

agreement or settling a future liability.

Parties:

Mortgager:

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Who transfers specific rights to the mortgagee. He can get back the specific rights

after the repayment of loan.

Mortgagee:

He is the lender i.e. bank.

Mortgage Deed:

Mortgage deed is that document through which the mortgage is executed

Property Documents for mortgage

Legal advice about property documents

Title deeds (original documents of property

Aux Sajra (location site map)

NEC (non-encompress certificate)

PT 1 in favor of borrower

PT 1 in favor of bank

MoTD (Mortgage of title deeds)

Agreement to create mortgage

Letters submit to registrar

Irrevocable general power of attorney (IGPA)

Valuation report

Transfer of Legal Title:

According to this there can be two types of mortgage.

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i. Legal Mortgage:

Title is legally transferred to mortgagee.

Mortgage is to be registered in case the loan amount is greater than

Rs.100.

After the payment of loan, legal title is transferred back to the mortgager

It is executed by the “mortgage deed”, which is signed by the mortgager

and 2 witnesses. This mortgage deed is registered with the revenue officer.

It is mentioned in the mortgage deed that legal title will be transferred to

the mortgager.

ii. Equitable Mortgage

The original deeds are submitted with the mortgagee with an intention of

creating its equitable interest in that property.

Mortgager cannot sell the property without the consent of the mortgagee.

Process:

The original title deeds are submitted with the bank with the covering letter

stating that these documents are submitted with the bank for the purpose of creating an

equitable mortgage.

It is to be registered with the Registrar of Joint Stock Companies within 21 days of the

mortgage agreement.

GUIDE LINE OF CREDIT POLICY

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Total outstanding financing facilities by banking company to single person shall

not at any point of time exceed 30% of bank’s unimpaired capital.

No banking company shall make loans or advances against the security of its own

shares.

No banking company shall grant unsecured loans / advances on the guarantee of,

o Any of its directors.

o Family member of director

o Any private company in which banking company is interested.

In arriving at exposure per person weight age of 50% shall be given to

o Documentary credit opened by bank.

o Guarantees/bonds other than repayment guarantees.

In arriving at per party exposure 90% of

o Deposit of party with bank under lien.

o Face value of FIBs lodged by the party as collateral.

o Pak rupee equivalent of face value of special US Dollar bonds converted

at official rate, lodged by the party as collateral shall be deducted.

Aggregate exposure of bank against all its clean facility shall not at any point

exceed the amount of bank’s capital and general reserve.

Advances given to the employees of bank in accordance with their entitlement.

While granting any accommodation, bank shall ensure the total accommodation

availed by any borrower from banks / financial institution does not exceed 10

tines of the capital and reserve of the borrower.

A borrower who is prepared to inject fresh equity irrespective of the fact that its

equity is negative is eligible to obtain finance from bank to the extent of 10 time’s

fresh injected equity.

No banking company allow financing facilities whether fund based / non funded

against the shares of companies which are not in central depository system.

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My experience at the Credit Department:

Corporate credits was the second last department in which I was been rotated. The most

important department in any bank is considered to be the Credits department. This is, in

my opinion, is also true due to some reasons. Firstly the reason being that in credits

department, the decision-making skills of a person are explored. When you need to make

a decision regarding the credit proposal after due verification, this will give a little stress

to your mind either to sanction the financing or not?

Credits involve very technological procedures and also a lot of exciting activities

because each case varies from the other one. You never become unenthusiastic because

you get an opportunity to walk around new bits and pieces every time.

In this department I worked under the supervision of Mr. Ateeq-ur-Rehman Sidu

(Credits Officer). He was also very supportive to me. He taught me the credit line

proposal from the first step till the end of its filling process. In the nutshell, the credits

department contributed a lot towards my decision-making and learning skills.

CLEARING DEPARTMENT:

Clearing is the arrangement to which collection of cheque, bills and other

instruments payable or deliverable at or through the offices of the members of the

clearinghouses for credit of the customer’s account for speedy and economic collections.

The clearinghouse members are authorized to send their cheque and instruments in the

clearinghouse established in the State Bank of Pakistan.

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Clearing house is the gathering of all the members of different banks and institutions

where they deliver or receive the instruments drawn on them for their clearances through

their branches in the city.

Advantages of clearing:

1) Systematic arrangement for the collection and clearance of cheque.

2) Speedy and economic collection and clearance of cheque.

3) Clearance of cheque and other instruments of different branches of

different banks in a systematic way without any flow or mistake.

4) The collection and clearance of government bills, instruments and cheque.

5) The collection of government revenue through cheque, pay orders and

drafts payable through State Bank of Pakistan and National Bank of

Pakistan.

6) It avoids the difficulties and cumbrances faced by the branches if they

collect the instruments directly from branch to branch.

7) Confidence among the clearing members is produced.

Role of State Bank of Pakistan in clearing:

State Bank of Pakistan gives the license end enlist them as clearing house

members authorizing to submit their clearance cheque and instruments through

the clearing house established as the office of State Bank Of Pakistan in

particular city.

The clearinghouse advantages are given in the big cities where the State Bank

office is available.

Where State Bank of Pakistan office is not available the clearinghouse functions

in the National bank of Pakistan branch. However the procedure is the same.

The State Bank of Pakistan provides the facility to member banks for clearances

of their cheque drawn on different branches of banks in different parts of their

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cities. It would have been more cumbersome and time consuming if they had

been dealing from branch to branch.

State Bank of Pakistan is a banker’s bank; it deals in a parental attitude and

provides space staff and technique to clear the bills and cheque of the member

bank.

State Bank of Pakistan maintains the statuary reserve of different banks in their

accounts and all the clearances are made by the debit and credit of these

accounts.

All the payments and receipts are settled to these accounts without any difficulty.

The State Bank of Pakistan chalks out clearing house timings and its procedures.

CLEARING OUTWARD

When the customer deposits cheque & other instruments of other banks for

collection, we send the cheque in outward clearing.

PROCEDURE:

Cheque are receives duly entered on pay-in-slip.

Counter foils are returned to customer after signature.

Crossing stamp is fixed on the Cheque is fixed on cheque and pay-in-slip.

Clearing stamp with next date is fixed on the cheque and pay-in-slip.

Endorsement stamp is fixed on the reverse of the instruments.

Depositor’s account number shall be mentioned on the reverse of the

instruments for the future reference. Endorsement and pay-in-slip are signed

by an officer.

All the instruments ate entered in clearing register.

The officer concerned will enter the cheque in computer system.

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Clearing register is generated by the computer system.

Clearing summary is produced and computer also generates bank wise

schedules.

The cheque is sorted bank wise and respective schedule id attached with

these cheque.

Total of bank wise schedule will tally with total in clearing register and

clearing summary.

All cheques along with bank wise summary are sent to main branch where a

revised summary is prepared.

The representative of the bank takes all the cheque of all the branches to the

branches to the clearinghouse at State Bank of Pakistan.

CLEARING HOUSE

In the clearinghouse the representatives of all the banks gather and exchange their

instruments. They enter the total amount of cheque delivered and received in their

summary sheets. The total of schedule received tally with the total of summary.

Clearing cheques received from other banks are sent to branches, which will clear the

cheque and instruments to the respective accounts. Some cheque is returned unpaid

with the reasons mentioned in the cheque return memo. IBCA for net amount is sent

to main branch.

In the 2nd house clearing cheque are returned and exchange by the representatives of

the banks. A summary is prepared for cheque received and delivered and net position

is ascertained. Amounts are settled through SBP accounts.

After cheque is returned, the main branch sends IBCA for net amounts to the

branches. Computer entries are made for (-) credits for returns and debits to Main

office A/C.

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FINANCIAL HIGHLIGHTS

For the year ended the Bank’s profit before provision and taxation stood at Rs.

3,263.635 million as compared to Rs.2,965.588 million for the previous comparable

period, which is 10% higher than that of last year . This increase in profit is primarily

attributable to overall increase in business volume.

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The Bank has successfully carved in the market an enviable niche for its

consumer products. Auto Finance, Credit Cards and Home Loans have significantly

contributed to the profit and growth in addition to contributions made by the core banking

activities during the period under review. Bank is indisputably market leader in some of

these initiatives.

Bank continues to make significant in-roads into the Agri-rural finance, SME,

corporate and investment banking sectors of the economy. With expanding network of

branches, bank is ideally poised and positioned to carry forward the success. It acquired

the operations of Shamil Bank of Bahrain’s B.S.C, Bangladesh operations for US$ 17.88

million under an agreement dated November 1, 2004. The entire undertaking of the

Bangladesh operations including all the properties, assets and liabilities and all the right

and obligations were taken over. It has also successfully obtained license to establish

banking operations in Kabul, Afghanistan. It continues to strengthen its presence in the

market place and as of June 30, 2007, bank has a nationwide network of 195 branches

that includes 23 Islamic Banking branches and five overseas branches 3 in Bangladesh, 2

in Afghanistan and one offshore banking unit in Bahrain. Bank’s plan is to add more

branches to the network during the 2nd half of 2007.

PACRA, a premier rating agency of the country, has rated the Bank ‘AA’ (double

A), Entity Rating for Long Term and A1+ for the Short Term. These ratings denote a

very low expectation of credit risk, strong capacity for timely payment of financial

commitments in the long term and by highest capacity for timely repayment in the short

term, respectively. Further, the unsecured subordinated debt (Term Finance Certificates)

of the Bank has been awarded a credit rating of AA- (double a minus).

In compliance with the requirement of State Bank of Pakistan, Bank has in place

an approved integrated risk management framework for managing risk, market risk,

liquidity risk and operational risk as evidence by its Board approved” Risk Management

and Internal Control” manual and a dedicated Risk Management Division (RMD) has

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been created with the Head RMD reporting directly to the Chief Executive Officer, Risk

management Division has been structured to address credit, market and operational risk

and a team of suitable person has been hired.

In summary, Bank had successful half-year results, as of June 30, 2009. This was

achieved primarily due to its long-standing and stable customer base, coupled with the

Management’s well-defined, focused strategies and positioning. Accordingly the Board

would like to thank its valued clients and Correspondents and also to acknowledge the

support of the State Bank of Pakistan, Ministry of Finance and other regulatory

authorities for their invaluable support, which has greatly facilitated its work. The Board

would also like to place on record its appreciation for the hard work, dedication,

professionalism and sincere efforts of the senior management, officers and staff of the

Bank.

RATIO ANALYSIS

Ratio analysis includes calculating different ratios for the organization of the

figures taken from its financial statements. The basic purpose of ratio analysis is that

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absolute figures often give misleading image so comparison with other figures is

necessary which can be done through ratio analysis. The ratios may be:

Balance Sheet ratios

Income Statement ratios

Mixed ratios

PROFITABILITY RATIOS

The continued viability of any bank depends on its ability to earn an appropriate return

on its assets and capital. Good earning performance enables a bank to fund its

operations, remain competitive in the market and increase or decrease in market funds.

“Profitability reflects not only the quantity and

trend in earning but also the factors that may

affect the sustainability or quality of earnings.”

