Professional Documents
Culture Documents
History of Bank Alfalah starts from Bank of Credit and Commercial International
“BCCI”. BCCI was incorporated in Luxembourg on 21st September 1972 with the
paid up capital of US $ 2.5 million. By early 1973 BCCI has established its first
four branches in,
• UAE
• UK
With the passage of time the branch network of the bank expanded rapidly in
different regions of the world i.e. Far East, Middle East, Africa, Europe and
Western and Latin America.
Its founders were an influential and professional team possessing an intimate
knowledge of East Asian and Middle East countries, particularly those with oil
resources and expertise for sophisticated of three most important elements in the
early formation of organization, e.g.
• Investors from the oil producing countries of Middle East
• A business connection in expanding markets
• A well developed and fully equipped management structure
There were three branches of BCCI in Pakistan. These were in,
• Karachi
• Lahore
• Rawalpindi
Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited
company under the Companies Ordinance 1984. Its banking operations
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commenced from November 1st, 1997. The bank is engaged in commercial
banking and related services as defined in the Banking companies ordinance,
1962. The Bank is currently operating through 274 branches, with the registered
office at B.A.Building, I.I.Chundrigar, Karachi.
Since its inception, as the new identity of H.C.E.B after the privatization in 1997,
the management of the bank has implemented strategies and policies to carve a
distinct position for the bank in the market place.
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.
Bank Alfalah aspires to evolve as the premier banking institution in the country
the bank Alfalah adequately prepares the organization to cope with unexpected
challenges to deliver products and services more efficiently. Customer
satisfaction will always remain the number one benchmark as they forward
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towards attaining their goals .The be employ and retain an unparalleled work
force of highly motivated, energetic, well trained and productive employees. The
bank Alfalah offers an inspiring work environment, competitive salaries, excellent
benefits and caring leadership. Bank Alfalah promote strong and ethical business
practices in the industry of focusing more on the effective collaboration with their
stakeholders team members remain aware of the organization’s commitment to
them as well. They strive to achieve the superior financial performance to be
considered a leading bank in Pakistan by reputation and performance, and to be
a good corporate of the communities they serve. The bank cultivates a sense of
ownership amongst the employees, with the overall business plan and the
direction in which their organization is headed. Their corporate strategy focuses
on striking the optimum balance in organizational work flows and process .The
dynamic environment in which the bank operate implies to them to remain poised
for the unexpected as the competitive pressures mount. Consequently business
process reengineering and branch marking remain notable guidelines for strategy
development.
Board Of Directors
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Mr. Abdulla Nasser Hawalileel Al-Mansoori
Director
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Mr. Sirajuddin Azi
Director & CEO
Vision
To be the premier organization operating locally & internationality that provides
the complete range of financial services to all segments under one roof.
Mission
To develop & deliver the most innovative products, manage customer
experience, deliver quality services that contributes to brand strength,
establishes a competitive advantage and enhances profitability, thus providing
value to the stakeholders of the bank.
Branch Network
Bank Alfalah has total 274 branches operating in Pakistan and overseas, some
Detail is as under:-
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Karachi
Main branch, B.A. Building, I.I. Chundrigar Road
Cloth market branch
Karachi Stock Exchange Branch
Clifton branch
Shah rah-e-Faisal Branch
P.E.C.H.S Branch
Timber Market Branch
Defense Housing Authority Branch
Gulshan-e-Iqbal Branch
Jodia Bazar branch
Korangi industrial area branch
M.A. Jinah Road Branch
North Napier Road Branch
S.I.T.E Branch
Paper market branch
North Karachi branch
Lahore
Gulberg branch
Defense branch
Circular road branch
Township branch
LDA Plaza branch
Badami bagh branch
Allama Iqbal Town Branch
Shah Alam Market Branch
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Rawalpindi
Mall road branch
Satellite town branch
Peshawar
Peshawar Branch
Peshawar City Branch
OTHER BRANCHES
Other branches are in:
Hyderabad
Sukhar
Rahim Yar Khan
Multan
Sialkot
Islamabad
Jehlum
Quetta
Mingora, Swat
Faisalabad
Gujranwala
Sargodha
Bahawalpur
Dera Ghazi Khan
Gujrat
Sahiwal
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Mardan
Overseas Branches
Chittagong, Bangladesh
Dhaka,Bangladesh
Bahrain
Kabul
Manama
They are continuously formulating new products and services for the growing and
diversified needs of their ever-expanding client base. Bank Alfalah has launched
Credit Cards, ATM Cards,
Following are the major products of Bank Alfalah Limited, which are prime
examples of quality innovation, providing timely banking opportunities to their
customers:
• Deposits
i. PLS Saving Account
ii. Royal Profit
iii. Basic Banking Account
iv. Alfalah Kifayat
v. Alfalah Mahana Amdan
vi. Alfalah Education
vii. Current Account
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• Advances
i. Funded
ii. Non-Funded
• Trade Finance
• Lease Finance
• Credit Cards
• Home Loans
• Auto/Vehicle Loans
• Lockers
• Debit Card
• ATM
• Agri Loan
• Money Gram
• Alfalah Online Banking
DEPARTMENTS
Functioning of BAL is dived into following departments.
