Internship Report

INTERNSHIP
REPORT
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well done
keep it up
good effort
BANK ALFALAH LIMITED
Student Name
Student ID
MBA (Finance)
Session
Date of preparation
VIRTUAL UNIVERSITY OF PAKISTAN (IIIT GUJRANWALA CAMPUS)
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DEDICATION
This project is dedicated to my parents, love of whom has been a constant

source of motivation for me.
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ACKOWLEDGEMENT
First of all I thank Allah Almighty for the blessings he has bestowed upon me. I would
like to thank my BIOLOGICAL AND SPIRITUAL PARENTS without whom I’ve not
been what I’m. I would like to thank Mr. Umair (Dean) and Mr. Farhan (our coordinator)
of internship program for guiding me in preparation of this report. I am grateful to the Mr.
Sheikh Masood Elahee (Branch Manager) of Bank Alfalah, Mr. Malik Javaid (Manager
Operations) and the entire operations Department & Miss Maria Khan (CRO) of Bank
Alfalah for helping and guiding me in a relentless manner during my internship at Bank
Alfalah. I also thankful to Miss Saira (Manager Trade) & Mr. Hamayoun Rasool Malhee
(Manager Credit), Miss Hina also give a greater knowledge about accounts department,
so I am also thankful to her, I am thankful to all those individuals who contributed for the
completion of this project.
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EXECUTIVE SUMMARY
Being a student of business administration, it’s very much necessary to get the practical
experience of an organization and see the implementation of all that we have studied in
theory. When I stepped in Alfalah to have my reality bite, I wasn’t blind of what I am
going to have. I’ve heard many people saying that these course books contradict with the
real scenario but I didn’t find any gaps. The organization, its procedures, its processes,
the system, everything was predictably sound. The only enigma was the “people”, as
books can’t provide the expertise needed to deal with them, its life that does!
In Pakistan, the integration of the Banking and Finance Sector with the international
finance community is a high priority of the Government to attract foreign investments in
the development of the country's economy.
Internship is in fact a glimpse of job world and off course practical and professional life.
Internship at Bank Alfalah provided me an opportunity to explore practical work in light
of what I have studied during MBA. My SIX week working at Bank Alfalah Limited,
Main GT Road Branch, and Gujranwala was full of learning regarding various aspects of
banking. This report contains practical knowledge, which I gained during my internship.
Bank Alfalah limited is one of the largest private banks in Pakistan, and due to bank’s
movement on its path of strategic excellence with a special focus on service and value
enhancement it has a very bright future ahead. During past few years the positive and
dynamic interplay of political and economic factors translated into higher performance
for the Bank.
Working at BANK ALFALAH LIMITED is really a very tough job. But the working
environment BANK ALFALAH LIMITED is marvelous. BANK ALFALAH LIMITED
is a perfect example of a modernized bank where great emphasis lies on achieving
customer satisfaction. Moreover, BANK ALFALAH LIMITED is a growing organization
and when organization grows, its employees also grow. All the information in this report
is based upon my observation, interviews and practical involvement in different tasks
during my internship at Bank
My report is divided in 4 sections. The first one contains the introduction of bank and
BAL. BAL is a big name in the world of banking. It’s a real BIG THING as it has its
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network spread country wide and internationally of course. Its 274 branches in 74 cities
say it all!
The second portion is all about my experience at BAL i.e. what I learnt there. My
experience at Alfalah was like a slice of a surprise cake, every bite of which was having
something new to taste. And I enjoyed every bite of it. It was an entirely new experience,
it was life… and I won’t be wrong if I say it was an experience of a life time.
I worked in A/C opening and Foreign Trade and spend my maximum time in exports. I
also worked in credit department & learn a lot. I also worked in accounts department for
one week. The reason behind it was the rush of internees, lack of time at employee’s end
and my own temperament. I also work for audit preparation for one week.
The third portion contains the financial analysis of BAL where I’ve analyzed the working
of Bank Alfalah Limited regarding cash flow ratios, liquid ratios, market-based ratios and
special bank ratios etc. The overall solvency of bank is good.
The fourth portion is about the financial analysis from where bank generate money for
financing and accounting system of the organization. I also mention the SWOT analysis
of the bank Alfalah limited. At the end I give some suggestions for further improvement.
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TABLE OF CONTENTS
TITLE Page #
DEDICATION 3
ACKNOWLEDGEMENT 4
EXECUTIVE SUMMARY 5-6
TABLE OF CONTENTS 7-9
SECTION 1: INTRODUCTION TO BANK ALFALAH LIMITED 10-31
1. ORGANIZATION’S BUSINESS SECTOR 11
1.1OVERVIEW OF BANK ALFALAH LIMITED 12
1.2. HISTORY OF THE ORGANIZTION 12-15
1.2.9. NATURE OF THE ORGANIZATION 15
1.3. BUSINESS VOLUME 16
1.4. SERVICES/PRODUCTS 17-25
1.4.1. HOME FINANCE 17-18
1.4.2. CAR LOANS 18-20
1.5. CREDIT CARDS: 20-22
1.6. BANK ALFALAH’S DEBIT CARD: 22
1.7. TYPES OF ACCOUNT OFFERED BY THAT BANK 22-24
1.8. MONEYGRAM 25
1.9. COMPETITORS 26
1.10. ORGANIZATIONAL STRUCTURE OF BAL 27
1.10.1. NUMBER OF EMPLOYEES 28
1.10.3. INTRODUCTION OF ALL THE DEPARTMENTS 28-29
1.10.4. COMMENTS ON THE ORGANIZATIONAL STRUCTURE: 29
1.11. INTRODUCTION OF BANK ALFALAH LIMITED GUJRANWALA 30-31
2. TRAINING PROGRAM: 32-102
2.1. "ACCOUNT OPENING 33-71
2.2.1OPERATIONS DEPARTMENT AT GUJRANWALA BRANCH: 34
2.2.2. MANAGEMENT AT OPERATIONS DEPARTMENT 34
2.2.3. ACCOUNT OPENING DEPARTMENT & CHEQUE BOOK 35-71
ISSUANCE & LOCKERS
2.3. PROCEDURE OF ACCOUNT OPENING 49-52
2.4. ACCOUNT CLOSING 52-55
2.4.4. STOP PAYMENT 55-56
2.4.5. CHEQUE BOOKS RECIVING & ISSUANCE 57
2.4.6. IN CASE OF CHEQUE BOOK LOST 58-59
2.4.7. MANUAL CHEQUES 60
2.4.8. RECEIVE THE CHEQUE BOOK BY OTHER PERSON ON BEHALF 60-63
OF ACCOUNT HOLDER
2.4.9. ACTIVATION OF DORMANT ACCOUNT 63-64
2.4.10. CHANGE OF ADDRESS & TELEPHONE 64-65
2.4.11. CHEQUE FILLING 66
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2.5. MONEY GRAM 67-68
2.6. LOCKERS 69-71
2.7. ACCOUNTS DEPARTMENT 72-76
2.8. CREDIT DEPARTMENT 77-89
2.9. TRADE DEPARTEMNT 90-97
2.9.14. TASKS THAT I PERFORMED 98
2.10. FINANCE DEPARTMENT 110-114
3. FINANCIAL ANALYSIS 103-142
3.4. CALCULATIONS OF SPECIALIZED RATIOS 105-109
3.5. CALCULATIONS FOR LEVERAGE RATIOS 115-120
3.6. MARKET ANALYSIS 121-124
3.7. CASH FLOW ANALYSIS 120-122
3.8. ACTIVITY RATIO 125-129
3.9. PROFITABILITY RATIO 130-132
3.10.1 HORIZANTAL ANALYSIS 133-137
3.10.2 GRAPHICAL REPRESENTATION OF VERTICAL ANALYSIS 140-146
3.11. FUTURE PROSPECTS OF THE ORGANIZATION 146
3.12. COMPARISON WITH COMPETITORS 147
4. SWOT ANALYSIS 148-151
5. RECOMMENDATION 152-153
6. CONCLUSION 154
BIBLIOGRAPHY 155
GLOSSARY 156-157
PERSONAL INFORMATION 158
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1. BRIEF INTRODUCTION OF THE ORGANIZATION’S BUSINESS
SECTOR:
2. Introduction of banking sector is not described.
3.
• Trading and sales
It includes fixed income, equity foreign exchange, commodities, credit, funding,
own position securities, lending and repos, brokerage debt and prime brokerage.
• Retail banking
It includes lending and deposits, banking services, trust and estates, private
lending and deposits, banking service, trust and estate investment advice,
merchant/ commercial/ corporate cards and private labels and retails.
• Commercial banking
Commercial banking include project finance, corporate finance, real estate, export
finance, trade finance, factoring, leasing, lending, guarantees, bills of exchange
and deposits.
• Corporate finance
Corporate banking includes services provided in connection with mergers and
acquisition, underwriting, privatization, securitization, research, debts
(government, high yield), equity, syndication, IPO and secondary private
placements.
SUBSIDIARIES OF BANK ALFALAH LIMITED:
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AL-BADER INTERNATIONAL DEVELOPMENT CO.
1.1OVERVIEW OF BANK ALFALAH LIMITED:
Private
Type KSE:
LSE:
Founded Karachi
Headquarters Principal Office, Karachi Pakistan
Key people H.E. Sheikh Hamdan Bin Mubarak Al Nahayan (Chairman)
Banking
Industry
Capital Markets
Products Loans, credit card, savings, consumer banking etc.
Revenue PKR
Website www.bankalfalah.com
1.2BRIEF HISTORY:
Bank Alfalah Limited is located in Karachi, Sindh, Pakistan. Bank Alfalah was
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incorporated on June 21, 1997 as a public limited company under the Companies
Ordinance 1984. Its banking operations commenced from November 1, 1997. The bank is
engaged in commercial banking and related services as defined in the Banking companies
ordinance, 1962.
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 bank’s commitment to a culture of innovation and seeks out synergies
with clients and service providers to ensure uninterrupted services to its
customers. Bank perceives the requirements of its customers and matches them
with quality products and service solutions. During the past five years, bank has
emerged as one of the foremost financial institution in the region endeavoring to meet the
needs of tomorrow today.
1.2.1. History of bank Alfalah limited:
Bank Alfalah has gone through different phases over the years. Its name has been
changed in the following sequence.
• Bank of credit and commerce and international (BCCI)………………1972
• Habib Credit and exchange bank………………………………………1992
• Bank Alfalah…………………………………………………………..1997
1.2.2. Introduction of BCCI:
Bank Alfalah limited was being formed after going through different changes. At first the
bank Alfalah limited was working the name of bank of credit and commerce international
(BCCI). BCCI was incorporated in Luxemburg on
September 21, 1972. At that time it's paid up capital was US $ 205, million. By early
1973 BCCI has established its first 4 branches in three countries.
o Luxemburg
o UAE
o UK
With the passage of time the branch network of bank Alfalah limited was expand rapidly
in different region of the world i.e. far east, Africa, Europe and western and Latin
America.
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1.2.3. Branches of BCCI in Pakistan:
There were three branches of BCCI in Pakistan. These were
o Karachi
o Lahore
o Rawalpindi
The Lahore branch was opened on 15th December 1978. This branch was opened at that
time when some other international banks like citi bank, bank of America and American
express etc. were already working. But within a few years this branch crossed mostly all
the other banks in case of deposits, advances, imports & exports dealings.
1.2.4. Liquidation of BCCI:

BCCI was closed on July 5, 1991. At that time BCCI was opening almost 69 countries in
the world. It had 3 operating branches in Pakistan. When financial authorities launched a
coordinated swoop, it was supposed to be the biggest international fraud story in history.
1.2.5. Incorporation of Habib credit & exchange bank:
In July 1991, the branches of BCCI in Pakistan at that time were taken over by The
Ministry of Finance and SBP. All three branches were under Habib Bank Limited after
valuation of its assets for 15 million dollars. It worked with Habib Bank Limited as a
subsidiary for around about 10 months from 14 March 1992 to 31st October 1992
1.2.6. Privatization of Habib credit & exchange bank:
H.C.E.B was privatized on July 7, 1997. 70% shares and management was taken over by
Abu Dhabi based Al-Nayhan consortium. This consortium consists of foreign investors of
UAE and highly professional Pakistani bankers. The bank was sold for Rs. 39 per share
for 70% shares. The government decides to sell 10% shares to employees and rest of the
shares was privatized through the stock exchange.
1.2.7. Emergence of bank Alfalah:
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 Sheikh Nahayan Mubarik al-Nahayan purchased 70% of its shares.
Bank Alfalah Limited was launched on June 21, 1997 as a public limited company under
the Companies Ordinance 1984. The bank commenced its operations on November 1,
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1997. The bank introduced commercial banking and related services as defined in the
Banking Company's ordinance, 1962.
After a few years, the bank introduced its new identity of H.C.E.B after the privatization
in 1997. The management of the bank had implemented strategies and policies so the
bank would become a major player in the market. With a partnership with the Abu Dhabi
Group the position of the bank became stronger which allowed the bank to invest more in
revolutionary technology to increase its range of products and services.
1.2.8. Bangladesh:
Bank Alfalah took over Shamil bank of Bahrain and renamed it to bank Alfalah in 2005
On the 16th of May, 2005 Bank Alfalah formally took over the Bangladesh operations of
Shamil Bank of Bahrain for US $17.88 million and renamed it to Bank Alfalah. This was
the first branch of the bank outside Pakistan. Currently there are three branches of the
bank in the country, two being in Dhaka and the other being in Chittagong.
Nature of organization:
Bank Alfalah Limited is a private bank in Pakistan owned by the Abu Dhabi Group. Bank
Alfalah was incorporated on June 21, 1997 as a public limited company under the
Companies Ordinance 1984. Its banking operations commenced from November 1, 1997.
The bank is engaged in commercial banking and related services as defined in the
Banking companies ordinance, 1962. After a few years, the bank introduced its new
identity of H.C.E.B after the privatization in 1997. The management of the bank had
implemented strategies and policies so the bank would become a major player in the
market. With a partnership with the Abu Dhabi Group the position of the bank became
stronger which allowed the bank to invest more in revolutionary technology to increase
its range of products and services. The bank is currently operating through more than 274
branches domestically and an international presence in Afghanistan, Bangladesh and
Bahrain, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Some of the
main branches are located in all of the major cities including: Lahore, Kasur, Islamabad,
Gawadar, Peshawar, Faisalabad, Quetta, D.I.Khan, Rawalpindi, Sargodha, Sukkur,
Sialkot, Multan, Murree, Attock District, Gujranwala, Pirmahal etc.
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1.3. BUSINESS (VOLUME):
The directors of Bank Alfalah Ltd have subscribed to right shares in accordance with
their entitlement on the basis of a number of shares held by them and so far deposited Rs
708.097 million in the bank’s account. According to a communique dispatched to KSE on
Wednesday, they included Hamadan Bin Mubarak Al Nahayan, Abdullah Naseer
Hawaileel, Abdullah Khalif Al Mutawa, and Khalid Mana Saeed Al Otaiba, Ikram ul-
Majeed Saigol, Nadeem Iqbal Sheikh and Sirajuddin Aziz. It may be noted that the board
of directors of Bank Al-Falah in a meeting held in Abu Dhabi, UAE on December 15,
2008 approved the issue of 50 percent right shares (one share for every two shares) at a
face value of Rs 10 per share to enhance its paid up capital. Bank Alfalah Limited,
through its subsidiaries, provides retail and commercial banking, and corporate finance
products and services in Pakistan, the Asia Pacific, and the Middle East. The company’s
retail banking products and services include retail lending and deposits, private lending
and deposits, trust and estates investment advice, merchant/commercial/corporate cards,
and private labels; commercial banking products and services include project finance,
corporate finance, real estate, export finance, trade finance, factoring, leasing, lending,
guarantees, bills of exchange, and various deposit products; and corporate finance
products and services include services in connection with merge. Bank Alfalah Ltd.
reported earnings results for the year ended December 31, 2008. For the period, the profit
before taxation declined to PKR 1.794 billion as compared to PKR 4.535 billion earned
in the corresponding period in 2007. The profit after taxation declined to PKR 1.301
billion in the period under review against PKR 3.130 billion earned in the same period a
year back. The bank earning per shares declined to PKR 1.63 against PKR 3.92 recorded
in 2007. The bank's mark-up/return/interest earnings increased to PKR 31.046 billion
against PKR 25.783 billion. The bank's total non-mark-up/interest income declined to
PKR 5.245 billion against PKR 6.038 billion.
Revenue ▲PKR 25.783 Billion

