CHAPTER 1

INTRODUCTION TO THE REPORT

1.1 Introduction
Albaraka Banking Group is the biggest Islamic banking group listed on the Bahrain Stock
Exchange in terms of capitalization. It has been rated by Standard & Poor's as BBB- with a
short-term rating of A-3. ABG offers retail, corporate and investment banking and treasury
services strictly in accordance with the principles of the Shari’ah. The authorized capital of
ABG is US$1.5 billion, while the total equity amounts to about US$ 1.59 billion. With
assets of US$11.2 billion, the Group has a wide geographical presence in the form of
subsidiary banking Units in 12 countries, which in turn provide their services through more
than 250 branches.

1.2 Background Of The Study

Albaraka Islamic Bank (AIB) is a member of Albaraka Banking Group (ABG) which is a
Bahraini joint stock company listed on Bahrain and Dubai stock exchanges and one of the
well-known leading international Islamic banks. ABG is committed to expanding its
presence in Pakistan, which is evident from the rapid growth being undertaken by Albaraka
Islamic Bank in the country and its plans to have its Pakistan operations localized as a bank
registered in Pakistan, over the next few weeks. Building on the expertise and experience of
its workforce and the growing awareness of shari’ah-compliant banking solutions among the
masses, AIB has successfully developed itself as a major unit of ABG operating in the
region, capitalizing on the group’s geographical presence and high quality research and
development in islamic financial products for its business expansion in the country.

1.3 Purpose of the Study

The main purpose of the study is to study the Albaraka Islamic Bank (AIB) from financial
perspective to have an insight into the overall strength and weaknesses of Albaraka
Islamic Bank (AIB) that is also a mandatory requirement for the award to bachelor’s
degree in Business Administration at Management Science Department, University of
Swabi.

1
1.4 SCOPE OF THE STUDY
The focus of the study is overall Management and operations of AlBaraka Islamic Bank
(AIB) but more confined to the finance and planning department. limited time
available for internship in organization, lack of cooperation from employees of the
company and limited access to the records has restricted the analysis & scope of work
of the project.

1.5 Methodology of the Study

The report is prepared using both primary and secondary data that included the following
methodological tools.

1.5.1 Primary data

The data, which is collected for the first time and exist in raw form, is called primary data.
It includes:
 Personal observations during the eight-week internship program.
 Interviews and discussion with the bank personnel from time to time.

1.5.2 Secondary Data

The data gathered from existing sources are called secondary data. They are in processed
form.
The main sources of secondary data of Al – Baraka Islamic Bank (AIB) are:
 Journals, newspapers and course books.
 Annual reports of Al – Baraka Islamic Bank (AIB)
 Brochures & manuals of the bank.
 Websites
 Previous internship reports
 Articles, text books

1.6 LIMITATIONS
The report is done with sole purpose of doing the best work but there were certain limitation
faced during the internship period. The most important limitations from which the internship
suffer are as under.

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 i. Hurdle in access to data. Due to pearly policy of the bank.
ii. Secrecy policy was a major obstacle in drawing a full precise picture of origination
health and its financial analysis.
iii. Major Key information discolours is banned to outsiders in practice.
iv. Two month internship duration is not enough to know and understand banking in
detail.

1.7 Scheme of Study

This internship report is divided into five chapters the detail of which is given below:

 Chapter one Contains the background of study, purpose of study, scope of study and
research methodology.
 Chapter two Includes background and history of banking in Pakistan, Historical
background of AIB Branch, Swabi, Organizational structure, roles, functions and
branches.
 Chapter three is about the financial position and products and services provided by
Al – Baraka Islamic Bank (AIB)
 Chapter four describes financial, SWOT analysis and findings of the study
 Chapter five feasible and constructive recommendations for different departments
of AIB Branch, Swabi.

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 CHAPTER 2
ORGANIZATIONAL REVIEW

2.1 Evolution of Banking

Like many other subjects and social sciences no any precise definition can be given for the
study of banking also keeping in view the particular function of banking. It is clear that there
is a big difference in functions performed by old institutions and modern baking. But the
basic idea is same banking has now become a multi-service organization with wider scope
and area of its influence. Mr. Gilbert says “bank is dealer in capital or more peculiarly in
money. He is an intermediate party between borrower and lender. The definition lay down in
the banking companies Act 1962 is "Bankers means a person, transacting the business of
accepting for the purpose of landing or investment, of deposits of money from public,
repayable on demand or otherwise and withdraw able by cheque, grafts or orders or otherwise
and includes any "Post office saving Bank".

In view of the above definitions, in simple words a bank can be defined as an institution
dealing in money, accepting deposits and advances loans.

2.2 Banking in Pakistan

Banking industry in Pakistan has passed through various transitional phases. The State Bank
of Pakistan regulates the banking sector, consisting of the commercial banks, along with all
NBFIs, except for the leasing companies. The IMF experts in their reports said that banking
industry has developed to cater to the local needs of the financial sector as well as it is
highly competitive to serve the customers globally. In the past it never attracted the
customers, as the interest rates were higher as compared to other countries in the region.
Taxes were all time high. Recoveries were hardly 25%. Political pressures damaged the
efficiency. The World Bank and IMF never lent support to the industry.

The State Bank of Pakistan realizing the gravity of the situation introduced reforms.
Banking sector reforms have brought in competition within the system, improved internal
efficiency, reduced the lending rates significantly and broadened access to the middle class.

4
While these results are encouraging, a lot more needs to be done and, we have spelled out
the agenda for the second-generation reforms in the financial sector covering the period
2005-2010. Banks in Pakistan account for 95% of the financial sector and hence good health
of banks is directly related to the economic growth and development of Pakistan. Banks in
Pakistan had been catering basically to the needs of the government organizations,
subsidizing the fiscal deficit, serving a few large corporations and engaging in trade
financing. There was no lending to small and medium enterprises, to the housing sector or to
the agricultural sector, which create most of the growth and employment in Pakistan. Most
important, the financial sector suffered from political interference in lending decisions and
also in the appointment of managers. The middle class which is the backbone of any
economy was not given due attention by the banking sector. (Hussain, S; Rana, K &
Shabbir, A (1991))

Pakistan is one of the few developing countries where the public sector banks went to the
private hands in a very short span of time. The government only owns the National Bank,
while 80% of the bank assets are in private hands. And there is tough competition among the
banks, as in the private sector everything is performance-based. Unlike the public sector or
the government, any employee not producing results is fired because he affects profit of the
organization. The bankers these days go out of their cozy offices to market their financial
products and build up customer base. The seller market has changed into a buyer market.
The customer may choose the bank with best products and services. There was a time, only a
few years back, people used to go the banks and the staff treated them shabbily, was
generally uncooperative and unfriendly. Now, they are after the customers.

Banking sector reforms were thus needed badly to address these and other constraints so that
the banks could play their due role in the economic development of the country. Although,
there is no room for complacency and a lot still needs to be done, even the worst critics of
this government do concede that if there is one sector, which has undergone basic
transformation that is the banking sector.

