INTERNSHIP REPORT AL-BARAKA ISLAMIC BANK Wah cantt branch

SUBMITTED TO: MR. ZEESHAN ABBASI (INCHARGE OF INTERNSHIP PROGRAM)

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Acknowledgement

Countless thanks to Almighty Allah (the most merciful the beneficial). The Only creator of Universe who enabled me to complete this report, in spite of various difficulties. All respects to the Holy Prophet (S.A.W.S) who enable us to recognize our creator and whose spiritual teaching guides us in every matter of the life. I would like to thank the branch manager Al-baraka bank Mr.Faisal as he gave me the opportunity to work in Al-baraka bank. I would like to thank all the officers of the bank for being so kind and supportive. I would like to thank Sir Zeeshan abbasi for being so kind in giving us enough time to complete the report. Last but not the least I would like to thank my friends for supporting me and helping me in making this report.

TABLE OF CONTENTS
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EXECUTIVE SUMMARY.......5

INTRODUCTION OF SILK BANK...............................................................................6

MISSION AND OBJECTIVES........................................................................................9

ORGANIZATIONAL STRUCTURE..............................................................................9

TASK PERFORMED AND KNOWLEDGE GAINED...............................................11

INTERNSHIP EXPERIENCE.......................................................................................11

REALTION OF MBA KNOWLEDGE & INTERNSHIP EXPERIENCE................17

RECOMMENDATION ..................................................................................................18

BIBILIOGRAPHY..........................................................................................................21

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Executive Summary

This report is about my internship that I have undergone at Al-baraka Islamic bank wah cantt. During my internship I am able to learn practical aspects of banking business and get good working experience. As at branch level in banks there is no proper Human resource department so I had to work in accounts and credit department and I had spent a few days in other departments of the bank. Although it was not entirely related to my field of specialization but it was quiet helpful to gain practical knowledge of business and how to deal with the customers.

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AL-BARAKA ISLAMIC BANK Background : For the fist time banking system was started in 2000 B.C. In these Greek banking institutions were popular, with the passage of time the need was felt to establish banks and so in the middle of 12th century banks were established at Venice and Geneva. The origin of modern banking started in Europe in the 14th century. Internship at banks has almost become a clich. Over the past decade trend has been established by the business and public administration students regarding internships at banks. Thus it can be very convenient for anybody to view this repot as any other report on any other bank. This misconception has been the biggest challenge and motivating force to take up this study. My efforts have been directed at maintaining a qualitative difference from a routine study. The picture of the banking sector in Pakistan is not a rosy one like the overall economy. There have several intermittent socio-political crises over the past few years. Banks in general have had to ear the brunt of the follies of politicians and economic managers of our country. Banks have been largely used as an instrument of manipulation rather than as a tool for financial stabilization. The liquidity crunch of our banks has been a direct consequence of loan defaults by the high ad might of our society.

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These rough conditions provide me with an excellent opportunity to explore the path to survival for a financial institution while all the others around it are falling like ninepins. The study is particularly aimed at the contributions of AIB to an unstable economy and at the urgent need of whole scale rationalized reforms. Purpose of Study Prime objective of the study is to accelerate knowledge, developing, technical skill, producing professional attitude modifying behavior as well as to enhance practical knowledge in the bank. Foremost stress has been placed to reduce practical & theoretical gap of the study. Key focus has been placed to appreciate technical concepts involved in the banking practice. However, it is difficult to ensure complete command & excess over the bank field as it is changing speedily with the passage of time. Scope of Study This report explains the operations of only one of the branch of AIB, which is AIB branch, located at The Mall, Wah Cantt. This study will help AIB management to identify their strengths, weaknesses, opportunities and threats for future strategic direction. Limitation of Study Due to the narrow time span 42 days it is not possible to cover each area of the bank for the purpose of study. Moreover, bank field is so vast that requires a long commitment & devotion for thorough learning. Methodology of Report The report is aimed at two levels, the first at the branch level and the second for the organization as whole. No secondary data is available at the branch level, Hence all the observation of the report are result of primary data gathered from he bank from the following sources. The secondary data is collected from the following sources: 1 2 Personal observations Brochures Quaid I azam school of management Sciencies Quaid I Azam University Islamabad www.facebook.com/tasalpha 7