1) Operation Department
2) Foreign Exchange Department
3) Credit Department
4) Accounts Department
OPERATIONS DEPARTMENTS
Operation Department has following segments.
a) Cash
b) Clearing
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c) Remittance
d) Account opening
e) Accounts department
OPERATION DEPARTMENTS
Operations department of the Bank Alfalah Limited is responsible for the overall
operations of the bank.
a) Account opening
b) Cash department
c) Clearing
d) Remittances
e) Online Transactions
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and checked according to the nature of account. If any formality is incomplete,
cheque book is not issued until it is fulfilled.
If a person cannot sign his / her hand thumb impression is affixed marked, which
is attested by one male or two female witnesses. Thumb impression for female
right hand and for male left hand.
They also have to give identity letter
1) NIC copies
2) Passport size photograph
One place on the form other is on SS Card they have non-bearer cheques. On
their cheque book a stamp is affixed on it there is written. Thumb impression
should be fixed in front of an officer of the bank.
The bank does not make payment of a cheque bearing a six months or older
date. If an account is not operated in six months. It is called dormant account.
TYPES OF ACCOUNTS
The bank different types of accounts exist.
1) INDIVIDUAL ACCOUNT
Any individual or proprietor of business can open an individual account at BAF.
PLS (profit and loss sharing) saving accounts can be opened with the minimum
balance Rs. 1000/-. Following requirements has to be fulfilled for this account.
Signature of customer on back of AOF.
Mention next of kin (nominee)
Name and A/C # of introducer.
Verified sign of introducer.
Customer signature admitted by officer.
N.I.C photocopy attached.
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Letter of thanks.
2) JOINT ACCOUNT
When more than one person open a single account it is called joint account. The
names of persons are written on the title of A/C and on S.S. card.
Joint A/C cannot be opened by single person. Both persons have to sign on
cheques. When two or more person neither partner nor trustee open account in
their name is joint account.
Requirements
Sign of both customers on back of AOF
Sign on joint A/C # mandate
Name and A/C # of catrodiecer
NIC copies of both members.
Mode of operation.
3) BUSINESS ACCOUNTS
When the owner of the firm operating singly, open an in his term name.
Three types of Accounts are here for Business Accounts:
a) Sole Proprietor Account
b) Partnership Account
c) Limited Company
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Requirements
Companies stamp
Declaration of proportion companies’ letter head.
Sign on AOF (Account Opening Form)
NIC copy
Verified signature of introducer.
Sole proprietorship declaration
Requirements
Sign of customers on back of AOF.
NIC copies of partners
Partnership deed (certified copy) duly attested by notary republic.
Partnership mandate (prescribed format)
Companies rubber stamp
The A/C is opened in the firm name and all partners designate one or two
persons to act behalf of the partnership firm all acts of the firm jointly and
severely.
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PRIVATE LIMITED
Requirements
Restrain on companies letterhead dully attested by chairman.
Sing of all directors on back of AOF.
NIC copies of all directors.
List of directors on company’s letterhead.
List of memorandum and article of association.
Copy of board resolution.
Latest form 29 (if director is to be changed or in case of his death, this
kind of form is filled, it includes information that a new director has how
much number of shares with him.
Companies’ rubber stamp.
Copy of certificate of incorporation should be attested by Director, co
register an office stamp should be affix.
Code Of Accounts
Saving account 02
Current account 01
Royal profit 029
Royal group 05
FSB 028
FCP 018
EURO 0287
PUBLIC LIMITED
1) Certificate of commencement of business
2) Same as home documents.
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Club / Society / Association
These concerns are non-trading in nature. They have their own rules and
regulation and their affairs are mentioned by the committee called as a governing
body or managing committee.
1) Stamp of directors
2) NIC copies
3) Certified copy of resolution
4) Memorandum and article of association
5) List of heads on companies’ letter head.
6) Bank account opened in their name with BAL.
7) Name of person to be specified for the operation in account.
8) The manner in which the account shall be operated.
9) Letter of registration.
Trust
Certified Copy of Trust Deed
1) Certified copy Of Buy Laws
2) List Of Trustees
3) Board of resolution resolving to open an account with BAL along with
the signing instructions of the authorized signatures to operate the
account. This resolution must bear the trust stamp and at the same
time must be attested by the company secretary.
