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Internship Report On

Allied Bank of Pakistan

Internship report submitted to the National Universty of Modern

Languages and Sciences to full fill the requirements of


Faisal Pervaiz Raja

MBA (Finance)

SESSION: 2007-2009


In the Name of

Most Merciful and Compassionate the Most Gracious and

Beneficent whose help and guidance I always
Solicit at every step, at every moment.

Faculty of Management Sciences

It is hereby certified that the report has been thoroughly and carefully
read and recommended to the Faculty of Management Sciences for
acceptance of Final Internship Report. by Faisal Pervaiz Raja, Roll No.
8341, (Jan 2007 to Dec 2009) Mor, in partial fulfillment of the
requirements for the degree of Master of Business Administration of
National University of Modern Languages Islamabad.

Dated: Feb 27, 2010

Supervisor Name: _________________________

Supervisor Signature: __________________________

Panel Member Name: ___________________________

Panel Member Signature: ___________________________

Head of Department: ______________________________


All praise to Almighty Allah, the most merciful and compassionate, who give me
skills and abilities to complete this report successfully

I am grateful to my parents who are always been a source of encouragement for me

throughout my life and from start to the end of this report

I am greatful to all my staff members so Allied Bank Of Pakistan Limited Tench

Bazaar branch Rawalpindi.

I found every one very co-operative and helpful for providing me the Theoretical as
well as practical knowledge about the function and operation of the bank.

I express my greatest gratitude to my kindhearted Supervisor MISS AFSHEEN who

was the Person who made me able to write this report, His enthusiasm shows the way
forward to me to achieve this success and who kept me in high spirit through his
appreciation. He helped me a lot each time I went up to him.


I would like to dedicate this


to my beloved and caring parents,

and to my teachers with

the support of whom I

am standing at this step of

my life stairs.


This documents provided details of my achievements in term of practical

implementation and understanding of working environment in banks. ALLIED
BANK is almost the leading commercial banks in the country and has always played
pioneering role in introducing innovative. technology based banking services.

Allied bank limitedwas the first bank to be established in started out in
Lshore by the name Australasia bank before independence in 1942, waas renamed
Allied bank of Pakistan ltd 1974 and then Allied bank ltd in 2005.

. My Internship at Allied Bank Limited tench bhatta Branch started from 2oth dec
2009 to 31jan 2010. During my stay at the bank I learnt a lot as the practical
knowledge of the banking sector is concerned. I was rotated in different departments
including clearing, online transfer, and customers’ services foreign exchange and
advances departments

. I learnt the basics of operations performed in each department. I undertook some

assignments that helped me apply the learnt techniques. I faced some problems during
this course, but I got full attention from the concerned persons and they always
encouraged me for asking any kind of question that rose during the course of my

I have been sending the reports of my progress on weekly basis to my internship

advisor. On the last day, the manager gave his comments and evaluation of my work
on the prescribed form provided by the institute and also certificate of internship.



DEDICATION .................................ERROR! BOOKMARK NOT DEFINED.
1 INTRODUCTION ....................................................................................... 1
1.1 PURPOSE OF STUDY................................................................................ 2
1.2 INFORMATION ABOUT THE ORGANIZATION.................................... 6
1.2.1 VISION........................................................................................................ 6
1.2.2 MISSOIN..................................................................................................... 6
1.2.3 VALUES...................................................................................................... 7
1.2.4 MAIN OBJECTIVE ................................................................................... 7
1.2.5 SERVICES/PRODUCTS OF ALLIED BANK LTD................................. 7
1.3 DEPARTMENT INFORMATION ............................................................. 13
1.3.1 CURRENT SAVING DEPARTMENT ............................................... 13
1.3.2 ACCOUNT DEPARTMENT............................................................... 14
1.3.3 ADVANCES DEPARTMENT............................................................. 14
2.1 SWOT ANALYSIS ..................................................................................... 18
2.1.1 STRENGTHS....................................................................................... 18
2.1.2 WEAKNESSES.................................................................................... 18
2.1.3 OPPORTUNITIES............................................................................... 21
2.1.4 THREATS ............................................................................................ 21
2.2 PEST ANALYSIS:-..................................................................................... 22
2.2.1 POLITICAL......................................................................................... 22
2.2.2 ECONOMICAL ................................................................................... 22
2.2.3 SOCIAL................................................................................................ 22
2.2.4 TECHNOLOGY .................................................................................. 23
3.1 INTERNSHIP EXPERIENCE ................................................................... 24
3.2 CONCERN DEPARTMENT , DUTIES & LEARNING .......................... 25
4.1 VERTICAL ANALYSIS ............................................................................ 32
4.2 HORIZONTAL ANALYSIS ...................................................................... 33
4.3 RATIO ANALYSIS .................................................................................... 34

5.1 RECOMENDATION................................................................................... 41
5.2 CONCULSIONS ......................................................................................... 42
ANNEXURE:......................................................................................................... 48

Chapter – I


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The study is about the general operations and management of Allied Bank

Every student of MBA has to under go an internship program of SIX weeks in any
organization to get exposure to the real time business environment and to know what sort
of changes Information Technology brings in management activities.. The real purpose of
this internship program is to provide an opportunity to the students to see the practical
applications of their background professional studies.

The repot is a reflection on my experience when I was internee in ABL, . Since its
inception in 1942, ABL has maintained a steady growth over the sixty years span of its
operations. After its nationalization in 1974, it was denationalized in 1991 and the
employees became the owners of ABL, through the unique concept of ESOP (Employees
Stock Ownership Scheme).


Purpose of the study was two pronged.

General Purpose
• To get acquaintance to the banking operations.
• To know what sort of changes IT brings in managerial activities.
• To see the application of our Professional studies especially.

Specific Purpose
Specific purpose of the study includes.
• A partial fulfillment as a requirement for the completion of degree.
• To objectively observe the operations of Allied Bank of Ltd in general and the
operations of ABL, Tench Bazaar branch Rawalpindi in specific.
• To make recommendations or implementation plans for the improvement of the
operations of ABL, Tench Bazaar branch Rawalpindi in the light of our
professional studies.


The study is critical in nature. It was conducted to investigate critically into the
operations of Allied Bank Ltd and it also explains that how ABL provides facility of
online banking to its customers. The annual reports or the consolidation data of the Bank
has not been focused in specific because it does not reflect on the operational
performance of branches. However, they have been referred to as when and where

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The study covers two areas with its variables, which affects the operations of the
branch directly, or indirectly. These two areas of variables are:

• Branch specific variable.

• Bank specific variable.

The branch specific variables are the variables under the control of the branch
management and directly affect its operations e.g.

• Layout of the branch.

• Customers’ relations.
• Departments in the branch
• Online banking.

The bank specific variables are those variables, which are not in control of the branch
management e.g.

• History of ABL
• Services provided by ABL
• Role of ABL


Established in December 1942 as the Australasia Bank at Lahore with a paid-up

share capital of PKR 0.12 million under the Chairmanship of Khawaja Bashir Bux, and
his business associates, including Abdul Rahman Malik who was amongst the original
Board of Directors, the bank had attracted deposits, equivalent to PKR 0.431 million in
its first eighteen months of business.
Total assets then amounted to PKR 0.572 million. Today Allied Bank's paid up Capital &
Reserves amount to Rs. 10.5 billion, deposit exceeded Rs. 143 billion and total assets
equal Rs. 170 billion. The Allied Bank's story is one of dedication, commitment to
professionalism, adaptation to changing environmental challenges resulting into all round
growth and stability, envied and aspired by many.