3 4 5 6

Review of annual report 2007 2008 Bank manuals Journals & newspapers Internet

INTRODUCTION TO AIB AlBaraka Islamic Bank (AIB) is a member of Albaraka Banking Group (ABG) which is a Bahraini Joint Stock Company listed on Bahrain and Dubai stock exchanges and one of the well-known leading international Islamic banks. ABG is committed to expanding its presence in Pakistan, which is evident from the rapid growth being undertaken by AlBaraka Islamic Bank in the country and its plans to have its Pakistan operations localized as a Bank registered in Pakistan, over the next few weeks. Building on the expertise and experience of its workforce and the growing awareness of Shariah-compliant banking solutions among the masses, AIB has successfully developed itself as a major unit of ABG operating in the region, capitalizing on the Groups geographical presence and high quality research and development in Islamic financial products for its business expansion in the country. Faced with growing challenges in this rapidly developing market, AIB strongly relies on its ability to be an effective and efficient market player through renewed focus on superior customer service, development of Islamic alternatives to conventional financing facilities, and strict adherence to Shariah rulings and principles. OVERVIEW AL BARAKA ISLAMIC GROUP Albaraka Banking Group is the biggest Islamic banking group listed on the Bahrain Stock Exchange in terms of capitalization. It has been rated by Standard & Poor's as BBB- with a short-term rating of A-3. ABG offers retail, corporate and investment banking and treasury services strictly in accordance with the principles of the Shariah. The authorized capital of ABG is US$1.5 billion, while the total equity amounts to about US$ 1.59 billion. With assets of US$11.2 billion, the Group has a wide geographical presence in the form of subsidiary banking Units in 12 countries, which in turn provide their services through more than 250 branches. These banking Units are Jordan Islamic Bank/ Jordan, Al Baraka Islamic Bank / Bahrain, Al Baraka Quaid I azam school of management Sciencies Quaid I Azam University Islamabad www.facebook.com/tasalpha 8

Islamic Bank / Pakistan, Banque Al Baraka D'Algerie/ Algeria, Al Baraka Bank Sudan/Sudan, Al Baraka Bank Ltd / South Africa, Al Baraka Bank Lebanon/Lebanon, Bank Et-Tamweel Al- Tunisi Al Saudi/ Tunisia, The Egyptian Saudi Finance Bank/Egypt, Al Baraka Turk Participation Bank/Turkey, Albaraka Bank Syria (under establishment), and representative office, Indonesia. Subsidiary Banking Units of ABG

ORGANIZATION STRUCTURE

BOARD OF DIRECTORS Mr. Khalid Rashid Al Zayani, Chairman Mr. Adnan Ahmed Yousif, Dy. Chairman Mr. Yousif Ali Fadhil bin Fadhil, Member Mr. Maqbool Habib Khalfan, Member Quaid I azam school of management Sciencies Quaid I Azam University Islamabad www.facebook.com/tasalpha 9

Mr. Adel Saud Dahlawi, Member Mr. Othman Ahmed Sulaiman, Member Mr. Ashraf Alghamrawi, Member Mr. Abdul Latif Janahi, Member Mr. Mousa Abdul Aziz Shehada, Member Mr. Mohamed Isa Al Mutaweh, Member

EXECUTIVE COMMITTEE Othman Ahmed Sulieman - Chairman Adnan Ahmed Yousif - Member Abdul Latif Adul Rahim Janahi Member Mohamed Isa Al Mutaweh Member

THE SHARIA BOARD Shaikh Dr. Abdul Sattar Abu-Guddah Chairman Shaikh Esam Mohamed Ishaq Member Shaikh Waleed A. Al Mahmoud Member Mr. Sayed Mohamed Mohyeldin - Secretary to Sharia'a Board

AUDIT COMMITTEE Abdul Latif A. Janahi Member Abdul Hameed Nazer Member Mousa A. Shihadeh Chairman Mr. Hani Nayem - Secretary Audit Committee, Manager Internal Audit MANAGEMENT BAHRAIN Muhammad Al Mutaweh General Manager Quaid I azam school of management Sciencies 10 Quaid I Azam University Islamabad www.facebook.com/tasalpha

 Yousuf Ahmed Ali Deputy General Manager Tariq Mahmood Kazim Deputy General Manager Adel Abdullah Al Baluchi Assistant General Manager Musa Abdul Latif Muhammad Assistant General Manager

MISSION : To be the Leading Islamic Banking Group with a World Wide Presence, Offering; Retail, Commercial, Investment Banking, and Treasury Services Strictly in Accordance with the Principles of Sharia. TASK PERFORMED AND KNOWLEDGE GAINED: During my internship I performed different task in different department which are as follows: 1. giving recommendations on basis of analysis 2. checking of daily transactions 3. handling of check book 4. accounts

RELATIONSHIP OF BBA KNOWLEDGE WITH THE INTERNSHIP: Having an experience of a reputed organization has one huge advantage, it makes you more professional and professionalism is the key to success. I have learned a lot during my internship. Working in AIB Bank gave an opportunity to relate my studies with the practical work. I have learned that how the bank perform the financial analysis of the companies. I also came to know what aspects the bank considers while giving loans to the companies. This internship will help me a lot because the tasks given to me are related to my studies and it will also help me in my professional life. Quaid I azam school of management Sciencies 11 Quaid I Azam University Islamabad www.facebook.com/tasalpha

Weekly learning Week one: The first week of my internship is related to the orientation. I was given the introduction of the bank and the brief history of the bank. After this the respected boss gave me the introduction of the different departments working in the bank. He told me functions of every department.