4) NICs of all the trustees
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CHEQUE BOOK ISSUANCE
When the account is opened, then the customer is given a chequebook to sign
upon and enact money. It proceeded as under.
PROCEDURE
All the account opening formalities must be completed before issuance of
chequebook. Particulars of the chequebook requisition should be completed
containing title of account, account number, type of currency, number of leaves
and signature to the customer. Signature of the customer is verified on the
requisition.
If customer is unable to collect his cheque book, then he can give authority to the
third person to collect his cheque book on his behalf by signing on the back of
the requisition, in such case, the particulars of the third person are required like
name of the person NIC number and signature of that person on requisition and
cheque book issuance register.
Chequebook is taken out from the safe / locker. It is assured that series of the
chequebook. Particulars are entered in the chequebook issuance register.
Account number is stamped on very leave of the chequebook and those leaves
are counted. Name of account holder is written on the cover of the chequebook.
And requisition on the chequebook for further issuance is properly filled, stamped
and signed by officer of the bank.
Chequebook is delivered to the customer and his signature on the chequebook
issuance register. Chequebook serial number entered. In the system (Bank
Smart)
Stock of chequebook are balanced at the end of each day and kept under safe
custody.
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Earlier the banks were charging a fee for issuance of cheque book but now
whenever a new account is opened, the account holder issued a cheque book
free of charge.
Bank Alfalah issues the following chequebooks.
Saving account-25 leaves
Current account 50 leaves.
Current account – 25 leaves
Foreign currency $ 10 leaves
Foreign currency 10 leaves
Loose cheques are also issued in some cases.
Closing of Account
When a customer wants to close an account he has to given a hand written
application to the head of the operations department to close his account plus
The manager first verifies the sign of account holder, then closing is done from
the registers on the computer where the account was opened. In the file of the
account holder his account opening form is crossed. For this closing a fee of Rs.
150/- is charge in BAF.
CASH DEPARTMENT
Cash department of Bank Alfalah works under the operation 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.
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This department performs the main function.
a) Cash receipts
b) Cash payments
CASH RECEIPTS
In cash department 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 cash receiving register. Cash received stamp is affixed on the face of
the deposit slip along with the signature of the cash receiving officer.
Deposit slip and cash receiving register is given to the officer in the cash
department. The officer cash department both on cash receipt and cash receiving
register makes again proper scrutiny. Officer cash department signs both the
deposit slip and register. 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.
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then cheque is cancelled by the officer. It is posted in the system and posting
stamp and number is affixed on it. Cheque is handed over to the cash payment
officer for payment. One more signature on that back of the cheque is taken from
the holder to match with the first one, and then cash is paid to the cash detail is
written on the back of the cheque. Cash paid stamp is affixed on the face of the
cheque. Entry is passed in the cash payment register.
CLEARING DEPARTMENT
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
1) Inward clearing
2) Outward clearing
Inward Clearing
When cheques drafts, etc, of our branch presented to us for clearing by the SBP.
Outward Clearing
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The cheques of other banks that the account holder deposits in their accounts
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.
With the cheques of each bank. Details of these banks are then entered into the
amount against the name of each bank. Then total number of cheques presented
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to all banks and their total amount is written on the foot of that schedule, which is
REMITTANCE DEPARTMENT
Remittance is transfer of funds from one city to another city or within the city. For
this purpose, most commonly used instruments are
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1) Demand Draft
2) Pay Order
3) Telegraphic Transfer
4) Online Transaction
1. Demand Draft:
A demand draft is an instrument in writing drawn by one branch of a bank on
another branch of the same bank for a certain sum of money; payable on
demand to the order of the payee mention therein the draft.
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Bank can issue duplicate of demand draft on clients request after taking charges.
The charges are Rs 100.
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.
2. Pay Order:
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.
Internal procedure:
After issuing Pay order, banker gives credit Sundry creditors account. Posting is
made in the computer terminal. When Pay order is presented on cash counter
bank makes payment against it after checking N.I.C of payee and Sundry
creditors account is debited. If it is crossed, the amount is transferred into the
payees account.
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Cancellation and Duplicate issue:
The procedure for cancellation and duplicate issue of pay order is same as that
of demand draft and the charges are also same. The charges for both the
services are Rs.100.
3. Telegraphic Transfer:
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.
Process:
• Customer obtain a requisition slip and fills it properly
• After filling the application from the concerning officer fills the TT form.
• This Telegram is send to he required bank.
• 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.
4. 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 online transactions cheques of different branches can be paid, fro instance
if a client has taken Online Transaction facility and presents Islamabad’s
cheque to Bank Alfalah Lahore, he/she can have payment from Lahore. If the
cheque has been cleared from Islamabad Bank Alfalah, a copy of cheque is
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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.