NET PROFIT RATIO

Net Profit after Tax X 100

Net markup/interest income after provisions

2007 2008

1325389 x 100

21194254

3506737 x 100

25816457

= 6.25% = 13.58%

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Significance:

o It is a more specific measure of sales profit ability. It is used to measure over all

profit ability and hence it is very useful to proprietors.

o The ratio is very useful as if the net profit is not sufficient, the firm shall not be

able to achieve a satisfactory return on its investment.

o It also indicates firms, capacity to face adverse economic conditions such as price

competitions, low demand etc.

o Higher is better is the profitability.

Analysis:

The above ratio indicates that the proportion of profit has seen increase over the

years from 6.25% in 2007; to 13.58% in 2008 the increase is significant. So it is a healthy

sign for bank.

7

OPERATING EXPENSE RATIO

Non Mark Expense X 100

Gross Income

2007 2008

15235688 x 100

3290623

16645178 x 100

6142240

= 436% = 271%

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Significance

This ratio shows how well the organization is managing its operating cost.

Operating expenses are those expenses which are incurred indirectly for the generation

of revenue. A large portion of these expenses is the administrative expenses which are

incurred on management of the organization. It is necessary to cut down these expenses

especially when interest rates on advances are declining leaving a narrower margin for

payment of such expense. So Lower it is better it is.

Analysis

Operating expenses for the bank decreased in 2008 from 436% in 2007 to

271%in 2008 and which is a good sign as it shows decreased costs of the banks and

hence increased net income.

ADMIN EXPENSE TO TOTAL DEPOSITS

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Administrative expenses X 100

Total deposit

2007 2008

5952637 x 100

239480772

8383322 x 100

273172088

= 2.49% = 3.07%%

Significance

This ratio measures bank’s ability to cover administrative expenses by spreading over

large number of depositors. Total deposits have been used as base as they are main

business activity of bank. A declining trend is desirable.

Analysis

In 2007 bank’s administrative expenses were 2.49% and in 2008 they are on

rising side i.e. 3.07% it’s not good for the bank. Bank should try to control its expenses.

TOTAL ASSET TURN OVER

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Interest- markup- return earned

Total Assets

2007 2008

21194254 x 100

275511483

25816457x 100

330679872

= 7.96% = 7.81%%

Significance

This ratio indicates the efficiency with which total assets have been utilized to

generate net interest income. If a bank has ROA on a higher side but the relation of net

interest income to total assets is not very significant, this may translate into the fact that

bank is relying on sources of income other than interest income which is not a healthy

sign.

Analysis

It is decreasing which is unfavorable. It means bank is not able to utilize its assets

efficiently in generating its main stream income. It was 7.96% in 2007, 7.81% in 2008.

RETURN ON ASSETS

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Net profit after tax x 100

Total assets

2007 2008

1906672 x 100

275511483

5004600x 100

330679872

= 0.69% =1.51%

Significance

ROA is the most comprehensive measure of bank’s earning capacity. Net profit

margin ignores ‘efficiency concept’ while total asset turn over ignores earning

perspectives. ROA takes both perspectives into account. That’s why it is most widely

used indicator for representing the earnings of bank over time period. Higher it is better

it is. An increasing trend of this ratio signifies increased efficiency of management of a

bank to improve upon its earnings capacity.

Analysis

As this ratio explains how much you are utilizing your assets. In year 2008 it is improved

from 1.151% to 0.69%. But still it is not very good, so bank should try to improve it.

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RETURN ON EQUITY

Net profit after tax x 100

Share Holder’s Equity

2007 2008

1325389x 100

11827209

3506737x 100

17414154

= 11.21% = 20.14%%

Significance

This is another measure of overall performance of bank. This ratio is of great

importance to the present and prospective shareholders as well as the management of

the company. As the ratio reveals how well the resources of a firm are being used,

higher the ratio better it is.

Analysis

In real sense ordinary shareholders are the real owners of the company (preference

shareholders have a preference over ordinary shareholders in the payment of dividend

as well as capital. Preference shareholders get a fixed rate of dividend irrespective of the

quantum of Profit Company).The rate of dividend very with the availability of profit in

case of ordinary share only. Thus ordinary shareholders are more interested in the

profitability of the company.

Return of equity of BAL is showing a good situation in year 2008 as compare to year

2007. In year 2007 the return on equity of BAL was 11.21 % and in year 2008 it was

20.14%, this increase shows that company is utilizing its funds properly relating to its

previous year.

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NON INTEREST INCOME TOTAL ASSETS

Non interest income x 100

Total assets

2007 2008

3290623x 100

275511483

6142240x 100

330679872

= 1.19% = 1.86%

Significance

Non interest income represents fees, commission, brokerage, and other income

and extra ordinary or unusual items if they represent income. Non interest income is

also an important source of banks earnings. While analyzing this ratio the trend of non

interest income to total assets should be considered. Whether the bank has maintained

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this ratio at a reasonable level or are there any significant changes over time? If this

ratio increases significantly, then there is a problem with the bank in generating revenue

from its mainstream activities. But on the other hand, high non interest income can also

represent a positive point for a bank. This income represents a diversification from

earnings generated from the taking and placement of money, which is subject to

interest rate and credit risk. An emphasis on fee income is another global trend along

with the growth of capital and rising ROA's.

Analysis

This ratio is increasing in the year 2008 but shows decreasing in year 2007. Over all non

markup income is increasing for the Bank. It is a positive sign.

NON INTEREST EXPENSE TO TOTAL ASSETS

Non markup expense x 100

Total assets

2007 2008

= 0.93% = 1.37%

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2554019x 100

275511483

4535382x 100

330679872

Significance

Non interest expenses represent operating expenses such as administrative

expenses, staff salaries and other charges plus extra ordinary and unusual items if they

represent expense. Lower this ratio better it is for the bank. If the level of non interest

expense to total assets is high this will also distort the ROA of the bank. Non interest

expense is a very critical number.

Analysis

This ratio is good when it is low. This ratio is higher in year 2008. It shows non mark up

expense in increasing and it should be controlled.

RISK ASSET TURN OVER RATIONet mark up after provision

Risk assets

2007 2008

3296623x 100

149942717

6142240x 100

171031183

= 2.19% = 3.59%

Significance

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Advances are the main use of bank’s assets. So it is necessary that bank earns sufficient value of

income on its investment of risk assets. So a steadily rising trend is desirable.

Analysis

In year 2008 it is higher than 2007. This is a good sign.

LIQUIDITY RATIOS

Liquidity represents the ability of a bank to efficiently and economically accommodate

deposits withdrawal as well as fund increase in assets. A bank has a liquidity potential

when it has the ability to obtain sufficient funds in a timely manner at a reasonable cost.

Illiquidity is a primary factor leading to a bank’s failure whereas high liquidity helps

otherwise weak institutions to remain funded during the period of difficulty.

“Liquidity reflects the adequacy of the

institution’s current and prospective sources of

liquidity and funds management practices.”

CURRENT RATIO

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Current Assets

Current Liabilities

2007 2008

259122914x 100

254203477

311886135x 100

302091341

= 1.02 = 1.03

Significance

Current ratio may be defined as the relationship between current asset and

current liabilities. This ratio is also known as working capital ratio. It is a measure of

general liquidity and is most widely used to make the analysis for a short-term financial

position or liquidity of a bank. It represents the margin of safety or cushion available to

the creditors. It is an index of the bank’s financial stability. It is also an index of the

strength of working capital.

A relatively high current ratio is an indication that the bank is liquid and has the

ability to pay its current obligations in time as and when they become due. On the other

hand, a relatively low current ratio represents that the liquidity position of the bank is

not good and the bank shall not be able to pay its current liabilities in time without

facing difficulties. An increase in the current ratio represents improvement in the

liquidity position of bank while a decrease in the current ratio indicates that there has

been deterioration in the liquidity position of the bank. A ratio equal or near to 2: 1, i.e.,

current assets double the current liabilities, is considered to be satisfactory. The idea of

having doubled the current assets as compared to current liabilities is to provide for the

delays and losses in the realization of current assets. However, the rule of 2 : 1 should

not be blindly followed while making interpretation of the ratio, because banks having

less than 2 : 1 ratio may be having a better liquidity than even banks having more than 2

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: 1 ratio. This is so because the current ratio measures only the quantity of current asset

and not the quality of current assets. If a bank’s current assets include debtor which are

not recoverable, the current ratio may be high but it does not represent a good liquidity

position.

Analysis:

BAL has maintained its liquidity position over the years. In 2007 and 2008 there

is increment in ratio which shows it have current assets to pay current liabilities.

ADVANCES TO TOTAL DEPOSITS

Advances x 100

Deposits

2007 2008

149942717x 100

239480772

1171031183x 100

273172088

= 62.61% =62.62%

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Significance

This is perhaps the most important ratio as far as financial analysis of a bank is

concerned. Advances represents lending to general public and deposits represent

amount borrowed from general public. Both these items represent core activities of a

bank. A bank is there to accept deposits and lend to general public. Deposits represent

source of banks funds and advances are use of funds. This ratio compares the major

source of a bank's funds with the major use of it. It signifies that how much deposits the

bank has mobilized from general public and to what extent has made use of these

deposits. Credit risk is the most recognizable risk associated with banking and granting

credit is the primary activity of a bank but at the same time interest earned on advances

is the major source of banks earnings. Although the bank wants to maximize its

earnings, but it can never lend the entire amount received through deposits. It has to

keep a certain proportion of its deposits in cash form with it as well as with SBP to meet

the day to day requirements of its customers. So there is a trade off between risk and

return. If the bank wants to increase return, it will go towards more lending thereby

enhancing risk and if the bank focuses on liquidity, it will have to forego return. Current

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accounts to are the lowest cost source of funds. The bank should strive to attract

current accounts to increase this ratio, so as to control its interest expense. The bank

should decide upon the mix of its sources and uses after taking into consideration the

CRR and SLR requirements and demographics of its depositors.

Analysis

We can see that for every one rupee deposit loan is given with the ratio 62. It is good

but it needs to be improved as increasing loans is always good source of earning for a

bank.

DEPOITS TO TOTAL ASSETS

= deposits / total asset

2007 2008

239480772x 100

275511483

273172088x 100

330679872

= 86.92% =82.61%

Analysis

This ratio explains how much deposits are in percentage and trend shows a decrease

from 2007 to 2008.

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INTEREST COVERAGE RATIO

Earning before interest and tax

Financial charges

2007 2008

15235688

1906672

5004600

16645178

= 7.99 =3.32

Significance

This ratio measures bank’s ability to pay financial charges. Interest expense is main expense of

bank just like cost of goods sold. So higher the ratio better is the ability of bank to pay this compulsory

obligation and hence better is the liquidity potential of bank.

Analysis

We observe a decreasing trend which is not favorable.

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PORTFOLIO MANAGEMENT RATIOS

Portfolio refers to the assets held by an investor taken as a group. From banking

point of view it means how the bank is maintaining its advances, investments and

lending to financial institutions with respect to its total assets. The portfolio of the bank

should be so that it contribute to overall profitability of the bank

“Portfolio management deals with managing

Advances, investments and lending to financial

Institutions with respect to the total assets of the

Bank”.

