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BANK ALFALAH LIMITED

REPORT
SUBMITTED TO:
SIR SANAULLAH

SUBMITTED BY:
(BBA-5A)
SUBMISSION DATE:
19-OCT-2010
 VISION

cally and internationally that provided the complete range o

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MISSION
uality service that contributes to brand strength, establishes
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Table of Contents
1. COMPANY’S BACKGROUND………………………………………………5

1.1. COMPANY’S OPERATIONAL ANALYSIS......................................................5

2. DEPARTMENTS........................................................................................6
2.1. ACCOUNT OPENING..................................................................................6
2.1.1. PROCEDURE OF ACCOUNT OPENING.........................................................6
2.2. REMITANCES...........................................................................................7
2.3. CREDITS..................................................................................................9
3. OPERATIONS DEPARTMENT....................................................................10
DEPARTMENT
3.1. CASH DEPARTMENT...............................................................................10
3.1.1. CASH RECEIPTS......................................................................................11
3.1.2. CASH PAYMENTS...................................................................................11
3.2. CLEARING DEPARTMENT........................................................................11
5. CONCLUSION.........................................................................................14
6. REFERENCES..........................................................................................15
REFERENCES
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1. COMPANY BACKGROUND

Bank of Credit and Commerce International (BCCI) was a Pakistan based bank
in association with U.A.E. and Europe. BCCI has its branches in 74 different countries of
the world. It had its 3 branches in Pakistan. But in 1991, the BCCI was banned, when it
was accused by European countries that the bank was involved in some illegal operations
with the Gulf countries.
Bank Alfalah Limited (“BAL”) 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. Bank Alfalah is registered at both
Karachi and Lahore Stock Exchange with a ticker name of “BAFL”. 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, with
the registered office at B.A.Building, I.I.Chundrigar Road, Karachi.
This was further strengthened with a partnership with the Abu Dhabi Group
which owns 70% of Bank Alfalah shares. This allowed the bank to invest more in
revolutionary technology to increase its range of products and services, perceiving the
requirements of their customers and matching them with quality products and service
solutions.

1.1.COMPANY’S OPERATIONAL ANALYSIS

Bank Alfalah is operating with an extensive network of 350 branches in
some of the major cities of Pakistan. As Bank Alfalah is operating with such an extensive
network of branches, it is not possible for it to control all activities of its different
branches from one main location, that is their head office in Karachi, so due to this reason
they have divided their branches in two areas: the north and south, these two areas are
further divided into different areas, each controlled and monitored by their respective
area office. There are 9 area offices in the northern area.

2. DEPARTMENTS
• Account Opening
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• Remittance

• Credits

1.1.ACCOUNT OPENING
Accounts opening department is one of the departments that come under the
retail/general banking facilities provided by Bank Alfalah. Some of the major deposit
accounts opened by Bank Alfalah are as follows:

• CURRENT ACCOUNT

Current Accounts are non-interest bearing accounts that have a minimum

account-opening requirement of Rs 10,000. No zakat is deducted on the accounts
balance. Furthermore all current account holders receive a Hilal debit card and there
are no restriction on the number of withdraws or deposits made to and from the
account.

• PROFIT AND LOSS SAVING ACCOUNT

Profit& Loss saving accounts can be opened with a minimum balance

requirement of Rs 5,000 and profit is credited on a half yearly basis. There are no
restrictions on the number of deposits and withdrawal made to and from the account
and all account holders receive a Hilal debit card as well. Profit and loss saving
account cannot be opened by a business corporation, however can be jointly opened by
individuals. Profits are paid at 2% on all account balances.

1.1.1.PROCEDURE OF ACCOUNT OPENING

Once customers submit the forms to officers, all the provided
information’s are verified. After confirmation, account no. is assigned to account
holder. After this all information is saved in system.

• This account is further approved by Manager Operations.

• After approval, S.S Card (attached with form) is received by Head of Cash Dept
for the purpose of scan the signature of account holder.
• Once the new account is opened and all information is saved in system, then
Letter of thanks is sent to customer.
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1.1.REMITANCES
Remittance is transfer of funds from one city to another city or within the city.
For this purpose, most commonly used instruments are:

• Demand Draft
• Pay Order
• Telegraphic Transfer
• Online Transaction
• DEMAND DRAFT:

Demand draft is made to transfer the funds from one station to other station.
This is not made for the same city and payment duration is 3 to 4 days. Demand draft
is made on the request of purchaser on drawer’s name or any bank account holder.
Demand draft is issued by three ways:

○ Through cheque
○ Through cash
○ Through transfer
➢ Agency Arrangement:

Those cities where Bank Alfalah has no branch, Bank has an agreement with
particular banks where Bank Alfalah will draw demand drafts and telegraphic
transfers. These banks will liable to perform operation on behalf of bank alfalah and
will receive 40% commission against this transaction.