Banks in Pakistan have been catering basically to the needs of the government organizations,
subsidizing the fiscal deficit, serving a few large corporations and engaging in trade

5
financing. There was no lending to small and medium enterprises, to the housing sector or to
the agricultural sector, which create most of the growth and employment in Pakistan. Most
important, the financial system suffered from political interference in lending decisions and
also in the appointment of managers.

As private sector credit is rising and money demand is constantly rising from agriculture as
well as manufacturing sectors. These are now offering from 7% to 11% return to their
depositors on term deposits. So it is also giving a strong indication that the people may not
withdraw their savings from banks in an environment where banks have started to give them
attractive rates with much better service than the saving centers. Banks have a vast branch
network and provide convenience too. Year 2016 is going to be the fourth consecutive year
for double-digit profitability growth of the commercial banks. The excellent performance of
the bank can be attributable to the prudent fiscal and monetary measures of the government
which resulted in the increased credit demand from private sector, improved spreads,
exceptionally increased in non interest income of the bank (particularly fee income and
dividends).

Some of the major reforms achieved in the banking sector to-date include:
 Strong corporate governance by SBP, enforcement of banking license regulations,
transparent financial transactions, independent appointment to board positions and chief
executive positions, arms length transactions for board family member representations,
inside trading, regulations of external auditor’s profession, and prudential guidelines for
Board of Directors (BOD).
 Strict monitoring and reduction of non-performing loans by active involvement of the
Corporate Industrial Restructuring Corporation (CRIC) and Committee of Revival of
Sick Units (CRSU).
 SBPs removal of restrictions imposed on nationalized NCBs for commercial financing
and incentive schemes for encouragement of mortgage financing by the banks.
 Implementation of Financial Institutions (recovery of finances) Ordinance 2001, and
relaxation of licensing and regulatory environment for Micro Credit and Rural Finance

6
 Institutions, encouraging their establishments at districts, provincial and national levels
with varying capital requirements;
 Mandatory requirement for all banks to get themselves evaluated by credit rating
agencies in order to facilitate depositors to make informed judgments about placing their
savings with the banks.

2.3 Historical Background of Al – Baraka Islamic Bank (AIB)

AlBaraka Islamic Bank (AIB) is a member of Albaraka Banking Group (ABG) which is a
Bahraini Joint Stock Company listed on Bahrain and Dubai stock exchanges and one of the
well-known leading international Islamic banks. ABG is committed to expanding its
presence in Pakistan, which is evident from the rapid growth being undertaken by AlBaraka
Islamic Bank in the country and its plans to have its Pakistan operations localized as a Bank
registered in Pakistan, over the next few weeks. Building on the expertise and experience of
its workforce and the growing awareness of Shari’ah-compliant banking solutions among
the masses, AIB has successfully developed itself as a major unit of ABG operating in the
region, capitalizing on the Group’s geographical presence and high quality research and
development in Islamic financial products for its business expansion in the country. Faced
with growing challenges in this rapidly developing market, AIB strongly relies on its ability
to be an effective and efficient market player through renewed focus on superior customer
service, development of Islamic alternatives to conventional financing facilities, and strict
adherence to Shari’ah rulings and principles.

2.3.1 Al – Baraka Islamic Group

Albaraka Banking Group is the biggest Islamic banking group listed on the Bahrain Stock
Exchange in terms of capitalization. It has been rated by Standard & Poor's as BBB- with a
short-term rating of A-3. ABG offers retail, corporate and investment banking and treasury
services strictly in accordance with the principles of the Shari’ah. The authorized capital of
ABG is US$1.5 billion, while the total equity amounts to about US$ 1.59 billion. With
assets of US$11.2 billion, the group has a wide geographical presence in the form of
subsidiary banking Units in 12 countries, which in turn provide their services through more

7
than 250 branches. These banking Units are Jordan Islamic Bank/ Jordan, Al Baraka Islamic
Bank / Bahrain, Al Baraka Islamic Bank / Pakistan, Banque Al Baraka D'Algerie/ Algeria, Al
Baraka Bank Sudan/Sudan, Al Baraka Bank Ltd / South Africa, Al Baraka Bank
Lebanon/Lebanon, Bank Et-Tamweel Al- Tunisi Al Saudi/ Tunisia, The Egyptian Saudi
Finance Bank/Egypt, Al Baraka Turk Participation Bank/Turkey, Albaraka Bank Syria
(under establishment), and representative office, Indonesia.

2.3.2 Subsidiary Banking Units of ABG

Figure 2.1: Subsidiary Banking Units of ABG

2.3.3 History

Al-Baraka Islamic Bank (AIB) has the honor of being the pioneer of islamic banking in
Pakistan and has been operating in the country as branches of Al-Baraka islamic bank
Bahrain since 1991. Over the years, the bank has successfully developed and maintained its

8
identity as one of the leading providers of a host of banking products and services in strict
compliance with Shari’ah principles. Currently operating with 20 branches in 11 major cities
of the country, AIB offers a wide array of Islamic financing products such as Murabaha,
Ijara, Musharaka and Islamic Export Refinance, etc., catering to a diverse cross-section of
the economy, including the corporate, SME and consumer sectors. Moreover, various
Shari’ah compliant deposit schemes are available for customers to invest their funds in,
along with a variety of other ancillary services such as online banking, ATM/debit card, safe
deposit lockers and utility bill payments etc.

2.3.4 Al - Baraka’s Commitment to Islamic Banking

Al-Baraka Islamic Bank and Al-Baraka Banking Group are fully committed to develop and
promote an integrated Islamic Financial System. Compliance with the rules and principles of
islamic shariah is the core of the banking and financial activities and its philosophy. All its
banking activities are very closely regulated by a Board of Shariah Advisors based at the
Head Office in Bahrain and a Shariah Advisor based in Pakistan, to ensure strict compliance
with the highest standards of Islamic Banking principles.

2.3.5 Present Status

Currently the authorized capital of Al–Baraka islamic is US $ 1.5 billion, while the total
equity amounts to about US $ 1.5 billion. The Group has a wide geographical presence in
the form of subsidiary banking units in, which in turn provide their services through more
than branches. Currently there are 496 employees working at different branches of Al–
Baraka Islamic at Pakistan.

2.3.6 Credit Rating

JCR-VIS Credit Rating Company Ltd. has reaffirmed the medium long term rating of
Albaraka Islamic Bank BSC © - Pakistan Branches at A (single A) with a ‘stable’ outlook,
the shot term rating is A-1 (Single A-one).

2.3.7Auditors
Ford Rhodes sidat Hyder & Co., Chartered Accountants, being eligible, have offered
themselves to act as auditors of the Bank for the year ending december 31, 2015

9
2.4 PRODUCTS & SERVICES OFFERED BY AL – BARAKA
ISLAMIC BANK
Striving to develop and an integrated islamic financial system. Compliance with the rules
and principles of islamic sharia is the core of the banking and financial activities of the bank.
To this end, Albaraka has successfully sought the advice and expertise of islamic scholars
acclaimed for their knowledge and piety from all over the Islamic world to guide its path
and monitor its performance. The banks’ activities and operations are regularly scrutinized
by its sharia advisory board.