Net income ▲PKR 3.130 Billion
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1.4. SERVICES/PRODUCTS OFFERED BY BANK ALFALAH LIMITED:
Bank Alfalah Limited, through its subsidiaries, provides retail and commercial banking,
and corporate finance products and services in Pakistan, the Asia Pacific, and the Middle
East. The company’s retail banking products and services include retail lending and
deposits, private lending and deposits, trust and estates investment advice,
merchant/commercial/corporate cards, and private labels; commercial banking products
and services include project finance, corporate finance, real estate, export finance, trade
finance, factoring, leasing, lending, guarantees, bills of exchange, and various deposit
products; and corporate finance products and services include services in connection with
mergers and acquisition, underwriting, privatization, securitization, research, government
and high yield debts, equity, syndication, IPO, and secondary private placements.
It also operates as an investment advisor/fund manager, as well as floats and manages
open-ended and closed-ended funds. The company’s products and services also include
deposit accounts, lockers, remittance, and hilal/debit cards; structured finance, trade
finance, lease finance, small and medium enterprise finance, and agriculture finance;
credit cards, home loans, and auto/vehicle loans; and money market, forex market,
correspondent banking, nostro account, consumer banking, and home remittance products
and services. As of December 31, 2008, it operated a network of 274 branches.
1.4.1. HOME FINANCE:
Following products in the Home Loan are offered by Bank Alfalah.
1.4.1.1. PRODUCTS
1.4.1.2. Home Purchase:
With this facility, customer no longer need to just dream about the home he wants for
himself and his family .Bank Alfalah will provide customer up to 80% of the purchase
price of the property (whichever is less), so that customer can realize his dream and enter
the reality of owning a home. Payment period ranges from 3 to 20 years.
1.4.1.3. Home Construct:
If customer has a plot and need finance to construct a home, which excites everyone in
your family! No problem. Bank Alfalah will provide customer 100% of the estimated
value of constructed property to enable him to say good-bye to rent forever! Even if
customer don't have a plot, Bank Alfalah will provide customer up to 60% of the value of
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the plot that customer has selected to purchase! Payment period ranges from 3 to 20
years.
1.4.1.4. Balance Transfer Facility:
Customer’s existing installment on a home finance leave customer with nothing to spend.
Customer need not worry any more because Bank Alfalah has genuinely low rates and
payment options that could leave more funds with customer each month. With Bank
Alfalah’s BTF, repaying home finance will not make customer break into a sweet!
Transfer up to 100 % of the existing finance. Customer can stretch repayment period for
up to 20 years.
1.4.1.5. Home Renovation
If your customer already own a home, but need extra space for a growing family or want
to see some rooms get a new look. Simply apply for financing of up to Rs. 3.50 million or
40% of the surveyed value of your home and get yourself the extra space. You can stretch
your payments for up to 10 years.
Home Start
The crown jewel of Home Finance Scheme, the golden opportunity for someone starting
a career to buy an already constructed housing unit so early in life! Bank Alfalah offers a
moratorium of up to 3 years in principal payments, for a financing of up to 20 years.
Customer services only the mark-up element initially, and principal repayment starts after
the end of moratorium period. Home Start is specially designed for young people to own
a home of their own.
1.4.2. CAR LOANS:
Objective
The main objective of the car finance department is to finance all the cars manufactured
or assembled in Pakistan and imported cars at a very reasonable markup.
1.4.2.1. Benefits and Features
• Quickest processing
• No hidden charges
• Minimum down payment
• Complete repayment at any point of time
• Balance transfer facility {BTF} for existing as well as new clients from other
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Banks
• Tenure period ranging from 1 to 5 years.
• Financing of all brand new locally assembled vehicles and used cars.
• Financing limit ranging b/w Rs. 200,000/- to Rs. 2000,000/- for brand new cars
1.4.2.2. Corporate & Individual Car Leasing:
BAL’s recently introduced car leasing facility for individuals and corporate sector has set
new dimensions for the product. Now customers are provided with the option of either to
get the vehicle leased or financed.
1.4.2.3.Insurance
Renowned and reliable Insurance companies are offering the competitive rates of
Insurance, per year insurance premium in advance {at the time of down payment} and
remaining in the subsequent equal monthly installment.
1.4.2.4. Processing Fee (Non Refundable):
For financing upto Rs. 1.00M 5000

For financing upto Rs. 2.50M 10,000
For financing upto Rs. 5.00M 12,500
For financing over Rs. 5.00M 15,000
1.4.2.5. Mark-up Rates:
1 Year KIBOR + 2% for salaried person
1 Year KIBOR + 3% for Business People / Self-employed and Overseas Pakistani (both
salaried and self-employed)
• 1 Year
o Salaried 14.00% per Annum
o Self-employed Professionals & Businessmen and Overseas Pakistani (both
salaried and self-employed) 15.00% Per Annum
These are indicative rates reviewed monthly
1.4.2.6. Late Payment Charges:
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Rs. 500/- per late payment
1.4.2.7. Prepayment Charges: Nill if repaid through own sources, otherwise 5% penalty
of the outstanding amount. No charges are applied on balloon/bullet payments for
reducing your loan amount
1.4.2.8. Documentation Charges: At actual, including stamp duty charges for legal
documentation, on-site inspection during construction, lawyer’s fee and charge
registration fee, as advised by the relevant persons/ agencies.
*All quoted rates are subject to change in response to SBP / Market factors. However, we
will notify our customers of each rate change.
1.5. CREDIT CARDS:
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 29 million
locations in more than 150 countries around the globe and over 22,000 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. Salient features
are:
o No Joining / Annual / Renewal fee
o Electricity, Sui Gas, PTCL and Warid bills payment through 24 hour Call Center
and Auto Debit instructions
o SMS for card usage, mini statement, payment receipt confirmation, etc.
o Cash withdrawal at all 1LINK ATMs
o Special offer on Warid post paid connections
1.5.1. Revolving Credit
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With Alfalah Visa a customer has the option of paying only 5% (minimum Rs. 500/-) of
his outstanding balance by the payment due date. Service charges at the rate of 2.25% per
month will be levied on the balance unpaid and carried forward. These charges are
calculated on a daily basis from the transaction date for all cash and
retail transactions. The following month, customer has the option of either the full
amount payment or if he wishes, pay only the minimum amount due and revolve again.
1.5.1. Free Supplementary Cards
Bank Alfalah gives up to six supplementary cards for the spouse, children, parents and
siblings of the cardholder. All the persons having supplementary cards can use the card
up to the limit of the original cardholder.
1.5.2. Zero Loss Liability
If the card is lost or stolen, and the cardholder notifies the bank immediately after such
event, then the bank will be responsible for any misuse of that card.
1.5.3. All Billing in Pak Rupees
Whether the customer makes transactions in Dollars or any other currency, for his
convenience, all his billing will be in PAK Rupees.
1.5.4. Comprehensive Travel Protection
Alfalah VISA offers a comprehensive cover up to Rs. 7.0 Million on Alfalah VISA Gold
Card in case of an accident, while traveling on any common carrier. It is applicable only
if the tickets are charged through Alfalah VISA card. All transactions will appear under a
separate heading stated as “Credit Cover Premium.” You will be charged 45 paisa’s per
Rs. 100 of your statement balance each month.
1.5.5. Legalities
The rights and obligations of any card member subscribing to Alfalah Credit Cover will
be governed by the definitions, terms and conditions given on the back of this form. By
virtue of Credit Cover, Bank Alfalah aims to offer through an insurance company of its
choice, certain protection to those card members who are subscribing to Credit Cover in
the event of death, prolonged illness, permanent, temporary or total disability. Followings
are the credit cards offered by bank Alfalah limited:
1.5.6. Platinum Card
It is accepted at nearly 29 million locations in more than 150 countries around the globe
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and at over 22,000 establishments in Pakistan.
Titanium
Titanium MasterCard is your partner everywhere and is globally accepted and welcomed
at locations displaying the MasterCard logo.
1.5.7. Gold & Silver
A perfect card combination for all segments of salaried & professional individuals.
1.5.8. Young Professional
This Card is for you, if you are:
• a Graduate
• has just started your Career
1.5.9. Women Exclusive
Now for the first time in Pakistan, Bank Alfalah has introduced a credit card exclusively
for women. This card has its unique features.
1.5.10. Student Card
For the first time in Pakistan, Bank Alfalah introduces a credit card for Students.
1.5.11. Supplementary Card
Now you can give Free Supplementary Cards to anyone you care for
1.5.12. Visa Mini
Visa Mini is a practical and convenient part of your everyday life - whether you go for
shopping, dine out, buy grocery, want to go for holidays.
1.6. BANK ALFALAH’S DEBIT CARD:
Alfalah Hilal Card is the revolutionary, new-age form of cash that provides you greater
freedom, security and convenience, combined with the wide reach of Visa Network. This
single card brings just about everything within your reach. Now, you can use your Alfalah
Hilal Card for all your financial needs around the world, round the clock, wherever Visa
cards are accepted, locally and internationally. The Alfalah HilalCard is an International
Visa Debit Card which gives you an unlimited access to your current / savings account
with a simple swipe, at millions of retail shops and ATMs, worldwide.
1.7. TYPES OF ACCOUNT OFFERED BY THAT BANK
For any type of transaction and for availing any type of credit facility the 1st and most
important step for customer is that he/she must be accountholder of bank. So he must
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open his/her account in the bank and then he can proceed further.
• On the basis of nature of account
• On the basis of functionality
• On basis of currency
1.7.1. On The Basis Of Nature: These accounts are further divided into three main
categories, which are as follows:
1.7.1.1. Saving Account: Saving accounts are those accounts in which the bank gives the
customers profit on their deposits. Bank also deducts zakat on this account. For opening
the saving account the customer’s initial deposit must not be less than Rs. 5000. The
special code is assign to this account is 02. This account is also further divided into 3
categories
• Saving account
• Profit and loss account
• Royal profit account
1.7.2. Current Account: Current accounts are those accounts in which we give no profit
to customer on their deposits. Bank also deducts no zakat on this account. For appending
the current account the customer’s initial deposit must not less then Rs.10, 000. The
special code is assign to this account is 01.
1.7.3. Term Deposit Account: In this account the customer gets its amount fixed for a
specified period of time. Bank adds interest in this account and the customer is not
allowed to withdraw the money before the expiry of the tenure.
On the basis of functionality: This account is also divided into three categories. These are
as follows.
1.7.4. Business Account: This account is related to the business community. This
account is also further subdivided into three categories.
• Sole proprietor account
• Partnership account
• Limited Company account

1.7.5. Personal Account: The accounts related to persons other than companied and
partnership firms are called personal accounts. These are further subdivided into three
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categories:
• Personal account
• Joint account
1.7.6. On The Basis Of Currency: This account is also divided into two categories.
These are as follows:
• Local Currency account
• Foreign Currency Account
1.7.7. Local Currency account:
The account dealing with the local currency is called local currency account.
Foreign Currency Account:
The account dealing with the foreign currency is called foreign currency account. This
account is further subdivided into following.
• USD
• Euro
• JPY
1.7.8. Alfalah Kifayat 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/-
27
1.8. MONEYGRAM:
1.8.1. FEATURES
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.
1.8.2. SECURE AND RELIABLE
An extensive network of quality agents linked by computer, transfer customer’s money
safely and ensures that it is handled with care and without delay. Thousands of people
already use the Money Gram service all over the world. It is trusted for its reliability and
security.
1.8.3. CONVENIENT AND FAST
Money Gram is available in over 154 countries and in more than 40,000 locations
worldwide. With Money Gram customer’s money is transferred immediately and usually
arrives at the receiving end within 10 minutes while other services can take days or
weeks. There are no complicated procedures and customers do not need a bank account
or a credit card. The receiver is handed the cash immediately.
1.8.4. FREE MESSAGE SERVICE (FOR SENDERS)
There is also an added personal touch-you can receive a 10 word message from the
sender with every transaction at no extra cost.
1.8.5. WAY TO RECEIVE MONEY
1.8.6. To receive money:
Ensure that the sender has given you the Money Gram reference number.
Go to any Bank Alfalah authorized branch, taking some form of identification (e.g.
passport) with you.
Provide the reference number and complete a simple form.
Customer will be given the money immediately, in your local currency.
1.8.7. MONEY GRAM AT BAL GRW
At Bank Alfalah Gujranwala Mr. Faisal is the Incharge of Money gram.
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1.9. COMPETITORS:
The major competitors of bank Alfalah are
• Allied bank
• Union bank
• Standard charter
• MCB
799500000
Number of share holders
17343
29
1.10. ORGANIZATIONAL STRUCTURE OF BAL GUJRANWALA BRANCH:
Branch Manager
Sheikh Masood Elahee
Credit Manager Operations Manger Trade Manager

Mr. Hamayoun Rasool Malhee Mr. Malik Javaid Miss Saira Chudhary
Home Loan Officer

Mr. Faisal Mr. Asim
Mr. Shahid Mehmood
Agri-Credit
Mr. Shahzad
Naseem Remittance Accounts Consumer Banking IT officer
Mr. Qamar Mr. Faisal Shahzad Ahmad Mr. Adnan Munir
Miss Hina M.Asif Bhatti
SME
Mr. Usman Cash Department CRO
Mr. Muhammad Waseem Butt Miss Maria Khan
Ali Irfan Ahmad
Amir Asgher
Amam Adil
M. Daud
M. Rizwan
Return &
guarantees
Usman Anwer
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1.10.1. NUMBER OF EMPLOYEES:
The bank Alfalah as everybody knows is well known banking organization they have
currently 7,584 employees all over the Pakistan and the numbers of employees working
in Bank Alfalah Gujranwala Branch are 45.
1.10.2. MAIN OFFICES
1.10.3. INTRODUCTION OF ALL THE DEPARTMENTS

At bank Alfalah G.T road Branch following are the departments
• Operations
o E.g. Deposits, Remittances, Foreign Trade, Lockers, account opening,
cheque books issuance, accounts.
• Consumer Department
o E.g. Credit Cards, Auto Loans, Home Loans, Consumer Durables.
• Electronic banking
o E.g. Phone Banking, ATM's, online banking.
• Trade Department
o E.g. Short/long Term Finance, Trade Finance, Structured Finance.
• Treasury & investment
o E.g. Money Market, Forex Market, Investments, Govt. Securities,
Correspondent banking.
detail required
o
o
1.10.4. COMMENTS ON THE ORGANIZATIONAL STRUCTURE:
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 bank Alfalah
Gujranwala branch, is concerned, there is some centralization and decentralization to
some extent, but most centralized
Administrative style of branch manger Mr. Masood Elahee is authoritative. His
authoritative style is the requirement of administration. For the implementation of
31
strategies and getting all the activities to be done properly with an organized
environment, unity of command is the requirement of the time. But the scenario is
different in case of departmental heads. In cash and credit department, powers are
delegated at low levels. Employees are allowed to organized and take necessary actions
to accomplish their work properly.
The organizational structure of BAL is Centralized every thing is approved from the head
office they follows the policy of their head department which is in Karachi and they
follows all the policy which they send them that BAL is working successfully employees
are very satisfied and customers get lower difficulties of any fraud because of
centralization. Employees directly reported to manager and then manager send their
problems to the head office and they try their level best in solving the matter. Bank
Alfalah's management believes in developing the potential of the bank's employees to the
fullest extent. Training & development centre of the bank is housed in custom built, state
of the art facility on the 4th floor of the head office building at Karachi. The centre is
responsible for providing multi-level high quality training programs to all staff members
in the following areas:
o Consumer banking operations
o Credit marketing & credit proposals
o Credit administration/documentation
o Trade finance operations
o Marketing & selling skills
o Customer service skills
o Performance appraisal skills
o Time management & personal effectiveness
It is obligatory for each staff member of the bank to attend at least one training
programmes. Whenever the training department is unable to provide focused training for
certain groups of staff, reputable external training providers are invited to fill the gap.
32
1.11. INTRODUCTION OF BANK ALFALAH LIMITED GUJRANWALA:
I have done my internship in BANK ALFALAH LIMITED main G.T. Road branch
Gujranwala. The internship provided me great opportunity to equip myself with
knowledge, techniques, application and tools used in an organization. I was very much
excited because working at Alfalah was my dream. The second portion is all about my
experience at BAL i.e. what I learnt there. My experience at Alfalah was like a slice of a
surprise cake, every bite of which was having something new to taste. And I enjoyed
every bite of it. It was an entirely new experience, it was life… and I won’t be wrong if I
say it was an experience of a life time!
Bank Alfalah limited is providing successful banking services in many cities, so
Gujranwala city is one of them. Valid city markets have their unusual importance
regarding import business. They are known as business and commercial hub of
Gujranwala. Major commodities and industrial raw materials are being imported in these
markets. Major industrials are routing prefer to route their business through the banks
situated in these areas. These markets are highly profitable and important for banking
sector.
BANK ALFALAH LIMITED major competitors, Union bank and Askari commercial
bank earned huge profits in this area. Therefore, to capture this business and to target this
very important segment, bank Alfalah launched its branch in December 22, 2002, with a
bright and clear vision of customer service. In the beginning there were some problems as
the citizens were afraid of depositing their money in this bank. The employees of the
bank worked very hard to increase the business of the bank in Gujranwala. It was due to
their firm determination and hard work that this branch of Gujranwala working
successfully.
Now in Gujranwala BANK ALFALAH LIMITED is making greater profit from rest of
the banks. Bank Alfalah G.T Road branch has the importance of backbone for BANK
ALFALAH LIMITED. It has second volume of foreign trade business and has led to
huge profits, just with in 4 or 5 years.
During my internship of 6 weeks at bank Alfalah I analyze that the employees are very
hardworking and try to give best level services to the customers, customer satisfaction is
more valuable thing for them. Entire team of Bank Alfalah Gujranwala were very
33
cooperative and every time ready to solve my problems in case of any problem. During
my internship I work in account opening department and cheque book receiving and
issuance there I got a lot of experience how to deal with customers. I got a lot of
confidence from this sort of environment of bank Alfalah limited, so this branch is
working well but due to economic crises it goes down from previous years but employees
are very hard working and from their firm determination Bank Alfalah will become
market leader again in Gujranwala.
1.11.1. Starting Date of my Internship at Bank Alfalah Limited:
I did six weeks Internship at BAL, so I start my internship on May 19, 2009 and ended on
June 30, 2009
1.11.2. Departments of Bank Alfalah where I got training & duration:
It was very shorter time for learning but I try to my level best to learn but I touched
almost the main departments of bank Alfalah Gujranwala branch. I start my internship
from accounting opening, cheque book & lockers department and here I spend 2 weeks of
my internship account opening department is more interested for me. I also got
knowledge of how to fill different cheque and slips I also got knowledge about money
gram.
After that in third week I rotate from account opening to Accounts department here I got
little bit knowledge about accounts because all officers were busy because of their audit
preparations and the closing of June so, I got little bit knowledge about accounts.
Then fourth week I spend one week in credit department here I got the knowledge of all
the requirements and documents of giving loan. The policies of central branch of bank
Alfalah limited.
Then the fifth week I got the knowledge of trade fiancé department and I only touched
export related working and activities.
Six week my last week of internship I spend my all time in closing the accounts its audit
working so operations manager give me the task of filing the accounts and close the
accounts, attach all customers requests attach with their account foams.
34
35
36
2. TRAINING PROGRAM:
“WORK DONE BY ME"
I reported at Bank Alfalah Limited (G.T Road Gujranwala) on May 19, 2009. Mr.
Sheikh Masood Elahee, the Branch Manager at that branch of Bank Alfalah welcomed
me and inquired about my educational status. He then directed me to see Mr. Malik
Javed, Manager Operations and also the internship Incharge at that branch of Bank
Alfalah. He introduced me about the internship program at Bank Alfalah.
Mr. Malik Javed, Manager Operations guided me about the banking operations and asked
me about my intentions for the internship program. Later I was instructed to start my
internship from Account opening & cheque Book issuance, so that I might understand the
basic banking operations. Miss. Maria Khan, Customer Relations officer, was assigned
the task of guiding me about working of department. In this report, my endeavor has been
to stipulate my experiences and observations, during my internship in Bank Alfalah G.T
Road, which would always be memorable for me.
2.1. "OPERATIONS DEPARTMENT HIERARCHY"