ADVANCES TO TOTAL ASSET RATIO

Advances x 100

Total Assets

2007 2008

149942717 *100

275511483

171031183

330679872

= 54.42% =51.72%

Significance

This ratio indicates proportion of advance to total assets. This is main earning

assets of bank. It has two distinct features. It is most risky earning asset and highest

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return getting asset. As we know, a proper balance should be maintained between risk

and return so bank should attain such level of advances. However a rising trend is

desirable. It indicates banks ability to compete in the market and generate sufficient

subsequent deposits.

Analysis

Over the last two years bank is showing decrease in ratio i.e.54.42%, 51.72%. It is

not good sign as it shows decrease in advances and hence earnings of the bank decrease

but risk is also decreasing as there is inverse relationship between risk and return.

GEARING RATIOS

These ratios measure the extent to which bank’s resources have been geared by

debt i.e. financed by debt in relation to share holder’s equity. It takes into account total

debt, capital employed, shareholder’s funds and total assets and then on the basis of all

these the proportion of debt is compared and it helps in understanding that what

proportion of needs should be met by debt and how much through equity.

“These ratios measure the extent to which banks

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Resources have been geared by debt i.e. financed

By debt in relation to share holder’s equity”.

Following ratios have been calculated:

1. Debt to equity ratio

2. Debt to capital employed ratio

3. Debt to total assets ratio

DEBT TO EQUITY RATIO

Long term debt x 100

Shareholders founds

2006 2008

263684274 *100

11827209

313265718

17414154

= 22.29% =17.98%

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Significance

It shows amount of long term debt per rupee of equity. In case of manufacturing

concern, acceptable ratio is 40:60. This ratio high lights composition of capital employed

of bank. In a banking concern this ratio could be 3:1

Analysis

Debt equity ratio of BAL is showing decreasing trend. It means that company is trying

to rely on its own resources and increasing its Capital.

DEBT TO TOTAL ASSET

Total debt x 100

`Total assets

2007 2008

263684274 *100

275511483

313265718*100

330679872

= 95.7% =94.73%

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SIGNIFICANCE

This ratio indicates the extent to which assets have been financed by debt. This

ratio has a direct bearing on financial risk of bank. In manufacturing concerns 50% is a

desirable proportion of assets financed by debt. However a banking concern, ratio up to

90% is acceptable as whole structure of banking is based on funds provided by the

depositors.

Analysis

This ratio for bank is same over years and 94% assets are financed through debt.

SHAREHOLDER’S EQUITY TO TOTAL ASSET

= Shareholder’s equity/ Total assets

2007 2008

11827209 *100

275511483

17414154*100

330679872

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Analysis

This ratio shows that how much bank’s assets are financed by internal resources. In year

2008 it is improved from 4.29% to 5.27%, which is not bad but bank should focus to

improve this ratio.

THE S.W.O.T ANALYSIS OF BANK ALFALAH LTD.

ISLAMIC BANKING:

Key External Forces:

External forces can be divided into four broad categories:

Social, cultural, demographic, and environmental

Forces

Political, governmental, and legal forces

Economic forces

Technological forces, and

Competitive forces

While performing an external audit, our company gathered the competitive

intelligence and information about social, cultural, demographic, economic, political, and

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technological forces as well. The overall motive was to consider and evaluate the

Opportunities and Threats for the company

Following can be some of the key opportunities and threats for Bank Alfalah.

Opportunities

The opportunities on which bank Alfalah can capitalize upon are delineated as under.

1) Extension of Local Branch Network

One of the biggest opportunities for bank Alfalah Limited is to extend its branch

network in Pakistan. The essential pre-requisites for a vast branch network are all there;

sponsors have the money, managerial expertise are available, and last but not the least

any bank with ‘Bank Alfalah Limited written in blue at its front is accepted in the

market’.

2) Establishing Foreign Branch Network

Going global could have been termed as a fad a few years ago, but now for those

business organizations that want to survive and thrive globalization has become the order

of the day. In order to increase the bottom line figure, it really is crucial. But the senior

management would start implementing this course of action once they feel that they have

got a strong hold in Pakistan.

3) Capitalizing On Information Technology

The information revolution has certainly made its inroads in almost all human

functions. If Bank Alfalah Limited’s senior management and the IT division make a

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concerted effort to make best possible use of this miracle of human mind it would enable

Bank Alfalah Limited to harness unexplored benefits of immense magnitude.

4) Unexplored Market of Multinational Corporations

Unfortunately in spite of unprecedented image building efforts, Bank Alfalah Limited

still is an unattractive bank for big multi nationals functioning in Pakistan. If the

management is able to develop a strong relationship with such MNC’s then it would open

doors of huge and unimaginable opportunities for Bank Alfalah Limited. If even a single

MNC becomes a corporate client of Bank Alfalah Limited i.e. it deposits its revenue with

Bank Alfalah Limited, pays its salaries through Bank Alfalah Limited, does trade

dealings through Bank Alfalah Limited, and avails credit facilities offered by Bank

Alfalah Limited, it would make a world of difference to Bank Alfalah Limited.

5) Customers are more willing

Muslims are more consciously differentiate the Islamic-base banking from interest-

base banking. That is why there is large caution of expansion.

THREATS

The predominant threats Bank Alfalah is facing at the moment are discussed in the

following lines.

1) Private Sector Banks

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Bank Alfalah Limited is at present facing really tough competition from not only the

first line international banks (ABN AMRO, Standard Chartered, Citi Bank) but is also

having a neck to neck race with other privatized banks such as Askari Commercial Bank

Limited, Union Bank, Prime Commercial Bank, Faysal Bank Limited, Bank Al-Habib

Ltd etc. All the new schemes launched by these banks and their plans to expand branch

networks are a real threat for Bank Alfalah Limited.

2) New Trade Polices

Introduction of new trade policies and laws are also been a source of threats to the

organization due to the imposition of new rules and terrifies, previous maintained

regulations have to be amended.

3) Network Expansion By Foreign Banks

Foreign banks have a lot of plus points as compared to Pakistani banks (state owned

and private); they have better products, better and personalized service, desirable interest

rates, foreign branch network, but they definitely lack in local branch network (in

Pakistan). Literary no foreign bank has been able to expand its network to far-fetched

places of Pakistan. Pakistani banks (private banks in general and state owned banks in

particular) are spread all over Pakistan. This is an intangible asset for Pakistani banks.

But if any of the foreign banks expands it network, backed by their traditional powerful

service, then it might prove to be the start of downfall for Bank Alfalah Limited, unless

and until Bank Alfalah Limited raises its level of service and product feasibility to the

international standards.

4) If Pakistani Banks (Especially State Owned Banks), Backed By Huge

Network Improve the Service They Give And Their Employee Skill Set

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State owned banks like National Bank of Pakistan and Habib Bank Limited have

huge networks, they have the experience, but the only set back they have is below par

service and lack of motivation amongst the employees. If their corporate strategy is

altered, and the managerial policy is revitalized, enabling them to improve upon the

service they give and enabling them to convert their work force into human capital then

such financial institutions backed up by their huge networks pose a potential threat to

Bank Alfalah Limited. So, Bank Alfalah Limited should endeavor to expand their branch

network as efficiently as possible and as soon as possible.

5) Terrorist Image of the Country

After the 9 / 11 incident every kind of transaction that uses to take place with the

outside world has assumed a different mode. The trade finance transactions are the bread

and butter for the commercial bank, were also hampered by that terrorist attack on 11 th of

September i.e. the magnitude of orders the exporters were receiving decreased by a great

deal, but as far as our image in the international community is concerned there is still a

considerable room for improvement. If this situation further aggravates rather than

improving, the trade finance business would really be hampered, and one of the major

earning avenues for Bank Alfalah Limited will loose its footings. This fact poses a real

threat to the sanctity of Bank Alfalah Limited.

6) Inconsistency in Government Policies

This is a phenomenon that could hamper smooth functioning of any organization

working in a particular country. Although the sponsors of Bank Alfalah Limited --- Al-

Nahayan Family --- are really committed to invest more and more in the country but still

any drastic change in either the economic policies like increase in taxation rates, or any

change in the foreign policy, which could hurt Pakistan’s image could also shake the

investor confidence and also could lead to a decrease in the repute of the entire banking

sector of Pakistan.

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STRENGTHS

The predominant strengths of Bank Alfalah Limited are

1) Humble Management

The senior management of Bank Alfalah Limited is considerably humble. Their

humility is an integral part of the organizational culture of the bank. The modern

management techniques have discarded the bureaucratic style of management in which

employees were treated as servants if not as slaves. In the contemporary business world

employees are said to be the biggest and the most crucial assets of a business concern,

specifically if we are talking about a service industry and this is precisely the

management policy Bank Alfalah Limited follows. The humility of the management

serves as a big morale booster and encouragement catalyst for all employees in general

and new inductees in particular.

2) Strength And Commitment Of Sponsors

Bank Alfalah Limited is a project of Al-Nahayan family, which is a renowned

Abu Dhabi based investor family. The first project of this particular family was Bank of

Credit and Commerce International (which later on became on of the most renowned

banks of the Muslim world). BCCI was acquired by Habib Bank Limited (a nationalized

bank) and as a result BCCI became Habib Credit and Exchange Bank (H.C.E.B). The

bank functioned under this particular name for six years and then Al-Nahayan family

bought 70% of its shares from Habib Bank Limited and renamed the institute as Bank

Alfalah Limited. Thus in real terms the same family reinvested in their lost project and

tried to rejuvenate their brainchild. This reinvestment shows the investor’s trust,

commitment, and perseverance to transform Bank Alfalah Limited into one of the

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strongest financial houses of Pakistan. The “Al-Nahayan” family is a royal family and

this fact further adds to the bank’s inherent strength.

3) ‘Kaizan’

Kaizan is a process of continuous improvement in production and every aspect of

value added (Japanese). In a very short time span the management of Bank Alfalah

Limited has been able to develop its image in a very effective and efficient manner.

Through the laborious efforts of the top management and the employees, the entire

organization as a whole has been able to continuously add its prestige as a reliable,

service oriented, and flourishing financial institution. When we compare the image of

Habib Credit and Exchange Bank with that of Bank Alfalah Limited we find a world of

difference, and when we compare the image of Bank Alfalah Limited at its inception with

its present image we find an even greater difference. This fact proves the thesis that there

has been continuous value addition. The number of individuals and corporate entities that

feel comfortable while dealing with Bank Alfalah Limited is increasing on a daily basis.

4) Phenomenal Growth In Profitability, Branch Network And Deposit

Portfolio

In the very first year of its inception Bank Alfalah Limited closed its operations at

a deposit portfolio of Rs. 7 billion, at the end of the second year the deposit portfolio had

risen to Rs. 14 billion. Thus Bank Alfalah Limited is growing at a multiplier rate of 50%.

The profit before provisions and taxation of your bank for the year 2006 stood at Rs.

3.264 billion which was 10% higher than that of last year. The deposit grew by 7.7% and

stood at a figure of Rs. 239.509 billion while advance portfolio grew by 26% and showed

a figure of Rs. 149.999 billion. When Bank Alfalah Limited started its operations it only

had three branches and in a short time span the branch network has expanded to 195.