2.4.1 Products and Services of AIB

Al-Baraka Islamic Bank in Pakistan offers a comprehensive range of banking products and
services. They are:

 Savings and Current Accounts

 Term Deposit Accounts
 Khazana Accounts
 Incentive Accounts
 Murabaha Investment Accounts
 Housing Musharakah

2.5 Other Services of AIB

Beside of these banks also offer a large range of services.
2.5.1 Demand Drafts
If you are looking for a safe, speedy and reliable way to transfer money, you can now
purchase AIB’s (D.D) Demand Drafts at very reasonable rates. Any person whether an
account holder of the bank or not, can purchase a Demand Draft from a bank branch.

2.5.2 Letters of Credit (L/C)

AIB is committed to offering its business customers the widest range of options in the area
of money transfer. If you are a commercial enterprise then our letter of credit service is just
what you are looking for. With competitive rates, security, and ease of transaction, AIB
letters of credit are the best way to do your business transactions.

10
2.5.3 Letter of Guarantee
The advances department also issues letter of guarantee. L/G is a form of advances against
guarantee. An L/G is an under taking given by a bank to be answered for the debt, default or
miscarriage of another person. It is also defined as a contract to perform the promise or
discharge the liability of third person in case of default. The L/G is opened in the name of a
party when another party with whom they are dealing business requires a bank guarantee.

2.5.4 Travelers Cheque

Pak Rupees Traveler’s Cheque are a negotiable instrument. There is no restriction on the
period of validity. Available at all branches of AIB all over the country. There is no limit on
purchase. AIB Traveler’s Cheque are the safest way to carry our money

2.5.5 Pay order

AIB provides another reason to transfer money using facilities. Pay orders are a secure and
easy way to move money from one place to another. And, as usual, charges for this service
are extremely competitive.

2.5.6 Foreign Remittances

To facilitate its customers in the area of Home Remittances AIB has taken a number of
measures to Increase home remittances through the banking system and Meet the SBP
directives/instructions for timely and prompt delivery of remittances to the beneficiaries.

2.5.7 Islamic Export Financing

This facility is encouraged to boost exports of the country. Funds are made available from
SBP at lower rates.

2.5.8 Foreign Currency Accounts (FCAs)

Foreign Currency Account in AIB can be opened in three major currencies of the world, i.e.,
U.S. Dollars, European Euro and UK Pound Sterling. Only authorized branches of AIB can
deal in foreign currency account. The accounts can be opened both by Pakistan citizens and
foreigners by introduction and following other procedures required for general accounts with
one exception for foreigners that they will have to submit a copy of their passport. Amount
deposited in the foreign currency account must be in four currencies, which are mentioned

11
earlier. When the customer will withdraw the money, they will receive the amount in the
same foreign currency/profit will also be in the same foreign currency.
There are two types of foreign currency accounts:
 Current Account
 Saving Account
These accounts are treated in the same manner as Pak Rupee Accounts.

2.5.9 Online Banking

You now have access to your account 24 hours a day, 7 days a week. You transfer funds or
even pay bills even if it's a holiday; AIB Online is a unique service offering from Al–Baraka
Islamic Bank. Through AIB Online, your account in Al – Baraka Islamic Bank is available
to you from any of our branches country-wide. No matter where you are in the country and
which branch your account is maintained, you can have your cheque encased at any of our
branches located in any cities. You can also use the service to deposit cash for instant credit
into your account or any other account in Al–Baraka Islamic Bank any branch. Similarly
account-to-account Funds Transfer facility is also available for instant remittance.

2.5.10 ATM Network

Al–Baraka Islamic Bank also provide the facilities of ATM card (Barakash). Customers now
have the convenience of withdrawing cash from any of multiple ATMs ("All-Time Banking"
locations) conveniently located in major cities like Karachi and Lahore at any time of the
day or night even on closed days/holidays. Other services include customer being able to
inquire about the AIB balance of his/her account or printing an abbreviated (mini) statement
showing the most recent eight transactions up to the previous working day.

2.5.11 Utility Bills

All branches of the Bank collect utility bills of electricity, gas and telephones. For
convenience of the customers, Utility Bills are collected by the branches during banking
hours and also in the evening-banking on all working days. Bills can be paid through Cash
or cheques. Consumers may drop bills with crossed cheques into a drop box available at the
branches under "Cheques Drop-in” system.

12
2.6 Our Vision
To be a leading and a diversified International Islamic Bank, Offering a wide range of
quality products and services and forming strategic alliances for a competitive edge.

2.7 The Mission Statement

We strive to be a premier regional islamic bank, dedicated to the economic and social
development of our target market, maximizing our clients and shareholders value and
focusing on the human resource development in an environment of creativity and
innovation.

2.8 Objectives
 To enhance shareholder value whilst pursing a strategy of business growth and
geographical expansion.
 To provide innovative and high quality research and development into Islamic financial
products which comply fully with the principles of shari’a law and islamic values, for
the benefit of our customers.
 To utilize the group’s geographical presence to distribute its products and services and
promote cross border services.
 To maintain the highest international standards of corporate governance and regulatory
compliance.

2.9 Core Values

The bank management has identified the following core values to achieve its targets:-

 Highest quality of service

 Professionalism, Integrity and Team Work
 Innovation & utilization of latest technology
 Corporate & Social Responsibility
 Islamic Banking service

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2.10 Corporate Profile
The corporate profile provides a comprehensive summary of the organization. The profile
contains the following information:
 Company Business Description
 Industry Classification (Major and Sub Industry)
 Address (mailing), Phone Number, Web Address
 Exchanges Listed, Ticker Symbol
 Senior Officers
 Number of Employees
 Earnings/Dividends
 Financial Ratio Analysis
 Recent Stock Performance
 Sales (recent year)
 Shareholder Information
 Up to 10-year Analysis Summary (Per Share)
o Market Price
o Value Ratios
 Price/Earnings
 Price/Book Value
 Dividend Yield
o Equity Capital
 % Earned Growth
 % Profit Rate (ROE)
 Beginning of the Year Book Value
o Earnings
 12 Month Earnings per Share
 Annual percentage Change
o Dividends
 % Payout Ratio
 12 Month Dividends per Share
 Proprietary Wright Quality Rating

14
 CHAPTER 3

ORGANIZATIONAL STRUCTURE

Figure 3.1: Organizational Structure of AIB

15
 BOARD OF
DIRECTORS
Executive
Committee Audit
EXECUTIVE committee
COMMITTEE

Shariah Board

Country Regional
Manager Manager

BRANCH
MANAGER

16
17
Al – Baraka Islamic Bank (AIB) Management Structure Chart
Figure 3.2: AIB Management Structure Chart

Board of Directors

Country Manager

Regional Manager Regional Manager Regional Manager

South Central North

Chief Head of Head Head Head of Head of

Financial (HR) of of (IT) (Treasury) (Credit)
Officer (Audit)