MR. MALIK JAVED
(MANAGER OPERATIONS)
MR. FAISAL MARIA KHAN IRFAN CD INCHARGE

(ACCONTS DEPT) ACCOUNT OPENING, CASH DEPARTMENT
MISS. HINA CHEQUE BOOKS
QAMAR
MR. ADNAN ADNAN, RASHID, MR. ASIF BHATI
(IT DEPARTMENT) LOCAL (ONLINE
MIAN FAISAL (MONEY TRASACTIONS) TRANSACTIONS)
GRAM, ATM CARDS,
LOCKER)
2.2.1OPERATIONS DEPARTMENT AT GUJRANWALA BRANCH:

Operations department deals with different field of activities dealing with accounts of
customers, provides money gram facility, locker facility and ATM cards, online
transitions, accounts, cash dealing services.
2.2.2. MANAGEMENT AT OPERATIONS DEPARTMENT:
Mr. Malik Javed is the operation manger and Mr. Faisal, Miss Maria Khan assists him in
37
the work. Mr. Faisal is the Incharge of Accounts department, Miss. Hina assists him. Miss
Maria Khan is the Incharge of account opening & cheque Book issuance department. Mr.
Irfan is the Incharge of cash department. Mr. Faisal handles the services of money gram.
Mr. Asif Bhati handles online transactions. Mr. Adnan deals with IT related services, Mr.
Adnan, Rashid and Mr. Qamar deals with local transactions.
2.2.3. ACCOUNT OPENING DEPARTMENT & CHEQUE BOOK ISSUANCE &
LOCKERS:
I spend considerable time in performing the job of Account opening & cheque Book
issuance coordinator & lockers. In account opening department I learned about
• How to deal with new customers.
• Kinds of accounts offered by Bank Alfalah Limited.
• What are the requirements for opening an account.
• The persons who are eligible to open an account.
• Procedure of closing an account.
• Details about loose the cheque.
• Details about loose cheque book.
• How to activate dormant account of customer.
• Procedure for online an account.
• Stop payment on customer request.
• Change the address of customers.
• Deal with the queries and problems of existing customers.
• Proper maintenance of requisite documents in files and pouches.
• Arrange the previous files for AUDIT.
• Providing account information.
• know about your customers (KYC'S)
I worked with Miss Maria Khan in this department. She was often busy dealing with
customers as in this department lots of customers use to come daily. But still she told me
a lot about account opening procedure. She also briefed me how to use bank smart in
account opening department. She use to be very polite with customers as her job requires
this. She use to mange relationships with customers by providing them better services.
38
Therefore customers are pleased.
In this department I worked 2 weeks, at my first day Miss Maria told me about what are
the requirements for open an account, how many kinds of accounts are there. At my first
week I understand the basic steps of account opening procedure. She also told me read
the other forms like closing of an account, what is dormant account, how to activate the
dormant account, how to issue cheque book to the customers, how to deal with new
customers, etc.
She told me all the things very briefly, after that she ask me to cheque the forms of
different customers & if there is something miss then write down it on the form. Then she
said me deal with a customer why she comes? I ask why you come she told me I want to
open an account. Then I told her about basic banking account.
2.2.3.1. BASIC BANKING ACCOUNT:
Basic banking account basically open for house wife & for salaried person, 1000 initial
deposit is needed for this account. In this maximum 2 deposits & 2 withdrawals through
cheque are allowed. Free debit card can be used to withdraw cash there is no limit for
ATM withdrawals.
I told her what documents are required for this accounts.
 Two clear copies of computerized national identity card (card holders signatures,
name, card number and photo should be clear).
 Introducer (bank Alfalah's account holder having good reputation)
 NIC No. of next of kin (preferably of blood relation of customer)
 In case of house wife account there is need for her husbands source of income
prove.
 Customer's service card/appointment letter/salary slip or any other documentary
evidence of service, including, but not limited to a certificate from the employer.
 If customer signs in language other than English, an understanding is required on
stamp paper worth Rs. 100 containing text of banks prescribed format.
 Signatures of customer should match with that of computerized national identity
card, if not then a separate undertaking will be obtained on banks prescribes
format and the same will be authenticated by introducer. See annexure
 annexure
39
 Two passport size photographs required if customer's signatures are shaky.
40
 If customers signs in a shaky style or affix thumb impression, a separate
indemnity will be obtained on banks prescribed format and the same will be
authenticated by the introducer.
 In case national identity card (CNIC) does not contain a photograph, then in
addition to CNIC, any other document such as Driving License etc that contains a
photograph is required. if customer does not have any other valid document which
bears photograph, then following documents will be obtained:
o A passport size photograph duly attested will be obtained:
o A copy of CNIC duly attested by gazetted officer/Nazim.
o A confirmation in writing to the effect that the individual have no other
document bearing photograph.
After that I gave the basic banking (BBA) form, and take signs from her on the form and
attach all required documents. And also introduce her with branch manger Mr. Sheikh
Masood Elahee who ok's her form after taking interview from her. In account opening
work was done on routinely basis every day you open accounts and give cheque books to
the customers. In account opening tasks was performed on routinely basis. I also learned
about other types of accounts at bank Alfalah Gujranwala branch. Following are the
accounts which I opened at this department.
2.2.3.2. BUSINESS INDIVIDUALS ACCOUNT:
This account is for business individual and firms. Like business has three types so same
as this account can also be opened by Sole proprietors, partners & companies. So it is of
3 types
 Sole proprietorship Account
 Partnership Account
 Limited company Account
2.2.3.4. REQUIREMENTS FOR SOLE PROPRIETORSHIP ACCOUNT:
 Attested copy of NIC (New) of proprietor.
 Declaration of proprtiorship on letter head.
 Attested copy of NTN certificate.
 Business stamp should be affixed on every signature.
 Next of kin of proprietor.
41
 CNIC number of next of Kin.
 Signature of proprietor should match with that of computerized national identity
card, if not then a separate undertaking will be obtained on banks prescribed
format and the same will be authenticated by introducer.
 Bank References.
 Accounts statements.
 If proprietor signs in language other than English, an undertaking is required on
2.2.3.5. REQUIREMENTS FOR PARTNERSHIP ACCOUNT:
 Attested copies of NICs (New) of all partners.
 Certified true copy of partnership Deed (on stamp paper worth Rs. 500).
--partnership Deed should be attested by Notary public.
 Copy of NTN certificate of firms as well as all partners.
 Partnership Mandate (Banks Prescribed Format).
42
Request Letter on firm's letter head mentioning the person/persons authorized to
operate the account.
 Firms should be affix on every signature.
 All partners should sign on banks prescribed format for partnership in their
43
individual capacity (i.e. Firms stamp should not be affixed with signatures on
mandate).
 Signature of all applicants should match with that of computerized national
identity card, if not then a separate undertaking will be obtained on banks
prescribed format and the same will be authenticated by introducer.
 Photocopy of certificate of registration issued by registrar of firms (only in case
registered firms).
 Copies of membership certificates from concerned trade organization, if any.
 Copies of import/export registration if any (only for trading firms).
 Balance sheet (optional).
 Banks References.
 If any partner signs in language other than English, an undertaking is required on
 Two passport size photographs required if signatures of any partner are shaky.
2.2.3.6. REQUIREMENTS FOR LIMITED COMPANY ACCOUNT:
 Memorandum & Article of association.
-Attested by SECP.
-Company seal should be affix on both memorandum & article of
association.
 Attested photo state copy of certificate of incorporation. (Attested by SECP).
44
 Attested photo copy of latest 'form A-29'. (Attested by SECP).
 List of Directors on company's letter head.
-under signed by the chairman & sectary of the company.
 Copy of Board Resolution regarding account opening.
-under signed by the chairman & sectary of the company.
-company seal should be affixed on Resolution.
 Attested copies of NICs (New) of all Directors.
 Copy of Board Resolution (Banks prescribed form).
 Attested copy of NTN certificate of company as well as all Directors.
 Attested copy of certificate of commencement of business (in case of public
limited company only).
 Rubber stamp should be affixed on every signature except banks prescribed
resolution.
 Signature of all applicants should match with that of computerized national
identity card, if not then a separate undertaking will be obtained on banks
prescribed format and the same will be authenticated by introducer.
 Balance sheet.
 Banks References.
 If any of directors/authorized signatory signs in language other than English, an
undertaking is required on stamp paper worth Rs. 100 containing text of banks
prescribed format.
 Two passport size photographs required if signatures of any partner are shaky.
45
2.2.3.7. REQUIREMENTS FOR CLUBS, SOCITIES AND ASSOSIATIONS
ACCOUNTS:
 Certificate copies of
a. Certificate of registration.
b. By-laws/rules & regulations.
 Regulation of the governing body/executive committee for opening of account
authorizing the person (s) to operate the account.
 An undertaking signed by all the authorized persons on behalf of the institution
mentioning that when any change takes place in the persons authorized to operate
on the account, the banker will be informed immediately.
 Copies of CNIC of all members signing the Account Opening Form.
 List of members of governing body/executive committee on letter head.
 Rubber Stamp.
2.2.3.8. REQUIREMENTS FOR AGENTS ACCOUNTS:
 Certificate copies of power of Attorney
 Attested copy of NIC of the agent.
2.2.3.9. CNIC VERIFICATION:
NADRA verification must attach with the form as a prove either this customer who want
to open an account is Pakistani or not.
46
47
2.2.4. TYPES OF ACCOUNTS AT BAL GUJRANWALA:
BAL opens the following accounts;
• Current account (both in foreign and local currency)
• Saving account (both in foreign and local currency)
• Royal profit account (in Pak. Rs.)
2.2.4.1. CURRENT ACCOUNT
Every bank maintains the current account with its customers;
“A current account is running account which is continuously in operation by the
customer on all working days of the bank”.
The customer withdraws money from current account without prior notice to the bank. In
short, in current account, the banker incurs an obligation to honors all the cheques drawn
by the customer so long as there is enough money to credit of the client.
2.2.4.2. Interest on current account
The banks don’t usually pay any interest on current account in local as well as foreign
currency. The amount can be withdrawn at any time, so the bank can’t comply these
funds due to fear of withdrawal.
2.2.4.3. Who are interested in opening current account?
The current account is operated by traders, business companies, institutions, public
bodies, industrialists who
Wish to have working capital in their custody
Like to receive and make payments through cheques
Are interested in keeping their money liquid and safe
Utilize the agency services of the bank frequently
2.2.4.4. Advantages of having current account
The customer gets the following advantages on behalf of current account;
The bank collects properly endorsed cheques on behalf of current account holders
The bank may allow the facility of overdraft on prior arrangements to the trustworthy
customers.
Loans and advances may be sanctioned to the creditworthy clients with ease.
On line facility alternative of cash transaction is also provided to customers having min.
balance of Rs.500, 000/- in their current account.
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2.2.4.5. Initial deposit
The minimum initial deposit for current account in local currency in Rs.1000, where as
for maintain current account min.Rs 5000 is must; otherwise the bank will take Rs.200
for not maintains account properly. Initial deposit in foreign currency current account is
US$ or UK pound 500.
Summing up, the current account doesn’t earn but serves the cause of industry trade and
commerce.
2.2.4.6SAVING ACCOUNT
Saving deposit account is an ideal account for those who have money to save but cannot
profitably invest it anywhere else, as amount is too small.
Saving deposit is an important source of fund for commercial banks. It is opened to
encourage thrift among the persons of small means. Saving account is opened both in
local and foreign currency.
2.2.4.7. Withdrawal of amount
The depositors are normally allowed to draw a limited amount of money only twice a
week. If a customer wants to withdraw a large sum of money, he then has to give a prior
notice of 7 to 15 days in writing to the bank.
The bank can safely invest the deposits of saving account, as it knows that only the
customer withdraws a small percentage of this account.
2.2.4.8. Interest on saving account
On Pak. Rs. Account the bank usually pays interest according to prescribed rates by the
central bank. This amount is credited to the customer’s account after every 6 months. The
rate doesn’t remain the same but fluctuates due to many reasons e.g. conditions of the
bank, bank’s total deposit’s position, inflationary and deflationary powers in the economy
etc.
The rate of interest on foreign account is as follows;
US$ saving account (new) 2.25%
UK pound saving account (new) 2.00%
While interest rate on the old foreign currency accounts is 1.00% both for initial deposit,
while in foreign currency account the minimum amount is 500$.
49
2.2.4.9. ROYAL PROFIT ACCOUNT
Royal profit account is just like the saving account with the following major differences;
The royal profit account is opened only in local currency.
Minimum balance for opening royal profit account is Rs.25000/.
Rate of profit is higher.
Following are the accounts which are mostly open at Gujranwala branch but during my
internship most of saving accounts closed because on customer demand and current
accounts because nill balance in their accounts.
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2.3. PROCEDURE OF ACCOUNT OPENING
2.3.1. STEP 1-REASON TO OPEN THE A/C:
When a person approaches the bank to get an A/C opened in his/her name with a request,
the first step is “knowing the reason” i.e. why does he/she want to open the A/C.
2.3.2. STEP II-THE ACCOUNT OPENING FORM:
The person who is desirous of opening on account with the bank has to fill in “The
Account Opening Form”. The client must bring his own original National Identity Card.
He is given an account opening form to fill in. If he/she wants to open a Current, Foreign
currency or PLS A/C, then he/she have to fill a form according to the account. Any
person, firm a body corporate that can enter into contract can open an account with the
bank.
2.3.3. STEP III-COMPLETION OF THE FORM:
The applicant must fill in the form properly. There should be no overwriting or cutting.
He has to write his name, address, contact number and the amount he has to deposit at the
time of opening an account. For PLS account the limit of initial deposit is Rs.500. for
current account the limit of initial deposit is Rs. 10000 and for foreign currency accounts
the limit of initial deposit is Us.200$ and 200 Pounds.
The applicant has to declare in the form that he/she shall comply with the bank rules,
which are enforced from time to time for the conduct of the account. 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 in future.
2.3.4. STEP IV-INTRODUCTION:
The prospective customer is to provide his introduction to the bank either from the old
customer of the bank or from the person known to the bank. The introducer or reference
verifies the integrity, character, honesty and good will of the intending customer on the
application form. The signatures of the introducer must be present on the form otherwise
the form will be considered as incomplete.
2.3.5. STEP V- SPECIMEN SIGNATURE CARD:
The signatures of the client are obtained on a Specimen Signature Card. These cards are
obtained in duplicate with two signatures on each card from the customer. These
51
Specimen Signature Cards (SSCs) are then scanned in the computer. Every time a cheque
is received for a payment from the client, the signature on the cheque are verified by
comparing them with the S.S. Card. see annexure
2.3.6. STEP VI-ACCOUNT NUMBER:

When all the formalities are completed then the final approval of account has to be taken
from the Branch Manager. After obtaining approval of the branch manager an account
number is allotted to the customer all the information is entered into the computer. Then
that account number is printed on the chequebook, S.S.cards and account opening form.
2.3.7. STEP VII- ISSUANCE OF A CHEQUEBOOK:
Once a person has opened the account, the next important phase is “acquiring the cheque
book”. For this, the bank issues him a “requisition slip” on which the A/C holder
mentions his A/C title, A/C number, type of account, the number of pages needed in the
cheque book along with his signatures.
The account number and the name of the client, from the requisition slips, are then E-
mailed to the Head Office Karachi. It’s to be mailed on Fridays – before 12:30pm, on
Saturdays – before 12:00pm, and, on the rest of the days – before 1:30pm. Bank receives
52
the required cheque books the very next day it makes the request (normally). On receipt
of cheque books from HO, the designated officer immediately sends a confirmation sheet
back to HO, through E-mail, on which the names and numbers of all sent chequebook are
mentioned. The officer then issues chequebook to customers, taking their signs on
another copy of that very sheet (sent to HO) against their names and stamp the signs
“verified”. This sheet is kept in the folder named “request for chequebook”. Another copy
(which is the 3rd use of this sheet) is kept for voucher records i.e. the cheque book
charges. The cheque book can be of pages containing the numbers: 10, 25 and 50.
There’s a requisition slip in every new cheque book to request the next one. Bank charges
Rs. 5 per leaf and vouchers are prepared where “chequebook’s charge recorded (Cr)”
with the rate “5*total number of leaves*total books” and “customer a/c (Dr)” with the
rate “5*total number of leafs”. And, “stationary security A/C (Dr)” and “stationary
payable (Cr)” with the ratio of 2.30. Bank takes its share at ratio of 2.70.
The expiry period of a cheque book is 3 months. A person can sign the records and take
away his/her cheque book. But if the entitled customer is unable to receive the
chequebook’s him/herself, he/she can authorize somebody else to receive the cheque
book on his/her behalf. In this case, Authority letter, 3rd / authorized person’s CNIC, along
with “verisys” (which is copy of 3rd person’s NIC from NADRA) copy and requisition
slip are taken. To make the transaction safer, “cheque book delivery of A/C” intimation or
the “acknowledgement letter” is also issued that’s signed and returned to bank by the
entitled customer/account holder to acknowledge receipt.
2.3.8. STEP VIII (A) - ENTRY OF A CHEQUEBOOK:
Before issuance of a chequebook, the employee performs certain functions. They
include:
• Stamping every leaf with specific A/C number.