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5) Vastly Experienced Management

The people who occupy the top positions in Bank Alfalah’s management

hierarchy are certainly no mugs at what they do. Rather they are as capable and as

competent as they come. Their superior management skills certainly do create a

synergistic effect when coupled with the enormous amount of trust sponsors have put in

the management. One of the most evident proofs of above average management expertise

are the deposit portfolio growth, profitability growth, and branch network growth figures

shown under the previous heading.

6) Highly Trained Human Resource Department; Transformation Of Work

Force Into Human Capital

One of the most significant catalysts, management of BAL had incorporated---and

it still is incorporating---in the organization, when H.C.E.B was transformed into Bank

Alfalah Limited, was induction of young and energetic business graduates. This was done

in order to achieve quite a few objectives; one was to raise the overall skill level of the

work force so that service provision could be improved and the second objective was to

reduce the average age of Bank Alfalah Limited’s employees so that an overall sense of

change is trickled down to the grass root level of the organization. Bank Alfalah Limited

has an excellent selection / recruitment and training program which are undertaken at its

Training and Development Center, Human Resource Division Karachi.

7) Superior Consumer Finance

In contemporary banking consumer finance has assumed immense significance, as

it is that department of a commercial bank whose personnel directly and extensively deal

with the client body. One of the most predominant sub departments of consumer finance

is Alfalah Car Finance. The customer interface is greater in the consumer finance

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department, and the diligent staff of Bank Alfalah limited enriched with its superior

service and relationship skills attracts / persuades these clients to develop relationship

with Bank Alfalah Limited in the arena of corporate banking as well. Thus a strong

consumer finance department really helps the bank to expand its corporate banking

business.

8) Crucial Location Of Branches

All the forty five branches of Bank Alfalah Limited are located at extremely

crucial and vital locations, which is indeed a very significant factor towards earning more

profit. Moreover all of the branches are very well furnished which is an integral

characteristic of a good bank in this age of consumerism.

9) Image Building Activities

Activities such as building of Alfalah Square at Liberty Lahore, the China Khan at

the Alfalah Square, Alfalah Mini Golf Course, and Shahdin Manzil (proposed main

branch, Lahore at The Mall, under construction) have really contributed a lot towards the

image building process of Bank Alfalah Limited. Such activities also make people aware

of the rejuvenation process of Bank Alfalah Limited. Such activities are classified as

strength because they involve people in the change process that contributes a lot towards

building customer loyalty.

WEAKNESSES

The chief weaknesses are enlisted as under

1) Small Size

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Bank Alfalah Limited is small in size; there is no doubt about this fact. Although, as I

mentioned in the strengths section, the branch network is expanding at a phenomenal rate

but still the size is not big enough as compared to some of the big banks present in the

market. Bank Alfalah limited has 189 branches in the whole of Pakistan. A huge branch

network is always an invaluable asset for any bank. Customers simply love it when they

could see another branch of their own bank at every turn they take. Extensive branch

network might reduce per branch profit but it is very likely to raise the overall profit

figure for the entire organization as a whole.

2) Lack of Research Cell

There should be a research cell in the bank, which should be engaged in gathering the

information about the present actions of its competitors

3) Uneven treatment with customers

Customers having accounts with small amounts are not given same services and

dealing given to those with high accounts.

4) Skill Set Of Employees Is Not Up To The Mark As There Is No Job Rotation

The contemporary banking all over the world has taken a unique turn i.e. they have

made job rotation an integral part of their management philosophy. Job rotation adds

value to every single employee, as he is able to perform a variety of jobs related to

banking profession. Moreover job rotation increases the human capital pool of the

organization as every one is trained in more than one sphere of banking. Bank Alfalah

Limited completely lacks this.

5) Foreign Banks Still Are A Little More Prestigious

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Although Bank Alfalah Limited is continuously adding to its prestige, but still it can

not be rated as a bank with the same repute as International Banks functioning in

Pakistan, for instance ABN AMRO Bank, Citi Bank and Standard Chartered Grindlays.

Banks function as custodian of people’s possessions, act as their agents, represent clients

in trade dealings outside the country, and give different types of guarantees and in all of

these transactions repute plays a central role. And when it comes to repute foreign banks

have a little more of it as compared to Bank Alfalah Limited.

6) Bank Alfalah Limited Does Not Possess Foreign Network

Foreign banks and some local banks having international network have this edge over

Bank Alfalah Limited. Banking transactions regarding trade finance constitute a very

important part of contemporary banking and moreover they are said to be the bread and

butter for the commercial bank. Bank Alfalah Limited, for such transactions has to rely

on its correspondents and agents in other countries, and naturally has to pay them some

remuneration --- an expense banks having foreign network do not have to incur.

7) No Advertising in Electronic Media

Bank Alfalah does embark upon occasional sales promotion activities, it also gives

advertisements in the print media, but it has never flashed an advertisement on the

television screen, which is said to be the strongest of all Medias. Some other commercial

banks are really capitalizing on the power of this media; examples are Askari commercial

bank, Muslim commercial bank, Habib Bank Limited etc.

INDUSTRY ANALYSIS:

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1) External Factor Evaluation (EFE) Matrix

External factor evaluation matrix is a very useful tool towards assessing as to what

are the factors that constitute the set of the most significant opportunities and threats. I

found it considerably enlightening because of its two dimensional approach towards

assessing an organization i.e. this particular matrix not only considers the relative

importance of the opportunities and threats by assigning them weights but it also allots

the factors rates on a one to four scale depending upon the kind response the organization

is giving to the opportunities and threats.

In the summer break I did my internship at Bank Alfalah Limited, Garden Town

Branch so assessing the opportunities and threats for Bank Alfalah Limited did not pose

any serious difficulties. But since I was also suppose to weight and rate the opportunities

and threats I had to go to the bank in order to get some views from the members of the

organization as to what do they think about the relative importance of the factors and

what is their view point regarding their organization’s response to these opportunities and

threats.

The resultant score of 2.23 shows an average External position of the bank.

OPPORTUNITIES WEIGHT RATINGWEIGHTED

SCORE

Extension Of Local Branch Network 0.15 3 0.45Establishing Foreign Branch Network 0.10 1 0.10Capitalizing On Information Technology 0.10 3 0.30Unexplored Market Of MNC’s 0.10 3 0.30More customers are willing 0.05 1 0.05

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THREATS WEIGHT RATINGWEIGHTED

SCOREPrivate Sector Banks 0.10 3 0.03New Trade Policies 0.05 1 0.05Network Expansion By Foreign Banks 0.10 3 0.30Pakistani Banks Improve Their Services 0.05 3 0.15Terrorist Image Of The Country 0.10 2 0.20Inconsistency In Government Policies 0.10 3 0.30

TOTAL 1.00 2.23

2) Internal Factor Evaluation (IFE) Matrix

The IFE matrix is constructed as a summary step to performing the Internal Audit /

Assessment. Its basic purpose is to list down the major Strengths and Weaknesses of an

organization. Other than these factors, its construction is more or less similar to that of

the EFE Matrix.

As I have mentioned before, I did my internship at Bank Alfalah Limited, Garden

Town Branch. Therefore I have taken the Strengths and Weaknesses of Bank Alfalah

Limited to construct this matrix.

The resultant score of 3.15 shows the strong position of the bank internally.

STRENGTHS WEIGHT RATINGWEIGHTED

SCORE

Humble Management 0.06 3 0.18

 Commitment Of Sponsors 0.08 3 0.24 ‘Kaizan’ 0.10 4 0.4 Phenomenal Growth In Profitability 0.05 4 0.2Vastly Experienced Management 0.02 2 0.04 Highly Trained HR 0.05 3 0.15

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 Superior Consumer Finance 0.10 3 0.3 Crucial Location Of Branches 0.02 4 0.08 Image Building Activities 0.02 1 0.02

WEAKNESSES WEIGHT RATINGWEIGHTED

SCORE

Small Size 0.15 3 0.45

Lack of research cell 0.05 4 0.2Uneven treatment with customers 0.05 2 0.1Skill Set Of Employees Is Not Up To The Mark

0.15 3 0.45

Foreign Banks Still Are A Little More Prestigious

0.04 4 0.16

Bank Does Not Possess Foreign Network 0.02 1 0.02No Advertising In Electronic Media 0.04 4 0.16

TOTAL 1.00 3.15

3) Competitive Profile Matrix

The Competitive Profile Matrix identifies a firm’s major competitors and their

particular strengths and weaknesses in relation to a sample firm’s strategic position. First

of all the critical success factors are determined and examined. Rates and weights are

assigned to each factor. Rate are company based which means the significance and

importance of such factors with in a firm whereas weights are industry based which

means their relative importance in an industry. So weights from 0.0 to 1.0 are assigned to

each critical success factor and the total of such weights should not exceed 1. On the

other hand rates are assigned from 1 to 4, 1 being the minimum and 4, the maximum.

Each factors weight is multiplied by the factors rate and hence the weighted score is

observed. Here advertising, turnover, organizational culture, market share etc are

considered to be the various critical success factors.

For comparison with Bank Alfalah Limited, I have chosen Askari Commercial Bank

and Muslim Commercial Bank. The reason for such a choice is simple. As Bank

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Alfalah Limited is a local bank; its primary competitors are the other local private banks.

Other than Bank Alfalah Limited, these two banks are providing the best services to the

general public.

Sr. No.

CRITICAL SUCCESS FACTORS

WEIGHT

BANK ALFALAH LIMITED

ASKARI COMMERCIAL

BANKMCB

RatingWt.

ScoreRating

Wt. Score

RatingWt.

Score1 Market Share 0.03 2 0.06 2 0.06 3 0.092 Price Competitiveness 0.02 3 0.06 2 0.04 2 0.043 Advertising 0.15 3 0.45 3 0.45 3 0.454 Financial Position 0.03 4 0.12 4 0.12 3 0.09

5Variety Of Products

0.02 4 0.08 2 0.04 3 0.06

6 Online Banking 0.05 0 0 3 0.15 4 0.27 Location 0.15 3 0.45 1 0.15 1 0.158 Domestic Networking 0.1 4 0.4 2 0.2 2 0.29 International Network 0.05 0 0 4 0.2 4 0.210 Customer Loyalty 0.1 4 0.4 3 0.3 3 0.3

11Environment & Decor

0.05 3 0.15 4 0.2 3 0.15

12Customer Relationship

0.15 4 0.6 3 0.45 2 0.3

13Efficiency of Staff

0.05 3 0.15 3 0.15 3 0.15

14 Brand Recognition 0.05 2 0.1 2 0.1 3 0.15  TOTAL 1   3.02   2.61   2.53

4) The Strengths-Weaknesses-Opportunities-Threats SWOT matrix:

SWOT matrix is formulated by considering and evaluating the strengths, weaknesses,

opportunities and threats of an organization. Through proper and keen observation, the

following factors are been initialized for the SWOT analysis of Bank Alfalah Ltd.