Regional Chief

Branch Manager

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3.1 Board of Directors

NAME DESIGNATION

Mr. Khalid Rashid Al Zayani Chairman

Mr. Adnan Ahmad Yousif Vice Chairman

Mr. Othman Ahmed Sulieman Board Member

Mr. Abdul Hameed Nazer Board Member

Mr. Abdul Latif A. Janahi Board Member

Mr., Mousa Adbul aziz Shihadeh Board Member

Mr. Adel Saud Dehlawi Board Member

3.2 Executive Committee

Name Designation

Mr. Othman Ahmad Suliman Chairman

Mr. Adnan Ahmad Yousaf Vice chairman

Mr. Abdul Latif A. Janahi Member

Mr. Mohammad Isa Al Mutaweh Member

3.2.1 Introduction to AIB Swabi branch

To provide the banking facility to people of Swabi Al-Baraka Islamic bank Swabi branch
was established in 2009 G.T Road Swabi. Mr. Hussain Ali is the manager of branch. AIB
Swabi branch started its operations smoothly and profitable and with the passage of time,
management improved its efficiency and reputation. The branch is accessible to all remote
villages and as well as the posh colonies of Swabi. The structure of AIB consists of a branch
manager, remittances, clearing and verification, bills department and cash department.

3.3 Departmentalization

19
The Al-Baraka Islamic Bank has number of interrelated departments that works together to
achieve the specific goals and objectives of the organization. The AIB has built a
hierarchical system that includes the sub departments.

The AIB’s exiting system includes following departments.

 Deposits department
 Cash department
 Clearing department
 Advances department
 Remittances department
All these departments come under the operations, which is headed/ controlled by the
manager operations.

3.3.1 Deposit Department

Basically this department is the pillar of the whole banking system. This is the department
which initiates the relationship between the customer and the bank. Here it the responsibility
of the officer that there is no element of fraud by the customer. For this purpose the bank
fulfills the KYC (Know Your Customer) policy related regulations issued by SBP.

3.3.2 Types of Accounts

Major types of accounts offered in AIB are following:-

 Current Account
 PLS Saving Account
 Term Deposit Account

3.3.2.1 Current Account

This type of account is payable to the customer on demand, hence called current liabilities
due to their nature. No profit is given at this account. Minimum amount for opening these
types of accounts is normally about Rs: 5,000/-.

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3.3.2.2 Profit and Loss Saving Account

The objective of saving account is to inculcate the saving habit in the general public because
profit is paid on this type of account calculated on every month basis. Minimum amount for
opening these types of accounts is normally about Rs: 2,000/-.

3.3.2.3 Term Deposit Accounts

In this category fixed or term deposit accounts are offered by the bank. In these types of
accounts the deposit can be withdrawn after a specified period of time. Since the amount in
these types of accounts is deposited for a fixed period so the bank can easily invest them in
any profitable activity and can get return because there is no burden of with drawl by the
customer.

3.3.2.4 Khazana Accounts

 Minimum balance Rs. 250,000
 Higher expected returns then saving account
 Profit: Quarterly

3.3.2.5 Incentive Accounts

 Minimum balance Rs. 100,000

 Higher expected returns then saving account
 Profit: Half yearly

3.3.2.6 Mahana Amadani Accounts

 Minimum balance Rs. 50,000
 Tenure from one year to five years
 Profit: Monthly

3.3.3 Opening of Account

Following is the procedure to open an account

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3.3.3.1 Requirements for Opening an Account

At the time of opening an account the customer must have following characteristics:

 Must be an adult/adult guardian.

 Must not be bewared under any law from entering into any contract.
 Should be known to the any of the banking staff according to KYC policy.
3.3.3.2 Account Opening Procedure

The following procedure is followed for opening of all the accounts.

 Filling of the application form.

 Signing the specimen card/SS Card.
 Submission of proper legal documents.
 Allotment of account number.
 Issuing of check book.

3.3.3.3 Method of Judging the Fraud

 The original CNIC card is checked.

 The signature of the customer is checked. In case if customer is illiterate then his photo
is attached and thumbs expression is given.
 After the account is opened a letter of thanks is issued to the customer. If the customer
had given the wrong address the letter will come back and the account is marked as
doubtful.

3.3.3.4 Types of accounts:

Bank offer following type of account to their customers.

 Individual Accounts:
Individual accounts are the most common personal investment accounts. Opened by single
person.

22
 Joint Account
A joint account occurs when two or more than two customers have one account. The parties
to a joint account are considered in law as they are one person.

 Business Accounts:
Business accounts can be opened by institutions, companies, partnerships, trusts and non-
profit organizations. Following documents are required.

3.3.3.5 General Rules for Various Types of Accounts

Following are some general rules, which are applicable to all kinds of accounts:

 Not more then one account of each category may be opened in one and the same branch
except joint account with any other individual.
 In the event of the death of an account holder the credit balance in the account shall be
paid to the legal heirs of the account holder.
 The account holder wishes to close the account should surrender all unused checks.

3.3.4 Cash Department

The major function of this system is receipts & payments to the customers, on behalf of their
account, through cheque or any other negotiable instruments.
The cash system mainly encompasses following areas:
 Receipts
 Payments

3.3.4.1 Receipts
The account holder deposits in their accounts through a deposit slip. The deposit slip
contains the account number and the title of account. The amount in figure and words is also
written on both side of the slip. The customer then deposits the amount to the cashier, which
is dully signed by the cashier and an officer .At last amount is deposited in customers
account.

23
3.3.4.2 Payments
The customers withdraw the deposit through their account through cheque.“Cheque is a bill
of exchange drawn on a specified banker and expressed to be payable otherwise on
demand”.

3.3.4.3 Kinds of checks

 Cross cheques
 Ordinary cheques

3.3.5 Clearing Department

The function of this department is getting payment of check, demand draft, payment order,
telegraphic transfer, mail transfer or dividends warrants deposited by the customer of the
branch and other branch of the same bank. SBP acts as a clearing house.

3.3.5.1 Clearing House

In Pakistan, State bank of Pakistan acts as clearing house to settle the claims of the different
banks through their representatives and this function was earlier performed by the National
Bank of Pakistan where there is no branch of SBP but now National Institutional Facilitation
Technologies (NIFT) is performing the function of clearing house for all the Banks
including Al–Baraka Islamic Bank.

3.3.5.2 Clearing Procedure

The following procedure is fulfilled for clearing items.
 All instruments for collection (check, drafts, pay orders, etc) received for clearing to be
deposited by the customers are be entered on the bank’s general pay-in slip along with
all the details, especially the bank name/code and the document number.
 The clearing official of the bank affixes the bank’s crossing and clearing stamps along
with his/her signature.
 All these instruments are sorted and posted in the system.
 The next day they are presented for clearing in NIFT.
 In case there is no objection the customers account is credited.

24
For dishonored instrument the fine is charged from the customer

3.3.6 Remittances Department

The function of the remittance department is the transfer of money/funds from one
bank/branch to the other.