1942 - 1947: Pre Independence

In the early 1940s the Muslim community was beginning to realize the need for
the active participation in the field of trade and industry. The Hindus had since the late

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1880s established a commanding presence in these areas and industry, trade and
commerce in the undivided Sub-continent was completely dominated by them. Banking,
in particular, was an exclusive enclave of the Hindus and it was widely believed, and
wrongly so, that Muslims were temperamentally unsuited for this profession.

It was particularly galling for Khawaja Bashir Bux and Abdul Rahman Malik to hear the
gibe that Muslims could not be successful bankers. They decided to respond to the
challenge and took lead in establishing this first Muslim bank on the soil of Punjab that
was to become Pakistan in December 1942; by the name of Australasia Bank Limited.
The initial equity of the Bank amounted to Rs 0.12 million, which was raised to Rs 0.5
million by the end of first full year of operation, and by the end of 30th June 1947 capital
increased to Rs. 0.673 million and deposits raised to Rs 7.728 million.

1947 to 1974: Australasia Bank

Australasia Bank was the only fully functional Muslim Bank on Pakistan territory
on August the 14th, 1947.

It had been severely hit by the riots in East Punjab. The bank was identified with the
Pakistan Movement. At the time of independence all the branches in India, (Amritsar,
Batala, Jalandhar, Ludhaina, Delhi and Angra (Agra)) were closed down. New Branches
were opened in Karachi, Rawalpindi, Rawalpindi, Sialkot, Sargodha, Jhang, Gujranwala
and Kasur. Later it network spread to Multan & Quetta.
The Bank financed trade in cloth and food grains and thus played an important role in
maintaining consumer supplies during riot affected early months of 1948. Despite the
difficult conditions prevailing and the substantial set back in the Bank’s business in India,
Australasia Bank made a profit of Rs 50,000 during 1947-48.

By the end of 1970 it had 101 branches. Unfortunately it lost 51 branches in the
separation of East Pakistan which became Bengladesh. The bank did well in despite
losing lot of its assets. By the end of 1973 the bank had 186 branches in West Pakistan.

1974 to 1991: Allied Bank

I 1974, the Board of Directors of Australasia Bank was dissolved and the bank was
renamed as Allied Bank. The first year was highly successful one: profit exceeded the Rs
10 million mark; deposits rose by over 50 percent and approached Rs 1460 million.
Investments rose by 72 percent and advances exceeded Rs 1080 million for the first time
in bank history. 116 new branches were opened during 1974 and the Bank started
participation in the spot procurement agriculture program of the Government. Those
seventeen years of the Bank saw a rapid growth. Branches increased from 353 in 1974 to
748 in 1991. Deposits rose from Rs 1.46 billion, and Advances and investments from Rs
1.34 billion to Rs 22 billion during this period. It also opened three branches in the UK.

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ESOP Revolution

(Employee stock ownership plan)

Under the philosophy of ESOP ownership of an enterprise is transferred to its

employees who are in an advantageous position in running the enterprise. The added
advantage of ESOP that it strengthens the workers stake in the free enterprise system, in
job securities, better profitability & unique corporate culture symbolizing family feelings
& professional fraternity.

September 10,1991 is the historical date as on this date the bank became the country’s 1st
bank to be reconstituted as an institution jointly owned by its employees through the
unique concept of Employees Stock Ownership plan [ESOP] developed by the Allied
Management Group headed by Mr. Khalid Latif enabled the bank staff to react creatively
to the privatization challenge. More that 7500 staff members acquired a share in the bank
. The articulation of the ESOP is a landmark in the financial history of Pakistan-indeed of
the entire world .It is a practical step ensuring an increase in workers participation and in
productivity a means for enhancing an equitable redistribution of financial assets & an
effective strategy for achieving the cherished goal of national self-reliance.

1991 to 2004: Privatization

As a result of privatization in September 1991, Allied Bank entered in a new

phase of its history, as the world’s first bank to be owned and managed by its employees.
In 1993 the First Allied Bank Modaraba (FABM) was floated.

After privatization, Allied Bank registered an unprecedented growth to become one of the
premier financial institutions of Pakistan. Allied Bank’s capital and reserves were Rs.
1.525 (Billion) and assets amounted to Rs. 87.536 (Billion) and deposits were Rs. 76.038
(Billion). Allied Bank enjoyed an enviable position in the financial sector of Pakistan and
was recognized as one of the best amongst the major banks of the country.

In August 2004 as a result of capital reconstruction, the Bank’s ownership was

transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group.

Today the Bank stands on a solid foundation of over 63 years of its existence having a
strong equity, assets and deposits base offering universal banking services with higher
focus on retail banking. The bank has the largest network of on-line branches in Pakistan
and offers various technology based products and services to its diversified clientele
through its network of more than 700 branches.


In May 2005 Ibrahim Leasing Limited was amalgamated by transfer to and vested
in with and into Allied Bank Limited. ILL shareholders were issued ABL shares in lieu of
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the ILL shares held by them. Application for the listing of ABL shares in all the Stock
Exchange Companies of Pakistan was made. ABL was formally listed and trading of the
shares of the Bank commenced w.e.f. the following dates.

• Islamabad Stock Exchange - 8th August 2005

• Lahore Stock Exchange - 10th August 2005
• Karachi Stock Exchange - 17th August 2005

Mohammad Aftab Manzoor has taken charge as CEO and President of the Bank
on August 13 2007. He is an ex-president of MCB Bank Ltd.


Today, with its existence of over 60 years, the Bank has built itself a foundation
with a strong equity, assets and deposit base. It offers universal banking services, while
placing major emphasis on retail banking. The Bank also has the largest network of over
700 online branches in Pakistan and offers various technology-based products and
services to its diverse clientele


ABL is one of the largest banks in Pakistan, serving the Country for over 60 years
in all spheres at banking and financial Services

1.2.1 VISION

To become a dynamic and efficient bank providing integrated solutions and the first
choice of bank for all customers.


• To provide value-added services to our customers

• To provide high-tech innovative solutions to meet customer requirements
• To create sustainable value through growth, efficiency and diversity for all
• To provide a challenging work environment, and reward dedicated team members
• To play a proactive role in contributing towards the society

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1.2.3 VALUES

• Integrity
• Excellence in Service
• High Performance
• Innovation and Growth

ABL has emerged as one of the foremost-privatized financial institutions in Pakistan

endeavoring to gear up its operations to meet the demands of the future.


The main objective of the bank is to accept deposits and provide loans to its
customers and also to be more efficient in providing services. The bank maintained its
commitment to most efficient and personalized services to its customers. Allied Bank of
Pakistan introduces many remunerative schemes for its depositors and introduce
computer services for the first time in the banking history of Pakistan. Allied bank gives
advances to small, medium and Big industries, commercial establishment, agriculture,
construction companies and other needy persons.
Allied bank collects electricity gas and telephone bills from public and over hundred
branches of Allied Bank Ltd. deal in foreign exchange were facilities are given to
financial and commercial so its ultimate objective is to receive funds from the depositors
and provides loans\credit facilities to different sector including trade, industry and
agriculture in its most branches.