Accounts Department
In any Bank the accounts department plays a major role. In Bank Alfalah the
burden of the accounts department is largely reduced because of
computerization. The use of the computer system increases the efficiency and
pace of the bank’s work.
Budgeting
The main task performed by the accounting department is the preparation of the
budget. Budget is based on forecasting and their own inspiration for future,
whereas forecasting is based on past performance. This is one important task on
the basis of which funds are allocated to various branches and also the targets
are determined. The targets determined Deposits, Advances, and revenues.
Every branch prepares its own budget for the fiscal year and then budgets of all
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the branches across the country are consolidated at the head office in Karachi. In
this way a consolidated budget is also prepared.
Fiscal year of the bank starts from January to December. Accounting department
starts preparing the budget from October for the next year.
Before the preparation of budget the bank reviews its sources and funds it has
and the uses of those sources.
The revenue target is fixed keeping in view the past performance. The cost of
generating these revenues is also estimated. Then budget of each branch is
submitted to head office for modifications and for approval. After the modification
and approval the budget for a specific branch is being set by the head office.
Monthly budget meeting is held to analyze the monthly performance by all the
branch mangers with head office. The actual performance is compared with the
estimated and variance is calculated. Variance can be negative as well as
positive. If there is a negative variance, this shows management’s inefficiency in
controlling its expenses or incompetence in achieving the desired revenue
targets. Proper adjustments are made in the next month’s target according to the
previous month’s performance because sometimes the goals which are set by
the head office are unrealistic and unachievable.
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Reports
In Bank Alfalah many types of reports are being prepared. These are daily,
weekly, monthly, semiannual and annual reports. These are generated from the
main frame and are used for proper analysis. The following reports are generated
daily from the main frame which are being used by the accounts department for
the preparation of their own reports:
Statement of affairs:
It includes information about assets, liabilities and their balance. Daily position
of deposit and advances are also calculated in this report.
Subsidiary Statement:
This is a detailed report which includes all the information regarding the
statement of affairs.
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time of nuclear explosions in Pakistan and were being freeze by the Nawaz
Sheriff government.
Sub 66 Report:
It contains income, expenditure, general ledger accounts and their balances.
Now following are the reports, which are being prepared with the help of the
above reports:
Daily position of advances and deposits:
This report is being sent to the head office daily in which the detail is given
regarding the new accounts of deposits and advances.
Statement of affairs:
This report includes assets and liabilities. Two copies of this report are made
daily, one is sent to the area office and one to the head office for analysis but
the format is different for both of them. Statement of Affairs also prepared at
the weekend for the whole week as well as at the end of a month.
Funds Management
Every bank in Pakistan has an account with State bank of Pakistan and has
to maintain 5% of the total deposit in the account with the State bank. Funds
management is done only through the main branch. If the bank has so many
branches in a single city then only the main branch is responsible for the
funds management. Daily a report was prepared and reported to State bank.
The important factors that affect the report are as follows:
o Total Deposit (of all branches in a single city)
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o Opening Balance (closing balance of the previous day)
o Inward Clearing
o Outward clearing
o Cheques issued by State Bank
o Cheques Deposited
After all the calculations, a result is obtained which signifies the cash in hand
of the respective day. If the cash in hand is sufficient to fulfill the needs of the
State Bank, well and good other wise if the cash is not sufficient then the
other options are considered.
In case of shortage of funds, the main branch has the following options, which
it can adopt.
1. TT from Head Office:
2. Cover from Head Office
3. Funds from Other banks
Therefore we first have to confirm head office that whether or not it is sending
TT to another branch of bank Alfalah. If the head office sends us the TT then
it cannot send any other TT to another branch of Bank Alfalah without
charges. The charges are also not negligible for example the charges of TT
for an amount of one hundred million is above 60,000. For this specific reason
the TT is not encouraged.
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2. Cover from Head Office:
The most frequent option used is to inform Head office about the shortage
and ask for cover. The head office then maintains extra amount in its account
with State bank. The extra amount will be the shortage of main branch
reported. The main branch will then pay interest to the head office on a rate of
11.5% per day. The head office is paid on monthly basis.
Activity Checking
Activity checking is the process of the entire banking, which has taken place.
A report known as activity report is prepared on daily basis. The report
specifies every vouchering, which has taken place. Sorting is made according
to the mainframe-generated report. All the vouchers are checked that whether
they are properly posted or is there any transaction left to be posted. This
checking makes the working of the bank more efficient and avoids any
loopholes.
Reconciliation
BAL prepares its reconciliation statements with
Head Office
State Bank of Pakistan
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branches to the head office. They check the outstanding entries, if there is
any entry posted by branch but not by head office they will send their query to
the branch and branch will respond to that query by sending the required
document. Head office reconciliation is carried out in the head office;
accounts department handles inquiries.