➢ Cancellation of DD:

In case, client wants to cancel the draft he has to make an application with his
signature. Banker checks the signature. Amount of draft is returned to client after
deducting cancellation charges. The cancellation charges are Rs 100.

• PAY ORDER

Pay Order is also known as Banker’s Cheque. This is the safest way to
transfer funds within a city. A pay order is an instrument in writing issued by bank for
a certain sum of money payable on demand to the order of the payee mention within
the city, where as pay slip is used for bank’s internal use. Pay order can be made for
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outstation but it will take more time for example; if pay order is sent from Lahore to
Karachi, this will be sent back to Lahore for collection purpose then it will be lodged
in clearing afterwards this will be sent back to Karachi at required place.

Total time duration of pay order is not more than 2days.when pay orders are
made; control number is assigned to determine how many pay orders are issued to a
particular city in one year.

➢ Cancellation of Pay Order:

If purchaser is willing to cancel the pay order bank will not entertain such
customer. If purchaser gets the cancellation of pay order from beneficiary, bank will
make the pay order canceled.

• TELEGRAPHIC TRANSFER:

TT is the quickest way to transfer funds from one station to another. This
process takes not more than one or two hours. TT is made on purchaser’s request that
in turn gets “Cost-Memo” in form of receipt in which TT number, charges that bank
has deducted, drawer bank name, issuing bank name, purchaser’s account number and
other particulars are included.

Telegraphic Transfer is bank-to-bank, and branch-to-branch. The bank has

settlement with other banks according to which the banks can make the payments to
the customer’s account mentioned by the other bank in the TELEX. In this case
proper authentication is must for this purpose.

After receiving the telegram bank immediately makes the payment to the
customer and the vouchers sent to the issuing bank by ordinary mail. Bank debits the
account of the customer or receives cash including charges of the bank.

TT is made through codes. Bank sent telegrams with codes and in banking
language using the words test.

• ONLINE TRANSACTION

For branch-to-branch transfer of funds on the same day, previously TT was

used. But now banks have adopted a new system known as Online Transfer. In
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online transactions cheques of different branches can be paid. For instance if a

client has taken Online Transaction facility and presents Multan’s cheque to Bank
Alfalah Lahore, he/she can have payment from Lahore. If the cheque has been
cleared from Multan Bank Alfalah, a copy of cheque is made and is faxed to
appropriate branch; the branch then checks the client’s balance, date of cheque and
signature of client. If the cheque is given clearance from the respective branch then
payment is made to client, the branch is then debited and the branch that has made
payment is credited.

1.1.CREDITS
The credit departments of Bank Alfalah work with both SME’s and corporate
clients. There are two major categories of credit line facilities that Bank Alfalah
provide to its customers

➢ Funded Credit Line Facility

➢ Unfunded Credit Line Facility

• FUNDED CREDIT LINE FACILITY

Funded capital is a facility where that bank provides capital to a person, in
response the person places a security with the bank. Funded capitals are mainly short
term; it can be a long term facility too. It is also categorized in to running finance and
term finance.

There are three major products that come under the funded credit line facility:

○ Current Finance

○ Karobar Finance

○ Milkiat Finance

• UNFUNDED CREDIT LINE FACILITY

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Unfunded capital facility comes in the form of either Letter of Credit (LC), a
facility that is used for import and export facility and Letter of Guarantee (LG), a
facility used in tenders filled for a specific job.

1. OPERATIONS DEPARTMENT
Operations department of the Bank Alfalah Limited is responsible for the
overall operations of the bank. Operation Department has following segments:

a) Cash
b) Clearing
c) Remittance
d) Account opening
e) Accounts department

1.1. CASH DEPARTMENT

This department is given the complete responsibility of cash, as result of
transaction in touch local and foreign currencies. It is also responsible for the book
keeping of these transactions and the safe custody of cash. Out of five counters of cash
department one counter is fix for senior citizens and females. All counters are dealing at
the same time in deposits, withdraw and online transaction processes.

This department performs the main function.

a) Cash receipts
b) Cash payments

1.1.1.CASH RECEIPTS

Depositors use deposit slip for depositing the amount into their accounts.
The officer checks if the deposit slip is properly filled up containing title of account, A/C
number date and amount in words and figures. Detail on both counter file and cash
receipt voucher should be the same. Cash is received by cash receiving officer, twice
counted and matched with the deposit slip. The cash details are written on the back of the
deposit slip and are also entered in computer software called “bank Smart”. Cash
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received stamp is affixed on the face of the deposit slip along with the signature of the
cash receiving officer.