All-Time Banking

Allied Bank has introduced the Allied Cash last year also referred to as ATM
card. The customer will now have the convenience of withdrawing cash from any of
ABL’s ATMs (Auto Taller Machine) conveniently located in major cities at any time of
the day or night even on closed days/holidays. Other services include customer being able
to inquire about the balance of his/her account or printing an abbreviated (mini) statement
showing the most recent eight transactions up to the previous working day.

In order to obtain Allied Cash+ Card, the customers simply have to fill out prescribed
Application form available at selected Allied Bank Branches in Karachi and Lahore. The
dully-filled form should be handed over the Manager of the Branch where the customer is
maintaining his account. Non-account holders would first have to open an account with
Allied Bank to have access to this facility. The Customer can feel absolutely safe his
Allied Cash + Card because it can only be used with the Personal identification Number
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(PIN), which is given to him by the bank. Graphical representations have been employed,
where appropriate, for ease of understanding.
This topic is further explained in chapter 4.

Allied Umrah Aasan

This unique scheme facilities those persons, who cannot afford to incur the lump
sum expenses for Umrah. It allows the intending pilgrims (Aazmeen) to make payment of
Umrah charges in monthly installments. Its salient features are:

• It is free of interest and markup.

• Using this scheme family, relatives and household servants can be sent for
• Around 2500 Aazmeen are to be sent for Umrah every month.
• Lucky winners of the draw are duly informed by their respective branches.
• Total package for Aazmeen from Karachi is being Rs. 45,000. Aazmeen from
Lahore and Islamabad will have to pay an extra Rs. 3,000/- for Airline fare.
• Umrah packages are of 10 days duration. The charges include Airline return
• Fee Visa, family accommodation and traveling within Saudi Arabia (Jeddah to
Makka, Makka to Madina and Median to Jeddah).
• Application for whole Family/Group can be filed through a single Application
Form. All applicants of a family/group are sent for Umrah even if only one
member of that family/group is declared successful in the draw.
• Due to any reason if Umrah Applicant needs to withdraw his/her application,
he/she will given a refund of all money deposited through installments till that
• At the time of submitting the application Aazmeen has to deposit Rs. 2,000 per
person as first installment. Rest of the money is to be deposited through monthly
installments of Rs. 2,000/- person on every 5th day of the month.
• If an Applicant wins in the draw he/she is required to pay the balance amount
through monthly installments on returning from Umrah.
• Aazmeen have to submit a copy of their NI Cards and Passports with the
• Applicants have to deposit the monthly installment using deposit slips still 5th of
every month. Defaulters will not be included in the draw.

Master Cards

The customer can now become the holder of a true Credit Card here in Pakistan.
Allied Bank under license from Master Card International, U.S.A. issues its Master Card
to anyone meeting the eligibility criteria. With the Allied Bank Master Card the customer
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is assured of a service meeting the highest international standards maintained by Master

The Allied Bank Master Card helps the customer pay without the complications of cash
or checks. It doesn’t cost the customer anything if he pays in full within the due date, but
if he decides to spread the payments over several months a service charge @ 2.50% per
month is charged. Allied Bank – Master Card is safer than cash and simpler than checks.

The customer has been an account holder with the Allied Bank to apply for the Allied
Bank – Master Card that is available to the customer for an initial fee of Rs. 2,000/- (Rs.
500/- membership fee + Rs. 1,500/- annual fee). Once the customer obtains his card, he
simply presents it at Shops, Supermarkets, Hotels, Pharmacies, Nursing Homes,
restaurants, Petrol Pumps and hundreds of other establishments which display the
familiar Master Card sign throughout Pakistan and abroad.

Once purchases are made, the customer signs a voucher and that’s it he is not required to
take extra troubles. Every month the customer receives a statement showing details of
transactions, outstanding and the minimum amount due. The statements also give the last
date for payment so the customer can avoid paying service charges.

In order to avoid disruption in use of the card, it is essential that a least minimum payable
amount of the bill be paid regularly. In case the required payment is not received the
operation of the Master Card is automatically, suspended by the system. In such case, the
card is activated after receipt of overdue payment only.

Allied Tahafuz Deposit Scheme

Brings the customer unparalleled life insurance covers along with attractive
monthly profit. Minimum Deposit amount – Rs. 50,000/- or multiples thereof. Insurance
cover up to - Rs. 5,000,000/. As Competitive rate profit. The features of this scheme are:

• Prospective client who will maintain a return free deposit for at least 3 months
shall eligible to avail interest free/mark-up free finance.
• Payment of profit on monthly basis, automatic renewal on face value.
• Life insurance up to 5 times of the customer’s deposit amount with no extra cost.
• Premium shall be paid by the bank.
• Full payment of claim in case of – Death – Permanent total Disability.
• Eligibility Age – 18 to 64 years.
• No medical examination for:

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Allied Karzas Scheme (No Interest/Markup)

Allied Bank moves a step forwards by introducing interest free banking through Allied
Karzas Scheme. The aim of this scheme is to provide an opportunity to the depositors to
take advantage of a real Riba Free economic environment and avail

• Prospective client will maintain a return free deposit for at least 3 months shall be
eligible to avail interest free/mark-up free finance.
• Deposit amount Rs. 100,000/- and multiples thereof.
• Minimum deposit period, 3 months with automatic rollover facility.
• Premature encashment allowed, without any penalty/charge.
• Minimum deposit period for eligibility of finance, 3 months.
• Maximum period of finance, 6 months.
• Maximum period to avail finance, 12 months from the maturity of deposit.
• Every month (30 days) completed by the deposit shall be taken into account for
calculation of entitlement of finance.
• Finance proposal processing fee Rs. 100/- (non-refundable) plus documentation
cost on actual basis.
• In case of default/delay in repayment @ 0.055% per day (20.075% p.a._ to be
placed in charity A/C.
• Formula for calculation of entitlement of finance.
- Same amount of finance for half the period of deposit or
- Same period of finance for half the amount of deposit.

Other Products

Home Remittances

The Bank having a network of 755 branches all over Pakistan, undertakes to
provide safe and instant payment of remittance from expatriates, routed through
designated foreign exchange companies and correspondent banks with whom special
arrangements have been made in this regard. Through the Allied Express Services, ABL

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ensures that beneficiaries’ Accounts in ABL branches are credited with in 48 hours of
receiving home remittance information from overseas.

Hajj Services

The Bank serves the intending pilgrims by helping them in performing this
religious obligation. The Hajj forms and other related services are provided by the bank.
However, the terms and conditions for accepting the Hajj forms from intending pilgrims
are in accordance with the Hajj Policy announced by the government, each year. Hajj
applications are available with all branches during Hajj season, immediately after the
Hajj policy is announced by the Government of Pakistan.

Utility Bills

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

Agricultural Finances

Bank under Agricultural Financing Schemes envisaged by he State Bank of

Pakistan extend short, medium and long term, farm and non-farm credits. The farm
credits are extended for production (inputs) and development purposes. Non-farm credits
are allowed for livestock (goats, sheep and cattle), poultry, factory including social
forestry and fisheries (inland and marine excluding deep sea fishing).