Building 2.5%
Furniture 10%
Carpets & curtains 25%
Equipment 20%
Vehicles 25%
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Test Keys
Test is a coding system used to authenticate money transactions between
banks. Whenever money is transferred through TT, the concerned officer
requests the accounting department to apply test to the message. The test is
applied to the message; three copies of this message are prepared. One
goes to the test key department, one to the Telex/fax operator and the third
one goes to the department record. When the TT is received at the other end,
this test is verified. The transaction will be carried out if and only if the test
matches with their own test.
Banks have arrangement with other banks with which they have quite a large
volume of business and it is beneficial to have a direct arrangement with
these banks. This test arrangement can be with banks within country and
outside country. For example BAL has test arrangements with ABN Amro
N.Y, American express N.Y, Citibank N.Y, etc. When this arrangement is
carried out a test key is provided to the concerned bank, which contains
codes. This test key is different for every bank. This test key is also different
for inward and outward TT.
In local transfer double coding is used and in foreign transfer single coding is
used. Test key tables are to arrive at the code. Separate key table are used
for different banks. Twelve branches of BAL have arrangement for local
transfer and three branches are authorized for foreign transfer. Four things
should be carefully checked because code is based on four things:
• Branch name
• Currency
• Date
• Amount
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Test can be applied on nil amounts. The purpose is to just secure the
transaction. Another important significance of test is agency arrangement, which
bank built with other banks. Inquiries originated by any bank regarding the delay
of any message are also solved by the bank. They will check the message and
will respond to the query.
CREDIT DEPARTMENT
The basic function of a bank is to receive deposits (at low rate of return) and to
lend money (at a high rate of return). So, the lending operations of a bank
constitute a vital part of its business. This department is the source of income
and earnings for the bank.
The credit department is further divided into two departments, which are as
follows:
o Credit Marketing
o Credit Administration
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Bank provides two types of credit facilities to its customers. Following are those
credit facilities:
1. Funded
2. Non-Funded
1. Funded:
Funded facility is that facility in which the bank funds are physically involved.
It is further divided into following types:
Current Finance (OD)
Cash Finance (Pledge)
Term Finance
FAPC I
FAPC II
FAFB
LBP
FIM
FATR
Cash Finance (pledge):
This is also a very common form of borrowing by commercial and industrial
concerns, and is made available either against pledge or hypothecation of
goods. This is also known as running finance. It is utilized for the creation of
current assets and to meet the permanent working capital requirements. In
this facility, the borrower is allowed to borrow money from the bank up to a
certain limit, either at once or as required. The borrower prefers this form of
lending due to the facility of paying mark-up charges only on the amount he
actually utilizes not the whole limit amount.
Term Finance:
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Term finance is for a fixed period of time, all the amount is transferred to the
borrowers account right in the beginning and interest is charged. The mark-up
is received in the end on semi annually basis. Term finance has to be paid
within a limit and once it is paid it cannot be taken back by the client.
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availed by the exporter after the shipment of goods and the bank purchases
the documents.
2. Non-Funded:
Non-funded facility is that facility in which the bank’s funds are not physically
involved. A non-funded facility can any time become a funded one. It can
further divided into the following:
L/C
LG
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perform his/her duties/services within the appropriate time other wise the
bank will pay the loan amount. When the bank takes the guarantee of the
client, a commission is charged from the customer.
Types of L/G:
Bid Bond
Performance Bond
Security Deposit
Repayment Guarantee
Mobilization Advance
Back to Back Guarantee
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pledged are normally raw material, consumables, finished goods and in
certain cases work in process (WIP).
Margin:
For every credit, the bank needs security with margin or cushion. The margin
requirements are different for every case. IF, there is 25% margin requirement
then to obtain loan of Rs 1 million, the security that is to be pledged should be
have worth of Rs. 1.25 million.
The possession of the goods is with the bank, so bank keeps these goods in
godowns under the custody of Mucaddams.
People who look after the pledged goods are called Mucaddams. If rice is to be
pledged with the bank, it doesn’t mean that this cotton will be kept in bank, such
type of goods is kept in the godowns of the company. So to make these goods
secure bank appoints its own men called Mucaddams to take care of the stock
and also bank has a board of its own name on the godown.
Precautions:
1. Nature of Commodity:
The banker must be aware of the nature of the property i.e. whether the
commodity is a perishable item. Also the commodity being pledged should
be easily saleable, so that in case of default of client, bank can easily sell
it in the market.
2. Client:
In case of pledge, godowns are in the premises of the clients under the
custody of Macadam’s, whose honesty can be brought at any time.