• Enters it in the chequebook issue register.
• Check whether or not a senior officer verifies the signatures, if no then first he
gets them verified.
After entry in the manual register, the employee issues the chequebook to the A/C
holder after his/her signature on the register.
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2.3.9. STEP VIII (B) - THE ONLINE RECORD:
Once a chequebook’s issued the officer immediately has to get the chequebook’s serial
number entered into the system. Otherwise the customers won’t be able to get the
cheque cashed. Software, named “bank smart”, is being used to keep the record of
customer’s transactions.
2.3.10. STEP IX- FILLING OF ACCOUNT OPENING FORMS:
For current and saving account, separate files are maintained in which the forms are
pasted 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.
2.3.11. STEP IX- MAINTAINING THE COMPUTER RECORD:
After opening of account, every 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.
2.3.12. KNOW YOUR CUSTOMER FORM:
Along with an account opening form an officer also fills a questionnaire form known as
“Know Your Customer Form”(KYC). In this form some additional information about the
customer is recorded. This form is an evident and shows that the account-opening officer
has personally met the client. KYC is another form same as account opening form but it
contains few more details which help the bank to know its customer. That is why it is
known as Know Your Customer form. This is the form proves that the documents and
details given by the customer are verifies and correct. After verifying the details like
monthly income, address, line of business, telephone number and the other details the
bank allows the customer to be a part of bank.
2.4. ACCOUNT CLOSING:
2.4.1. Two types of account closing
• Own customer request
• Due to Nill balance
A customer comes and told I want to close my account so I gave him account closing
form and told him requirements for closing an account give & ask why you want to close
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your account, he ask me I have no need to continue the account. There are no charges in
some conditions when a customer wants to close their account. See annexure
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After filling the form I told him confirms the form from Mr. Malik Javed who is the
operations manager and he has the authority to close or activate the account or stop the
payment. After that Mr. Malik took interview from the customer & closes their account.
2.4.2. PROCEDURE FOR CLOSING AN ACCOUNT:
`The procedure followed for the purpose of closure of an account is described in the
following steps.
The customer who wishes to close an account first has given 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 customer can also give an application on 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 foreign currency
account then the account balance before closing should be zero. In case of these 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 customer's cheque book is also received
from him and then it is destroyed in order to prevent any misuse in the future.
A liability form is filled and sent to the Trade Finance Department and credit Department
in order to check that the customer does not owe the bank a single penny in any regard. A
debit voucher and a credit voucher are also attached to the liability form.
When both of these departments approve that the customer does not owe any money to
the bank and the form is returned to the account opening department, then 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 marked. One thing has to be taken into
immediate consideration that the account number allotted to the client (who has to close
his account), after closure of the account becomes unless and is not allotted to any one in
the future.
After approval of the liability form, it is sent to either the foreign currency department or
the cash department, as the case may be so that the officer who scanned it in the first
place could return the specimen signature card to the account-opening department.
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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 passed in the ledger
right along side the original account opening form. The form has to be pasted with the
original account opening form even if the account was opened a decade ago. In the
computer as well all the entries and records related to that particular account are
permanently deleted by using the 'close account' option.
2.4.3. IMPORTANT DOCUMENTS USED:
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 security so as to check whether or not the customer owes
some money to the bank or not.
2.4.4. STOP PAYMENT:
I also learned how to stop the payment on customer's request. One ID card copy is
required from the customer & and attach the stamp of original seeing on ID card. The
charge of stop payment of one cheque is Rs. 200. whole cheque book stop payment is 550
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2.4.5. CHEQUE BOOKS RECIVING & ISSUANCE:
After opening an A/C with the bank, the A/C holder once makes a request in the name of
bank for the issuance of a cheque book. The A/C holder mentions title of A/C, A/C
number, sign it properly and mentions the no of leaves he/she requires. Normally BAL
issues a cheques book having at least 25 or 50 leaves. Every cheques book also contains
one leaf that is used for another of a cheques book.
It was routine work at account opening department that customer gave request that is
known as cheque book requisition slip for new cheque books. See annexure
When customer give request for new cheque book it is quality of bank Alfalah customer
get cheque book from next day, that issues from head office that is in Karachi. After
collecting the cheque book slips all requests mail to main office before 2 o clock, and
enters the information in system.
It was an important task at account opening department that was issue cheques book to
customers on their request. It was very sensible & responsible task at that department,
because their may be conduct different kinds of frauds due to irresponsibility.
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2.4.6. IN CASE OF CHEQUE BOOK LOST:
There was many cases regarding cheques books lost of customers, in case of cheques
book lost of a customer following procedure must be followed by a customer,
Inform to the Account opening Incharge, My cheque book was lost & bring a police
report of cheques book lost. One ID card copy is also attached with the report and
INDEMITY REQUEST. See annexure
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2.4.7. MANUAL CHEQUES:
A manual Cheques book is issued to the customer his/her request of 25 leaves. After
issuing the new cheques book to the customer it was enter in the register as a record. The
charges of stop all cheques book is Rs.500 & for stoppage of single cheque is Rs.200. in
case of lost of single cheque the following procedure is follow,
• Inform to the Incharge
• ID card copy
• Stop payment request
In case of loss of a cheque, to stop a cheque from encashment, the rules say the
following
2.4.7.1. (No specific order):
• Customer has to come personally with an application to prevent the cheque from
encashment
• Rs. 210, per complaint of a cheque
• Rs. 520, on loss of complete cheque book, after filing an RAPAT.
2.4.7.2. Of requisition slip:
In this case the rules say the following:
• Indemnities for Requisition slip loss. Indemnity is and undertaking/request in case
of loss of requisition slip that is resulted in issuance of Form B.
• Application to issue Form B for Rs. 105.
• Issuance of Form B (requisition slip)
2.4.8. RECEIVE THE CHEQUE BOOK BY OTHER PERSON ON BEHALF OF
ACCOUNT HOLDER:
If a customer was very busy and don’t have time to receive cheques book so he/she give
authority to give cheque book to this person. See annexure
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ACKNOWLEDGEMENT:
When a person want to receive cheques book on behalf of account holder, then that
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person acknowledge, that I receive cheques book on behalf of account holder.
2.4.9. ACTIVATION OF DORMANT ACCOUNT:
What is dormant account?
A dormant account is that if a customer cant doing the transaction in last 6
months, or if a customer not have enough amount in his/her account that account
becomes the dormant account. In my internship period it was routine work to activate so
many dormant accounts. Customer ID card is must to activate the account on request. It is
necessary a customer must come for activation with amount according to the requirement
of that account.
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2.4.10. CHANGE OF ADDRESS & TELEPHONE:
If a customer wants to change the address or telephone then first of all fill this & attach
the copy of his/her ID card. See annexure
This & attach the copy of his/her ID card. See annexure
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2.4.11. CHEQUE FILLING
It was another duty I have ever done during my internship period. To fill a cheque
requires full attention on what you are writing. The account holders who are illiterate and
never know how to fill the cheque ask for help from the customer service officer. While
filling a cheque on behalf of customers I must had to check the following things:
1. Date of withdrawing amount
2. Writing exact amount
3. No cutting and over writing
4. Signatures or thumb impressions on right place
5. CNIC number must be mentioned in the back side of cheque
6. Who is the bearer
2.4.12. PERSONAL EXPERIENCE OF FILLING CHEQUES
While filling the contents of cheque I was very attentive about what I am writing on the
cheque. It should be written with proper attention that what is the date and what amount
the customer wants to withdraw. Because by increasing or decreasing the number of zero
in the amount column the amount can be totally changed and the customer will have to
bear the problem. It sometimes happened with me that I filled the cheque wrongly then
my in charge instructed me to cut the written word and take sign of the customer in
cutting place. My way of writing amount is like =______/-, and also I used to write the
numbers very close to each other so that the person who came to withdraw the amount
could not add any other number. So it was a simple task but requires proper attention of
the person.
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2.5. Money Gram:
I also work for few days Money Gram. Mr. Faisal, Incharge of Money Gram, welcomed
me in his department. For his, I would just say, that I did not find such a helpful and
cooperative person in my career.
In that, I worked for few days of my internship program. One major difference that I
observed in this department and other departments was the difference in the nature of
work. Here, I have tried to describe my experience and observation, Money Gram
department.
2.5.1. First of all what is money gram?
Money gram is software, through which we get foreign remittances without any Account
#, only just know the basic information from customer who wants to deposit money
Procedure:
• Name of the sender
• ID card copy of the receiver
• Receiver & sender Contact numbers
• Currency
• Date and time
All these information must be fulfilled.
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2.6. LOCKERS:
To keep the valuables safe, BAL also provides the LOCKERS facility to its A/C
holders…so, it needs no special verification and documentation procedures. It is
important to first time check by the officer of lockers what customer put in locker. If
customer has no account at BAL then it must provide ID card copy with attested B form.
These lockers are in various sizes and definitely on various rates.
2.6.1. SIZES AND RATES OF LOCKERS:
Lockers are available in the following rates and sizes:
• SMALL – Rs. 1000 per year
• MEDIUM – Rs. 1500 per year
• LARGE – Rs. 2500 per year
Bank deducts 5% Federal Excise Duty (FED) on this amount.
2.6.2. MAINTAINING THE LOCKERS:
The locker maintenance involves three major issues:
• Locker Map
That presents the position of each locker.
• Locker Control List
Presents, which locker has been issued to whom and against which key.
• Locker Position
It makes the further issuance of lockers easier by demonstrating the issued and
remaining numbers and types of lockers.
2.6.3. DOCUMENTS REQUIRED:
• Request Form
• SS card
• Locker Form
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• ID card of customer
2.6.4. OPERATING THE LOCKERS:
• The customer first contacts the official locker operator.
• Signs on locker attendance register
• Gets to his/her own locker after having that HEAVY door opened.
• The bank key along with the customer key is used to open the locker.
• Meanwhile, the officer leaves the room. The customer operates the locker and
then locks it with his/her own key alone.
2.6.5. LOSS OF KEYS:
If a person loses his/her keys, which results in breaking the lockers, bank fines him Rs.
1000 and all the breaking charges are to be borne by the customer himself.
2.6.7. INSURANCE:
Lockers are insured upto 0.25 million.
2.6.8. LOCKER SIZES:
• 6 by 6
• 6 by 12
• 12 by 12
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2.7. ACCOUNTS DEPARTMENT:
After account opening department I rotate towards the account department Mr. Faisal is
the head of the accounts department in this department I just touch the procedure of the
accounts because of the closing reports and they must be complete them before their
audit, Miss Hina assist me little bit working of this department. To do work in this
department it required a lot of time but I had shorter time so I learn little bit. First day
when I move towards this department Mr. Faisal and Miss Hina welcomed me and told
me about the daily task of accounts department, and give me activity of affairs to check
and marked the amounts of each department to know the daily working of the whole
branch.
She also told me about what statements she makes at the end of the each month; she
makes the following ratio for bank. But she doesn’t tell me about how to calculate them
because she said these ratios are calculated in our banks software named as Bank Alfalah
SMART. So internees are not allowed to use it she also told me that we must be report in
every morning the daily position of the branch to the centralized.
2.7.1. Month end Statements:
• Assets & liabilities
• Other assets & liabilities
• Rate of return
• Deposit about 3 million
• Quality assurance balancing
• Mandatory leaves report
• Monthly performance review report
During my internship in accounts department I learn following things not in detail but
followings are according to my learning.
The accounts department deals with various routine activities for the bank. The main
activities performed by it are
• Budgeting
• Reporting
• Maintenance & depreciation of fixed assets
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• Miscellaneous function
2.7.2. BUDGETING
Accounts department of a bank Alfalah, for a makes budget for the branch. Procedure
The budget is based on forecasting through past performance.
2.7.2.1. Procedure:
• First of all, they review what its sources of funds are and where it can utilize these
funds?
• The main sources of the bank Alfalah are deposits, securities issued by the bank,
borrowing from other banks, borrowing from SBP, bank’s paid-up capital, its
reserve fund, profit generated by the bank.
• The bank may employ these funds in lending to others at a high rate of mark-up.
Investment in securities, placement in inter-bank markets etc.
• It also takes into account the income from other sources, cost of funds,
administrative expenses, and utilities expenses.
• Then the budget is submitted to the head office for recommendation and
modification.
• Monthly budget meeting is held by branch managers to analyze the monthly
performance. Budget and actual performances are employed and variance is
computed for analysis.
• Variance can be negative or positive. Variance does not mean that it will have
positive effect on the overall profitability e.g. positive increase in deposits is not
always coupled with positive increase in advances.
• The management will then drive the reasons for the variance and take remedial
measures to achieve the targets.
2.7.3. REPORTING
The accounts department in the form of reports clubs and details of various departments
together, Each and every minute detail is provided in weekly, monthly and annual reports.
The reports are submitted to head office, SBP and to the government.
2.7.3.1. Kinds of Reports
Following reports are prepared by the accounts department on daily basis.
• Statement of affairs
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• Income & expenditure
• New FCY report
• Royal profit report
• Subsidiary statement
• Currency wise deposits report
• Stationary reports
Following are the reports that are prepared on the basis of reports granted from
mainframe. These are very important for proper analysis and feedback.
2.7.3.2. Daily advance and deposit position
• Daily exchange position
• Daily fund management
2.7.3.3. Maintaining of fixed assets & their Depreciation
Accounts department maintains the record of all the assets and charges depreciation on
them. Department prepares asset purchase report and asset sale report after every 6
months that helps in changing the depreciation. It is calculated on monthly basis and
charged yearly. Bank Alfalah does not only depreciate the existing assets but also the
assets but also the assets transferred in and transferred out.
2.7.3.4. Miscellaneous function:
The accounts department also performs some other miscellaneous functions:
• Daily activity checking
• Reconciliation statements
• Closing entries
• Foreign exchange forward transaction
2.7.3.5. Daily Activity Checking
The accounts department the vouchers with daily activity report generated by the
computer. The vouchers are then sorted out into bundles according to their categories and
comparing with the activity report checks the posting of transaction.
2.7.3.6. Reconciliation statements:
The bank prepares reconciliation statement with head office and SBP.
2.7.3.7. Head office
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Reconciliation with head office is done in reconciliation department. The branches sent
out the head office. They check the posting of all the entries if outstanding, which has not
been posted by branch or head office.
The reconciliation is carried out in the head office and accounts department handles
quarries.
2.7.3.8. State Bank of Pakistan
The SBP keeps the record of every scheduled bank. The bank statements and statements
of SBP are reconciled on daily basis. Reconciliation is basically setting of outstanding
entries. The reconciliation statement contains two sides. One contains entries originated
from bank but not responded by SBP and on the other side entries originated by SBP but
not responded by bank.
2.7.3.9. Closing Entries:
Accounts department also passes the closing entries on monthly, 6 monthly and yearly
bases to calculate the profit and analyze the overall performance for a certain period.
2.7.3.10. Foreign Exchange Forward Transaction
In the past, the banks has to keep their foreign exchange with SBP on the agreement that
SBP will purchase the foreign exchange on book rate and charge a fee for covering the
risk. This whole transaction was known as foreign transaction. Now this facility is not
available. To bank on new accounts, but they can avail it by renewing their limit on old
accounts with SBP.
We can say that the accounts department holds a sort of internal check on the branch
relating to its income and expenditures.
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2.8. CREDIT DEPARTMENT:
After accounts department I spend my forth week in credits department Mr. Hamayoun
Rasool Malhee is the head of the CAD department credit administration department. In
credit department Mr. Usman and Mr. Muhammad Ali deals with SME’s and corporate
department Mr. Faisal deals with home loan and also assists Muhammad Ali. Mr. Usman
Anwer deals with monthly return and Guarantees. Mr. Shahzad Naseem deals with Agri
finance, so my mail focus on SMEs Mr. Malhee helps me a lot and told all the answers of
my question and also helps in my learning.
The credit department plays a key role in a bank it earns considerate income in form of
mark up on its advances enjoyed in this department very well.
The credit department has been sub-divided into two sections
• Credit Marketing
• Credit administration & Monitoring
2.8.1. CREDIT MARKETING:
Credit marketing is the most important department of the bank that actually finds the
ways to utilize the deposit that are beneficial for the bank and generate income for the
bank. The credit marketing department consists of two sections
• SME’s
• Corporate
2.8.1.1. SME [small and medium enterprise]
In this section, we grant the loan to the small businesses, which fall in the category of
SME. According to Prudential Regulations of SME:
SME means an entity, ideally not public limited company, which does not employ more
than 250 persons (if it is manufacturing / services concern) and 50 persons (if it is trading
concern) and also fulfills the following criteria of either ‘a’ and ‘c’ or’ b’ and ‘c’ as
relevant:
a) A trading service concern with total assets at cost
excluding land and building upto Rs. 50 million.
b) A manufacturing concern with total assets at cost
excluding land and building upto RS 100 million.
c) Any concern (trading, service or manufacturing)
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with net sales not exceeding Rs. 300 million as per latest financial
statements.
d) An individual, if he or she meets the above criteria,
can also be categorized as an SME.9
Here the sale or turnover is normally up to three million and the number of employees is
fifty for service organization and 250 for manufacturing organization.
2.8.1.2. CORPORATE
The corporate section gives loan to industries and different companies according to worth
of the company.
2.8.1.3. LOAN LIMIT
Branch is allowed to extend the credit from minimum of 500,000 to maximum of
5,000,000. The Area office can extend the limit up to 10,000,000 and above this limit the
branch has to get approval from Head Office.
2.8.1.4. WORKING OF CREDIT MARKETING
CREDIT LINES
The bank offers following credit lines to its worthy customer.
• Funded Facility
• Non Funded Facility
2.8.1.5. FUNDED FACILITY
Funded lines are those in which bank directly issues cash to its customers and it consist of
the following lines:
• Current Finance /Running Finance (CF)