Deposit slip is forward to the officer in the cash department. Again proper
scrutiny is made by the officer cash department both on cash receipt and Bank smart
software. Officer cash department sign the deposit slip and finally approved the
transaction on Bank Smart. Deposit slip is credited and posted in the concerned
accounted in the system. Counter folio is given the deposition as receipt. One
consolidated cash debit voucher is posted in the system to balance the cash.

1.1.2.CASH PAYMENTS

All five counters deal with cash payments the process for payment of
cheques local and foreign currency is same. First the cheque is presented by the customer
or holder to cash payment officer. He confirms that it is drawn on the same branch and
the particulars of cheque are properly filled in. one signature of the holder is taken on the
back of the Cheque. Officer checks the date, amount in words and amount in figures,
payee’s name, crossing if any, account number, cheque serial number, any material
alterations / endorsements and signature of the customer. Account is debited in Bank
Smart and then cheque is cancelled by the officer. It is posted in the system and posting
stamp and number is affixed on it. At the end officer hands over cash to client.

1.2.CLEARING DEPARTMENT
The process by which cheques exchanged between the collecting and paying
bank and the ensuing financial settlement is called “clearing”. This facility is provided by
the state bank of Pakistan for offsetting of cross obligations between the different banks.
Clearing is of two types:

1) Inward clearing
2) Outward clearing

• Inward Clearing
When cheques drafts, etc, of our branch presented to us for clearing by the
SBP. Cheques are to be honored by the bank.
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• Outward Clearing
The cheques of other banks which the account holder deposits in their
accounts are send for collection.

➢ CLEARING PROCESS (INWARD/OUTWARD)

Here the local cheques are received that are drawn on BAF. All the
cheques are received on one counter along with the paying slips duly filled in properly
containing particulars of cheques and account holder. Counter folio of paying slip is
handed over to the customer by putting stamp for cheque received for collection for Bank
Alfalah on it duly signed by officer. These cheques are scrutinized and cheques for local
clearing are separated from OBCs. These are then entered in clearing register and
cheques for collecting are entered in OBC register and handed over the bills department
of collection. Clearing officer checks and verifies title of all the cheques deposited by the
customer to confirm the good title of the cheques. Cheques are scrutinized properly and
paying slips are separated from cheques. Special crossing, endorsement and clearing
stamps are affixed on the cheques. Cheques of each bank are sorted and arranged branch
wise. All the cheques are then entered into the clearing system of bank.

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

1.1. ACCOUNTS DEPARTMENT

Account department is the most important department of the bank since it is
concerned with:

• Revenue
• Expenses
• Assets
• Liabilities

Accounts department is a backend department at Bank Alfalah Limited that

performs the following functions:
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➢ Reports
It generates reports like Statement of Account Activity (a report on the
activity of all accounts at Bank Alfalah), Statement of Affairs (a report on the assets and
liabilities of Bank Alfalah), Statement of Foreign Exchange (a report on the foreign
exchange currencies at the bank) and Statement of Profit & Loss (a report on the income
and expenditures of Bank Alfalah). These reports can be generated at daily, weekly,
monthly, quarterly or yearly basis as required by the bank.
➢ Income and Expense
The department also needs to calculate the revenues and expenses, control
expenditure and forecast profits every month.
➢ Budget
Formulation of yearly budgets & targets in consultation with the branch
manager is also done by the accounts department.
➢ Activity Checking
Daily activity checking and monitoring is done by the accounts department of
the whole bank.
➢ Storage of Records
Accounts Department also has the duty to store vouchers and system
generated reports.
➢ Payments
The accounts department is responsible to pay vendors on behalf of the bank
with authorization from the branch manager. It also has to amortize large payments and
calculate depreciation of branch assets.

1. CREDIT CYCLE

0.0.0.0.0.2 Renewal / Revise /

Write-off
0.0.0.0.0.3 Processing Information
Monitoring & CLP
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0.0.0.0.0.6 Disbursement
0.0.0.0.0.7 O
of
f
Lo Purification of the
0.0.0.0.0.8
Documents & Security

2. CONCLUSION
The bank has seen phenomenal growth in the past few years by opening more
branches in the country, increasing the deposit base, while also increasing the assets
and profits of the bank. In 2002, Bank Alfalah’s assets were worth Rs. 65 million
whereas; in 2009 they were worth Rs. 380 billion.

The services that Bank Alfalah provides have a great market penetration not
only because of their features but also the profit and markup rates that they charge.
Also the products that Bank Alfalah provides cater to sector of the economy.

The top management of the bank is always developing strategies that cope
with unexpected challenges to deliver products and services more efficiently.

3. REFERENCES

• Mr. Syed Ahsan Raza, Credit Manager at Bank Alfalah, G-9 Markaz branch

• Bank Alfalah (www.bankalfalah.com)

• Wikipedia (www.wikipedia.com)
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• Google (www.google.com)

• State Bank of Pakistan (www.sbp.org.pk)

• Annual Report Bank Alfalah 2009