Therefore greater risk is imposed by the client. So the bank must be
satisfied with the honesty and credibility of the client.
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3. Market Awareness:
A banker must have market awareness e.g. fluctuation in prices. Such
commodities should not be pledged that might have low demand in market
and have many risks attached to it.
4. Suitability of Godown:
Suitability of godown depends upon the nature of the commodity. Banker
must be fully satisfied with the appropriation of the Godown.
5. Proper Valuation:
Whenever goods are pledged, the banker should be aware of the true cost
of the product as the client always overvalues his product. Sales taxes,
excise duties are also paid on the finished goods.
6. Insurance:
The goods offered for security must be properly insured. Banker must
analyze all the associated risks of the goods. So, to cover these risks
banker should decide about the insurance of the commodity.
2. Mortgage:
In mortgage, immovable assets are offered as security. Mortgage means, to
surrender the proprietary rights of the property. The transferor of property is
called a mortgagor and the transferee (bank) is called a mortgagee.
Usually two types of Mortgages are being created in the bank for the purpose
of collateral.
1. Equitable Mortgage
2. Registered Mortgage
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When a mortgage deed is attached with the title documents only and is
deposited in the bank, it is known as “Equitable Mortgage” or “Mortgage
by deposit of title deed”. It is the most common form of the mortgage
created in bank.
Precautions:
1. Nature and value of the property:
The banker satisfy themselves that whether the property is suitable for
security purposes and in case of sale the bank will not suffer any loss. For
this purpose, the bankers inspect the property and properly visit report is
prepared. Also the bankers hire the services of different valuators to
assess the right value of the property.
2. Investigation of Title:
The banker must be satisfied that his borrower has a good title to the
property. The bankers, therefore, conduct a proper investigation into the
borrower’s title to the property, through their own legal advisors.
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the registrar indicating that no lien or charge has been created on property
being mortgaged, upto a specific date.
After a banker is satisfied with the property offered for security, mortgage
against his property is created through “Mortgage Deed”. For this purpose,
the original title documents are deposited in the bank with the mortgage
deed. Along with the title documents of property, the bank requires:
Memorandum of Deposit of the Title Deed
Agreement to create Mortgage
General Power of Attorney (Registered)
3. Hypothecation:
When an immovable property is offered for security against credit but both
the ownership and possession is left with the borrower, the goods are said
to be “Hypothecated”. Securities like machinery, stock etc. are offered for
hypothecation. Lending against hypothecation of goods is very risky. The
control of bank is weak so greater risk is involved in hypothecation.
In case of hypothecation
a) The banker reserves the right to inspect the goods hypothecated to
him and can ask for periodic stock reports, where necessary.
b) The banker, for his protection, may ask the borrower to insure. The
banker may himself do so and recover the expenses from the
borrower.
c) The banker may ask the borrower to maintain a balance of goods
sufficient to fulfill the margin requirements.
For the creation of hypothecation, the bank gets the letter of hypothecation
signed by the client. This deed is got registered in case of both public and
private limited companies, with the Registrar of Companies (SECP).
4. Charge:
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Charge means the legal right on the assets of the person (company). In
case of limited companies, banks generally create their charge on the
assets of the company, as security. The charge is registered with the
Registrar of the companies (SECP).
Charge is of many types:
a. First Charge
b. Second Charge
c. Pari Passu Charge
a) First Charge:
The bank who has the first charge means that it has the first right on the
assets of the company in case of liquidation. If other banks also have
charge against that asset then they have second charge after the first one.
b) Second Charge:
Second charge means that the bank has the second right on the assets of
the company, and then afterwards third charge, fourth charge and so on
have the right.
5. Lien on Documents:
Like charge, bank creates its lien on the documents in its possession, as
security. For example, in case of import transaction under L/C, bank
creates lien on import documents.
6. Guarantees:
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Along with other securities, bank may rely on other guarantees like other
bank guarantees, to protect himself against the advances.
Processing of Loan
The banker must be very careful and ensure that his depositor’s money is
advanced to safe hands where risk of loss does not exist. When a
customer requests his banker to facilitate him with different credit facilities,
the banker first assess the credibility of customer and the market
conditions.
The elements of credibility, integrity, repayment, and market conditions
help a banker in arriving at a conclusion regarding the safety of advances.
Credibility:
It is the most important factor in determining the safety of advances, for there
is no substitute for integrity, honesty and trustworthiness. A borrower’s
character can indicate his intention to repay the advance, since his honesty
and integrity is of primary importance. If the past record of the borrower
shows that his integrity has been questionable then the banker usually tries to
avoid such a customer.
Repayment:
This is the management ability factor, which tells how successful a business
has been in the past, and what are the future possibilities are. Before
advancing loan a banker must be satisfied with the sources of the repayment
of the funds.