• Term Finance (TF)
• Local Bill Purchase
• Foreign Bill Purchase
• Finance against Foreign Bills(FAFB)
• Finance against Packing Credit I, II (FAPC)
• Finance against Imported Merchandise (FIM)
• Finance against Trust Receipts (FATR)
2.8.1.6. NON-FUNDED FACILITY
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Non-Funded lines are those in which bank does not give cash to its customers, rather it
gives guarantee to the creditors of its customers.
These lines consist of the following:

• Letter of Credit [that can be Usance or Sight
• Letter of guarantee
2.8.1.7. PRINCIPLE OF LENDING

• Know your customer
• Purpose of facility
• Profitability
• Sources of repayments
• Security( Collateral)
2.8.1.8. GOLDEN PRINCIPLE OF LENDING
The following points are considering the Golden Principles for lending:
• Short term loan
• Secured
• Self-Liquidation
2.8.1.9. DOCUMENTS REQUIRED
2.8.1.9.1. FOR SOLE PROPRIETOR AND PARTNERSHIP
• BBFS (Borrower’s Basic Facts Sheet)
• Copy of ID card
• Partnership deed
• Collateral Documents
• Tax Return
• Bank Statement for the last six months
2.8.1.9.2. FOR THE COMPANY BORROWER
In addition to above document the following documents are required.
• Memorandum of Association
• Article of Association
• Form 29
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• IT Form 30
• Valuation of property being offered as collateral
• Collateral documents
• Request letter
• Previously owned property to assess net worth
2.8.1.10. TYPE OF BORROWERS
2.8.1.11. INDIVIDUALS
It consists of the following:
• Existing account holder
• Staff members
• Close relatives of the staff members
• Employee of other banks
2.8.1.12. BUSINESS ACCOUNT
• Sole proprietor ship
• Partner ship
• Limited company
2.8.1.13. OTHERS
• Clubs and association
• Federal, provisional and local govt. bodies
• Traders
• Contractors and construction companies
• Transport, storage, warehousing
• Property dealers
2.8.1.14. INTERNAL DOCUMENTS
It is also the responsibility of the credit marketing department to search for the potential
customers by visiting the business institutions and the individual business people. When a
customer applies for credit, the credit marketing department verifies his credit
worthiness, ensures that all the required documents are provided, and after being
satisfied, it refers the case to the branch credit committee for approval. Also the
department prepares the case history and the required internal documents of the applicant.
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2.8.1.15. CREDIT LINE PROPOSAL
In this document the department mentions all the important information about the client
and prepares the proposal for the loan. CLP has 8 Sections
• Customer information
• Proposal
• Securities
• Brief customer profile
• Financial briefs
• Account Conduct
• Attachments
• Rational justification and consideration
2.8.1.16. TYPES OF PROPOSAL
There are three types of proposals:
New
Here the client applies for loan for the first time.
Revision
In this type of Proposal the client requests the bank that he wants to make certain changes
in the credit limit.
Renewal
In this the client request for the same limit after expiring the date of previous one
In case of limit change or amount change the expiry date is changed but in case of
markup change the expiry date doesn’t change.
2.8.1.17. CATEGORIZATION OF SECURITY
Category A involves tangible and releasable security (lien). Whereas, Category B
involves non tangible and realizable security (personal guarantee, corporate guarantee)
2.8.1.18. COMPOSITE CREDIT LINE APPRAISAL
In this regard, the bank checks the credit worthiness of the borrower and analyzes the
borrower on different aspects, gives different rating to each and on the basis of rating
gives recommendations to the authority. It consists of following sections:
• Grade
• Risk index level
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• Condition
• Trends
• Aggregate score
Grade - In this section, we give different grades to different credit limits.
Risk Index Level - In this section, we assign different points associated with different
level of risk e.g. 1 to lowest risk and 10 to highest one.
Condition - In this section, we mention what is the condition of the business on the basis
of different factors e.g. excellent to the strong condition and poor to weakest condition.
Trends - In this section, we tell about the financial position of the firm.
Aggregate Score - On the basis of above we give aggregate score to the different
borrowers.
SCORE CONDITION
41 and above [80%and above] Strong
31 to 40 [60% to 79%] Good
21 to 30 [41% to 59%] Fair
20 and below [40 and below] Poor
So, in this way we recommend the authority either to accept or reject the proposal.
2.8.1.19. APPRAISAL OF CREDIT PROPOSAL
• The constitution of borrower and his nationality
• The liquidity and reliability of the borrower
• History of borrower relationship with the bank
• Status report from the borrower previous /other banks
• Management structure of the borrower
• Nature of the business
• The borrower financial position
• Financial analysis
• Feasibility analysis
• Project analysis
• The profitability transaction with the bank
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• Repayment ability
• The security offered
• Documentation for considering credit facility
• Visit report
• Status report (CIB report)
• Credit line proposal (CLP)
• Financial statements
• Stock inspection report
• Credit file
• Among all theses document the most important is the CIB report that show the
actual worth and past loan data of customer. CIB (Credit Information Bureau)
depicts the following:
• Outstanding liability (funded or non funded)
• Overdue
• Recovery during the month
• Amount under litigation
• Write offs
• Number f time rescheduling
• Outstanding liabilities (post due90 days due 360 days)
2.8.1.20. DURATION BASED CLASSIFICATION OF LOANS
Credit loan can be classified as.
Short Term - Covering a period of one year.
Medium Term - Covering a period of two to three years.
Long Term - Covering a period of more than three years.
2.8.1.21. MONITORING
Monitoring is required on the loan issued by the bank and it is different for long term and
short term mostly it is of two types, monitoring by means of practical visit and by means
of analyses of financial statement. Here in head office, sanctioning of big loan are made
as branches have limited power to issue loan.
2.8.1.22. SECURITIES /COLLATERAL
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PRIME COLLATERAL
It is consist of liquid securities that can be pledged or mortgage.
2.8.1.23. SECONDARY COLLATERAL
These securities are readily convertible to cash that should of more than adequate margin
fully under bank control having high value that can with stand the volatile market
condition.
2.8.1.24. TANGIBLE COLLATERAL
The availability of tangible collateral with necessary margin and fair degree of
marketability under forced sale situation.
2.8.1.25. ATTRIBUTES OF GOOD TANGIBLE SECURITY
• Marketability
• Easy assessment of value
• Stability of value
• Ascertainment of title/easy transferability of title
• Yield
Moreover, following things need to be observed:
2.8.1.26. MANAGEMENT
Management should have skill, vast experience and strong succession, aggressive and
able to adapt change.
2.8.1.27. MARKET POSITION
It should be market leader with the clear competitive edge.
2.8.1.28. INDUSTRY BUSINESS SEGMENT CONDITION
Traditionally stable and establish industry with strong future and growth potential.
2.8.1.29. CONDUCT OF OBLIGOR
Excellent /commitment are met in due time with exception.
2.8.1.30. DEFAULTERS
Defaulters can be of two types:
2.8.1.31. WILLFUL DEFAULTERS
People deliberately pledge securities whose values on documents are far more than their
actual worth. So when the person defaults, bank has to face this fraudulent act and to bear
the loss.
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2.8.1.32. RANDOM DEFAULTERS
These defaults are due to the situational factors. Any accident can result in such default.
To avoid the losses from such defaults bank make sure that it must have equal amount of
borrower assets so that it can recover its amount. To make this possible bank usually go
for pledges, personal guarantee, hypothecation (charge on other asset) and mortgage of
property. Once the borrower defaults he will not be granted loan again. Bank will file a
suit and to recover amount from the borrower bank can offer rescheduling in the form
that only the principal should be returned to the bank in specific time period.
2.8.2. CREDIT ADMINISTRATION DEPARTMENT (CAD)
The chairman of the Bank in his review for 2001 annual report defines the credit policy
of Bank as:
“CONSERVATIVE YET DYNAMIC CREDIT POLICY”
2.8.2.1. OBJECTIVE
The overall objective of the department is to provide independent assurance to branch
management and head office credit monitoring division that lending activities are
properly controlled and monitored.
2.8.2.2. FUNCTIONS
• Documentation
• Lodgment of documents and cash collateral
• Reimbursement audit certificate
• Limit input in bank smart
• Post disbursement monitoring
• Monitoring of irregular doubtful and bad debts
• Reporting
Here it is necessary that we must have an overview of at least the most important
documents that are relevant to this department.
2.8.2.4. DOCUMENTATION
• Sanction Advice
• Facility Offer Letter
• General documentation
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• Standard charge documents
• Legal document pertain to properties
• Cash collateral
• Charge with SECP
• Other securities
• Insurance covers
• Guarantees
2.8.2.5. SANCTION ADVICE
A type of document in which the senior officer of bank discuss all the confidential terms
& condition that the demanded facility should be provided or not.
2.8.2.6. FACILITY OFFER LETTER
When it is decided that loan should provided to borrower than branch makes facility offer
letter which explains type of facility to be provided & document required from borrower
according.
2.8.2.7. GENERAL DOCUMENTS
After facility offer letter general document are checked these document consist of
• Complete account opening form
• Facility request letter
• BBFS
• CIB
• Credit opinion
• Search report
• Audited /unedited financial
• Borrower’s profile
• Checklist of state bank regulation
• Board resolution to borrow
• Memorandum and article of association
At this stage all the past records are checked & verified to ensure that past record of the
borrower matches with data provided in request letter. The most important document,
which is checked, is CIB report. In this report all the past loan of borrower are showed
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and their repayment record is also mentioned. The company polices are also collected and
their aim is checked that whether the company is working in the same direction which it
has mentioned.
2.8.2.8. STANDARD CHARGE DOCUMENT
CF (Current Finance)
TF (Term Finance)
FAPCI (Finance against Packing Credit)
FAFB (Finance against Foreign Bill)
LBP (Local Bill Purchase)
FBP (Foreign Bill Purchase)
SLA (Sight Letter Of Credit)
ULC (Usance Letter Of Credit)
FIM (Finance against Import)
FATR (Finance against Trust Receipt)
2.8.2.9. GUARANTEE
LEGAL DOCUMENT PERTAINING TO PROPERTIES
• Title deeds
• Copy of record of rights
• Copy of mutation
• NEC
• PTI
• Aks Shajra
• Site plan
• Valuation
• Site visit report
• Power of attorney
• Agreement to create mortgage
• Token mortgage
• Pre disbursement lawyers opinion
• Perfection certificate of lawyer
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These all documents are taken from borrower & bank make a file of these documents.
These documents are very important because if at any time in future bank has to take
legal action against borrower then bank is well aware that who are the owners or partners
of the company, which property is mortgaged and these all the things are provided to
bank own lawyer which finally decided that is everything right and he make a certificate
or borrower can bring this certificate himself from the recommended lawyer of bank.
2.8.2.10. GUARANTEES
Personal guarantees of borrower
Personal guarantees of mortgagors
Counter guarantees
Cross corporate guarantees
Guarantees are most important thing because in this document it is written that who is
responsible in case of default. Personal Guarantees are considered most important
because it mentions that the guarantor has liability to pay bank’s money.
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2.9. TRADE DEPARTEMNT:
After working in credit department for one week, I was advised by Mr.Malik Javed,
Manager Operations, that I should move on to Trade Finance department. I was much
pleased to hear this as I had a great desire to work and learn something regarding foreign
trade operations. So, I was sent to Miss. Saira Chudhary, Incharge trade finance. Mr.
Asim assists Miss Saira both were very kind persons and told me a lot about Exports.
Although 1 & half week period was very small to get knowledge of whole this
department but still they explained me everything that they can in this short span of time.
2.9.1"Trade Finance DEPARTMENT HIERARCHY"
Miss SAIRA CHAUDARY

Trade Manager
Trade Office
Mr. Asim
Miss Saira is the head of this department and checks the activities of the import & export
departments.
2.9.2. EXPORT OPERATIONS:
During the one week in trade finance department, I was much desirous to know that how
the export transactions are carried out through bank. The export transactions in BAL G.T
Road were not of such extensive nature as imports due that specific area.
2.9.3. CONDITIONS FOR EXPORTER:
There are certain conditions that a person must fulfill to become an exporter.
1) The person must be an account holder of BAL.

2) No one can export any commodity until and unless he/she is a Pakistani
and has a valid export registration with the EPB (Export Promotion
Bureau).
3) The person must process a valid membership certificate of Trade
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Organization, licensed and recognized by Federal Government like a
Chamber of Commerce.
4) The person must possess a valid NTN (National Tax No.) certificate.
5) A person cannot export any good unless he files a Form E (E stands for
exports) with his application to the bank. The form E must be filled in
writing and all specifications stipulated on the form, must be met.
6) The person must have the Sales Tax Registration Certificate.
2.9.4. COMPLETE EXPORT CYCLE:
 The process of export starts with the receipt of the letter of credit (or contract) by the
bank. The issuing bank sends the L/C to BAL G.T Road through the advising bank.
Upon receipt of L/C, an intimation letter is prepared and is sent to the beneficiary of
the L/C, advising him that his document has reached BAL and he should collect them
immediately.
 An E-form is necessary for exports out of the country. It is a part of exchange control
mechanism of the State Bank of Pakistan. When an exporter receives an L/C, the next
job is to get an E-form from the bank. The E-form is a quadruplicate and contains the
following information.
 The Commodity
 The quantity
 The price
 The port of shipment
 The port of destination
 Terms of shipment
 After getting the E-form verified from bank, the exporter starts preparing for his
shipment. As the banks only deal in documents, so in order to receive the payment for
his good to be exported, the exporter has to send certain documents to the L/C issuing
bank via negotiating bank. These documents have already been discussed in import
section.
 A very important step in the export process is to scrutinize the documents, before
sending them to the issuing bank. It requires utmost care and attention of the bank
officer. When the documents are presented in the bank, they are always scrutinized
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and they must be in accordance with the requirements stipulated on the L/C. Any
deviation could result in rejecting the documents by the importer, hence causing loss
to the exporter or even to the bank if the documents are to be negotiated.
Bank Alfalah provides a platform to enhance foreign trade in Pakistan. No one can deny
the important role Foreign Trade plays in progress of any economy. This foreign trade can
be in two forms: either Exports (sending your goods out) or Imports (buying goods from
a foreign land). I would first through light on Exports by describing the various methods
used by the bank.
In exports, bank Alfalah provides its customers with 2 different ways. Those are
1. FDBC
2. Advance Payment
Let me explain each one, according to my understanding.
2.9.5. FDBC – FOREIGN DOCUMENTARY BILL FOR COLLECTION:
If a person/company in Pakistan wants to do business with a company in UK by
supplying its products against money through this mode, it’ll come to the bank to get an
E-FORM (export form). The requirements for E-form issuance are:
• A/C in the name of firm
• NIC
• Chamber membership (if any)
• NTN
Then the party transfers its goods to UK through ship or air and will come to the bank
with the following documents:
• Invoice (containing the amount of goods shipped)
• Shipping bill
• Bill of Lading (non negotiable)
• Bill of Exchange
• Packing list (containing the list of goods shipped)
The bank attaches the Cover Letter with these documents and transfers the CAD (cash
against documents) request to the importer’s bank, who after taking the cash from
importer against these documents (that are used by importer to get hold on the goods
shipped) sends it back to BAL through NOSTRO bank. NOSTRO bank is the one that
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knows both parties and is having A/C of both.
Bank uses software named SWIFT that gives message whenever a payment comes in
NOSTRO. Message is actually an “information” that’s provided by HO (head office).
Gujranwala branch is having a code of 0053 in SWIFT. Whenever a message is received
containing export receipt with code 0053, the activity of NOSTRO is downloaded
through the software NAS (NOSTRO activity system) that contains all the operations and
activities of NOSTRO in various countries and places with lots of other banks and
branches. Thus, activity can be rightly called as “conformation” of the information. The
directed officer, who’s Miss Saira, does this process and highlights the
• Customer reference
• Date
• Payment Details
• Match with that of the message.
This is the brief process. The detail is mentioned below under the specific heads.
2.9.6. E-FORM ISSUANCE:
On request, by party, to issue the E-form, bank does the following:
• Verify the signs on request letter with stamp
• Note down A/C number from the letter
• Stamp and write initials representing the sign verification on request
• Write down the issuance on register named E-form issuance to keep the
record.
• On the request, E-form number and date is mentioned.
• Issues four paged E-form with stamp on it. Customer keeps the original
(for customer) and the quadruplicate (for custom) copy and returns to bank
the triplicate (SBP’s copy) and duplicate (bank’s copy) one.
2.9.7. E-FORM CERTIFICATION:
On issuance of E-form, certification is done in two ways. If it’s FOB (freight on board –
importer will pay the freight) then only “authority certificate” would be filled, saying that
we authorize this person to receive B/L.
If it’s CIF (cost insurance freight – we pay for it), we issue certificate saying that this
transaction is not FOB based, with a request to issue B/L and an NOC.
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In both cases, we stamp the e-form and make entry (which is incomplete at the time of
issuance) on certification register.
2.9.8. MAINTAINING CUSTOMER FILE:
When documents come for CAD, the documents for bank record (other than those that
are sent to the importer) are punched in a separate file carrying the name of firm. Then
the file is assigned with a number e.g. FDBC/GWL/90. On the front, the USD amount of
consignment sent is also mentioned. A liability is also booked on the same file on the
basis of that day’s rate (taken from HO) in Pak Rupee (rounded value), that will simply
be reversed the day payment is received. This is done to bind the customer. In this file,
the list of the documents kept is as under:
• Covering letter of firm
• 2 Packing lists and invoices
• 1 copy of B/L (non negotiable)
• 1 shipping bill (copy)
• 2 e-forms (that are returned by the customer)
• 1 photocopy of voucher (of liability booked in the name of party)
• 1 photocopy of cover letter to foreign bank
• 1 photocopy of BOE
• 1 photocopy of original B/L (on the original B/L, officer endorses that the
shipment is in the order of foreign bank and the copy of this endorsed B/L
is attached in bank’s file)
• DHL receipt (courier)
The front of the file is stamped with
Date of certification……… (Taken from E-form)