Week two and three: Accounts Department In week two I joined Maam Farwah (Accounts Officer) and I stayed in accounts department for two weeks. First of all she gave me the introduction of the accounts department and then she told me about the different activities accounts department had to perform. * Vouchers batch * Reporting * Maintenance & depreciation of fixed assets * Miscellaneous functions Accounts Department: Account department is responsible for budgeting and account opening all the transaction that are take place in the bank and their physical prove are match to the computer generated report and save it as a physical that these transaction are take place in the bank. Secondly account is responsible for budgeting and also record daily expense incurred by the bank. Account department work as a backbone of the organization this department directly reports the operational manger and vice president preparing the banks annual accounts and coordinating external audit is also a direct function of the finance division. What I learned: I learned about the sorting of vouchers in ascending order and according to the title of the voucher and than I had to match it with computer generated report of accounts number to make it more safe and risk free. This is called daily activity checking. Budgeting: Quaid I azam school of management Sciencies 12 Quaid I Azam University Islamabad www.facebook.com/tasalpha

She told me about the budgeting that the accounts department of a bank, for a year makes budget of every branch. Fiscal year of bank starts from January 01 and ends on December 31. The accounts department starts preparing budget from October for the next year. Voucher batch: The voucher batch mean the all kind of vouchers will be sorted as batch wise for example current a/c voucher makes sprit batch saving a/c batch sprit and in the same way third batch Mise a/c and general ledger a/c voucher makes sprit batches maintained date wise for record of the bank. Reporting: The accounts department, in the form of reports, clubs the 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. The accounts department prepares many reports, of which the most common are:* Statement Of Affairs * Income & Expenditure * Business Report * SBP Report * Outstand Receipt Report * Currency Wise Deposits Report Maintaining of Fixed Assets & their Depreciation: Accounts department maintains the record of all the assets and charges depreciation on them. The bank normally uses the straight-line method to compute the depreciation. It is calculated on monthly basis and charged yearly. Bank not only depreciates the existing assets but also the assets but also the assets transferred in and transferred out. Miscellaneous Functions: The accounts department also performs some other miscellaneous functions like Closing Entries Daily activity checking Quaid I azam school of management Sciencies 13 Quaid I Azam University Islamabad www.facebook.com/tasalpha

Report Generation Minor Expense Recording Week Four and five: Credit department: In week four I joined Mr.shahid (Credit Officer). I stayed in credit department for two weeks. Initially I was given the introduction about the credit department. Mr.shahid told me about the different activities and functions of the credit department. As par sensitivity of the credit department I wasnt given any special task to do but I got to see the financial statements of the bank and ratio analysis etc of the bank. To give credit is to finance directly or indirectly the expenditure of others against future payment. Lending or financing is one of the basic functions of banks of all categories, through which they gain major part of their profits. A bank accepts deposits of money and repays cash to its depositors on demand. But this is not to say that; bank gives this service for nothing. Bank borrows money at a lesser rate of interest and lends to the borrower at higher rate of interest. And the difference between these two is the profit of the bank. Maximum loan limit is seven billion. Week six: In week six I gathered information about the other departments of the banks like service customer services.I ask about what kind of activities and tasks they performed.

Customer Service Department: Customer Service Department perform the following duties * Give brief information about different account to customer * Account Opening * Provide service to customer such as filling the form * Issuing the cheque book * Issue Debit card and credit card * Locker record keeping * Computerize record keeping of utility bills and other collection Quaid I azam school of management Sciencies 14 Quaid I Azam University Islamabad www.facebook.com/tasalpha

Mr. Kamal khan is the head of the department.