Capital:
The bankers also check the capital of the borrower. This can be kept as a
security of a loan. In other words, if the businessman financial Position is
sound, only then he can be lended.
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CIB Report:
Bank cannot sanction any loan to a customer, until and unless it gets credit
report form CIB (Credit Information Bureau, SBP). Before making any
decision about the client, bank needs a CIB report. Therefore, first of all the
bankers requests CIB to provide the credit report of the client. This report
indicates all the credit facilities outstanding (availed) by the client.
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Reciprocal business is also stipulated on the proposal, which means
expected business that would be routed through the bank for these
facilities. Bank calculates his profitability on the basis of this business.
FOREIGN EXCHANGE
DEPARTMENT
“The transfer of credits to a foreign country to settle debts or accounts between
resident of home country and those of the foreign country” or “the foreign bills
currencies etc used to settle such accounts”.
Foreign exchanged department deals within exports and imports. The bank acts
as exporter as well as importer bank for different parties who are in the business
of export and import.
Import
All goods and services brought into a country that were purchased from
Export
All goods and services sent from one country to another country.
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Bill of lading
Packing list
Total quantity
Net weight / carton
Gross weight / carton
Total net weight / carton
Total gross weight
Bill of exchange (original or draft)
E-form: Initial document on which total export proceeding is based. In this
form, all the conditions are given, which are necessary for exports.
Letter of credit: It is written agreement between importer and exporter.
Beneficiary certificate.
DHL certificate (TCS certificate)
Form ‘M’
Certificate of Origin (Form – A)
FORM-E
Government has provided facility to exporter in taking E-Form from any bank and
he can present it to any bank for negotiation. Export precede realization
certificate.
SBP gives rebate to exporter against export after realization. It is paid according
to commodity wise and bill wise. Claim period: 1 year.
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CIF (cost insurance and freight) when insurance is done by exporter, CIF
is used.
Tenor (At sight) immediate payment by importer after receiving product.
Partial shipment: Product is sent partially.
Transshipment: Product is sent via any country.
E-FORM CERTIFICATION
When export is done on C&F basis, so bank issues E-form certification to
exporter and he submits it to the custom officer along with e-form certification to
certify e-form.
CERTIFICATE OF ORIGIN
This certificate shows that goods are from Pakistan.
COVERING SCHEDULE
If in covering schedule, it is given that “please remit proceed to our Karachi office
a/c no. 5740734881 with ABN (Amro Bank New York), USA for onward credit to
BAF Islamabad.
BENEFICIARY CERTIFICATE
If L/C requires some information as proof of anything from exporter then exporter
has to present beneficiary certificate for that proof.
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E-FORM
E-form has four copies:
One for custom officer
One for exporter
Triplicate copy for SBP
Duplicate copy for bank
Bank reporting or duplicate and triplicate is done by bank. Custom officer (date is
given on the foot form) should clear product.
BILL OF LADING
Certificate from shipping company for loading commodities. If requirement of L/C
is to issue bill of lading in favor of L/C opening bank, then authorized dealer
certificate will be provided by bank in favor of L/C opening bank.
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E-form
IMPORTS
L/C is opened by the importer. There are two types of L/C
Revocable L/C
Irrevocable L/C
NECESSARY REQUIREMENT
If place of issue and port of loading is different on bill of lading, then along with
the stamp of shipment on board, vessel name and port of shipment is written.
1) Issue date of bill of lading – shipment on board.
2) There should not be cutting on bill of lading without authentication.
3) Bill of lading should show capacity of agent. If the agent of Importer
Company can take bill of lading, then his name should be mentioned
on bill of lading.
4) Original GSP should be presented.
5) If TT reimbursement is not acceptable, it means bill of lading is
necessary.
When documents are received fro export, do enter into lodgment
register.
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o Verification of signature by S.S. Card
o L/C issued on basis of L/C application form.
o Insurance if covered by buyer.
o Insurance cover note.
o Insurance policy.
DOCUMENTARY CREDIT
DC Department
Alfalah Bank has his full-fledged documentary credit department.
As a credit instrument and as a means of making as a payment the documentary
credit is an essential instrument for conducting word trade today. A documentary
credit represents a commitment bank to pay the seller of goods or services a
certain amount provided present stipulated documents evidencing the shipment
of the goods with prescribed period of time.
For the cases of imports or exports first the parties have to do upon a sale
contract regarding the term and condition of sale. One mode of payment is by
L/C, which is secured, and now a day mostly uses the business.
Letter of credit is under taking by opening bank (Importers bank the Exporters
bank (Negotiating bank) that it will make payment if documents are as per terms
of LC.