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STRENGTHS WEAKNESSES

1. Humble Management2. Commitment Of Sponsors

3. ‘Kaizan’4. Phenomenal Growth In

Profitability5. Vastly Experienced

Management6. Highly Trained HR7. Superior Consumer

Finance8. Crucial Location Of

Branches9. Image Building Activities

 1. Small Size2. Lack of research cell3. Disproportionate Presence

Of Old Staff 4. Skill Set Of Employees Is

Not Up To The Mark5. Foreign Banks Still Are A

Little More Prestigious6. Bank Does Not Possess

Foreign Network7. No Advertising In

Electronic Media

 

OPPORTUNITIES SO STRATEGIES WO STRATEGIES 1. Extension Of Local Branch

Network2. Establishing Foreign

Branch Network

3. Capitalizing On Information Technology

4. Unexplored Market Of MNC’s

5. More customers are willing

 

1. Expansion of branch network to increase profitability

2. Capturing the market currently held by the foreign banks

3. More investment in the projects of Multi National companies

4. More Advertisement to promote the

increasing branch network

1. Increase Branch Communications

Network2. Product development3. Expansion to foreign

countries to facilitate Expatriates in transmitting money

4. Training of the existing employees to increase their efficiency and effectiveness

 

THREATS ST STRATEGIES WT STRATEGIES1. Private Sector Banks2. New trade policies3. Network Expansion By

Foreign Banks4. Pakistani Banks

Improve Their Services 5. Terrorist Image Of The

Country6. Inconsistency In

Government Policies

1. High customer loyalty and experience can be use to avoid disasters and breakdown in service

2. More effective leadership to increase competitive and relative advantage

3. Increased profits to be used to open new branches to compete with competitors

4. Opening new branches in business related hubs

1. Increase the marketing to the customers to meet the competitors claims

2. Decrease the number of personnel to avoid the threat of takeovers

3. Increasing employee retention through the introduction of attractive pay and benefits

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5) Strategic Position and Action Evaluation (SPACE) Matrix

This four-quadrant framework indicates whether aggressive, conservative, defensive, or

competitive strategies are most appropriate for an organization. The axes of the SPACE

matrix represent two internal dimensions (financial strength [FS] and competitive

advantage [CA]) and two external dimensions environmental stability [ES] and industry

strength [IS]). These four factors are the most important determinants of an

organization’s overall strategic position. For Bank Alfalah Ltd. this matrix is been drawn

using the following critical success factors

Ratings Average

Financial Strength (FS)

Bank’s revenue increased by 74 % 4

3.50

Bank’s profits increased by 43.5 % 4

Return on assets have also increased showing effectiveness of bank in proper utilization of its assets 3

Return on equity has increased indicating that the bank has become more attractive for its investors 3

Industry Strength (IS)Growth and Profit potential 4

3.50Deregulation provides geographic & product freedom & increases competition in banking industry

3

Environmental Stability (ES)High inflation and Technological changes -4

-3.33Political instability -3

Competitive pressure and Demand variability -3Competitive Advantage (CA)

Becoming increasingly Competitive -2-2.67Bank’s customer base is expanding and strong Customer loyalty -3

Providing services all over Pakistan -3

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       5

       

Conservative   4 Aggressive  

 3

 

 2

 

       1

       

-4 -3 -2 -1 0 1 2 3 4

 -1

 

 -2

 

 -3

 

 Defensive-4

  Competitive

143

DIRECTIONAL VECTOR COORDINATES X - axis:Industry Strength + Competitive Advantage

3.50 + (-2.67) = 0.83 Y - axis:Financial Strength + Environmental Stability

1.50 + (- 3.33) = 0.17

Page 144: Report on Bank Alfalah

       -5

       

From the examination and evaluation of the above mentioned SPACE matrix for Bank

Alfalah Ltd.,it can be represented that the bank is currently been falling into the region of

being AGGRESSIVE, which shows the banks is in an excellent position to use its

internal strengths to take advantage of external opportunities overcome internal

weaknesses and avoid external threats.

6) Boston Consulting Group (BCG) Matrix

This matrix enhances multidivisional firms’ efforts to formulate strategies. It stresses

that autonomous divisions (or profit centers) constitute the business portfolio. It states

that a firm’s divisions may compete in different industries requiring separate strategy.

This matrix

Graphically portrays differences among divisions

Focuses on market share position and industry growth rate

Manages business portfolio through relative market share position and industry

growth rate Relative market share position is defined as“Ratio of a

division’s own market share in a particular industry to the market

share held by the largest rival firm in that industry”

                   

 Relative Market Share Position

      High 1.0 Medium 0.5 Low 0.0  

 High 1.0 Stars

IIQuestion Marks

      

144

Bank

Alfalah

Limited

Page 145: Report on Bank Alfalah

Ind

ustr

y S

ale

s G

row

th

Rate

   

 Medium 0.5

Cash Cows III

Dogs IV

 

   

   

   

  Low 0.0                     

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7) Internal – External Matrix

This matrix is a continuation and an advanced form of the Boston Consulting Group

(BCG) Matrix. The same interpretation goes for this matrix as well. The non-availability

of the department wise data limits me to construct only a rough sketch of the matrix.

           THE IFE TOTAL WEIGHTED

SCORES (3.15)     Strong Average Weak

 3.0 to 4.0

2.0 to 2.99

1.0 to 1.99

TH

E E

FE T

OTA

L W

EIG

HTED

SC

OR

ES

(2

.23)

 4.0 3.0 2.0 1.0

I II IIIHigh

3.0 to 4.0

3.0 IV

V VIMedium

2.0 to 2.99

2.0

VII VIII IXLow

1.0 to 1.99

        1.0            

146

Bank Alfalah

Page 147: Report on Bank Alfalah

8) The Grand Strategy Matrix:

The upcoming details and evaluation will show a grand strategy matrix for Bank

Alfalah Ltd. based on the observation.

RAPID MARKET GROWTH

Quadrant II

1. Market development

2. Market penetration

3. Product development

4 Horizontal integration

5. Diversification

6. Liquidation

Quadrant I

1.Market development

2. Market penetration

3. Product development

4. Forward integration

5. Backward integration

6. Horizontal integration

7. Concentric diversification

STRONG

COMPETITIVE

POSITION

WEAK

COMPETITIVE

POSITION

Quadrant III

1. Retrenchment

2. Concentric diversification

3. Conglomerate diversification

4. Divestiture

5. Liquidation

Quadrant IV

1. Concentric diversification

2. Horizontal diversification

3. Conglomerate diversification

4. Joint Venture

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SLOW MARKET GROWTH

According to my observation while working with Bank Alfalah Ltd.,It have experienced

and evaluated that my bank lies in the first quadrant of the Grand Strategy Matrix,i-e,

Quadrant I. This is because Bank Alfalah is enjoying a moderate rapid growth in the

market and the competitive strategy position as well in the industry. So for this purpose,

we can say that Bank Alfalah is in an excellent strategic position. So continued

concentration on current markets and products are appropriate strategies. Also Bank

Alfalah Ltd. can afford to take risks and advantages of external opportunities in many

areas, this is the reason that now Bank Alfalah Ltd, has started the ISLAMIC banking in

the countries like Afghanistan and Bangladesh. So market development, market

penetration and product development are appropriate strategies.

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MARKETING MIX OF BANK ALFALAH LTD.

Marketing mix is a set of tools you need for establishing your detailed marketing

plans and forecasting your sales to pursue the marketing objectives in the target markets.

Thus marketing mix of any organization is very much important in order to ascertain the

overall functioning of the organization. Bank Alfalah has a strong marketing mix

structure for its branches growth. Marketing mix of Bank Alfalah will be focusing the

following major aspects:

Product

Price

Place

Promotion

PRODUCT

Due to trend setting and innovative banking, Bank Alfalah presents a range of

quality products with revolutionary perks and convenience. Alfalah provides a wide

range of products/ services to its customers, which can be compared with any foreign, or

national bank in terms of quality and reliability. The acceptability of these products is

very much effective to the customers. Bank Alfalah has now achieved a competitive

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advantage over other banking institutions by offering a complete range of banking

solution for its valued customers.

As per current laws and State Bank of Pakistan’s regulations, customers are

required to provide proof of their identity and a satisfactory introduction to open any

Bank Account. Term Deposit account can be opened by providing a copy of national

identity card only.

Here is an overview of different products and services formulated by Bank Alfalah.

Nature of Accounts Offered

No doubt in saying that the basic function around which the banks operations

circulate constitute the opening of accounts and ultimately enhancing the deposit base for

the branch. Accounts offered by the banks for the deposits of customers constitute the

basis of their operations and develop the basic relationship between a banker and

customer.

Deposit Products

Likewise, Bank Alfalah has formulated a number of accounts for the deposits of

customers, with unique features. These are:

Current Accounts

This account offers unlimited deposit and withdrawal facility to facilitate business

transactions. There is absolutely no limit on number of transactions deposits and

withdrawals. Individuals, partnerships, companies, associations, clubs, societies, and

NGOs are eligible to open current account.

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PLS SAVINGS Accounts

Saving account is the most common account for individuals. Saving accounts are

designed to mobilize savings primarily from a large number of individuals and

households. Any one or more individuals or partners can open a PLS saving account with

the bank.

ROYAL PROFIT: 

Royal profit is a highly yield rupee account intended to provide higher rates of

profit to high net worth customers and greater flexibility and convenience in terms of

transactions.

BASIC BANKING ACCOUNT:

Initial deposit for account opening is Rs. 1,000 with no minimum balance

requirement.

 

Non interest bearing checking account.

 

Maximum 2 deposits & 2 withdrawals through cheque are allowed.

 

Free debit card can be used to withdraw cash and make purchases at thousands of

outlets across Pakistan which provides access to funds 24 hours a day.

 

No restriction on ATM withdrawal.

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Alfalah Education:

Alfalah Education is a Term Deposit product with No Additional Cost (NAC)

education insurance cover for account holders with school going children. Alfalah

Education Account , beside offering competitive return on TERM DEPOSIT , offers

tuition fee reimbursement of children for 15 years of schooling or up to their 20th

birthday, in the unfortunate event of the death (either through accident, illness or natural

causes) of the main breadwinner (account holder) parent.

Alfalah Education offers a competitive return on term deposit and secondly, it creates a

contingency provision for our school going youth’s education in the hapless event of the

death of any major breadwinner. The product seems rewarding in the current scenario of

increasing number of children of school going age and the general public interest in

quality education of their off springs.

Alfalah Mahana Amdan:

Alfalah Mahana Amdan is a 3 year TDR with expected rate of profit of 10% p.a.

This term deposit will provide an opportunity to individual/joint customers to enjoy

higher returns that will automatically be credited to his/her current/PLS/RP/BBA account

on 1st working day of each month.

This facility is not available for business and corporate customers.

Alfalah Kifayat :( more than a saving account)

Features:

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Any Pakistani resident over the age of 18 can open this account. This account is

for individual/joint customers only. Other customers like companies, corporate etc

are not eligible for opening of this account

Minimum balance requirement for opening this account is Rs. 10,000/- with a

maximum of Rs 1, 000,000/-

Three debit transactions are allowed in a month either through cheques or Debit

Card/POS machine.

There is no restriction on deposit transactions.

The bank will issue the first cheque book of 25 leaves and a Debit card free of

cost.

Profit will be calculated on monthly minimum balance basis and will be credited

in the account on quarterly basis. No profit shall be payable for a particular

month, if the minimum balance for any particular day of said month falls below

the amount of Rs. 10,000/-.

All service charges are as per the prevailing ‘Schedule of Charges’.

Only one account per customer will be allowed across all branches of Bank

Alfalah.