HR Policies, An overview The manpower resources in an entity is rightly characterized as the single most valuable asset that holds the key to either make, or break, the brands they represent. Attracting and retaining quality people and motivating them to peak performance, are now the buzz words in corporate boardrooms and corridors as every organization competes for scarce talent. Regardless of size, spread, nature of business and geographical location, investment in human capital, is by far the most promising and rewarding avenue for modern day entrepreneurs. Al Baraka Islamic bank has an existing Human Resource development department, which operates to increase the existing skills of the people existing or coming in the organization, in order to achieve its objectives in a more efficient manner. AIB has devised two basic training techniques. First is related to the training and development of mid term plan, regarding new clients & middle level employees. Secondly, the training & development for long term plan, regarding the career development. AIB applies on-job and off-job strategies to train its employees (middle & higher level). AIB training & development academy advises Job rotation to ensure & facilitate the producing of all rounder.

Companies are faced with the daunting task of adopting a harmonious approach to people management on a global basis while respecting domestic and regional sensitivities. Acquisitions, mergers, and other forms of corporate restructuring and privatization inject new imperatives in human resource management prompted by the need for relocation and the shifting and creation of new job responsibilities. Availability of documented human resources policies and procedures facilitates the discharge of the HR function in an organization and serves as an important and useful tool in ensuring the presence of an effective HR culture but as for as Al-Baraka Quaid I azam school of management Sciencies 15 Quaid I Azam University Islamabad www.facebook.com/tasalpha

Islamic bank policy is concerned there is no well documented open to the public, often consultants are hired in determining their needs in this regard, and they help them to formulate and compile prescribed policy and procedures adapted to their specific needs.

SWOT Analysis of AIB

SWOT stands for Strength, Weaknesses, Opportunities and Threats. SWOT is useful tool for providing a framework for analysis of an organization. It is widespread approach to make assessments in terms of internal and external environment of the organization and to formulate strategies by analyzing its internal strengths and weaknesses, external opportunities and threats. SWOT analysis for Al Baraka Islamic Bank is as follow: STRENGTHS 1. Experienced and Qualified Staff During the research it has been observed that the staff/personnel of the organization is qualified and experienced. Many of the bank officials have got advance knowledge and experience in the fields of management, banking law and practice. 2. Good PR with Customers The relationship of the manager and the other staff of the organization is really good with the customers, which results in good will and loyalty of the customers towards the organization. 3. Good Managerial Skills The managers are fully aware of the recent managerial concepts and are able to deal with any type of scenario. 4. Job Satisfaction at All Levels Job satisfaction is one of the important factors for the employees to be motivated. The people in the organization under consideration were found highly satisfied with there jobs. 5. Quarterly Performance Appraisal Quaid I azam school of management Sciencies 16 Quaid I Azam University Islamabad www.facebook.com/tasalpha

Performance appraisal is the way by which one can evaluate the employees performance; it results in the enhancement of the organizations overall performance. The performance appraisal is done on quarterly basis in this organization, which results in better performance. 6. Friendly environment The environment of the organization is very friendly. People over here are very cooperative, not only with the customers but among themselves as well. 7. Competent senior management The senior management in the organization is very much competent and experienced; they successfully handle different internal and external affairs. WEAKNESSES 1. No HR department level at zonal and branch level Human resource department is one of the foremost requirements of any organization of this age. The organization under consideration, though contain a HR division at headquarter but there are no sub divisions at the provincial or branch level. So when different problems related to HR are raised, they are left unaddressed. 2. Centralized decision making The decision making in the organization is completely centralized which results in the loss of confidence of the employees over the management, employees may not want to follow the dictates, rules and regulations. 3. Lack of frequent training Though there is training academy at head office, but the training programs are usually confined to the managerial staff, there is a need of training at all the levels. 4. Lengthy recruitment process The recruitment process is quite lengthy which can discourage the new comers. So, there is a need to shorten the whole process. 5. Less internal recruitment for new posts It has been found that in the organization under consideration, if new vacancies are allocated there is a trend of external recruitment, which results in the dissatisfaction of the current employees. 6. Lack of Marketing Effort Quaid I azam school of management Sciencies 17 Quaid I Azam University Islamabad www.facebook.com/tasalpha

The bank does not promote its corporate image, services, etc on a competitive way. Hence lacks far behind in marketing effort. A need for aggressive marketing is there in the era marketing in now becoming a part of every organization. OPPORTUNITIES 1. More qualified people in the market Due to the increase of interest of people in business field, many business institutions have been established, which produces a good lot of qualified and competent business professionals. So, the organization under consideration can hire more qualified people from market. 2. Effective utilization of internal human resources People working in the organization get use to the norms and values of the organization, so these expirees can be utilized with in the organization whenever required. 3. Training can enhance the employees skills. Training and development is one of the important function of human resource management. If the staff of the organization are properly trained and developed they will add to the value of the organization. THREATS 1. Increase in Competition The increasing competition in local as well as national and multinational level also lower down the profitability of the bank and compelling the bank to use a large amount of funds to meet out competition. 2. Good job opportunities outside. The other organizations of similar nature are offering more salaries and benefit packages to their employees. So, there is a threat to the organization that their current employees may leave it. 3. Uncertainty about future change An uncertainty about the future changes has been noticed among the employees of the organization, it results in dissatisfaction and demotivation of the employees, which is a serious threat to the organization. 4. Other organizations are using better HR techniques. Quaid I azam school of management Sciencies 18 Quaid I Azam University Islamabad www.facebook.com/tasalpha