Allied Bank Lockers are available in three different sizes Small, Medium and
Large on a yearly fee. Locker holders need not have an account in the Bank.

Import Export Business/Trade Finance

ABL Provides highly efficient trade finance services for import/export business
for our clients/customers through large number of authorized branches where trained and
motivated staff is available to handle the business on behalf of customer.

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Allied Bank Rupee Travelers Checks

Carrying cash to strange alien location can prove to be risky as a single incident
can render one without monetary backup of any sort. Hence banks introduce traveler’s
checks in order to protect against any contingency.

Seasonal Finance

v Running Finance is a short-term loan allowed by the bank for a period of one
year. The running finance account can be operated and daily sale proceeds can be
deposited into the account. The markup is recovered on the products of daily
outstanding balance. The running finance is suitable for meeting day-to-day
financial needs of the business.
v Cash Finance is allowed against pledge of goods. The delivery of goods is made
against payment.
v Demand Finance is disbursed in lump sum or in accordance with the agreed
disbursements schedule and it is repayable as per the agreed installments, which
could be monthly, quarterly, biannual or annual.

Data Sources
Both primary and secondary have been used in the compilation of this report. The
methodology used is as under:

During the compilation of this report, I relied mainly on the primary data. The tools used
for the collection of primary data are interviews and observation. To get primary data I
also performed some practical work. The secondary data was mainly used for as a
background material and for purpose of references. The major sources of secondary data
were the annual report 2007; other printed material of the Bank and internet played a vital
role as a source of secondary data.

Research Approaches
Keeping in view my limitations during and the nature of the study, two research
approaches were adopted. These research approaches are:

• Survey.
• Observation as.

Ø Participant observation and

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Ø Non-participant observation.
Sampling Plan
Details of the sampling plan used during this report are given below.

Sampling Unit
The sampling unit constitutes of the following.

• Manager of ABL Tench Bazaar branch.

• Staff of ABL Tench Bazaar branch.
• Customers.
• Personnel from Regional operations department.
• ATM coordinator

Sample Size
The sampling size constituted of

• All the customers coming into the Bank.

• Five bank managers.
• Fifteen staff members.
• Two personnel from operation department.
• Three ATM coordinator of different branches

Sampling Procedures
The sampling procedure used was non-probability judgmental and convenience

Contact Method
Personal contact method was used as a contact method, which included:

• Structured interviews with managers and personnel from operations department.

• Unstructured interviews with staff members.
• Structured interviews with stuff related to ATM



In ABL Tench bazaar Branch current saving department mainly deals with
cheques, vouchers and advices. First of all a cheque holder have to present his/her cheque
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to the person responsible for issuing the tokens. . Then cheque is passed on to the
computer operator to entry it in computer. Afterward it will go for signature verification
after which it will be given to cashier for payment.


Deposits the Life Blood of a Bank

Bank borrowing funds from outside parties is more important because the entire
banking system is based on it. Receiving of deposits is a basic function of all commercial
banks. Commercial banks do not receive these deposited for safekeeping purpose only.
When the bank receives the amount of deposited as a depositor, it become the owner of it.
The bank may therefore use these deposits, as it deems appropriate. But there is an
implicit agreement that the amount owned by the bank will be paid back to the depositors
on demand or after a specified period of time.

The borrowed capital of the bank is than the bank own capital. Bank’s borrowing
is mostly in the form of deposits. These deposits are lend-out to different parties. Larger
the difference between the rate at which these deposits are borrowed and the rate at which
they lend-out the greater will be the profit margin of the bank. Larger the funds lend-out
the greater will be the return earned on them and greater the amount of return on these
deposits earned greater will be the profit for the bank. It is because of this interrelated
relationship. Deposits are referred to as the “life blood small” for any banking sector.



The basis function of the bank is to accept deposit and lend money to the
borrowers against a spread so to be able to give some profit to the depositors as well as to
earn profit for the bank.

While lending the money to the borrowers the bank should observe the following lending

Function of Credit Department.

The main function of the credit department is to lend money to the customer.
Allied Bank Ltd. Lends money in the form of clean advances against promissory notes as
well as secured advances against tangible and marketable securities. Beside these ABL
also lend money against life policies and immovable property..

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Another important department in ABL Tench bazar Branch is Remittances

Department. The remittances department transfers the funds from one bank to other bank
and from one place to another place.

In remittances department the collection take place. The ABL made payment of only
open cheques on the counter and prohibits the payment of crossed cheques.ABL transfers
money from one place to another by the following means:


This is the most important and critical department in a Bank. There are two basic
functions performed by the cash department. These are




Like Pak rupees account the foreign currency has many accounts like
§ Saving account

§ Current account

§ Term deposit account.

The bank deal in three type of foreign currency account
1. Dollar
2. Euro
3. Pound


In clearing process, if the account holder of ABL receives the cheque of other
bank like City Bank, Habib Bank Limited etc, and he submits it in ABL branch to be
cashed. At the same time the clearing process starts. First the bank name. Cheque number
and the amount are written in the register. After this three kind of stamps are required

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first bank name stamp, secondly clearing stamp of next date and If the cheque is not local
then the inter city clearing stamp is required.

Some cheques are local and some are outstation. The institution N.I.F.T. provides the
services in clearing the cheque. They send the different cheque to different banks. The
N.I.F.T service is only in few cities, like Karachi, Lahore, Rawalpindi. The cheque of
inter city is send through N.I.F.T. And where, the N.I.F.T service is not available so the
cheque is sent through T.C.S.

The clearance of cheque is informed through advice. Some cheque is not passed so they
should return so Rs. 100 is deducted and if the cheque is inter city then the postage
charges is deducted. For this purpose the Debit & Credit voucher is used. When the
cheque is cleared the today stamp is required. Some cheque is drawn on ABL. This is
called outward clearing. These cheques will be entered in the outward clearing register.
And the advice is sent for the clearance of cheques. The account holder account is

Faisal Pervaiz-03315597157 16
Chapter – II



Faisal Pervaiz-03315597157 17

SWOT analysis is an acronym that stands for Strengths, Weaknesses, Opportunity and
Threats. This is a careful evaluation of an organization’s strengths to avail an opportunity
by overcoming its weaknesses and phasing out all he threats to its survival in order to
grow and survive.

2.1.1 Strengths
• This branch is provided with 3 fax machines, more than 7 telephone connections,
which makes communication easier with different branches
• The branch is linked through a online network of 755 BRANCHES, thus enabling
them to serve customer in better way.
• This branch is provided with latest computer which increases the speed of
computer work.
• The branch is situated in the commercial hub of Rawalpindi. This location
provides a competitive edge to the Branch.
• The branch is situated in commercial area were business activities perform
greater as compare to residential area. Thus it increases the number of customers.
• The Branch has the most experienced and the least experienced staff, which is a
good combination of experienced heads and exuberance of youth.
• The branch is the main branch in the areas, which is another plus point for the
• It holds the Hundi Accounts, where the payments are made through checks. This
process provides an opportunity to the Branch to have more of the Hundi
customers as the Bank customers.


• The Branch has a good staff combination on the basis of experience, but their
training capabilities are not up to the requirements of the fast changing banking
• The customer’s Long-term contacts are not maintained with customers.