NOTICE DEPOSITS

These are the short-term deposits of customers where the notice is to be given to the

bank prior to the withdrawal. Profit rates for these deposits are:

07 - 29 days 4.00%

30 days & above 4.50%

TERM DEPOSITS

Term deposit is a fixed PLS account where the profit rates increase with the amount as:

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Tenures Rates of profit

1 Month 3.50%

3 Months 4.00%

6 Months 4.25%

1 Year 4.75%

2 Years 6.00%

5 Years 6.50%

Salient features:

Short to long term deposits

Choice of term 1,3,6,12,26 & 36

Minimum balance required Rs. 50,000/-

Profit paid on maturity of respective term profit rates increase with tenure and

amount

FOREIGN CURRENCY ACCOUNTS

Due to the increasing globalize business; all leading commercial banks have been

offering foreign currency accounts to their customers. Bank Alfalah has done it by

facilitating its customers to have their foreign currency accounts in the bank.

At present, BAL offers US Dollar & UK Pound accounts and profit is being paid on half

yearly basis.

ON-LINE SERVICE

Bank Alfalah provides on-line services to its customers. At present, this service

facilitates the customers to deposit and transfer their amounts from one branch to another

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of BAL. It is being planned to launch a universal account to update this facility and make

it more extensive.

OTHER CONSUMER PRODUCTS

Besides the accounts variety that has been mentioned in the previous sections,

Bank Alfalah Islamic Banking provides a wide range of products that are purely Islamic

based.

These products fall in the category of Musharakah, Maharajah based financing, that is

related to the trade concerns and not the interest based financing or mark up thing.

ALFALAH VISA CARDS (FREE forever)

Your Bank Alfalah Credit Card is your partner everywhere and is globally accepted and

welcomed at locations displaying the VISA logo. It is accepted at nearly 30 million

locations in more than 150 countries around the globe and over 18,000 Bank Alfalah’s

establishments in Pakistan.

Alfalah VISA lets you pay for shopping, travel, entertainment, meals and much more.

Card members are facilitated through a number of promotions from time to time. In

addition, there are a number of strategic business partnerships with leading local and

international brands for purchase of home appliances at exciting Step-BY-Step (SBS)

monthly installment plan with free home delivery at lowest interest rates.

ALFALAH HILAL CARD (Debit Card)

In our endeavor to give you versatile banking options to fulfill your financial needs,

Bank Alfalah Limited presents you the Alfalah Hilal Card, the first Visa Electron

International Debit Card which gives you an unlimited access to your current / savings

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account with a simple swipe, at millions of retail shops and ATMs, worldwide. The

Alfalah HilalCard is globally accepted welcomed at all locations displaying the VISA/

ELECTRON/PLUS logos with self-printing POS terminals. Your card is accepted at

nearly 13 million physical locations in more than 130 countries round the globe with

above 14,000 major establishments in Pakistan.

What's more, it is easy to operate and can be used on any electronic self-printing POS

machine where VISA is accepted, locally and internationally. No more hassle of

remembering your PIN for retail transactions and no need to go to the ATM for cash

withdrawal, one swipe and your transaction is complete.

CAR FINANCE

Financing a car at Alfalah Bank is very easy with the due favor of no collateral

requirement. Alfalah Car is a consumer-financing scheme that enables a customer to own

his desired car at easily affordable and flexible installation with minimum down payment

and insurance. All maintenance and insurance expenses are borne by the bank because of

the reason that the ownership of the car is still with the bank even after the signing of the

contract. The bank is just receiving the rentals from the customers. All businessmen,

Corporate Employees, Salaried and self-employed professionals having net take home

income in excess of three times the monthly installment are eligible to take the advantage

of this scheme.

The customer is able to finance their vehicle(s) the smart way with us. Bank will

purchase the vehicles(s) of the customer’s choice and later rent to the client at a pre

agreed rental amount. Ownership of the vehicle(s) is transferred to the client upon

satisfactory payment of all the rentals by the time the customer’s security deposits period

expires.

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ALFALAH AGRI FINANCE

Bank Alfalah Ltd. (BAL) agri finance program has been named as "Bank Alfalah

Zarie Sahulat”. Bank is extending this service to the clients on a competitive markup rate.

BAL model is in letter and spirit based on SBP instruction. The scheme now covers

financing of a multitude of activities related to crop production, harvesting,

transportation, marketing, storage, processing, packing, export, agri development,

working capital and fixed investment financing of agri non crop activities, storage, silos,

etc. making it quite exhaustive and comprehensive. The products have been, therefore,

designed keeping in mind objectivity of practical applicability in market scenario and to

cater to the most commonly demanded items of agricultural financing by farmers

Alfalah Karobar finance

a) AKF is a Running Finance facility between Rs 0.50M to Rs 10.0M.

 

b) Tailor-made product for SMEs for their working capital financing based on the

cash flow methodology. (Our Edge = Better pricing, quicker TAT and low

processing charges.)

 

c) At Bank Alfalah, 65 branches are designated to deal with AKF business in the

entire country.

 

d) The purpose of the AKF is financing procurement of raw material, finished goods

and receivables of SME businesses.

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MONEYGRAM

Bank Alfalah limited, in collaboration with Money Gram, offers remittance service

to Pakistan. Money Gram is person to person money transfer service that allows

consumers to receive money in just a few minutes. Money Gram is available in over 156

countries and in more than 40,000 locations worldwide.

With Money Gram your money is transferred immediately and usually arrives at the

receiving end within 10 minutes, other services can take days or weeks. There are no

complicated procedures and you do not need a bank account or a credit card. What’s

more, the receiver is handed the cash immediately.

SOME SERVICES OF BANK ALFALAH LTD.

In addition to the above mentioned products offerings by the bank, we are engaged in

providing some extraordinary facility services to our customers as well. The details are as

under:

Bank Alfalah Rupee Traveler Cheques

Rupee traveler’s cheques are being pioneered by MCB Bank limited initially but

these days many banks are engaged in providing this service to the clients. Rupee traveler

cheques are been issued at different denominations at Bank Alfalah.

Relationship Banking

Relationship banking is basically a term been used for the purpose of the banking 365

days all along and 24 hours a day. The Bank prides itself on recognizing and fulfilling the

varied financial needs of its customers. In doing so, it tries to develop and build upon

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relationships that are based on mutual trust and confidence: the very essence of what they

call "Relationship Banking". A customer can operate his account from any branch in

the country, or through its 24-hour ATMs.

Bank Alfalah Lockers

Before disclosing the details of lockers facility by the bank, a quote needs to be

mentioned,

“If your jewellery has been giving you sleepless nights, and the prize bonds tucked in

the bottom drawer make you feel tense, it's time to discover peace of mind.”

Bank Alfalah provides safe deposit locker facility to its customers for safe keeping of

their valuables like documents, securities and jewellery etc. For the snatching of the

peace of mind, Bank Alfalah is the best Trustee amongst all. Because of the reasons that

the bank is providing extraordinary services for the easy lockers.

The online Banking

Contrary to other banking organizations, Bank Alfalah is constantly engaged in

finding new ways to facilitate its customers and to increase its customer net. THE BANK

ALFALAH’s ON-LINE BANKING is a competitive edge for them; because in this

service they provide a facility to their customer that they can operate transfer their

amount on a phone call! All the requirements for inquiries, transactions, suggestions and

complaints are handled over the phone.

Phone Banking

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24 hours UAN connectivity with unmatched ease and convenience servers our

customers efficiently through interactive Voice Response delivering cards, PIN

generation and other services.

Automated Teller Machines (ATMs)

The ATM’s are provoking new ways to attract the customers through facilitating

transactions. The Auto Teller Machines at Bank Alfalah are continuously running and

delivering instant cash facilities to the customers any time in the day. Its ATMs allow the

customers an access to their money 24 hours a day, 7 days a week, giving you flexibility

to bank at your convenience.

Miscellaneous Services:

o Issuance of Pay Order

o Issuance of Demand Draft

o Collection of Local, outstation and foreign bills

o Import export facilitation

PRICEThe term pricing refers to:

“The key to pricing is to Build value into the product and price it accordingly.”

Bank Alfalah has to face the ever-increasing competition in the fabric industry. As the

number of competitors are increasing day by day but still Bank Alfalah enjoys a

reasonable market share with the facts of providing excellent services amongst the

competitors.

BAL provides different products and services to its customers, which have been

discussed in previous section. Pricing of products means the commission to be paid by

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the customer in return of services provided by the bank. The price paid for the services

mainly include:

Mark up

Bank charges

Fees and bank commission etc.

These charges and commissions are prescribed on Schedule of Bank Charges (SOC)

that keeps on changing time-to-time, and issued by the bank periodically (generally after

six months).The price charged for all the products and all the services is given in

complete detail in the schedule of bank charges for Islamic banking are as follows:

PLACE

Pricing refers to the following methodologies taken by an organization:

“Various activities the company undertakes to make the product accessible and

available to the target customers”

Also,

“Its can be viewed as set of interdependent organization involved in the process of

making a product or service available for use or consumption”

Place refers to the means by which our customer acquires your product. This includes the

actual place it is purchased (the shop, the telephone, the web page, the warehouse) as well

as the actual route of distribution. Simply place refers how you will sell your product to

your customers.

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

meet clients’ needs as has been mentioned clearly in the mission statement of the bank. .

Bank is well positioned and geographically poised, to cater for increased business

demands, from its existing potential clientele. Bank Alfalah has 195 branches, spread all

over Pakistan covering major business centers and principle cities. Bank plans to add

more branches to his growing network in the ensuing years.