Date of shipment…………. (Taken from B/L i.e. boarding/shipment date)
Date of lodgment……….. (The date on which doc are received: current)
Date of realization……….. (On receipt of payment)
2.9.9. ON REALIZATION OF EXPORT PAYMENT:
On realization of payment in FDBC, we do the following:
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• Reverse the liability in voucher
• Make entry in FDBC register
• Make entry in E-form certification register
• Make entry in realization register
2.9.10. FILE MAINTENANCE:
• On receipt of payment, a file is opened (say with the number 20) in the
following form:
ADV/20/07
This file will contain:
o Message and activity
o Copy of Blotter and vouchers
If, this whole payment is being withdrawn through the e-form, we’ll
endorse and place all the documents in this very file and not otherwise.
• On withdrawal of 5000, the file code would be:
ADV/20A/07
And the documents provided by the customer would be punched in it. The documents
include:
o Copy of shipping bill
o Copy of B/L
o Invoice
o Covering Letter from the party
o Two e-forms
This file’s not complete yet. A few more documents are to be placed in it, which will be
described next.
• On withdrawal of next amount, which if is 5000, file ADV/20B/07 would
be the last file and if it’s lesser then file 20C, 20D and so on would come
into existence.
Again the documents to be attached would be the 2 E-forms and the other previously
(customer provided) and next (bank arranged) mentioned documents.
2.9.11. EXPIRY OF PAYMENT:
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Advance payment, if not used, gets expired after a year. To use this expired amount,
special permission is to be sought from SBP.
Now, a question arises, that if advance payment is credited to party’s account and it uses
it for things other than export and doesn’t export anything to the foreign party, what then
is to be done? The answer is, a person has to be mad to do it, because he’s paying all the
duties to the bank. If he does it, then bank after a year will seek permission from SBP to
let him do the shipment now from his own money against that payment. And if he’s not
willing to do the shipment at all, he’ll lose his credibility with the banks. Bank doesn’t
lose anything in Advance Payment.
2.9.12. E-FORM SUBMISSION:
E-form’s triplicate copy along with the original invoice provided by the party and the
copy of advance payment voucher from return will be submitted to SBP on month end.
2.9.13. RETURN:
On month end, return is to be sent to SBP, illustrating the progress and performance of
the bank in that whole month. On receipt of advance payment, A advance payment
voucher is filled with the total amount. If any amount is used, this voucher is endorsed
from the back. And if the amount is used after sending that month’s return, the
endorsement is made on the back of the copy of that voucher maintained in the Return
Register, which are kept month wise. This return is sent to SBP along with the following
documents:
• M FORM
The charges that foreign bank has deducted from the payment are enlisted
on it.
• FDBC E-Form
• Foreign Currency Details
• Money Gram
Each department provides its details which are combining sent to SBP in the form
of return.
2.9.14. TASKS THAT I PERFORMED:
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In exports, I understood the whole process while watching Ma’am doing all the steps. the
tasks that I performed were:
• Got documents photocopied
• Got documents (blotter, voucher, EPRC) signed
• Got vouchers stamped.
• Calculated of W.H.Tax.
• Searched Return, Advance payment, FDBC, E-form certification and other
required registers and source, W.H.T and reference files.
• Compiled W.H.Tax files.
• Arranged and completed FDBC and ADV payment files.
• Endorsed ADV payment vouchers and E-forms.
• Got DD number from Mr. Qamar downstairs.
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2.10. ORGANIZATIONAL STRUCTURE OF FINANCE DEPARTMENT OF BAL
GUJRANWALA BRANCH:
Credit Manager
Mr. Hamayoun Rasool Malhee
SME Home Loan Return & Agri-Credit

Mr. Usman Mr. Faisal guarantees Mr. Shahzad
Mr. Muhammad Mr. Shahid Usman Anwer Naseem
Ali
2.10.1. Number of employees working in the finance department:

There are the 6 employees working in the finance department of BAL Gujranwala. Mr.
Hamayoun Rasool Malhee is the head of the department and check all the activities
performed by their subordinate’s whole team are responsible. They just forward the case
to centralize and if centralize give approval then they provide finance to the customers.
2.10.2. Finance & accounting operations:
Finance and accounting departments are interlinked with each other finance department
makes financing decision first confirm from accounting activities then provide finance to
the customers either finance is available or not. Finance department easily makes the
decision on behalf of the calculation of the accounting system of the organization. The
accounting operation includes the banks accounts maintained with other banks, the
updated status of the customer, execution of standing instructions, discounting bills of
exchange, payment and collation on behalf of customers, customers accounts
maintenance, collection of bills of exchange by bank, the collections of bills including
utility bills. Accounts department also passes the closing entries on monthly, 6 monthly
and yearly bases to calculate the profit and analyze the overall performance for a certain
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period. The accounting system of the BAL deals with various routine activities for the
bank. Fiscal year of bank starts from January and ends on December.
2.10.4. Functions of the Finance Department
Accounting System of the BAL:
The accounting system of the bank is well mange they have the accounting software in
their BAL smart software there is no manual work required all accounting ledger generals
are computerized. Their accounting system is based on cash and accrual basis they make
daily reports for the record keeping and make analysis and decision on that basis. They
check the daily activity which is generated automatically from the system the daily
transactions report. A Debit value will always be recorded on the debit side left hand side
of a nominal ledger account and the credit value will be recorded on the credit side right
hand side of a nominal ledger account. A ledger has both a Debit left side and a Credit
right side. If the values on the debit side are greater than the value of the credit side of the
nominal ledger then that ledger is said to have a debit balance.
The accounts department the vouchers with daily activity report generated by the
computer. The vouchers are then sorted out into bundles according to their categories and
comparing with the activity report checks the posting of transaction. Accounting
operations provides decision makers with sufficient relevant information to make prudent
and intelligent decisions regarding bank’s business. From this system we easily calculate
the assets and liabilities of bank, cash inflow and outflow all activities done in the
accounting system of the BAL.
Finance system of the organization:
The financing system of the BAL is centralized all the decisions regarding financing is
taken by head office. In this branch they only inform the customers about the procedure
and policy regarding financing activities. Financing by BAL include SME, Home loans,
credit cards, agri-finace, leasing, bank guarantees etc. The Financing policy of bank is the
combination of certain globally and locally accepted time standards and other dynamic
factors dictated by realities in ever-challenging market and industry.
The extension of a financing facility should add value to the bank’s assets” should be
borne by the bankers. For this purpose the bank takes special care for judging the
• Ability to repay
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• Willingness to pay
The development of bank by earning income in the form of mark-up, development of
whole economy by financing the development projects both in private and public sector
and help in accelerating the rate of growth. This department facilitates the trade activities
both inside and outside the country
2.10.5. Use of electronic data in decision making:
The accounting system of the BAL is provide electronic data all the daily activities report
generated through electronic systems, whole organization is electronic base if the send or
receive any file they use email system fax system. The file generated by system is helpful
in making budgeting financing make the analysis current deposits situation of the branch
the profit of the branch all electronic data is helpful in decision making, because
electronic system of bank generate accurate and timely information for further decision
making. Banks Smart Software is very helpful in making decisions.
2.10.6. Mobilization of funds:
Bank Alfalah mobilize its funds in financing to SME’s, provide home loans who have no
residential facility bank Alfalah give then the facility to take money and build new home
or renovation purposes, it also provide finance to Agri sector also provide Agri
equipments or machinery to the former. It also facilitates the customers through leasing.
Through financing they charge interest from customers that is called markup rate it is the
profit of the bank.
2.10.7. Generation of funds:
BAL generate its funds through the following activities from consumer banking like
deposits, profit from investments, through offering share and bonds, through markup.
Savings and loan associations, which are state institutions, provide home-building loans
to their members out of funds obtained from savings deposits and from the sale of shares
to members. Finance companies make small loans with funds obtained from invested
capital, surplus, and borrowings. Credit unions, which are institutions owned
cooperatively by groups of persons having a common business, fraternal, or other
interest, make small loans to their members out of funds derived from the sale of shares
to members.
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2.10.8. Sources of fund:
• Deposits
• From financial institutions incase of any sharing
• From their subsidiary companies
• Leasing
• Guarantees
• L/Cs
• Credit card interest
• Markup on different funding
2.10.9. Allocation of Funds:
These decisions of allocation of funds are taken by head office because it’s the risky task
so the main office takes decisions regarding this matter but the SBP policy that it takes
30% reserves from every bank for any assistance or for further investment of the bank.
Description of allocation of funds in different departments was required.
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2. FINANCIAL ANALYSIS:
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RATIO ANALYSIS
3.4. CALCULATIONS OF SPECIALIZED RATIOS:
CONCERNED YEARS: 2006, 2007, 2008
Ratios 2006 2007 2008 Change

Earning assets to total
84% 85.5% 84.1% Unfavorable
assets
Return on earning assets 0.76% 1.11% 0.10% Unfavorable
Net margin to earning
2.57% 3.25% 36.5% Favorable
assets
Loan loss Coverage ratio 1.27% 19.6% 0.18% Unfavorable
Deposit time capital 22.6% 19.8% 20.5% Favorable
Loans to deposit 0.62 6.26 0.64 Unfavorable
Earning assets to total assets:

Formula:
Earning assets
Earning assets to total assets = * 100
Total Assets
Calculation of earning assets missing?????

Ratio 2006 2007 2008
Earning =231690140/2756855 =281523353/32889515 =293540950/34899076
assets to 41 2 4
total assets =84% =85.5% =84.1%
COMMENTS
This ratio shows that bank management does not efficiently uses the bank assets to
generate profit. The earning assets of Bank Alfalah Limited are decreasing, which is
because of the change in investment pattern of Bank Alfalah Limited. Although the
earning assets of Bank Alfalah Limited have increased as compared to both previous
year by yet lesser than increase in total assets. The bank has used much amount to invest
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in operating fixed asset, which are not included in earning assets.
Return on Earning Assets:
Formula:
Net profit after tax

Return on earning assets = * 100
Earning assets
Ratio 2006 2007 2008

Return on =1762691/231690140 =3130229/281523353* =1301301/293540950*
earning *100 100 100
assets =0.76 =1.11 =0.10
COMMENTS
This ratio is a profitability measure that shows the strength of a bank. The calculation of
the concerned ratio indicates that the earning of Bank Alfalah Limited has decreased in
the current year as compared to the previous year. This may be due to mismanagement of
the bank resources. The net profit of the bank has decrease, whereas the earning assets of
the bank have increased. This is due to change in the investment pattern of the bank.
Net Margin to Earning Assets:
Formula:
Net Margin
Net margin to earning assets = * 100
Earning assets
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Ratio 2006 2007 2008
Net Margin =5958584/231690140 =9162908/281523353* =10715389/293540950
to Earning *100 100 *100
Assets =2.57 =3.25 =36.5
COMMENTS:
This ratio is most important in measuring the bank profitability because it represents the
ability of the management to control the spread between interest income and interest
expense. Although the calculations show favorable result of Bank Alfalah Limited as
compared to the previous year yet the bank has not properly controlled the spread of
expenses over income. It shows that although the bank has increased its profitability but
the earning assets are not the quality assets because of higher increase in interest expense
as compared to interest income.
Loan Loss Coverage Ratio:
Formula:
Pre tax profit + provision against non-performing loans

Loan loss Coverage ratio =
Net charges off + provision against non-performing
loans
Ratio 2006 2007 2008

Loan Loss =2565945+9162908/ =4535552+237086/584 =1794720+2035997/28
Coverage 1537+9162908 4+237086 298+2035997
Ratio =11728853/9164445 =4772638/242930 =3830717/2064295
=1.27 =19.6
=0.18
COMMENTS:
This ratio is also the profitability measure of the bank. It helps in determining the asset
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quality and level of protection of loans. This is a measure of protection to the depositors
about the coverage of loan loss. The loan loss coverage of Bank Alfalah Limited shows
lesser results as compare to the previous years because the provision against non-
performing loans increased. Bad debts have also increased which show a negative aspect of
the bank because it can affect the profitability of the bank.
Deposit Time Capital:
Formula:
Deposits
Deposits time capital =
Capital
Ratio 2006 2007 2008
Deposit =239509391/1057260 =273173841/13766673 =300732858/14608523
Time 5 =19.8 =20.5
Capital =22.6
COMMENTS:
This is a key ratio to determine the bank credit rating. Higher deposits show the
availability of more amounts for advances, which is the major operation of commercial
banks. The higher deposits of Bank Alfalah Limited in the current year indicate that the
bank has more money to advance which will affect the profitability of the bank in a
positive way. Increase in deposits will definitely improve the credit rating of Bank
Alfalah Limited. But on the other hand the capital also increased which gives a negative
answer to the ratio.
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Loans to Deposit Ratio:
Formula:
Advances
Loans to deposit =
Deposits
Ratio 2006 2007 2008
Loans to =149999325/ =171198992/27317384 =192671169/30073285
deposit 239509391 1 8
=6.26 times
=0.62 times =0.64 times
COMMENTS:
This ratio is a type of debt coverage ratio and it measures the position of the bank with
regard to taking risks. In specialized analysis of Bank Alfalah Limited it is observed that
debt coverage of bank is decrease in 2008. The decrease in loans shows that the bank
deposits are not utilized more properly. The profitability of the bank directly depends on
the loans / Advances.
3.5. Calculations for Leverage Ratios:

Ratios involved in the analysis are
• Debt ratio
• Equity ratio
• Debt to equity ratio
• Total equity
• Sales to Fixed Assets Ratio
• Debt to Tangible net worth Ratio
• Fixed Assets to Equity Ratio
• Total Capitalization Ratio
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ITEMS INVOLVED:
• Earning before interest and taxes

• Interest
• Lease payment
• Preferred dividend
• Total debts
• Total assets
• Total equity
• Tangible debts
• Tangible net worth
Concerned Years
2006, 2007, 2008
Debt Ratio:
Formula:
Total debts
Debt ratio = *100
Total assets
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Ratio 2006 2007 2008
=263,443,596 / =312675308/ =331946025/
275,685,541*100 328895152*100 348990764*100
Debt ratio
= 95.5% =95% =95.1%
Equity Ratio:
Formula:
Total equity amount is incorrect.
Total Equity
Equity Ratio = *100
Total Assets
Ratio 2006 2007 2008

=10572605/ =13766673/ =14608523/
275685541*100 328895152*100 348990764*100
Equity ratio
= 3.8% =5% =5%
Debt to Equity Ratio:
Formula:
Total Debts
Equity Ratio = *100
Total Equity
119
Ratio 2006 2007 2008
=263,443,596 / =312675308/ =331946025/
10572605*100 13766673*100 14608523*100
Debt to
Equity Ratio = 2491.7% =2271.2% =2272.2%
Debt to Tangible net worth Ratio:
Formula:
Total Debts
Debt to Tangible net worth Ratio = *100
Tangible net worth
Tangible net worth = Equity – All intangible assets
2006= 10572605-38906 =10533699
2007= 13766673 -116676 = 13649997
2008= 14608523-217931= 14390592
Ratio 2006 2007 2008

=263,443,596/ =312675308/ =331946025/
Debt to 10533699*100 13649997*100 14608523*100
Tangible net
worth Ratio = 2500.9% =2290.6% =2272.2%
120
Sales to Fixed Assets Ratio:
Formula:
Net sales
Sales to Fxed Asests Rtio = *100
Net fixed assets
Ratio 2006 2007 2008