Faisal Pervaiz-03315597157 18
• The technical training of the staff is negligible e.g. in case of the absence of
computer there is no alternate trained personal who can record the daily
• The organization is very much mechanistic and provides no flexibility to encourage
• The lower staff is non cooperative as compared the lower staff of other branches.
• The control of manager is not effective.
• The discretionary powers of manger are very low to offer more incentives and
value added services to its customers.
• There is a lack of commitment and professionalism on part of the employees. The
staff is always in a hurry to leave the bank as soon as possible. They were also
observed to starting their operations comparatively late.
• The organizational culture is not cooperative
• Nepotism was observed on part of the manger as well as the top management
towards some staff members.
• The branch has no industrial accounts.
• The level of technology management in the branch is very low. The technology
available is not maintained well mainly because of the lack of technically trained
staff. For instance the scanner, in spite of its availability has not been used for
scanning the specimen signature cares.
• In spite of the presence of technology many jobs are done manually such as the
letters, drafts for fax messages and other calculations, which could be easily, done
in MS Word and Ms Excel.
• The branch lacks some physical facilities such as clean washrooms which can
affect employee’s performance
• The layout of the branch is such that it is hindering the flow of work on one hand
and the documents are lying exposed which can be easily taken away by any person
entering the branch.

Faisal Pervaiz-03315597157 19
• The job distribution is not up to the mark. The immediate result of this immediate
result of which is:

Ø The filing system is not up-to-date. Much time is wasted while searching for
even a week old document.
Ø The staff spent ore time in collections than required.

• Delays were observed because the prescribed procedures are not followed.
• Though ABL, Tench Bazaar branch in the area it lack specialized counters or
facilities such as:

Ø Investment advisory counters;

Ø Leasing or leasing arrangements;
Ø Credit services.
• The four branches of Allied bank in Rawalpindi are closely located where most of
the services offered are not at all differentiated.
• No efforts are made to recover the outstanding debts.
• There is no facility for receiving and satisfying complaints and inviting
• Foreign currency accounts are not entertained. The main reason for these negative
responses that the staff is not trained in dealing foreign currency accounts.
• Customers’ coming to the Bank for TTs TCs etc. are not received with open hearts
and thus deprives the bank of revenues.
• Some shortcomings on part of Allied Bank of Pakistan, which affects the operations
of the bank Tench Bazaar branch:

Ø There is a lack of functional and proper research and development, which

could scan the micro and macro environmental data for future planning and

Faisal Pervaiz-03315597157 20
Ø Financial audits are conducted but operational audits have not received proper
attention as much as it should get.
Ø There is no procedure, which could encourage the middle and lower level
management to initiate creativity.

2.1.3 Opportunities

• The biggest opportunity for the ABL, Tench Bazaar branch Rawalpindi is the
greater number of Christine customers who get their payments through ABL,
Bank Tench Bazaar branch. These customers can be easily convinced to open
their accounts with ABL.
• A considerable portion of the labor force of the area is serving overseas. Their
families can be encouraged to use ABL as channel for remittances.
• The Internet facility in the area provides an opportunity to ABL to get Online.
• The Bank has the basic infrastructure, which can facilitate the online process.
• The location of the ABL, Tench Bazaar branch itself provides an opportunity to
ABL to get more and less cost deposits.
• The group from its survey and analysis of IT companies have found out that there
are many companies which are not satisfied with its current bank, so Tench
branch with its superior service quality and long working hours can capture those
2.1.4 Threats

• The biggest threat to the operational success of the branch is the better
competitor’s services. Many private sector banks are offering higher rates of return
to customers than Allied Bank of Pakistan.
• Cannibalization of profits is yet another threat to the success of Bank Tench Bazaar
branch. The branche of Allied Bank are located very close to the Soneri Bank
Tench Bazaar branch. All these branches are taking away each other’s customers.

Faisal Pervaiz-03315597157 21
• One of the biggest to the ABL, Tench Bazaar branch is the increasing rate of
dissatisfies customers. Most of these customers were observed to be dissatisfied
with the delays in their servicing.
• The greatest threats to the performance of ABL, Tench Bazaar branch are the
decreasing morale of employees. They feel that they are not provided with bonuses.
They are not given proper attention to have a say in the annual meetings. The proxy
forms are signed on their behalf without letting them know.
• High-pressure interest groups are developing which poses a constant threat to
Allied Bank.



Pakistan despite all international and public perceptions, today is a functioning

democracy and gradually there is a change in complexion and composition of
legislatures with more educated people and women (27% of National Assembly and
17% of Senate) entering into politics Similarly it helps in designing best strategies
to implement that could support the revival of bank industry. Like in the era of
nationalization banks had to suffer as other industries that’s why that impact is still
found in the performance of this industry.


Although banking sector development is important at the early stage of economic

growth, general liberalization presuming a homogeneous bank role may not
necessarily promote growth. The estimated cost structure indicates that state-owned
commercial banks are large enough, while development financial institutions and
private banks can expect to obtain cost-saving advantages by expanding their
operations. Since scope economies are significant, portfolio diversification generally
increases bank profits. In addition, privatized banks are the most efficient, followed by
foreign and private banks. Public banks are the least efficient.

2.2.3 SOCIAL

Banks always helped people in improvement of living condition of poor people in

various forms like giving loans to poor for starting business or directly providing them
the instruments that could enhance their living conditions. Similarly Allied Bank
always tried to provide the needy people loans on soft terms and also helped to
Faisal Pervaiz-03315597157 22
eradicate unemployment by providing job opportunities Recent high growth trends
coupled with enhanced spending on social and
005/2006 has together begun to pay some dividends as evident from the reversal
in poverty incidence trends and social indicators.


The Banking sector in Pakistan has experienced a rapid transformation. Just about
a decade back this sector was limited to the Sarkari (read nationalized) and co-
operative banks. Then came the multi-national banks, but these were confined to
serving an elite few. One could regard the past as the 'medieval ages' in the banking
industry, wherein every branch of the same bank acted as an independent
information silo and multi-channel banking (ATMs, Net banking, Tele-banking, etc)
was almost non-existent. Today banks have to look much beyond just providing a
multi-channel service platform for its customers. There are other pressing issues
that banks need to address in order to chalk-out a roadmap for the future. Here
are the top three concerns in the mind of every bank's CEO. The customer is
interested in how he/she can benefit from the bank and its products. That's why it
becomes necessary for a bank to differentiate its products from the others. Some of
the ways in which differentiation can be introduced are through specialization, new
products, and increasing the added value

Faisal Pervaiz-03315597157 23
Chapter – III


Faisal Pervaiz-03315597157 24

My duties at the bank during my internship were of the diversified nature. I was rotated
in the different departments of the bank. I was also assigned with some responsibilities of the
minor level. They gave me some assignments as well to give me the true exposure of
practical work environment. So my duties can be categorized department wise as under:


In this department I spent about 3-4 days. I observed the procedure carried down here.
Based on my observation and briefing from the staff I was asked to prepare advices for
collection of demand draft amount, Outward Bill for Collection (OBC), fill in the deposit
slips presented by the customers, enter the proceedings in concerned registers.


Online banking is a wide spreading concept in banking sector. This department mainly
performs the basic operation of fund transfer and other functions facilitating the transfer
and enquiries. I observed the basics of the department. I didn’t have the opportunity to
seek the details because the online department is a sensitive area and also electronic

I prepared online transfer slips foe the customers. I also informed the customers of their
account balance, account status and about other queries available online.