3.3.6.1 Modes/Instruments of Remittance

The Bank of Punjab, like other Commercial Banks undertakes to remit or transfer money
from one place to any part of the country and outside the country. The money is remitted
mostly by means of:

 Demand Draft (DD)

 Pay Order (PO)
 Mail Transfer (MT)/Telegraphic Transfer (TT)
 Outward Bills for Collection (OBC)
 Inward Bills for Collection (IBC)

3.3.6.2 Demand Draft (DD)

A demand draft is an order instrument issued for payment of a certain sum of money to the
order of certain person and drawn on one office of the bank by another office.

It is made by the banks against payment of cash. The bank recovers different types of
charges from the applicant on issuance of DD, covering its commission and other postal
charges.

3.3.6.3 Pay Order (PO)

It is a check drawn by a bank on itself. The payment orders are generally issued for the
payment with in the city where payment through checks is not possible. The bank charges
fixed commission for clearing this instrument.

25
3.3.6.4 Mail Transfer/Telegraphic Transfer
These are the faster ways to transfer money. The following procedures are fulfilled in this
regard:-
 Check the test numbers at the arrival
 Verify the signatures of the bank official.
 Entered in the relevant register.
 Make payment.
 In Telegraphic transfer the specific codes are exchanged by the bank official on
telephone but this is normally not followed.

3.3.6.5 Outward Bills for Collection

Bills sent to other cities’ banks for clearing are called outward bills for collection.
 Checks are entered in the OBC register, the number is written and clearing stamp is
affixed along with the test number entry.
 The OBC advice is prepared.
 The respective checks are attached with the advice.
 This is sent to the relevant city.
 Upon clearing that bank credits the bank account and gives advice to the bank.

3.3.6.7 Inward Bills for Collection

Bills received from other banks out of city for the local clearing are called inward bills for
collection.
 The bank received the clearing advice along with the check/draft.
 The checks/drafts are recorded in the inward mail and entered in the IBC register.
 The checks are lodged for clearing.
 After realization the advice is mailed to the branch and its account is credited.

3.3.7 Advances/ Credit Department

The function of this department is to lend money in the form of clean advances, against
promissory notes, as well as secured advances against tangible and marketable securities.

26
The bankers prefer such securities that do not run the risk of general depreciation due to
market fluctuations.

3.3.7.1 Securities
Common Securities for the banker’s advances are as under.

 Guarantees
When an application for advance cannot offer any tangible security, the banker may rely
on personal guarantees to protect himself against loss on advances or overdraft to the
applicant.

 Mortgage
A mortgage is the transfer of an interest in specific immovable property for the purpose
of security the payment of money advanced or to be advanced by way of loan, and
existing or future debt, or the performance of an engagement which may rise to a
pecuniary liability. The transfer is called a mortgagor, the transferee a mortgage.

 Hypothecation
When property in the shape of goods is charged as security for a loan form the bank the
ownership and possession is left with the borrower, the goods are said to be
Hypothecated. The essence of hypothecation is that neither the property in the goods not
the possession of them are possession is left with the borrower, the goods are said to be
Hypothecated the essence of hypothecation is that neither the property in the goods not
the possession of them are possessed by the lender, but the security is granted by means
of letter of hypothecation, which usually provides for a banker’s charge on the
hypothecation goods.

 Pledge
In a pledge the ownership remains with pledge, but the pledge has the exclusive
possession of property until the advance is repaid in full. While in case of the default the
pledge has the power of sale after giving due notice.

27
 Promissory Note

Sometimes promissory note is also accepted as a security, "A promissory note is an

instruments in writing containing an unconditional undertaking signed by the maker, to
pay on demand or at a fixed or determinable future time a certain sum of money only, to
or to the order of certain persons, or to the bearer or the instrument." A promissory note
is incomplete until has been delivered to payee or the bearer. Moreover, the sum
promised in a promissory note may be made by two or more makers who may be liable
there on jointly and severally.

3.3.7.2 Consumer Finance Schemes

Following are the modes used for consumer finance.
 Car Ijarah
AlB provide the facilities of car Ijarah/leasing to his customer. AlB provided fund up to
4 million to his customer for the period of 2 to 5 year. No interest concept is involved,
therefore profit margin is not announced before transaction .finance on the concept of
asset based financing. Therefore no chance of default for bank.

Table 3.1: Features of AIB Car Ijarah

REQUIREMENTS EXPLANATION

MAXIMUM FINANCE LIMIT RS: 40,000,000

MAXIMUM PERIOD UP TO 1-5 YEARS

SECURITY(IES) ASSET BASED FINANCING

 Housing Musharakah
AlB also provides the facilities of housing musharakah to his customer. AlB contribution is
80% of total investment, and client can contribute 20% of the investment. The employee can
pay rental and installments to bank in order to get total share of the property or land which
they jointly buy. The period is from 1 to 15 year.

28
Following are some requirements of AIB housing musharakah;

Table 3.2: Features of AIB Housing Musharakah

REQUIREMENTS EXPLANATION

FINANCING BY BANK 80% OF INVESTMENT

MAXIMUM PERIOD UP TO 1 TO 15 YEARS
SECURITY(IES) ASSET BASED FINANCING

3.4 Conclusion
From the list of products and services mentioned it is obvious that AlB is providing a range
of products and services in various fields of corporate banking to its customers and its
services are spread over many aspects of commercial banking.

3.5 Network of Al – Baraka Islamic Bank, Pakistan

Al – Baraka Islamic bank, Pakistan, operates as branch of foreign bank incorporated and
domiciled in Bahrain on February 21, 1984 and is a member of Al – Baraka banking Group.
The registered office of the bank is situated at 95-B Hali Road, Gulberg II, Lahore and it
presently operates through 20 branches (2006: 11 branches) in Pakistan.

AIB branches network is divided into three regions.

3.5.1 Region: North

 Mansehra Branch (01 branch)
 Rawalpindi (03 branches)
 Mirpur, Azad Kashmir (01 branch)
 Peshawar (01 branch)
 Mardan (01 branch)
 Islamabad (01 branch)

3.5.2 Region: Central

 Lahore (04 branches)

29
  Gujranwala (01 branch)
 Faisalabad (01 branch)
 Multan (01 branch)

3.5.3 Region: South

 Karachi (05 branches)

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 CHAPTER 4

DATA ANALYSIS

4.1 Financial Analysis of AIB

Financial measures are also used to rank a company’s performance. The analysis of financial
data employs various techniques to emphasize the comparative and relative importance of
the data presented and to evaluate the position of the firm. These techniques include ration
analysis, common size analysis, study o differences in components of financial statements
among industries etc.