According to import policy, no import is valid with out import license, which is
issued by the chief controller of import, and export or we can say export
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promotion bureau (EPB). If a person desires to take up import trade must get his
name, his firm or his limited company, registered with the EPB. On being granted
registration certificate, he will be eligible to import goods according to import
policy. There is no special condition of eligibility for registration. The only
requirement is that he should be a Pakistani and must be registered with income
tax department.
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Document Required for “LC” Opening
When the bank opens LC, it requires following documents.
Valid import license
Performa invoice
Importer should be Pakistani
Letter of under taking form importer
Insurance cover.
An important point, which the bank will consider before opening of LC, is that
sufficient funds be available in the LC openers accounts. At the time of
establishing the LC the opening bank generally retains a maximum margin to
safe guard its own commitment. The margin may vary from nil to 100% according
to the nature of commodities and it also depends upon the party. At the item of
establishing the LC opening bank charges bank commission, postage and other
charges from the LC opener account. Another main important point is that value
of LC should not increase the value of import license. After all the documents are
the bank verifies being checked and signs. A sanction slip is attached with each
form so that the approval can be gained from the manager of the bank.
After the approval is made four copies are prepared and the entries are made on
the computer and the printout is taken the margin amount is checked from the
importer account and if the amount is not found then LC is not opened and the
party is informed about the situation. On the deposit of the margin then LC is
opened LC limit if set by the bank is also checked.
After the LC is opened following entries are made.
LC opening register
Margin / Liability Account Register.
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Payment To Seller
The negotiating bank upon receiving the documents from the seller checks the
documents according to terms and conditions of credit upon satisfying it self of
this the negotiating bank makes payment to the seller if sight credit. It then
forwards the documents to the opening bank and reimburses it self through the
opening banks account with itself.
Competitors
Despite notable economic uncertainties, the financial strength of Bank Alfalah
Limited has greatly enhanced during the previous years. The successful
expansion program proved their capability and commitment in comparison with
the competition in the financial sector. The Banking structure in Pakistan
comprises of:
Central Bank
Commercial Banks
Investment Banks
Development finance Institutions
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Specialized Banks
Foreign Banks
Bank Alfalah is a private commercial bank so the major competitors of Bank
Alfalah are the following:
• HBL
• UBL
• Askri Bank
• Standard Charted
• RBS
• Muslim Commercial Bank
• The bank of Punjab
• My Bank Ltd
• Bank Al-Habib Ltd
• ABL
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SWOT ANALYSIS
BAL is one of the fastest growing banks in Pakistan. In the light of these
situations we can make an analysis.
Strengths:
Bank is in its growing stages so there is good financial position.
Professional and Committed workforce
Good customer service
Increasing the number of branches in the country
Online Banking
Well experienced and quality staff
Fully computerized Network
Each department in the bank is fully allowed to take adequate decisions of
its own, saving the time and help in achieving the objectives
Weaknesses:
Although the bank is growing fastly but it has some weaknesses which it should
remove to make itself further strong.
The staff is not satisfied with the salary structure
Gives its staff less benefits
Opportunities:
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Growing market
Threats:
Uncertain economic conditions
Action taken by competitors
Political Instability
Good Image:
Bank Alfalah has the benefit of having better reputation and image because of
having the strength of Abu Dhabi consortium and under the leadership of His
Highness Sheikh Nayan Mabarak Al-Nahayan. People feel lesser risk for
investing their money with the bank.
Coordination:
Meetings are held very frequently which keeps the head-office well informed
about the performance of its branches and also provides officials with the
opportunity to communicate, discuss and deals with different situations as
they arise.
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Employee Behavior:
The employees of Bank Alfalah Limited are very committed to their work.
They are very hard working and punctual but some of them have problems
with he environment of the bank and they feel that the branch environment is
not very encouraging.
I observed during internship period and met with other Internees, all were not
satisfied, they said the behavior of employees with internees, is not satisfactory
and they take too much work from internees so due to that internees not take
too much interest in their work.
I observed the bank Alfalah a financially sound bank. Its profits are increasingly
year-by-year. Its staff is very good and sincere with the bank. Bank Alfalah under
the leadership of Sheik Nahayan has made significant progress in building and
strengthening both the corporate and retail banking sectors in Pakistan.
Bank Alfalah views specialization and service excellence as the cornerstone of
its strategy. The people at bank realize that innovation; creativity, reliability,
customized, services and their execution are they key ingredients for their future
growth.
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Recommendations
For internees:
I recommend that the staff should behave well with internees and share their
experience with them, create interest and encourage them so that internees can
learn easily.
Misdistribution of work:
In Bank Alfalah, there is misdistribution of work; some people are over burdened
with the work and they are not happy with that. So I suggest that there should be
fair distribution of work in all the departments and use job rotation technique for
better performance of the employees.
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