Other organizations of similar nature are using better and recent HR techniques, so they have got an edge to facilitate their employees whenever they need. It can be a serious threat to this organization as there employees would not be satisfied of their own organization which will effect their performance.

Conclusion and Recommendations

Conclusion

After observing this AIB very closely and its HR department in particular, following outcomes have been concluded.
Banking is the business that is directly related to general public and an employee can be judged by the appraisal from customer. This practice will increase the accuracy of performance check as well will improve the behaviour of employees with general public Though there is training department in head office, but the training programs are usually confined to the managerial staff, there is a need of training at all the levels. The decision-making in the organization is completely centralized. There are no sub divisions at the provincial or branch level. So when different problems related to HR are raised, they are left unaddressed. The recruitment process is very lengthy it should be trimmed. If new vacancies are allocated in the organization they are filled through external recruitment. Internal expirees should be utilized and should be considered for new posts. If above mentioned recommendations are properly taken into account this can help prevent wastage of time, resources, professional potential and can increase the organizations performance and goodwill.

Recommendations

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I am going to suggest following initiatives, to resolve the problems. And these suggestions in my point of view are as follows.
1. Higher Management should set an example by implementing all those communication ethical codes on themselves first. 2. Penalties and punishments must be implemented on all employees regardless of their job status and holding company position. 3. To provide proper information to consumers, information counter should be set where true professionals guide consumers. 4. New staffing technology also is affecting other job-market dynamics. For instance, with streamlined processes and skills-based candidate-relationship databases, companies that have just-in-time-staffing needs can hire permanent employees as quickly as they once hired temporary employees. For this reason, temporary hiring may no longer be as reliable an indicator of an economic recovery in the future. 5. The work should be equally distributed among all employees. This will end the discomfort among employees. 6. The coordination among employees and different departments should be improved. The coordination between top and lower management also needed to be improved. 7. Employees are not rotated to other positions thus they do not acquire the knowledge of other departments and their development doesn't occur. 8. All placements should be on merit, i.e. Competence and performance, without personal bias and external influences and everyone should be promoted on the basis of required qualification and experience.

9. AIB should conduct meaningful refresher courses, seminars and workshop with a view to improve the knowledge of the staff. The HR Departments arrangement for staff trainings to coup with new demands that may become threats for interests of the Company. The present conventional training programs need to be made more comprehensive.
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10. The performance appraisal system needs to be made strict and unbiased. The drawbacks which are obvious like nepotism, favoritism etc. Need to be removed and the culture of ultimate meritocracy in appraising class needs to be included, so employees of the AIB may think for the organizational interest rather than their personal motive. 11. Better performances and efforts should be rewarded equitably in order to encourage initiatives and enhance motivation level of employees. This step will help in team building, which will create motivated employees. 12. There is lack of healthy and entertainment activities like excursions on weekend, parties and other important days, celebration in their tidy life. Such activities should be encouraged at once in a month. 13. There is lack of ATM machine, from which the ATM card holder cannot with draw the cash. The management should install an ATM machine in Branch.

References
Al-Baraka Islamic Bank (2008), Annual report 2007, Hussain, S; Rana, K & Shabbir, A (1991); Banking Currency and Finance, Lahore: Ilmi Kutab Khana. www.ibp.org.pk www.albaraka.com.pk www.abg.bh/English/home2.html Quaid I azam school of management Sciencies 21 Quaid I Azam University Islamabad www.facebook.com/tasalpha

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AIB Organizational structure

President & Chairman President Secretariat Board of Director Secretariat

Corporate & Investment Banking Group Commercial & Retail Banking Group Operations Group Audit & Inspection Group Compliance Group Financial Control Division Special Assets Management Group Organization Development & Training group Information Technology Group Risk Management Group Treasury Management Group Human Resources Management & Admin Group

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ATM Application Form

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Account Opening Form

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Account Opening Form

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Al-Baraka Murabha Islamic Investment Account Form

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Credit Rating

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