This department serves as the front representative of the bank. Multiple tasks are
executed in this department. I was asked to observe different complaints received by the
bank by its customers. I maintained the sundry account register, suspense account
register. I put the applications received for the ATM cards in the register. I also had to
maintain the register maintained to record the receipt of new account opening forms
along with the register kept for recording those ATM cards, which have been delivered


This is the department with a very vast scope and a variety of dimensions. There, I had to
maintain the record of some Letters of Credit (LCs). I was liable for making drafts of
outgoing SWIFT messages. I also made the entries of incoming SWIFT messages in the
register. I was asked to enter the particulars of I-form (Import form) and E-form (Export
form) in their respective registers.
Faisal Pervaiz-03315597157 25

In this department I was given some files to study, which were about the applications of
credit to be approved. The person in charge of there briefed me about the term and
conditions on which the bank accepts or rejects an application foe the credit. In this
department, like the online department, I didn’t have an opportunity to practically handle
the work due to the sensitive nature of the work.


Apart from the duties mentioned above, I had to perform some other duties as well. The
prominent amongst them is called “Calling” in the banking jargon. It’s manual checking
of the record produced by the computer pertaining encashment, transfer and collection of
cheques and other instruments like deposit slips and online slips. I had to work with the
person responsible of keeping the record of DD payable. I was assigned with the duty of
keeping the record of DD payable of a given period.



If some one opens a new account and become the client of the Allied bank of certain
branch then he gets the requisition slip on which cheque book is issued Normally people
use two types of accounts

1)Current Account

2)Profit and loss account or PLS Account

3)Term Deposit Account

Current account cheque book has 50 leaves and it cost RS.100

Profit and loss account or PLS account cheque book has 25 leaves and it cost
Term deposit account cheque book has also 25 leaves and it also cost RS.50

In every cheque book there is also a requisition slip available for the purpose of reissue
of a cheque book, if the first cheque book has no more leaves. There is written the title of
account holder, his account number, the stamp of Allied bank and the signatures of the
authorized person on every page of cheque book and also on the requisition slip.

Faisal Pervaiz-03315597157 26

There are two types of clearing/collection cheques

1 Inward clearing/collection
2 Outward clearing/collection


This department receives negotiable instruments drawn on local branches of other banks.
NIFT clearing house, in which cheques and other negotiable instruments are brought by
each local bank representative and the claims of each bank on other is offset and a
settlement is made by the payment of difference. Clearing system is helpful for both the
customers and bank in saving money, time and labour.


The cheques and drafts come to branch from different BANKS. They enter the
particulars of the cheques on a register. After this process the balance with total drafts
and total amount are given to the representative. ABL works under the rules and
regulations prescribed byf State Bank of Pakistan (SBP) and has an account with SBP.
The clearinghouse of SBP (NIFT), through whom brnches forward/receive-clearing
cheques along with a schedule conducts clearing.
The clerk of forwarding branch prepares the schedule and vouchers of all the claearing
cheques, which he receives by the clerk on that day and sends these cheques to the
checking officer. Checking officer passes these cheques and vouchers by his initials,
endorsement stamp and branch special crossing stamp. Clerk posts the contra entries of
these vouchers in the clearing register. Representatives’ banks collect these cheques.
Next day at 8:30 A.M. representatives of all local banks and foreign banks exch The
cheques and drafts come to branch from different banks.
They enter the particulars of the cheques on a register. After this process the balance
with total drafts and total amount are given to the representative. ABL works under the
rules and regulations prescribed byf State Bank of Pakistan (SBP) and has an account
with SBP. The clearinghouse of SBP (NIFT), through whom branches forward/receive-
clearing cheques along with a schedule conducts clearing.
The clerk of forwarding branch prepares the schedule and vouchers of all the clearing
cheques, which he receives by the clerk on that day and sends these cheques to the
checking officer. Checking officer passes these cheques and vouchers by his initials,
endorsement stamp and branch special crossing stamp. Clerk posts the contra entries of
these vouchers in the clearing register. Representatives’ banks collect these cheques.
Next day at 8:30 A.M. representatives of all local banks and foreign banks exchange
their cheques, which are drawn on their banks.

The clearinghouse debits/credits the payee/receipt branch with the total amount of the
cheques paid on their behalf. The settlement of book entries e.g., if ABL is to give Rs. 2
Faisal Pervaiz-03315597157 27
Million to UBL and UBL has to give Rs.1 million to ABL then ABL will draw a cheque
of 1 Million in favour of UBL. SBP will debit this amount from ABL account and credit
of UBL account. In this way mutual cross debiting and crediting in the books of SBP
settle obligation of banks


All the inter-bank adjustments will be affected through head office account called Pak
account. It will be essential for the branch to advise pak account of each transaction so
that they may also pass the necessary entries in their books. The NIFT will send a
consolidated debit/credit advice to the branches in respect of clearing cheques delivered
to or received from the branches. The amount of the advice will agree with the total be
office. amount appearing in the schedule of cheque delivered/received. The head office
will similarly send advice to the branches of the returns, if any. Copies of all advices will
sent to the head office


transfer and delivery of cheques. The same clearing cheque procedure will be adopted in
the transfer deliveries except in case when the facility of SBP is not availed. In case of
cheques drawn on one branch and collected by an other branch for the credit of its
constituents, the branch delivering the cheques will send a consolidated debit advice. If
any cheque is returned unpaid, aBranch receives the cheques and other negotiable
instrument drawn on other branches of the same bank. Main branch of ABL handles the
credit advice will be sent to the branch returning the cheque

The collection cheques/OBCs are the cheques, which we have cleared for our
customers when some of our customers receive the cheque that is of some other city.
These types of cheques are known as collection cheques or the other name we gave them
is OBC


On the cheque there is written that the person to whom it may concern can cash it from
the certain branch of the bank in favour of which it’s drawn. The customer presents the
cheque to his branch, which send a document called “OBC” to the bank that has
to make the payment. The clearing department of the receiving bank follows a prescribed
procedure and credits the amount to sending bank through a central account
maintained by each bank with SBP. ABL sends the cheque to it’s own branch if available
for collection from the payer’s bank otherwise the OBC is directly sent to other bank.

Faisal Pervaiz-03315597157 28

We have a register in which we have the serial no for OBCs with other details
like amount, date, sending and receiving branches’ codes. Every OBC is entered
in tha register on daily basis. If OBC is not cleared due to what ever fault, we take it
back as a return but after that we call the concerned person and we also write name of
the perso


I learnt how to open a new account. The person willing to open an account has
o complete the account opening forms, which has several particulars pertaining to
personal information of the person.
The bank makes sure that all the information provided by the person is
authentic. Along with the information given by the person himself, bank requires
introduction of an already existing account holder of the same bank but preferably
of the same branch.
The bank also requires account no. and copy of the introducer’s NIC.
Bank also requires a copy of the NIC from account opening person. He will also have to
provide two samples of his specimen signatures for any withdrawal of amount. In case of
illiterate person, he will provide the bank with his left thumb impression along with two
photographs. In case of a Pardah Observing lady, the bank prefers not to open an
account but if so, it will require her to provide impressions of her both thumbs.
After all this formality, the bank after a few days sends a letter of thanks to the address of
the person disclosed in the AOF. When the letter is received, the person may come to
bank and collect his cheque book
The bank also informs its head office about the new accounts and also charges nominal
amount at first time.