=5958584/ =9162908/ =10715389/
Sales to 10502990*100 11922324*100 13773293*100
Fixed Assets
Ratio = 56.7% =76.8% =77.7%
Fixed Assets to Equity Ratio:
Formula:
Fixed Assets
Sales to Fxed Asests Rtio = *100
Equity
121
Ratio 2006 2007 2008
=10502990/ =11922324/ =13773293/
Fixed Assets 10572605*100 13766673*100 14608523*100
to Equity
Ratio = 99.3% =86.6% =94.2%
122
COMMENTS
In consideration to the long-term debts paying ability of Alfalah Bank Ltd in the year
2006, 2007, 2008, it is observed that the solvency of the business is towards the owner.
The results of the calculations show that the Alfalah Bank Ltd is in normal position as
comparative years. In this year, the bank assets and equity have increased with a higher
percentage as compare to the previous years but total debts also increase in 2008 slightly
which shows that the bank is now not in good position as compared to pay its long-term
debts. Equity of the bank has increased and Asset has increased which shows that the
bank is in a good position to pay its long-term debts. Although, the debts of the bank are
also increasing, but the percentage of increment in assets are more than debts.
From calculation of ratios show that bank are in struggling to achieve its previous a
image for the prospective investors to invest their money in the bank. It also shows that
the bank has ability to pay its debt easily which is due. The increase in equity is also due
to the increase in reserves and net earnings of the bank. But as on one side if it is
favorable for the bank on the other side it is also unfavorable because when the solvency
of the company is favorable toward the owner so it means that the equity of the company
is contributing more than other items. Due to increase in equity, the company has to face
the tax with a high percentage.
123
3.6. Market Analysis:
Definition
Market Analysis considers the current market position of any organization. Especially of
those investors who want to invest in stock of Organization and gain a long term benefits.
This analysis provides facility to the investors to make’s their investment decisions on the
basis of following ratios:
Calculations for Market Analysis
Ratios involved in the analysis are
• EPS (EARNING PER SHARE)
• BOOK VALUE PER SHARE
• DIVIDEND PAYOUT RATIO
• PERCENTAGE OF RETAINED EARNING
ITEMS INVOLVED:
• Earning before interest and taxes

• Interest
• Market price per share
• Earning per share
• Number of shares outstanding
• Dividend per share
• Total equity
EPS (earning per share):
Net earning or Net income

EPS =
124
No of shares outstanding
Net income amount is incorrect
Ratio 2006 2007 2008

=1762691/ 500000 =3130229/799500 =1301301/799500
Earning Per = 3.52 =3.91 =1.62

Share
P/E Ratio:
Formula:
Market price per share
P/E Ratio=
Earning per share
Ratio 2006 2007 2008

=38.5/ 3.52 =40.8/3.91 =55.4/1.62
Price = 10.93 =10.43 =34.1

Earning
Ratio
Book Value per Share:
Formula:
Total Equity – preferred stock
Book Value Per Share =
No of shares outstanding
Ratio 2006 2007 2008

Book Value =10572605/ 500000 =13766673/799500 =14608523/799500
125
Per Share = 21.1 =17.2 =18.2
Dividend payout ratio:

Formula:
Dividend per share

Dividend Payout Ratio =
Earning per share
Ratio 2006 2007 2008

Dividend =0/3.52 =0/3.91 =975000/1.62
Payout =0 =0 =601851.8
Ratio
Dividend Yield Ratio:

Formula:
Dividend Yield = Dividend per share

Market value per share
Ratio 2006 2007 2008
Dividend =0/38.5 =0/40.8 =975000/55.4
Yield ratio =0 =0 =17599.2
Percentage of Earning Retained ratio:

Formula:
Percentage of earning retained= Total Income- Dividend *100

Total Income
Ratio 2006 2007 2008
Percentage =1762691-0/1762691 =3130229-0/3130229 =1301301-601851.8/
of Earning 1301301
Retained =100% =100% =53.7%
ratio
126
COMMENTS
The market analysis of bank Alfalah shows that the bank has not performed well in the
market even though the net earnings have increased but still Earning per Share has
declined to only 1.62 from 3.91. It shows a decline of profit of share which can
discourage the investors to invest in the bank. The book value of the bank is far lower
than its market value. But the market analysts do not rely more on book value because it
is based upon historical cost. When market value is below book value, investors view the
company as lacking potential. A market value above book value indicates that investors
view the company as having enough potential to worth more than the unrecovered cost.
When investors are pessimistic about the prospects for stocks, the stocks will sell below
book value. On the other hand, when investors are optimistic about stock prospects, the
stock will sell above book value. Book value per share has increase slightly as compared
to the previous year this is because the equity has increased but the shares have increased
which resulted in the decline of book value. This also shows a negative picture of the
bank.
In the year 2008 the dividend payout ratio also increases and the management has
decided to give dividend in that year. It is positive for the bank on one side that then
invertors may be willing after change and invest in BAL. Most firms hesitate to decrease
dividends since this tends to have adverse effects on the market price of the company’s
stock. No rule of thumb exists for a correct payout ratio. Some stock holders prefer high
dividends; others prefer to have the firm reinvest the earnings in hopes of higher capital
gains.
The increase in the percentage of retained earnings could give a negative influence to the
investors. But still the investor will be waiting to see the further results. It is due to the
reason that the investor would be interested to invest in the business in order to get more
dividends. But with this decrease in the retention ratio the potential investor will not
remain any more interested in the business because investor requires return and if he
don’t get that he will not invest in that firm.
3.7. Cash flow Analysis:
127
The statement allows the preparer to use the concept of cash that included not only cash
itself but also short-term high liquid investments. It contains three important things these
are:
• Cash flow from Operating Activities.
• Cash flow from Financing Activities.
• Cash flow from Investing Activities.
Operating Cash per Share Ratio:

Formula:
Operating Cash per Share = Operating Cash______
No of shares Outstanding
Ratio 2006 2007 2008

=7852362/500000 =39645325/799500 =2499606/799500
Operating =15.7 =49.5 =3.12
Cash per
Share
Operating Cash to Total Debts Ratio:
Formula:
Operating Cash to Total Debts = Operating Cash*100
Total Debts
Ratio 2006 2007 2008

=7852362/263,443,59 =39645325/312675308 =2499606/331946025*
Operating 6*100 *100 100
128
Cash to =29.85% =12.67% =0.75%
Total Debts
Ratio
Operating Cash to Cash Dividend Ratio:
Formula:
Operating Cash to cash dividend = Operating Cash*100
Cash dividend
Ratio 2006 2007 2008
Operating =7852362/0*100 =39645325/0*100 =2499606/
Cash to =0 =0 (601851.8)*100
Cash =(415.3)%
Dividend
Ratio
129
COMMENTS
In consideration to the ability of the bank to use the cash that includes not only cash itself
but also other short term highly liquid instruments has negative impact on the business.
All the measurements taken are unfavorable to the bank.
The operating cash of the bank has decreased in the current year which is the major
reason for the unfavorable results of cash flow analysis. It shows that the operating cash
is insignificant in relation to total debts, which show the Bank Alfalah is not able to
cover its total debts against the yearly cash flow.
The negative results show the inability of the management to cover the total debts with
the available cash of the bank. Operating cash per share has the negative indication for
short term which indicates that the bank cannot make capital expenditure decisions
properly and will pay lesser dividends in the concerned year. The Bank is, thus, not in a
better position to pay its one-year cash dividend.
Overall cash flow analysis shows that the net cash flow of the Bank Alfalah from its
operating activities would not attract the prospective investors to make their investments
in the concerned business.
3.8. Activity Ratio:
Current Ratio:
Formula:
Working of current assets and current liabilities missing???/
Current Ratio = current Assets__

Current liabilities
Ratio 2006 2007 2008
Current =53047965/11485265 =51269175/25368940 =575838878/1714225
Ratio =4.61 =2.02 =33.5
Working Capital Ratio:
130
Formula:
Working Capital Ratio = Current Assets – Current Liabilities
Ratio 2006 2007 2008

Working =53047965- =51269175-25368940 =575838878-1714225
Capital 11485265
Ratio =41562700 =25900235 =574124653
Accounts Receivable Turnover Ratio:
Formula:
Accounts receivable turnover = Net Sales______________

Average Goss Receivable’s
Ratio 2006 2007 2008

Accounts =5958584/134431667 =9162908/160599158.5 =10715389/181935080
Receivable .5 .5
Turnover =0.04 =0.05 =0.05
Ratio
Accounts Receivable Turnover in Days:
Formula:
Accounts receivable turnover in days=Average Gross receivables

Net sales/365
131
Ratio 2006 2007 2008
Accounts =134431667.5/59585 =160599158.5/9162908 =181935080.5
Receivable 84/365 /365 /10715389/365
Turnover in =0.06 =0.03 =0.04
Days
Total Assets Turnover Ratio:
Formula:
Total assets turnover= Net sales______

Average Total Assets
Ratio 2006 2007 2008
Total Assets =5958584/12241945 =9162908/316219844 =10715389/17044739
Turnover =0.48 =0.028 =0.62
Ratio
COMMENTS
From the above analysis it is observe bed that the current assets of BAL are increase as
compare to its liabilities it means BAL has more current assets to pays its current
liabilities as compare to previous years. Total assets turnover measures the activity of the
assets and the ability of the firm to generate sales through the use of the assets. The total
assets turnover of bank is increasing which is a favorable for bank Alfalah limited. Bank
Alfalah currently generates more sales by introducing new products and increase more
assets to pay its liabilities.
The receivable of the bank Alfalah limited in current year is constant which shows that
the bank is recovering its receivables constantly as compared to the previous year that is
favorable for the bank.
3.9. Profitability Ratio:
132
Net Profit Margin Ratio:
Formula:
Net Profit margin= Net Income
Net sales
Ratio 2006 2007 2008

Net Profit =1762691/5958584 =3130229/9162908 =1301301/10715389
Margin =0.29 =0.34 =0.12
Ratio
Return on Assets Ratio:
Formula:
Return on assets= Net income_______

Average total assets
Ratio 2006 2007 2008
Return on =1762691/12241945 =3130229/316219844 =1301301/17044739
Assets Ratio =0.14 =9.89 =0.076
DuPont Return on Assets Ratio:

Formula:
DuPont return on assets= Net profit margin * Total assets turnover
Ratio 2006 2007 2008

DuPont =0.29*0.48 =0.34*0.028 =0.12*0.62
return on =0.1392 =0.009 =0.0744
assets
133
Operating Income Margin Ratio:
Formula:
Operating income margin= Operating income
Net Sales
Ratio 2006 2007 2008

Operating =7852362/5958584 =39645325/9162908 =2499606/10715389
Income =1.31 =4.32 =0.23
Margin
Ratio
Return on Operating Assets Ratio:
Formula:
Return on operating assets= Operating income

Average operating assets
Ratio 2006 2007 2008

Return on =7852362/10502990 =39645325/13773293 =2499606/11922324
Operating =0.74 =2.87 =0.20
Assets Ratio
Operating Assets Turnover Ratio:
Formula:
Operating asset turnover= Net sales____________

Average operating asset
Ratio 2006 2007 2008
Operating =5958584/10502990 =9162908/13773293 =10715389/11922324
Assets =0.56 =0.66 =8.98
134
Turnover
Ratio
Gross Profit Margin Ratio:

Formula:
Gross profit margin= Gross profit

Net Sales
Ratio 2006 2007 2008
Gross Profit =5259357/5958584 =6786197/9162908 =7172032/10715389
Margin =0.88 =7.40 =0.66
Ratio
COMMENTS
In consideration to the ability of the bank to generate its profibility return on assets
measures the firm’s ability to utilize its assets to create profit by comparing the profits
with the assets that generate the profits. The decreasing return on assets in 2008 year
show that the bank’s ability to utilize its average operating assets. The gross profit ratio of
bank Alfalah also decreases.
135
3.10. TREND ANALYSIS OF BANK ALFALAH
It shows the trend over a period of time. It includes:
• Speed of the trend
• Direction of the trend
• Nature of the trend
Two types of trend analysis these are:
1. Horizontal analysis
2. Vertical analysis
3.10.1. HORIZONTAL ANALYSIS OF BALANCE SHEET OF BAL:
HORIZONTAL ANALYSIS OF TOTAL ASSETS
As At 31 December, 2006 – 2008
ITEMS 2006 2007 2008 Average Direction Nature of
change Trend
Cash and 100 106 117.3 8.65%
balance
with +VE Favorable
treasury
banks
Balances 100 144 169 34.5%
with other +VE Favorable
banks
Investments 100 27.7 26.6 36.7% +VE Favorable
Financings 100 156.6 134.4 17.2% +VE Favorable
Operating 100 114.1 128.4 28.4%
Fixed +VE Favorable
Assets
Other 100 106.7 159.5 29.75%
+VE Favorable
Assets
Total 100 119.3 126.5 13.25%
+VE Favorable
Assets
HORIZONTAL ANALYSIS OF TOTAL LIABILITES
136
ITEMS 2006 2007 2008 Average Direction Nature of
change Trend
Bills 100 133.8 111.6 5.8%
+VE Unfavorable
Payable
Borrowings 100 252.9 163.0 31.5%
from other
+VE Unfavorable
commercial
banks
Deposits 100 114.0 125.5 12.75%
and Other +VE Favorable
Accounts
Other 100 130.4 154.5 27.25%
+VE Unfavorable
Liability
Total 100 118.6 126.0 13%
+VE Unfavorable
liabilities
HORIZONTAL ANALYSIS OF EQUITY

Items 2006 2007 2008 Avg. Direction Nature of
Change trend
Share
100 130 159.9 29.95 +VE Favorable
capital
Capital
100 138.0 115.1 15.1% +VE Favorable
Reserves
Total
100 130.2 138.1 19.05% +VE Favorable
Equity
COMMENTS:
In consideration to the horizontal analysis of balance sheet of Bank Alfalah Limited, it is
observed that the bank has positive impacts. The cash and balance with other bank is
increasing which is favorable for the bank & also, the investment of the bank is
increasing which is positive for the business. If the any banks investment increases its
137
means investments it enhances the profitability that will increase the good will of the
bank towards the current as well as the prospective investors. More and more investors
will attract towards the bank due to its increasing profits in order to earn higher gains.
On the other hand, the borrowing of the bank has been increasing which is negative for
the bank. The bank has increased its debt burden which will affect the solvency of the
business. Also, the periodic interest payments of the bank will increase and the bank has
to bear high interest expense which will also affect the profitability of the bank. The bank
should decrease its debt burden to pay off its debt in order to increase its solvency as well
as to decrease the interest expense.
The share capital of the bank also increases during these years which are positive for the
bank. Its means the claims of the outsiders have decrease in the business which is positive
towards the owner of the bank. The bank has to the more profit for distribution profit
among the stockholders and the owners also enjoy more profit.
HORIZONTAL ANALYSIS OF INCOME STATEMENT

Change trend
Interest earned 100 121.6 146.5 23.25% +VE Favorable
Interest
100 109.1 133.4 16.7% +VE Unfavorable
expenses
Interest
100 153.7 179.8 39.9% +VE Favorable
income
Provision
against loans 100 -339.8 -291.8 535.7% +VE Unfavorable
& advances
Net interest
income after 100 129.0 136.3 18.15% +VE Favorable
provisions
Fee,
commission
100 134.6 140.6 20.3% +VE Favorable
and brokerage
income
138
Dividend
100 173.0 804.8 352.4% +VE Favorable
Income
Income from
dealing in
100 122.6 236.3 68.15% +VE Favorable
foreign
currency
Other income 100 122.4 148.1 25.54% +VE Favorable
Total non
markup 100 187.2 162.6 31.3% +VE Favorable
income
Administration
100 104.8 178.2 39.1 +VE Favorable
expenses
Other charges
100 22.0 283.4 -183.4 -VE Favorable
Total non
interest 100 140 179.4 39.7 +VE Unfavorable
expenses
Profit Before
100 176.7 69.9 -15.05 -VE Unfavorable
Taxation
Taxation 100 362.6 100.1 -199.9 -VE Favorable
Profit after
100 177.5 73.8 -26.2 -VE Unfavorable
taxation
COMMENTS:
In consideration to the horizontal analysis of the income statement of Bank Alfalah
Limited, it is observed that the bank has negative impacts over the past 3 years. The
increase in interest expense is one of the reasons for the unfavorable result. The increase
in debt has caused increase in the interest expense. Although the interest expense of the
bank Alfalah limited has increased but the increase in interest income is more than the
increase in interest expense which is also favorable for the bank.
The administration expenses of the bank Alfalah limited have also increased which cause
the decrease in profitability of the bank. The increase in administration expenses show
that the management of the bank is not properly utilizing its resources and putting them
into work. The management should utilize the bank resources properly in order to reduce
139
its expenses which will enhance the profitability of the bank in the future.
The profitability of the bank has been decreasing which is unfavorable for bank Alfalah
limited & it will decrease the confidence of the current investors as well as prospective
investors will not invest in the bank Alfalah limited. The decrease in profitability is also
favorable for the bank Alfalah limited because it will decrease the tax expense of the
bank.
140
VERTICAL ANALYSIS
VERTICAL ANALYSIS OF INCOME STATEMENT


Change trend
Interest
100 100 100 ------- -VE Favorable
expensed
Less: interest
71.1% 64.4% 65.4% 66.9% +VE Favorable
expense
Net Spread 46% 35.6% 34.6% 38.7% + VE Favorable
Other
28.9% 32.1% 34.5% 31.8% -VE Favorable
Expenses
Profit Before
12.1% 17.5% 5.78% 11.7% + VE Favorable
Taxation
Profit After
3.79% 5.45% 1.58% 3.60% -VE Favorable
Taxation
VERTICAL ANALYSIS OF BALANCE SHEET