The information derived from these types of analysis should be blended to determine the
overall financial position. No one type of analysis supports overall findings or serves al
types of users. Financial statement analysis is a judgmental process. One of the primary
objectives is identification of major changes (turning points) in trends, amounts, and
relationships and investigation of the reasons underlying those changes. Here only two type
of analysis is done
 Common size Analysis
 Ratio Analysis

4.1.1 Common Size Analysis

Common-size analysis expresses comparisons in percentage. The use of percentages is
usually preferable to the use of absolute amounts. The use of common-size analysis makes
comparisons of firms of different sizes much more meaningful.
It has the following types:
 Horizontal Analysis
 Vertical Analysis

31
 4.1.1.1 Horizontal Analysis

Horizontal analysis compares each amount with a base amount for a selected base year or
we take each item of base year as 100% and compare with other items

4.1 .1.1.1 Horizontal Analysis of AIB Balance sheet 2015-2016

Table 5.1: Horizontal Analysis of Balance Sheet

Horizontal analysis of Balance sheet 2014(%) 2015(%) 2016(%)

Balance sheet
Cash and balance with treasury banks 88.45 106.99 135.67
Cash with other banks 102.26 88.58 246.78
Due from financial institution
investments 167.62 104.74 80.81
Financing 103.80 98.72 128.62
Operating fixed assets 92.34 93.96 103.67
Deferred tax assets 100.18 125.34 110.75
Other assets 134.10 91.87 124.58

Liabilities
Bills payable 105.47 165.54 97.18
Due to financial insititution 62.97 114.72 110.55
Deposit and other account 124.80 102.79 119.54
Sub ordinated loans
Liabilities against assets subject to finance lease 26.53
Deferred tax liabilities
Other liabilities 107 80.65 119.01
Represented by
Share capital 100 100 100
reserves 100 100 100

32
 4.1.1.2 Vertical Analysis
Vertical analysis compares each amount with a base amount selected from the same year.
Simply, we compare the items of balance sheet or income statement vertically by taking one
item as 100%.

Vertical Analysis of Balance Sheet

Balance sheet 2014(%) 2015(%) 2016(%)
Cash and balance with treasury banks 5.43 5.71 6.52
Cash with other banks 10.44 9.08 18.87
Due from financial institution 1.48
investments 36.08 37.12 25.25
Financing 38.06 38.96 42.18
Operating fixed assets 3.85 3.55 3.10
Deferred tax assets 1.42 1.74 1.63
Other assets 4.69 2.31 2.42

Liabilities
Bills payable 0.621 1.01 0.82
Due to financial institution 2.39 2.69 2.50
Deposit and other account 84.85 85.66 86.19
Sub ordinate loans 1.32
Liabilities against assets subject to finance lease 0.007
Deferred tax liabilities 3.127
Other liabilities 2.47 2.48
Represented by
Share capital 12.31 12.09 10.18
reserves 0.11 0.11 0.093

Introduction
Ratio analysis is powerful tool of financial analysis. A ratio is defined as “the quotient of
two mathematical expressions” and “as the relationship between two or more variables”.
Financial analysis is the process of identifying the financial strengths and weaknesses of the
firm by properly establishing relationships between the items of balance sheet and profit and
loss account. Financial analysis can be undertaken by management of the firm, or by parties
outsides the firm viz., owners, creditors, investors and others. The nature of analysis
depending on the purpose of the analyst.

33
4.2 Trade Creditors:
Trade creditors are interested in firm’s ability to meet their claims over a very short
period of time. Their analysis will, therefore, confine to the evaluation of the firms liquidity
position.

Suppliers of Long Term DEBT:

Suppliers of long-term debt on the other hand are concerned with firm’s long-term
solvency and survival. They analyze the firm’s profitability over time, its ability to generate
cash to be able to pay interest and repay interest and repay principal, and the relationship
between various sources of funds (Capital structure relationship). Long term creditors do
analysis of the historical financial statements by placing more emphasis on the firm's
projected financial statements to make analysis about its future solvency and profitability.

Investors:
Investors who have invested their money in the forms of share are most concerned about the
firms that have steady growth in earnings. As such, they concentrate on the analysis of the
firm’s present and future profitability. They are also interested in the firm's financial
structure to the extent; it influences the firm's earnings ability and risk.

Management:
Management of the firm would be interested in every aspect of the financial analysis. It is
their overall responsibility to see that the resources of the firm are used most effectively and
efficiently and that the firm’s financial condition is sound.

4.3 Financial Ratio Analysis

Ratio analysis is powerful tool of financial analysis. A ratio is defined as “the quotient of
two mathematical expression” and as “the relationship between two or more things”. In
financial ratio analysis, a ratio is used as benchmark for evaluating the financial position and
performance of a firm.

34
Liquidity Ratios:
Liquidity ratios are used to judge a firm’s ability to meet short term obligations. It shows the
cash solvency of a firm and its ability to remain solvent in the event of adversities.

Current Ratio:
This ratio shows a firm ability to cover its short- term liabilities through short term assets.
The current ratio is the ratio of current assets to current liabilities.
Formula
Current Ratio = Current Assets / Current Liabilities

The Three year comparison of ALBARAKA BANK is given below:

Table: Current Ratio

Years 2014 2015 2016
Current Assets 11522667 10933858 22292784
Current Liabilities 7726472 7301954 7243692
Current Ratio 1.49 1.49 3.67

Source: Financial Statements of ALBARAKA BANK 2014, 2015& 2016.

Graph: Current Ratio

35
Interpretation

The current ratio for the financial year 2014 is low. It tells that for every Rupee 1 of current
liability it has 1.49 rupees of current assets. However in 2015, it increases to 1.49. But in
2016it increases to 3.6 which show the average performance of bank.

Quick Ratio:

A more conservative measure of liquidity is the acid quick ratio. This ratio is same as current
ratio except it excludes inventories and prepayments, presumably the least liquid portion of
current assets. The ratio concentrates primarily on the more liquid current assets, cash,
marketable securities, receivables and advances.
Formula
Quick Ratio = Current Asset –Inventory/Current Liabilities

The Three year comparison of ALBARAKA BANK is given below:

Formula: Current Assets-Prepayments / Current liabilities

Table: Quick Ratio

Years 2014 2015 2016

Current Assets 11522667 10933858 222927884

Prepayments 1030852 1292139 1431069

Current 7726472 7301954 7243692

Liabilities
Quick Ratio 1.35 1.32 2.87

Source: Financial Statements of ALBARAKA BANK 2014, 2015 & 2016

36
Graph: Quick Ratio

Interpretation
The Acid Quick Ratio for the financial year 2014 was 1.35.The ratio in 2015 was 1.32 which
was more as compare to previous year, because of the decrease in current liabilities. But this
ratio decrease in 2016 to 2.87 due to increase prepayments.

Cash Ratio:
Sometimes it needs to view the liquidity of the firm from an extremely conservative point of
view, for example the company may have pledged its receivables and inventories. In such
type of situations, the best indicator of the firm of the short- term liquidity is the cash ratio.

Formula
Cash Ratio = Cash + Marketable Security / Current Liabilities
or
Cash Ratio = Cash + Cash / Current Liabilities
THE THREE year comparison of ALBARAKA BANK is given below:
Formula: Cash / Current Liabilities

Table: Cash Ratio

Years 2014 2015 2016
Cash 3945481 4221381 5727407
Current 7726472 7301954 7243692
Liabilities
Cash Ratio 0.51 0.57 0.79

37
Graph: Cash Ratio

Interpretation
The three year comparison shows that cash ratio has upward trend from year 2014 to
2016.In 2014 it was 0.51 and in 2016 it was 0.79, which shows that ALBARAKA BANK
carried more cash in 2016 as compared to other years.