The deductions of Zakaat from the account of Muslims are made on the 1st
Ramadan according to the Islamic rate. But the people who do not want the bank to
deduct Zakaat and want to disburse it at their own, they have to provide an affidavit on a
prescribed format provided by the bank.


The department providing online facility to the customers, I liked the most. I learnt
different procedures regarding this department. I learnt the process of online transfer. The
whole this process need is filling of a slip, and cheque or cash. In the slip the name of
remote branch and account number of the remote person must be entered. If the person is
not an account holder of the bank then he has to attach his NIC copy with the slip for his
identification. The person availing this facility submits the cash on the cash counter and
Faisal Pervaiz-03315597157 29
then gives the slip to the host person at the department, who then enters the data in the
computer. In this way the money is transferred to an account through PAK account,
which is the central account of the bank and all the inter branch transactions has to go
through this process.


As an internee I learnt many things some of which I have described above. The
remaining few include the processes involved in the foreign exchange and advances
department. Now a day, both of these departments are considered to be the backbone of
any bank. Foreign exchange department brings foreign reserves. Mostly import and
export business takes place through foreign exchange department.
Advances/Credit department is equally important. This department gives the bank a real
business. The bank gives money to the borrowers on interest and earns a lot in this way.
The bank lends money against some guarantee or pledges some property for this purpose.
So that in case the customer cannot pay back money, the bank can meet over come its


My internship experience has given me a realistic preview of practical life. Now I feel
that I am better prepared to enter the world of professional work. I have come to know
and been appreciated by a number of professionals who are lending their services to the
banking sector for more than a decade.
I feel honored that I have worked with such experienced professionals. I must admit that
such interaction in this respectable professional community will help me in seeking out
good job opportunities in the near future.Each task I performed was a different
experience in itself. By the end of it, I must say I realize my potentials, I have realized
that practical life is not so easy after all, it takes alot of hard work and devotion, and not
to forget time

. And I now know that if I want I can make things possible, and I also know how good it
feels to having accomplished something and being appreciated for it. I definitely have
learnt things, which will impact my career and my character.The overall experience of
my internship was very good; I have learnt the sense of responsibility in its literal
meaning. I am now capable of dealing with different sort of customers, and how to be
patient while doing so. Besides this I also gained knowledge about banking which I
previously lacked and many more products being offered by the bank. So in a nutshell,
this internship gave me the experience, which would no doubt boost my confidence to
work in future.

Faisal Pervaiz-03315597157 30
Chapter – IV


Faisal Pervaiz-03315597157 31

2006 2007 2008
cash 24745023 9.28% 30408306 9.5% 25750533 7.02
Lending to 19050239 7.56 18419241 5.75% 15793183 4.31%
investments 46953241 18.63% 83958463 26.23% 82631118 22..53%
Ad net 144033634 57.15% 168407280 52.61% 212972008 58.08%
Fixed asset 6445111 2.56% 7548628 2.36% 11134436 3.04%
Asset 638168 0.25% 662431 0.21% 1029223 0.28%
Other asset 10161361 4.03% 10705374 3.34% 17369961 4.74%
Total asset 252026776 100% 320109723 100% 366680192 100%
Customer 206031324 87.92% 263972382 100% 366680192 86.39%
Inter bank 18410428 7.86% 22933656 7.64% 27778151 8.07%
B/P 2278007 0.97% 3494384 1.17% 2952490 0.86%
Other 5119267 2.18% 7332059 2.4% 13620616 3.96%

Sub- 2500000 1.07% 2499000 0.84% 2498000 0.72%

Total 243339023 100% 300231481 100% 344324578 100%
Net assets 17687753 7.55% 1987242 6.62% 22355614 6.49%

Faisal Pervaiz-03315597157 32
( Amount in rupees)

2006 2007 2008

Cash 24745023 100% 30408306 122.88% 25750533 104.06%
Lending to 19050239 100% 18419241 96.68% 15793183 82.901%
investment 46953241 100% 83958463 178.814 82631118 175.98%
s %
Advance 144033634 100% 168407280 116.92% 212972008 147.86%
Op fixed 6445111 100% 7548628 117.12% 11134436 172.75%
Assets 638168 100% 662431 104.95% 1029223 161.27%
Other 10161361 100% 10705374 105.35% 17369961 170.93%
Total 25202677 1005 32010972 127.01 36668019 145.49
assets 6 3 % 2 %
Customer 206031324 100% 263972382 128.12% 297475321 144.38%
Inter bank 18410428 100% 22933656 124.59% 27778151 150.88%
B/P 2278007 1005 3494384 153.39% 2952490 129.60%
Other 5119267 100% 7332059 143.22% 13620616 266.08%
Sub- 2500000 100% 2499000 99.96% 2498000 99.92%
Total 24333902 100 30023148 128.11 34432457 146.9%
liabilities 3 % 1 % 8

ASSETS 17687753 100% 19878242 112.38% 22355614 126.3%

Faisal Pervaiz-03315597157 33





2006 2007 2008

Total loans advance 144033 168407 212972
Total deposits 206031 263972 297475
69.90% 63.79% 71.59%


This ratios shows a r/s between loans and advances and reveals how much
Productively the deposits are used. Analysis shows an increase in loan to
Deposit ratio, because advances are also increasing sharply with the increase
Of deposits. This condition is favorable or the bank. If deposits increase by
Higher rate than an increase in loan than bank has to face difficulty

Faisal Pervaiz-03315597157 34




2006 2007 2008

Total loans advances 144033 168407 212972
Total ASSETS 252026 320109 366680
57.00% 52.60% 58.06%


Total advances of the bank increased from 2006 to 2008 and total asset
Also increase from in 2006 to in2008. This parallel increase in advances
Provide us gradually increasing ratio.

Faisal Pervaiz-03315597157 35




2006 2007 2008

Net profit 4156 4076 4397
Return on financing 15006 12387 12166
27.69% 32.90% 36.14


The net profitability of the company is increasing from 2006 to 2008 as
Shone above. The increasing net profit trend shows the managements
Efficiency to control the operating cost and to maximize the profit

Faisal Pervaiz-03315597157 36




2006 2007 2008

Interest income 9.717 8.467 10.854
Total loan 144.033 168.407 212.972
6.74% 5.02% 5.09%


The rate of return at loans of the company is increasing. This show that the bank is
in good position. When we compare the interest income of the company with the loan.
The rate of return is increasing with the amount of total loan. This shows that the bank
Is earning favorable interest income on the loans.

Faisal Pervaiz-03315597157 37




2006 2007 2008

NET INCOME AFTER TAX 4397 4076 4156
Total ASSETS 252026 320109 366680
1.74% 1.27% 1.13%


In return on assets ratio we evaluated whether the bank management has
Earned a reasonable return with the assets under its control. The bank is
Required to increase its performance as the standard rate of return is
3 % or more.