VERTICAL ANALYSIS OF BALANCE SHEET (ASSETS)
Items 2006 Avg. Direction Nature of
2007 2008
Change trend
Cash 10.1% 8.95% 9.36% 9.47 +VE Favorable
Balances
with other 4.61% 5.58% 6.18% 5.45 +VE Favorable
banks
Lending to
financial 4.51% 1.04% 0.95% 2.16 +VE Favorable
institutions
Investments 20.4% 26.9% 24.7% 24 +VE Favorable
Advances 54.4% 52.09% 52.0% 52.83 +VE Favorable
fixed assets 3.80% 3.62% 3.94% 3.54 +VE Favorable
Other assets 2.18% 1.82% 2.87% 2.29 +VE Favorable
Total Assets 100% 100% 100%
141
VERTICAL ANALYSIS OF BALANCE SHEET (LIABILITIES)
AS AT 31 DECEMBER, 2006, 2007, 2008
Change trend
Total
96.14% 95.78% 95.78% 95.9% +VE Unfavorable
Liabilities
Total
3.86% 4.22% 4.22% 6.15% + VE Favorable
Equity
Total
Liabilities 100 100 100
& Equity
142
3.10.2. GRAPHICAL REPRESENTATION OF VERTICAL ANALYSIS
INTREST EXPENSE
65.4 71.1
2006
2007
2008
64.4
NET SPREAD
34.6
46
2006
2007
2008
35.6
143
OTHER EXPENSES
28.9
34.5
2006
2007
2008
32.1
PROFIT AFTER TAXATION
1.58
3.79
2006
2007
2008
5.45
144
PROFIT BEFORE TAXATION
5.78
12.1
2006
2007
2008
17.5
CASH
9.36 10.1
2006
2007
2008
8.95
145
BALANCES WITH OTHER BANK
4.61
6.18
2006
2007
2008
5.58
LENDING TO FINANCIAL INSTITUTIONS
0.95
2006
1.04
2007
2008
4.51
146
INVESTMENTS
20.4
24.7
2006
2007
2008
26.9
ADVANCES
52 54.4
2006
2007
2008
52.09
147
FIXED ASSESTS
3.94 3.8
2006
2007
2008
3.62
OTHER ASSESTS
2.18
2.87 2006
2007
2008
1.82
148
TOTAL LIABITIES
95.78 96.14
2006
2007
2008
95.78
TOTAL EQUITY
3.86
4.22
2006
2007
2008
4.22
149
3.11. FUTURE PROSPECTS OF THE ORGANIZATION:
The future of the industry portends prosperity for BAL, with major restructuring taking
place in the economy, and the increasing concentration of a few large institutions has
propelled BAL to focus on strategic excellence. The environment not only instills in the
entire BAL team a sense of heightened competition but also the relentless pursuit of
rising above the fierce challenges the industry has to offer.
In view of the above we have come up with product development and service and quality
assurance departments to identify the gaps in the market, profitably fulfill them by
developing premium products and offering them to our customers through our counters
coupled with service beyond distinction. BAL’s management is increasingly focusing on
the service quality aspect to increase retention rate through organized programmes as the
Gold Standard Service. The program has met spirited response and is being implemented
to increase efficiency levels internally and externally.
3.12. INDUSTRY ANALYSIS WITH OTHER ORGANIZTION:
BAL is a large conventional bank in Pakistan from last years its position goes down but
not that much as compare to its competitors. BAL only one branch earns huge profit
every year but like ALLIED BANK they have number of branches but that are not equal
in profit generation as BAL. BAL provide innovative services and products to their
customers but like ALLIED BANK they provide small range of products and facilities to
their customers. BAL’s team’s firm determination is very strong and they are liable to
their bank too much and bank gives them incentive in large amount and they are satisfied.
Last year the Gujranwala branch earns 3 billions profits, and they also provide trade
facilities to their customers but most of the banks are not provided such kinds of facilities
to their customers. From analysis it is proved that bank has a lot of assets to pay its
liabilities as compare to its competitors. Economic factors effect on the profitability of
the BAL but not that much. Like the recent merger of the 3 banks and they become the
SILK BANK. BAL will achieve its previous well known status easily soon.
150
4. SWOT ANALYSIS
STRENGTHS
Bank Alfalah is considered to be a very sound bank in the financial circles a bank, where
the customers can safely keep their money as long as they want. I am pointing some of
the major strengths of the bank:
COMPASSIONATE CUSTOMER SERVICE

The officers of BAL are considered as one of the most able professionals in the banking
world (some belong to BCCI). However, they have added some local flavor in
accordance with their targeted segmented. Especially, in G.T Road Branch, I observed
that they interact with their clients as if they are their personal friends and discuss about
their problems as their own.
GOODWILL & TRUST
As a result of the compassionate and personalized services of the officers, the clients’
perception for BAL is very high. They have trust and feel themselves to be secure while
dealing with BAL. the bank has efficient and qualified management. The management
has a keen observation on future aspects which play a key role in bank success.
LOCATION
Bank Alfalah has opened all its branches at commercial areas so that the customers or
clients face no problems in reaching to the bank. For example, G.T Road branch for being
situated in business and commercial hub of Gujranwala has second largest volume in
trade finance.
FOREIGN TRADE BUSINESS
The bank is focusing on Trade Finance it shows a great significance to the development
and maintenance of healthy correspondent relationships with other banks and financial
institutions. Towards this pursuit, BAL has developed excellent business relations with
foreign banks, whose support in terms of lines of credit extended to the bank, has enabled
it to handle the ever-growing trade volumes.
WIDE BRANCH NETWORK
Bank Alfalah’s objective has been to expand its branch network to meet clients’ needs. It
151
is heartening to note that in just five years, which is considered the infancy stage in the
industry, the bank has increased the branch network from 274. And, due to the growing
business requirements, there are further more proposed branches in different cities. The
expansion program is strategically important to increase customer base and to approach
different customer segments. Recently one more new branch open in Gujranwala.
THE COMPUTERIZED SYSTEM
BAL has got a reliable and easy to use internal computer system. Every information
regarding the transactions in customers’ deposits has been computerized. ‘Bank excel is
being practiced for this purpose but now, a new program named ‘Bank smart is
functioning very efficiently and accurately.
TREND SETTER
Bank Alfalah is a trend setter and always goes to explore the risky market. This helps the
bank to meet new challenges in order to compete in the banking sector of the country and
also to attract more customers both with in and outside the country.
WEAKNESSES
Perfection is only the claim of Allah Almighty. No other being living or dead can say this
for itself. Similarly, Bank Alfalah also has some shortcomings that need to be mentioned:
ADVERTISEMENT
It is already doing much advertisement
BAL has formulized a lot of products and services for its customers, even more than
other commercial banks, but any advertisement on electronic media has not been seen.
Since, BAL’s major competitor Union Bank Limited has started large media campaign, so
keeping in view these threats; Bank Alfalah should emphasize more on its advertisement.
PROBLEMS OF EMPLOYEES
I observed during my internship that some of the employees were burdened with over
work. So I think that the work should be distributed according to their post and
capabilities.
WORK LOAD
I observed that the employees of BAL facing heavy load of work and they go back home
152
8 or 9 P.m. it’s not good for the health of employees and for personal life also.
LACK OF INCENTIVES
The bank lack incentives to motivate the employees. Due to this reason there is a high
employee turnover rate. The employees of higher ranks are given incentives in the form
of bonuses but the employees of lower rank are totally ignored.
LACK OF COMMUNICATION
There is lack of upward communication. Also there are barriers in horizontal
communication due to lot of professional jealousy.
NO HUMAN RESOURCE DEPARTMENT
In this branch no specific human resource department for the hiring and firing of
employees and for the satisfaction of employees
OPPORTUNITIES
Bank Alfalah has grown up its business with a very high pace and it has got tremendous
popularity, even with in a very short span of time. There are many opportunities for the
bank and by availing that it can stand amongst the top foreign banks.
INFORMATION TECHNOLOGY
All the opportunities of the 21st century are to be availed in the information technology.
Information technology is the future of this dynamic world. Therefore BAL should
emphasize much on IT, especially on E-Banking. Bank can design a universal account
like other foreign banks, to enhance online facilities.
EXTENSION OF BRANCH NETWORK
Bank Alfalah’s growing business requires an extensive branch network. There are great
opportunities for BAL for the expansion of its business.
GROWTH IN DEPOSITS
BAL has introduced a number of financial schemes including special ‘Royal Accounts’.
These accounts have their unique features (discussed earlier). During the last three years,
BAL’s deposits have been increasing @ 30%, which is a very healthy sign. Therefore,
with the commencement of new schemes there can even be a greater increase in its
deposits.
THREATS
ECONOMIC CONDITIONS
153
Despite the difficult circumstances that confronted the banking sector in particular and
the country in general, Bank Alfalah has been still highly profitable. But, the facts can’t
be denied and there might be an adverse impact of such situation.
COMPETITORS
Bank Alfalah is facing a strong competition by its major competitors, ‘Union Bank’ and
‘Askari Commercial Bank’. Business of these banks is also growing with very high pace.
The SWOT analysis of the bank signifies that its strengths overcome its weaknesses and
its opportunities are more than its threats. This is a positive sign for any organization.
154
5.RECOMMENDATIONS
I spent six weeks of my internship in BAL G.T Road Branch, Gujranwala. During these
six weeks, I felt myself to be a part of BAL. Even, this was my first experience of
working in a banking organization, but I learned a lot from this experience. Based on my
experience & observation regarding the operations and policies of Bank Alfalah, I have
tried to stipulate some recommendations for further improvement.
MARKETING
BAL has formulized a lot of products and services for its customers, even more than
other commercial banks, but any advertisement on electronic media has not been seen.
So, I think that there should be a proper marketing department and advertisement
expenditures of the bank should also be increased to improve its visibility and to
publicize its financial schemes.
ENHANCED COMPUTER NETWORK
The bank should emphasize much on computer technology. Like other banks, BAL
should enhance its on-line services. Bank, also should concentrate on E-banking and use
of ATM. Moreover, bank should also emphasize on enhancing its website information.
One drawback that I observed in G.T Road Branch was manual preparation of negotiable
instruments like PO, DD etc. Due to growing business requirements of concerned branch,
it should be provided more facilities.
EXPANSION IN BRANCH NETWORK
Bank Alfalah’s business has grown with a tremendous pace. There have been
considerable profits just with in a short span of time. Therefore, due to the expanding
business requirements, BAL should expand its branch network to capture other business
markets.
TRAINING FACILITIES AND SEMINARS
Human resource constitutes the most valuable asset for an organization. To improve the
professional skills and quality, BAL has started six-months comprehensive training
program that is really a commendable step taken by BAL. Bank, apart from this program,
conduct some training programs for existing employees to improve their proficiency.
Also, Bank Alfalah should arrange some seminars to make its visions and objectives,
155
clear to every one.
EQUAL STATUS OF BRANCHES
One major & alarming drawback that I observed in G.T Road. Branch, is the inferiority
complex faced by some employees. BAL G.T Road Branch, for being situated in business
and commercial hub, has its unusual importance and has huge foreign trade business. But
I observed some employees to be the victim of complex. So, to avoid such discrepancies,
seminars should conduct to signify the importance of each branch.
EXPANSION & RECRUITMENT IN G.T ROAD BRANCH
BAL G.T Road. Branch has huge business volume, whereas the staff is not enough to
meet these requirements. I found that some employees were burdened with overwork,
even some clients’ complaint for the slow service. Therefore, more staff should be
recruited. Also, there should be an expansion in the area of branch to meet the
requirements of growing business transaction.
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6. CONCLUSION
The time duration of my internship was of six weeks. I have learnt a lot about the banking
functions. Bank Alfalah is playing a key role in the banking sector in Pakistan. It was
established in 1998 and developed very effective growth strategies. As a result of this the
bank progressed so well that in the short time of six years it has become one of the
leading banks in Pakistan. Its profitability has increased about 75% as compared to the
previous year.
As mentioned in its mission statement that it provides innovative products and services to
its customers. This makes this bank different from other banks. Bank strategy is to
maximize the synergies of branch network though an optimal allocation of financial,
human and other recourses in order to meet the dynamic challenges of present financial
environment.
The recruitment and training policies of the bank are according to the latest requirements
so the employees are motivated and work efficiently and effectively. But the incentive
system is weak and this is the main reason which makes the employees at lower level less
motivated than the employees of the higher level. The bank should make its policies by
considering the present conditions of the banking sector in order to compete in today’s
world.
157
BIBLIOGRAPHY
All the information mentioned in this report is gathered from the following sources.
o Websites
www.bankalfalah.com.
www.google.com
www.wikipedia.com
www.businessrecorder.com
www.investopedia .com
www.pakistaneconomist.com
www.businessrecorder.com
www.kse.com.pk
o Other sources
ANNUAL REPORT BANK ALFALAH LIMITED (2006, 2007, 2008)
EMPLOYEES AT BANK ALFALAH
o Manuals
Branch Manger Mr. Sheikh Masood Elahee
By miss Maria Khan (CRO)
BY Miss Saira Chudhary (Trade Manger)
BY Miss Hina (Accounts Officer)
BY Mr.Hamyoun Masood Malhee
o Book
Financial Statement Analysis
BY: Charles H. Gibson 7th Edition
158
GLOSSARY
Business Account
This account is related to the business community.
Current account
Current accounts are those accounts in which we give no profit to customer on their
deposits.
Deferred Taxation
Sum set aside for tax in the Financial Statements that will become payable in a financial
year other than the current financial year.
Export
Export is the actual shipment, transfer, or transmission of items out of a country; a
transfer of good or technology with knowledge or intent that the goods or technology
shipped, transferred, or transmitted to an authorized recipient; or the transfer of goods or
information in a country to an embassy or consulate of a foreign.
Money gram
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.
Market Capitalization
Number of ordinary shares in issue multiplied by the market value of share as at the year
end.
Net Dividends
Dividend net of withholding tax
Net Interest Income
The difference between what a banks earns on assets such as loans and securities and
what it pays on liabilities such as deposits, refinance funds and inter-bank borrowings.
Non Performing Loans
A loan placed on cash basis (i.e. Interest Income is only recognized when cash is
received) because in the opinion of management, there is reasonable doubt regarding the
collect ability of principal or interest. Loans are automatically placed on cash basis when
a payment is 3 months past due. All loans are classified as nonperforming when a
159
payment is 3 months in arrears.
Online banking
Quantum of settlement within different branches is appreciable because of updating daily
record.
Price Earnings Ratio (P/E Ratio)
Market price of a share divided by earnings per share.
Return on Average Assets
Profit after tax divided by the average assets.
Repurchase Agreement
Contract to sell and subsequently repurchase securities at a specified date and price.
Return on average Equity
Net profit for the year, less preference share dividends if any, expressed as a percentage
of average ordinary shareholders’ equity.
Revenue Reserve
Reserves set aside for future distribution and investment.
Saving account
Saving accounts are those accounts in which the bank gives the customers profit on their
deposits.
Shareholders’ Funds
Total of Issued and fully paid share capital and capital and revenue reserves.
Term deposit account
In this account the customer gets its amount fixed for a specified period of time.
160
PERSONAL INFORMATION
Sttudent Name
Student ID
Student Contact Number
Student Address
161

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INTERNSHIP

VIRTUAL UNIVERSITY OF PAKISTAN (IIIT GUJRANWALA CAMPUS)

This project is dedicated to my parents, love of whom has been a constant

1.1OVERVIEW OF BANK ALFALAH LIMITED:

1.2.4. Liquidation of BCCI:

Revenue ▲PKR 25.783 Billion

For financing upto Rs. 1.00M 5000

These are indicative rates reviewed monthly

1.4.2.6. Late Payment Charges:

• Sole proprietor account

• Limited Company account

Credit Manager Operations Manger Trade Manager

Home Loan Officer

1.10.3. INTRODUCTION OF ALL THE DEPARTMENTS

Road, which would always be memorable for me.

2.1. "OPERATIONS DEPARTMENT HIERARCHY"

MR. FAISAL MARIA KHAN IRFAN CD INCHARGE

2.2.1OPERATIONS DEPARTMENT AT GUJRANWALA BRANCH:

2.3.1. STEP 1-REASON TO OPEN THE A/C:

comparing them with the S.S. Card. see annexure

2.3.6. STEP VI-ACCOUNT NUMBER:

• Stamping every leaf with specific A/C number.

That presents the position of each locker.

• Locker Control List

• Current Finance /Running Finance (CF)

These lines consist of the following:

2.8.1.7. PRINCIPLE OF LENDING

2.9.1"Trade Finance DEPARTMENT HIERARCHY"

Miss SAIRA CHAUDARY

1) The person must be an account holder of BAL.

Date of certification……… (Taken from E-form)

2.9.14. TASKS THAT I PERFORMED:

SME Home Loan Return & Agri-Credit

2.10.1. Number of employees working in the finance department:

Ratios 2006 2007 2008 Change

Earning assets to total assets:

Calculation of earning assets missing?????

Return on Earning Assets:

Net profit after tax

Ratio 2006 2007 2008

Net Margin to Earning Assets:

Loan Loss Coverage Ratio:

Pre tax profit + provision against non-performing loans

Ratio 2006 2007 2008

Deposit Time Capital:

3.5. Calculations for Leverage Ratios:

• Earning before interest and taxes

Ratio 2006 2007 2008

Debt to Equity Ratio:

Debt to Tangible net worth Ratio:

Tangible net worth = Equity – All intangible assets

2006= 10572605-38906 =10533699

2007= 13766673 -116676 = 13649997

2008= 14608523-217931= 14390592

Ratio 2006 2007 2008

Ratio 2006 2007 2008

Fixed Assets to Equity Ratio:

• Earning before interest and taxes

EPS (earning per share):

Net earning or Net income

Ratio 2006 2007 2008

Earning Per = 3.52 =3.91 =1.62

Ratio 2006 2007 2008