At present, Bank Alfalah has opened all its branches at commercial and business areas or

near to commercial areas so that the customers or clients face no problem in reaching the

bank. Head Office of Bank Alfalah is situated in Karachi. The detail description of its

branches is as follows:

No. Branch Name Address PABX FAX No

1 Abbottabad 191, Supply

Bazar, Main

Mansehra Road,

Abbottabad

0992-344723-

6

0992-344728

1 Ahmedpur East

Branch

Plot#188, Block

XI, Kutchery

Road, Ahmedpur

East

(062)

2275504-8

(062)

2275503

1 Arifwala Branch 47/D, Zain

Palace, Qaboola

Road, Arifwala

0457-835711-

13

0457-835717

1 Attock Branch Zila Council

Building, Kutchery

Chowk, Attock

057-2701557-

58

057-2700248

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Page 163: Report on Bank Alfalah

City

1 Bahawalnagar Shop # 6, Ghallah

Mandi,

Bahawalnagar

(063)

2272005-8

(063)

2277437

1 Bahawalpur Branch Ground Floor,

Bldg.No.V/912,

Circular Road,

Bahawalpur

062-2889922-

25

062-2889874

1 Bahawalpur Branch Ground Floor,

Bldg.No.V/912,

Circular Road,

Bahawalpur

062-2889922-

25

062-2889874

1 Bhalwal Branch Liaqat Shaheed

Road, Bhalwal

048-6642647 048-6643709

1 Burewala 95-C, AL-Aziz

Market, College

Road, Burewala

067-3771901-

04

067-3771905

1 Chakwal City trade Centre,

Tehsil Chowk,

Rawalpindi Road,

Chakwal

0543-555206-

218

0543-555220

1 Chaman Branch Trunch Road,

Chaman,

Balochistan

0826-613440 0826-613488

1 Karachi Main

Branch

B. A. Building

I.I.Chundrigar

Road, Karachi

021-2414030-

39

021-2417006

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2 Cloth Market Branch Luximidas Street,

Karachi

021-2401621-

26

021-2401627

3 Clifton Branch Fl-10, Block 5,

KDA Scheme 5,

Khayaban-e-

Roomi, Clifton,

Karachi

021-5833779 -

82

021-5879175

4 Shahrah-e-Faisal

Branch

Progressive

Square, Block 6,

PECHS, Shahrah-

e-Faisal, Karachi

021-4313536-

38

021-4313539

5 Jodia Bazar Branch Gulzar Manzil,

Jodia Bazar,

NP/12/49-50,

Mohammad Shah

Street, Karachi

021-7532482-

84

021-2401627

6 Korangi Branch Plot No ST 4/2,

Sector 12-B,

Aiwan-e-Sanat,

Korangi, Industrial

Area, Karachi

021-5050964,-

387

021-5050653

7 M.A.Jinnah Road

Branch

Plot No.23/1,

Zelin Place,

(Habib Bank

Bldg.)M.A.Jinnah,

Road / Abdullah

Haroon Road,

Karachi

021-2750627-

8

021- 2750

629

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8 SITE Branch Siemens

Chaurangi,

S.I.T.E. Karachi

021-2582114-

116

021-2582113

9 North Karachi

Branch

Plot No SA-1 (ST

1/1/) Sector 12-B,

Gabol Town,

North Karachi,

Industriail Area,

Karachi

021-6950805-

06

021-6986051

10 Paper Market

Branch

Plot No.S.R.7/23,

Campbell Street,

Paper Market,

Karachi

021-2211353-

58

021-2211243

11 Gulshan-e-Iqbal

Branch

Ground Floor,

Sumera

Apartments, Plot

SB-15, Block 13-

B, KDA Scheme

No 24, Gulshan-e-

Iqbal, Karachi

021-4984937 021-4984971

12 Stock Exchange

Branch

18-20, Karachi

Stock Exchange,

Building, Stock

Exchange Road,

Karachi

021-2417515-

19

13 North Napier Road

Branch

Ground Floor,

Building at

Surv.No.35 /

021-2544021-

24

021-254006

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Sheet, No.NP-10

(Old

Surv.No.A26/5),

Napier Quarters,

Karachi

14 Bahadurabad

Branch

1-3, Prime

Arcade, Bahadur

Shah Zafar Road,

Bahadurabad,

Karachi

021-4128577-

81

021-4129676

15 Timber Market Siddiq Wahab

Road, Old Haji

Camp, Karachi

021-7750635-

9

021-7733463

16 Defence, Karachi Plot No 40 & 42,

26th Commercial

street, Defense

Housing Authority,

Phase V, Karachi

021-5304167

17 PECHS 154-S, Block 2,

PECHS, Karachi

021-4538423-

24

021-4314221

18 Federal B Area C-28, Block 13,

Federal B Area,

Karachi

021- 6344700 021-6803043

19 Eidgah Branch,

Karachi

166, M.A. Jinnah

Road, Near Light

House, Karachi

021-2217290-

4

021-2217244

20 Tipu Sultan Road Z-111,112,

Adamjee Nagar,

021-4398457- 021-4398456

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Tipu Sultan Road,

Karachi

9

21 Marriot Road Murad Khan

Road, Marriot

Road, Karachi

021-2414138-

40

021-2412082

22 Hyderi Al-Burhan Circle,

Block E North

Nazimabad,

Karachi

021-6626066

23 Gulistan-e-Jauhar 30-31, Saima

Classic, Rashid

Minhas Road,

Karachi

021-4815926-

7

021-4815924

24 Korangi bypass (D.

H. A. Phase I)

114, 9th East

Street, D. H. A.

Phase I, Karachi

021-5887571-

73

021-5887574

25 Hawksbay Road KB-28, Haji Ishaq

Market, Main

Hawksbay Road,

Karachi

021-2355873

26 Shershah Branch D-283, Main

Shershah Road,

SITE, Karachi

021-2585001-

4

021-2585005

27 Landhi Branch,

Karachi

Area 5-D, Sctor

36-E, Landhi

Township,

Karachi

021-5034451-

3

021-5030875

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28 Tariq Road Branch 124/A, Block 2,

P.E.C.H.S, Main,

Tariq Road,

Karachi

(021)

4386052-5

(021)

4386056

29 Malir Cantt Branch Old Malir

Cantonment

Library, Cantt

Bazar, Malir

Cantt, Karachi

021- 4904601 021-4904602

30 Gulshan Chowrangi

Branch

Sani Arcade,

Block 3, Gulshan-

e-Iqbal, Karachi

021-4988695 021-4985729

31 Garden East

Branch, Karachi

Silver Jubilee

Apartment,

194/2/1, Britto

Road, Near

Ismailia Jamat

Khana, Garden

East, Karachi

021-2238704,

2238717,

2238722,

2238605

021-2225941

32 DHA Phase IV,

Karachi

Plot No. 80, 10th

Commercial

Street, Phase IV,

Defence Housing

Authority, Karachi

021-5312832-

35

021-5312837

33 Gizri K-4/3, Bazar Area

Clifton, Karachi

021-5868991-

93

021-5867149

34 Sea View Sahil Promenade,

Block 3, Scheme

021-5364095-

97

021-5371259

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5, Clifton, Karachi

35 Nazimabad "Al-Kausar

Homes, Plot # 2,

Block-III, Sub-

Block “E”,

Nazimabad,

Karachi

(021)

6708980-83

(021)

6708978

1 L. D. A. Plaza

Branch

Kashmir Road

Lahore

042-630 6201-

5, 042-630

5614-18

042-

6307836,042-

6301193,042-

6368905

2 Gulberg, Lahore

Branch

125/E-1,Gulberg-

III, Lahore

042-5877800-

5

042-5754900

3 Defence Lahore

Branch

G-9, Commercial

Area, Phase-I,

ICCHS (Defence),

Lahore Cantt.

Lahore

042-5729723-

26

042-5729727

4 Circular Road,

Branch

Circular Road,

Lahore

042-7638256-

58

5 Township Branch 47, B/1, Block 10,

Akber Chowk,

Township, Lahore

042-5152831-

6

042-5113716

6 Badami Bagh

Branch

29-30,PECO

Road, Badami

Bagh, Lahore

042-7704961 042-7728074

7 Allama Iqbal Town 36, College Block, 042-543 2961- 042-5432960

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Page 170: Report on Bank Alfalah

Branch Allama Iqbal

Town, Lahore

5

8 Shah Alam Market Hilal-e-Ahmar

Complex, Shah

Alam Market,

Lahore

042-7673401-

6

042-7673409

9 Shadman Branch Bunglow No. 88,

Shadman - 1,

Lahore

042-7538116-

18

042-7538119

10 Tufail Road, Lahore

Cantt

50/3, Tufail Road,

Lahore Cantt

042-6689016-

19

042-6688374

11 Lahore Stock

Exchange

Basement Level

2, Lahore Stock

Exchange

Building, 19,

Khayaban-e-Iqbal,

Lahore

042-6307461-

68

042-6307469

12 IBD- New Garden

Town

Awami Complex,

Block 1, New

Garden Town,

Lahore

042-5846374-

81

042-5846386

13 Baghbanpura,

Lahore

268, G.T. Road,

Baghbanpura,

Lahore

042-6844006-

9

042-6844010

14 Ravi Road, Lahore 13, Ravi Road,

Lahore

042-7708661-

5

042-7708660

15 Thoker Niaz Beg Raiwind Road,

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Page 171: Report on Bank Alfalah

Lahore

16 Shahdin Manzil Faysal Chowk,

Lahore

042-601 2000 042-6012081

17 Liberty Market 10-C, Commercial

Area, Liberty

Market, Gulberg

III, Lahore

042-5789431-

34

042-5755226

18 Azam Cloth Market Rehman Centre,

Akbar Block,

Azam Cloth

Market, Lahore

042-7643851-

54

042-7643860

19 Shadbagh 37,Umer Din

Road,

Wassanpura,

Lahore

042-7616252-

56

042-6260295

20 Defence Extension Divine Centre,

Near Bhatta

Chawk, New

Airport Road,

Lahore Cantt

042- 570

0301-9

042-570 0311

21 Urdu Bazar Urdu Bazar,

Lahore

042- 7210644 042- 7210647

22 Shahdara Branch Main G.T Road,

Shahdara Chowk,

Lahore

(042) 7900290 (042)

7900291

23 Walton Road Branch E-28/A, Main

Walton Road,

(042)

6602334-8

(042)

6687391

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Page 172: Report on Bank Alfalah

Lahore

24 Brandreth Road

Branch

91-A, Brandreth

Road, Near

Australia Building,

Lahore

042-7674115-

18

042-7671633

25 Ghari Shahu Branch 99-A, Allama Iqbal

Road, Ghari

Shahu, Lahore

(042) 6310973 (042)

6360962

26 DHA Phase II

Branch, Lahore

65 CCA, Phase II,

DHA, Lahore

042-5748846-

47

042-5748849

27 Model Town, Lahore 13 Bank Square,

Central

Commercial

Market, Model

Town, Lahore

042-5884670-

72

042-5884675

28 Cavalry Ground,

Lahore

35 Main

Boulevard,

Officers Housing

Scheme, Cavalry

Ground Lahore

042-6610531-

32, 6610534

042-6610536

29 Chuburji 24, Niaz View

Scheme, Rewaz

Garden, Chuburji,

Lahore

(042)7356640-

42

(042)7222236

30 Main Market

Gulberg

32-E-Main

Market, Gulberg

II, Lahore

042-5786955-

59

042-5786964

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Page 173: Report on Bank Alfalah

1 Islamabad Branch Awan Arcade,

Jinnah Avenue,

Blue Area,

Islamabad

051-2873345-

8

051-2279897

2 I-10, Markaz,

Islamabad

4-A,I-10 Markaz,

Islamabad

051-4435804-

6

051-4435807

3 F-7, Markaz 5-A, Markaz, F-7,

Islamabad

051- 265

3941-49

051-265 3940

4 F-10, Markaz 4-D, Urfi Centre,

F-10 Markaz,

Islamabad

051-2809 703-

711

051-2809 702

5 Islamabad Stock

Exchange

101, W. Waqas

Plaza, Blue Area,

Islamabad

051-280 4102-

104

051-280 4106

6 I-8 Markaz,

Islamabad

Plot No. 34, I-8

Markaz,

Islamabad

051-4862563-

6

051-4862567

7 G-9 Markaz,

Islamabad

39, G-9 Markaz,

Mauve Area,

Islamabad

051-2253002-

3

051-2854932

8 F-8 Markaz,

Islamabad

Shop # 2 & 3 Al-

Babar Center, F-8

Markaz,

Islamabad

051-7151673,

2854615

051-2260270

1 The Mall ,

Rawalpindi

B.A. Building, 8

The Mall,

Rawalpindi

051-5700038-

40,051-

5566084,051-

051-

5700042,051-

5700029,051-

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Page 174: Report on Bank Alfalah

5566086 5700037

2 Satellite Town

Branch

B/20 North Star

Plaza, Murree,

Road, Satellite

Town, Rawalpindi

051-4424080-

85

3 Jinnah Road ,

Rawalpindi

A-351, Jinnah

Road, Rawalpindi

051-5775325-

28

051-5775324

4 College Road Rawalpindi 051-5762

0008

051-5762 007

5 Chaklala Scheme III

Branch

59, Shah Plaza,

Commercial Area,

Chaklala Scheme

III, Rawalpindi

051-5766003-

4

051-5766005

6 Lalazar Branch Tulsa Road,

Lalazar,

Rawalpindi

051-5522904-

5

051-5527814

7 Peshawar Road

Branch

Plot No. 400/2,

Gammon House,

Peshawar Road,

Rawalpindi

051-5468401-

02

051-5468403

8 Airport Road 7- Fazal Town,

Airport Link Road,

Rawalpindi

(051)5781484-

5

(051)5781483

1 Peshawar Branch 6-B, Saddar

Road, Peshawar

Cantt.