Working Capital
Working capital is the difference between current assets and current liabilities
Formula:
Working Capital = Current asset - Current liabilities

The three year comparison of ALBARAKA BANK is given below:

Table: Working Capital Ratio
Years 2014 2015 2016
Current Assets 11522667 10933858 22292784

Current 7726472 7301954 7243692

Liabilities
Working 3796195 3631904 15049092
Capital

38
Graph: Working Capital Ratio:
Interpretation
The analysis of working capital shows upward trend from year 2014 to 2016. For 2016 it
shows minor change in working capital.

Total Asset Turnover:

Generally the total assets turnover measures the activity of the assets and the ability of the
firm to generate sales through the use of the asset.
Formula:
Total Asset Turnover = Interest earned/ Total Assets

The three year comparison of ALBARAKA BANK is given below:

Table: Total Asset Turnover
Years 2014 2015 2016
Markup,
6699178 6271140 6131232
Return Earned
Total Assets 72545064 73866558 87759404
Total Asset
Turnover 0.092 0.084 0.069
Ratio

39
Graph: Asset Turnover Ratio

Interpretations
The Assets efficiency of the ALBARAKA BANK has increased for the year 2014 to 0.092
as compared to 2015 which was 0.084. For 2016 we can say that each rupee investment in
total assets produces 0.069 rupee as return earned. Asset turnover ratio of ALBARAKA
BANK of Pakistan has improved a little bit in 2015 as compare to 2016.

Debt Ratio or Debt to Assets Ratio:

It show that how much assets have been financed through liabilities. it also shows the
margin of protection available for the creditor . It shows the relationship between total debts
and total asset.

Formula:
Debt of Assets = Total Debts / Total Assets.

The three year comparison of ALBARAKA BANK is given below:

Formula: Debt Ratio = Total Liabilities / Total Assets

40
Table: Debt Ratio
Years 2014 2015 2016
Total
66020396 67847098 81911211
Liabilities
Total Assets 72545064 73866558 87759404
Debt Ratio 0.91 0.91 0.93

Graph: Debt Ratio

Interpretation
The three year comparison of Debt ratio for ALBARAKA BANK shows that in 2014 and
2015 assets is financed through debt was 0.91 while in 2016 it increases to 0.93.

Profitability Ratios
These ratios indicate the firm’s overall effectiveness of the operations.
Net Profit Margin
This is the conservative method of sales profitability. This ratio gives a measure of Net
Income in Rupees generated by each Rupee of sales. This is ratio of net profit after taxes to
net sales. It is also expressed as a percentage
Formula: Net Profit Margin = Net Income / Net Sales x 100

41
The three year comparison of ALBARAKA BANK is given below:
Net Profit Margin=Net Income / Interest earned x 100
Table: Net Profit Margin
Years 2014 2015 2016
Net Income 410370 644040 41231
Interest 6699178 6271140 6131232
Earned
Net Profit 0.06 or 6% 0.10 or 10% 0.006 or 67%
Margin

Graph: Net Profit Margin Ratio

Interpretation
The ratio shows upward trend from 2014 to 2015 but in 2016 it decreased. It increased 4%
in 2015 as compare to 2014 .In 2016 the ratio decrease to 0.006 as compare to 2015.

Gross Profit Margin

This ratio shows the profit of the firm relative to the sales. It is a measure of efficiency of the
firms operations as well as an indication of how product or services of the firm are provided.
Gross Profit Margin is the ratio of gross profit to net sales expressed as a percentage. It
expresses the relationship between gross profit and net sales.

Formula: Gross Profit Margin = Gross Profit / Net Sales x 100

42
The three year comparison of ALBARAKA BANK is given below:
Formula: Interest expense x 100
Interest earned
Table: Gross Profit Margin
Years 2014 2015 2016
Return on 5001222 4725249 4340094
deposite and
Expense
Return Earned 6699178 6271140 6131232
Gross Profit 0.746 or 74.6% 0.75 or 75% 0.70 or 70%
Margin Ratio

Source: Financial Statements of ALBARAKA BANK 2014, 2015 & 2016

Graph: Gross Profit Margin Ratio

Interpretation
Albaraka bank of Pakistan has a better Gross profit margin for the year 2014 and 2015
compared to 2016. Gross profit margin decreases in 2016 as compare to 2015 and 2014
which shows that albaraka bank has become less effective in producing the services
reasonably above cost and charging for them.

43
4.4 SWOT Analysis of AIB
SWOT stands for Strength, Weaknesses, Opportunities and Threats. SWOT is useful tool for
providing a framework for analysis of an organization. It is widespread approach to make
assessments in terms of internal and external environment of the organization and to
formulate strategies by analyzing its internal strengths and weaknesses, external
opportunities and threats.
SWOT analysis for Al – Baraka Islamic Bank is as follow:

4.4.1 STRENGTHS

 Commitment to Islamic Shariah

Striving to develop and an integrated islamic financial system. Compliance with the rules
and principles of islamic shariah is the core of the banking and financial activities of the
Bank. To this end, Albaraka has successfully sought the advice and expertise of Islamic
scholars acclaimed for their knowledge and piety from all over the Islamic world to guide its
path and monitor its performance. The Banks’ activities and operations are regularly
scrutinized by its shariah Advisory Board.

 Experienced and Qualified Staff

During the research it has been observed that the staff/personnel of the organization is
qualified and experienced. Many of the bank officials have got advance knowledge and
experience in the fields of management, banking law and practice.

 Good PR with Customers

The relationship of the manager and the other staff of the organization is really good with
the customers, which results in good will and loyalty of the customers towards the
organization.

 Good Managerial Skills

The managers are fully aware of the recent managerial concepts and are able to deal with
any type of scenario.

44
 Job Satisfaction at All Levels

Job satisfaction is one of the important factors for the employees to be motivated. The
people in the organization under consideration were found highly satisfied with their jobs.

 Quarterly Performance Appraisal

Performance appraisal is the way by which one can evaluate the employee’s performance; it
results in the enhancement of the organization’s overall performance. The performance
appraisal is done on quarterly basis in this organization, which results in better performance.

 Friendly environment
The environment of the organization is very friendly. People over here are very cooperative,
not only with the customers but among themselves as well.

 Competent senior management

The senior management in the organization is very much competent and experienced; they
successfully handle different internal and external affairs.

4.4.2 WEAKNESSES

i. No HR department level at zonal and branch level

Human resource department is one of the foremost requirements of any organization of this
age. The organization under consideration, though contain a HR division at headquarter but
there are no sub divisions at the provincial or branch level. So when different problems
related to HR are raised, they are left unaddressed.

ii. Centralized decision making

The decision making in the organization is completely centralized which results in the loss
of confidence of the employees over the management, employees may not want to follow
the dictates, rules and regulations.

iii. Lack of frequent training

Though there is training academy at head office, but the training programs are usually
confined to the managerial staff, there is a need of training at all the levels.