091-5287051-

7

091-5287058

2 Peshawar City Park-in Hotel 091-251794-6 091-251380

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Page 175: Report on Bank Alfalah

Branch Building,

Peshawar City

3 Hayatabad Hayatabad,

Karkhano Market,

Jamrud Road,

Peshawar

091-5822903-

907

091-5822908

4 G. T. Road 1045-

1046,Hashtnagri,

Opp: Sarhad

Chamber of

Commerce,

G.T.Road,

Peshawar

091- 2593003 091-2593001

1 Quetta Branch M. A. Jinnah

Road, Quetta

081-2827567 081-2827562

2 Hazar Gunji Truck Stand,

Hazar Gunji,

Quetta

081-2460520 081-2460519

3 Cut Piece Cloth

Market

Shahra-e-Iqbal,

Quetta,

Balochistan

081-2834425 081-2827270

4 Double Road Arbab Plaza,

Double Road,

Quetta

(081)

2441961-62,

2441662

(081)

2441665

1 Chichawatni Rai House, 1,

Railway Road,

Chichawatni

040-5487802-

5

040-5487807

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Page 176: Report on Bank Alfalah

1 Chiniot 1-A, Shahrah-e-

Quaid-e-Azam

047- 6337704-

05

047- 6337706

1 Chitral Branch D.C. Office Road,

Opposite

Mountain Inn

Hotel, Attalique

Bazar, Chitral

(0943)

414367,

414396

(0943)

412988

1 Daharki Branch 1285-1287, Zafar

Bazaar, Daharki,

Taluka & Town

Daharki

0723-641255 0723-644040

1 Daska Gujranwala Road,

Daska

052- 6616834-

5

052- 6619650

1 Dera Ismail Khan 3666-B, Kashmir

Chowk, North

Circular Road,

Dera Ismail Khan

0966-720606-

610

0966-720612

1 Dera Ghazi Khan

Branch

B.A. Building,

Jampur Road,

Deara Ghazi

Khan

064 -

2468201-6

064 -

2468104

1 Faisalabad Branch Ground Floor,

State Life Bldg.

Liaqat Road,

Faisalabad

041-2617436-

9

041-2617432

2 Peoples Colony 237-B,

Commercial Area,

D-Ground,

041-8722636-

39

041-8722184

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Page 177: Report on Bank Alfalah

Peoples Colony

No 1, Faisalabad

3 Susan Road 25-Z-101, Susan

Road, Madina

Town, Faisalabad

041-8556 673-

5

041-8556679

4 Rail Bazar,

Faisalabad

P-81, Rail Bazar,

Faisalabad

041-2540801-

3

041-2540806

5 Yarn Market Branch P-229, Tikka Gali

No. 2,

Montgomery,

Bazar, Faisalabad

041-2621486 041-2621487

6 Minerva Road

Branch

Shop No. 16 & 17,

Golden Market,

New Grain

Market, Minerva

Road, Faisalabad

041-2540763-

5

041-2540759

7 Sheikhupura Road,

Faisalabad

P-352-A, Gulistan

Colony II, Millat

Chowk,

Sheikhupura

Road, Faisalabad

041-8582141-

3

041-8582147

1 Gawadar Airport Road,

Gawadar

0864-211783

No. Branch Name Address PABX FAX No

1 Gilgit Branch Shahrah-e-Quaid-

e-Azam, Near,

Radio Station,

05811-51904-

07

05811-51903

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Page 178: Report on Bank Alfalah

Jutial, Gilgit

1 Gojra P-86, Block III,

Bohar Wali Gali,

Gojra

046-3517876-

77

046-3517878

1 Gujar Khan 58-D & 59-C,

Akbar Kiani

Shopping Mall,

G.T. Road, Gujar

Khan

051-3515704-

707

051-3515703

1 Gujranwala Branch B XII-7S-145,

Krishan Nagar,

G.T. Road,

Gujranwala

055-3859931-

33

055-3856471

1 Gujrat Branch G.T.S Chowk,

G.T. Road, Gujrat

053-3530069 053-3530319

2 Kotla Branch Bhimber Road,

Kotla Arab Ali

Khan, Tehsil

Kharian, Dist.

Gujrat

0537-586892 0537-586337

3 Dinga Thana Road,

Dinga, Distt.

Gujrat

(053)

7404844-46

(053)

7404840

1 Hafizabad Branch Railway Road,

Hafizabad

0547-540801 0547-540804

1 Hangu Saif ur Rehman

Market, Opp:

0925-624641-

43

0925-624644

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Page 179: Report on Bank Alfalah

DCO Bunglow,

Kohat Road, Main

Bazar, Hangu

1 Haripur Main Shahrah-e-

Hazara, G.T.

Road, Haripur

(0995)

627451-2

(0995)

627831

1 Haroonabad Branch 15/16-C, Ghalla

Mandi,

Haroonabad

063- 2256457 063-2256458

PROMOTION

Promotion is a term that refers to the following statement:

“Steps taken by the company to enhance its sales by focusing the target markets”

Thus we can say that promotion can be categorized into different categories based on the

above mentioned marketing perspective definition of promotion. So advertisement, sales

force, billboards etc are major sources through which the promotion scheme can be

implemented.

This is an age of competition. Numerous organizations are providing financial

services to the customer. These days every one is facing pressure of competitors. In this

world of growing competition, the only way to survive and grow, for an organization, in

the market place is the proper marketing and promotion of its products. Same is the case

with banking companies. There is large number of foreign and local banks working in the

country and it has been noticed that they are emphasizing much on their marketing

strategies. In this scenario, the key for a bank to succeed and attract its customers is

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adequate promotion of its products &services. The bank can attract and retain its

customers through:

Sales Promotion

Advertisement

Direct Marketing

Public Relations

The most prominent and important way to attract a large number of customers is

the advertisement of bank and its products/services. Bank Alfalah has adopted different

approaches for the accomplishment of this purpose. For example, formation of Alfalah

Mini Golf near Gulberg is a major step taken by BAL. It not only provides a source of

recreation to the people but it serves as a major source of marketing for the bank. Due to

Bank Alfalah’s assistance for the construction of fountain in Liberty Market Square, it is

named as Bank Alfalah Square. BAL Square, for being situated in such a business and

commercial area has its unusual importance and has resulted into bank’s promotion.

Construction of Shaahdin Manzil as main branch Lahore is going to be the

revolutionary step for Bank Alfalah. It would not serve just as a main branch only, but it

would also be a great source of ever growing marking and promotion of bank.

Bank Alfalah issued its own rupee travellers cheques with highest denomination

during the course of my internship. I have seen some colored advertisements of RTC’s in

some well-known magazines like Herald. Also, some fascinating advertisements have

been printed on Daewoo City Busses, which serves as a dynamic source of marketing.

However, one drawback or shortcoming is that, Banl Alfalah has formalized a lot

of products and services for its customers, even more than other commercial banks, but

any advertisement on electronic media has not been seen. Since, Bank Alfalahs major

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competitor, Union Bank Limited has started large media campaign, so keeping in view

these threats; Bank Alfalah is emphasizing more on its advertisement.

Along with the advertisement, the bank is providing personal services to its

clients with maximum security as other banks provide. Bank also encourages the public

relation policy of marketing.

Some brochures and promotional material has been printed but it is distributed

mainly through the clients who visit the branch for their day-to-day business or through

the customers who come to get information about new schemes launched by the bank.

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RECOMMENDATIONS

It was an interested experience to do internship in Bank Alfalah Limited. The staff was

highly cooperated and due to their help I learned big deal about modern banking.

I suggest that such an internship program highly integrative for the students of commerce

education so that the students should be enquired with the knowledge of practice world .I

do summarize that it would be a great help to me in selection of job or future field of

work.

Here I am putting some suggestions, which will enable the bank to compete with other

banks more effectively & efficiently.

It is observed that the employees were overburdened so they have to

stay at branch till late at night. In this way their efficiency is affected and

hiring more employees can reduce their work.

The employees should be signed jobs for specific period and than they

should shifted to other department so that they gain knowledge of other

jobs.

Bank Alfalah Limited should properly advertise and Communicate to

public about the services provided by it, so that more customers will be

attracted.

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The bank’s management should give more incentives and pay scale of

officers should be revised & improved.

System and operations should be more defined and organized.

IT draw backs should be improved.

Administration drawbacks should be improved by the strict control of

general issues.

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.

Lockers, ATM, all these facilities should be provided to attract more

customers.

Expenditures must be control, which are very high.

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 CONCLUSIONS

If I have to express my experience of internship in Bank Alfalah Limited Garden Town

Branch Lahore I would briefly say:

Bank Alfalah is a good Organization in the way that anybody can join it for his/ her long-

term career. Overall working environment is comfortable. Management of branch cares a

lot of its employees and considers them as the Asset of bank. Behavior of senior

executive of bank is very polite and they are caring about the individual’s career and their

growth.

However management is very demanding about the targets but good reward at the

achievement of assigned targets is awarded.

Employees at Bank Alfalah are quite efficient. As Garden Town 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.

Employees are given the benefits like bonus, gratuity funds, loans, increments, and

medical.

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

given to all the 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.

Prioritizing its product portfolio in line with its corporate and consumer needs and wants

the bank is committed to develop products that give more value to its customers in both

the sectors.

In bank, all the work is done on computers. All the entries are made in computer. Balance

is fed into the computer. This increases efficiency of the bank.

During my internship training I gathered information regarding how a successful bank

operational aspect decorticated with the practical.

I found my internship training at Bank Alfalah Limited Garden Town Branch Lahore to

be a very rewarding experience. The training was beneficial because it helpful me to

aware a real life working environment.

So far my learning is concerned; all the employees at branch were quite cooperative.

They helped me to understand the activities of a bank to possible extent. Their good

attitude gave me more confidence to learn more and to ask if I have any query in my

mind. Besides their ever going activities they never get irritant by my questioning. I had

made an honest efferent to present the working & operation of Bank Alfalah Limited

Garden Town Branch Lahore in simplest way.

I feel pleasure that I have really gained a lot during 8 weeks & enjoyed working with

experienced cooperative & intelligent staff.

185