45
iv. Lengthy recruitment process
The recruitment process is quite lengthy which can discourage the new comers. So, there is a
need to shorten the whole process.

v. Less internal recruitment for new posts

It has been found that in the organization under consideration, if new vacancies are allocated
there is a trend of external recruitment, which results in the dissatisfaction of the current
employees.

vi. Lack of Marketing Effort

The bank does not promote its corporate image, services, etc on a competitive way. Hence
lacks far behind in marketing effort. A need for aggressive marketing is there in the era
marketing in now becoming a part of every organization.

4.4.3 OPPORTUNITIES
i. More qualified people in the market
Due to the increase of interest of people in business field, many business institutions have
been established, which produces a good lot of qualified and competent business
professionals. So, the organization under consideration can hire more qualified people from
market.

ii. Effective utilization of internal human resources

People working in the organization get use to the norms and values of the organization, so
these expirees can be utilized within the organization whenever required.

iii. Training can enhance the employee’s skills.

Training and development is one of the important function of human resource management.
If the staff of the organization are properly trained and developed they will add to the value
of the organization.

4.4.4 THREATS
i. Increase in Competition
The increasing competition in local as well as national and multinational level also lower
down the profitability of the bank and compelling the bank to use a large amount of funds to
meet out competition.

46
ii. Good job opportunities outside.
The other organizations of similar nature are offering more salaries and benefit packages to
their employees. So, there is a threat to the organization that their current employees may
leave it.

iii. Uncertainty about future change

An uncertainty about the future changes has been noticed among the employees of the
organization, it results in dissatisfaction and demotivation of the employees, which is a
serious threat to the organization.

47
 CHAPTER 05

FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Conclusion
The Albaraka islamic bank is a new emerging bank and it is trying to get market share in the
presence of national and foreign banks operating in the country. It has played an important
role in boosting the economy of the country but there always exists some room for
improvement.
After observing this AIB very closely and its HR department in particular, following
outcomes have been concluded.

 The decision making is still centralized as the middle and low level management is not
taken into confidence.
 There are no sub divisions at the provincial or branch level. So when different problems
related to HR are raised, they are left unaddressed.
 Most of the employees working in this branch are not much familiar with computer.
They just know how to use their part of software if any problem comes in the computer
they can’t fix it.
 The spacing requires expansion. The employees are seated congested .If the customers
exceed more than fifteen in number, then the branch get filled with lot of disturbance.
 The recruitment process is very lengthy it should be trimmed.
 The marketing efforts at the branch level are less disciplined and there are no integrated
efforts from all the staff members. The mobilization of deposits is mainly considered as
the responsibility of the branch manager but the rest of the staff is usually least
interested.
 Bank branches are restricted to some specific cities.
 The bank has been applying the modern concepts of management and marketing at both
micro levels. The interior and exteriors of the branch have been changed but the staff of
the branch has been found less motivated towards the organizational objectives.

48
5.2 Recommendations
As I have spent two months in AIB Swabi Branch for the Internship purpose. During this
period I have tried my best to observe the banking environment in the AIB. I have observed
a lot of strengths and weaknesses in the branch. On the basis of this observation I have come
up with certain recommendations particularly related to the AIB Swabi Branch but generally
can be applicable to the whole banking system of Pakistan including all other branches of Al
– Baraka Islamic Bank for improvement. These recommendations will help to cope with the
problems being faced by the Bank and will enhance the efficiency and performance of the
AIB in particular and all the banking sector of the country in general.

From the previous analysis of the financial statements I have realized that that Al – Baraka
Islamic Bank is performing very well since its inception. It is quite difficult to give
suggestion to improve the banking conditions AIB. As we know that nothing is perfect, there
is always a room for improvement, so I will recommend following suggestions for AIB:

 Employees Training programmes must be introduced on continuous basis so that

Employees have understanding with the latest developments especially with the
customers.

 Bank should introduced incentive plans for employees on regular basis so that if
employees may work whole heartedly for the welfare of their organization. While giving
incentives qualification, work, experience, hard work and such other factors must be
considered.

 Mismanagement of resources must be avoided as much as possible as it decreases profit

but also discourage hard worker and honest employees.

 Fresh graduates must be recruited. As the combination of Experienced and fresh can
produce better results and it will improve the efficiency of management.

 AIB is going towards mobile banking but the problem is that a common client has no
idea of its usage due to lack of marketing. I think that a proper marketing programme
must be launched for client’s awareness.

49
 Banks different schemes must be conveyed to the targeted customers so that to have a
reasonable share in market

 To motivate the employees their remuneration / salaries should be made at par with top
tier Banks.

 Aggressive publicity campaign must be introduced through press and Electronic media
for new products and scheme by initiating vigorous marketing policy.

 Bank should adopt such an induction plan that when a customer opens his account with
the bank he should be supplied with a booklet which enables him to know the procedure
of filing the cheques, pay-in-slip etc. It will save a lot of time of the bank staff afterward
during the conduct of the account of that customer.

 The attitude of the bankers with all of their customers is not the same; they pay more
attention and good service to some of the customers and neglect a major portion of them.
Some of the customers approach to the bank officials and get their work done before
others; it is not a good practice. All the customers should be treated equally.

 AIB should increase its communication with customers about the terms and conditions
of its different products and services.

 Misuse of telephone internet, fax machines and other facilities available to the
employees of the bank must be handled properly.

 In AIB mostly recruitments are done through recommendations or references of

employees. Recruitment should be strictly on merit with no other favor given to any
candidate. Selection should be on the basis of test and interview as like Muslim
Commercial Bank (MCB) and other banks etc. this will ensure the entry of competent
and worthy employees into the bank.

 Scholarship programs should be designed for senior employees and branch managers.
The AIB should get into contract with top foreign universities. Every year the bank
should finance and send their senior managers for further education abroad. After
completion of higher education employees will be in a better position to attain the
strategic objectives of the bank and increase the overall business and profitability
portfolio of the bank.

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 The branch network should be improved and number of branches should be increased to
reach and provide services to maximum number of customers.

 AIB should conduct meaningful refresher courses, seminars and workshop with a view
to improve the knowledge of the staff. The HR Departments arrangement for staff
training’s to coup with new demands that may become threats for interests of the
Company. The present conventional training programs need to be made more
comprehensive.

 The coordination among employees and different departments should be improved. The
coordination between top and lower management also needed to be improved.

 To provide proper information to consumers, information counter should be set where

true professionals guide consumers.

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Bibliography

Al-Baraka Islamic Bank (2015), Annual report 2014, Lahore.

DeCenzo D.A & Robbins S.P (2004); Fundamentals of Human Resource

Management,8th ed. John Wiley & Sons .

Hussain, S; Rana, K & Shabbir, A (1991); Banking Currency and Finance, Lahore:
Ilmi Kutab Khana.

Waleed (2010); Interview with Mr. Waleed, Manager Operations, Al-Baraka Islamic
Bank, Swabi, 11 March, 2015

Tariq Mahmood (2010); interview with Mr. Tariq Mahmood, Branch Manager AIB,
Abbotabad branch, 15 March,2016.

Tamuja Agarwala (2014); Strategic Human Resource Management, 7th ed. Oxford
University Press, New Delhi, India .

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Account Opening Form

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ATM Application Form

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