Faisal Pervaiz-03315597157 38




2006 2007 2008

NET INCOME AFTER TAX 4397 4076 4156
Total ASSETS 4488 5386 6463
97.97% 75.67% 64.30%


The equity capital of the bank is increased every year while in 2007 the net
Income decrease and in2008 the net income is also increased. Due to this the
Equity capital ratio has decreasing trend from 2006 to 2008. we cannot set any
Standard for the bank’s return on capital because different capitals have different

Faisal Pervaiz-03315597157 39




2006 2007 2008

NET INCOME AFTER TAX 4397 4076 4156
SHARE HOLDER E QUITY 16299 18404 20805
27.09% 22.14% 19.97%


It is a tradition that stock holders have expected to earn in average annual return
Of 12%or more from equity investment in large companies. In this case we can
See that the banks return on equity is up to the standard of the return on equity
And stock holders received favorable return from 2006 to 2008.

Faisal Pervaiz-03315597157 40
Chapter – V


Faisal Pervaiz-03315597157 41

The critical analysis ABL in the previous section is the representation of its past,
mirror of its present, and an insight into its future. The past data of ABL Tench Bazaar
branch enabled me to study the organization in a historical perspective and understand
the nuisances in the banking operations. Study of he present of ABL helped me evaluate
the organization in comparison to its future and competitors

. The data obtained from the analysis of its present and future in combination with my
professional studies resulted in some suggestions and implementation plans, which can
help to increase the profitability and operational success of the ABL, Tench Bazaar
branch Rawalpindi.

Some of the major findings suggestions are discussed.


The physical facilities or the layout are the most fundamental features in an
organization, which the customers observe in forming an opinion, perception or idea
about the organization. Therefore, every organization tries to make a good first
impression on customers through the presentation of its physical facilities or layout. The
physical facilities in the branch are not up to the mark, which requires timely changes to
provide good environment to customers. The suggested changes and corrective actions
are gives below:

• The lighting system must be improved and all the out of use lights must be
• There is always a stinking smell in the Bank due to the out of order condition of
washroom. Therefore the washroom must be brought into order to remover this
unpleasant smell.
• Generators should be made available to the branch to minimize the disruptions
due to power failure.
• Newspaper should be provided to the customers to avoid the pain of waiting long.
• A cash counting machine can help reduce the time spent in counting cash.

Faisal Pervaiz-03315597157 42

The existing staff in the Bank is overburdened due to the non-availability of more
staff. Staff in the branch must be in proportion to the customer has so as to expedite the
workflow, avoid overloading of staff and remove the customer’s grievances arising
mainly due to delay in workflow.

The additional staff required is in the fallowing categories.

• More technically trained staff should be added to the existing staff
• One staff assistant or grade 2 officers properly trained in computer and
sufficiently trained in foreign currency accounts.
• One employee of grade 4 should be hire on daily wages or contract, to maintain

The decreasing commitment of employees can be increased by introducing an

effective performance appraisal system, which can reward and recognize the
achievements and services of employees for the Bank.
The appraisal system must have the following features.

• Feed Back:
Periodically provided to employees and recognizing their efforts through reward
(bonuses) and publicly appreciation.
• Uniform:
The appraisal system must be uniform in evaluating all the employees without
any discrimination.
• Objectivity:
The appraisal system must be based on facts and figures and objective evaluation
of the facts on grounds.

Faisal Pervaiz-03315597157 43

The biggest source of the bank revenue is advances. The advances of ABL, Tench
Bazaar branch are on him decreasing trend, causing a decrease in the revenue for the
bank. The bank should make the advance procedure simple and quick to meet the
customer’s requirements. The following steps are suggested for simplifying the advance

• Increasing the discretion of manager for the amount of advance to Rs. 100,000.
• Speeding up the process of investigation and verification.
• Expanding its customer base.


The concept of marketing should be followed in every aspect of the organization.

Generally, the bank’s staff considers that marketing is to go to customers, beg them for
opening an account with the Bank and to abide by his every just and unjust action

They should be taught that marketing is not only to go to customers only. A customer can
also be attracted by provided customer oriented services, showing empathy to your
customers and attending him personally.


Deposits are the main source of funds for commercial banks. Therefore, the
priority of every bank is to increase the number and amount of deposits. The key to
successful business does not lie in simply attracting new customers. The real success is to
maintain in the old customers and attract new customers at the same time because
retaining a customer is more difficult than attracting new customers.

• Every depositor should be given equal importance and there should be no

differentiation between customers so that every customer feels himself as much
important as the other customer.
• The attitude of the staff should be friendly to all the customers. The customers
should be taken to the concerned person or guided friendly if the concerned
person is not available. The attitude of “that’s not my job” should not exist

Faisal Pervaiz-03315597157 44

The analysis of expenses shows that 43% of expenses of the bank are the
payments on fixed deposits, which is a very high proportion. Apart from this the interest
earned on advances Rs. 0.265 million is smaller than the interest paid on different
deposits Rs. 4.1 millions

The bank should launch a campaign to get less cost deposits much as high amount
current account as well as low cost PLS saving accounts.


The Bank should provide information to all the present and potential customers
relating to the new products, services, some service’s fee structure and other matters,
which are likely to affect the customers. It should be made sure that all the customers
have access to this information. Conveying information is of no use, unless, there is some
feedback from the customers. The following measures are suggested to implement this

• Brochures, hand outs, pamphlets and other printed reports must be provided to
customers, which should provide all the information necessary to attract and
retain customers and to satisfy the customer’s need for more information.
• Personal contacts with the customers can help in providing information to
customers. All the customers must be provided a chance to get the desired
information by personal contact with the Bank staff.
• Complaint and suggestion box should be maintained at the door of the Bank
where the customers can point out drawbacks in the customer’s services and put
forward their suggestions on his improvement of the services quality of the Bank.


The financial audit of the bank is conducted on regular basis both as a surprise
and routine audit. However, the performance and system audits are completely ignored
which, other wise, should have been a compulsory part of the auditing services of the
Bank. The immediate outcome of ignoring performance outcome is shortcoming in the
non-financial aspects of this organization such as customer relations, lack of necessary
facilities, motivation of employees, and the control of manager.

Faisal Pervaiz-03315597157 45
In the light of the above facts it is suggested that the performance audit of the bank must
be carried out on both regular and surprise basis to keep the Bank competitive in the run
of for more customers, more deposits and high profitability.


The numbers of account holders in a bank make a significant contribution to the

deposits of the Bank and determine its business volume, profits and size of a bank.
Therefore, ABL, Tench Bazaar branch must a clear plan for increasing the number of
accounts. The details of plan for increasing the number of accounts are given in the
implementation plan.


I have found some problems with ATM network. Many customers have
complaints that their requests placed on ATMs don’t carry out. It is mainly because of
bad PTCL lines. Distortion in lines of PTCL restricts the execution of requests placed on
ATM machines by customers. Although there is a network of dedicated lines for ATM
machines, a request may not be successfully carried out because of complicated request
processing. A successful execution of a request needs to be approved from three places:
§ The branch (online) with which the customer (placing the request) have the account.

§ Main branch of that area (city).

§ The head office (in Karachi).

So connecting to all of these three places simultaneously and getting the request approved
is a complicated process. However management claims that there is nothing wrong with
processing. The only problem lies with PCL lines. So to solve this problem the bank
should hire technicians who can work during public holidays to make the ATM useable
while it shows any distortion.


Now-a-days in foreign countries ATM machines are also used for deposits of
money and utility bills can b paid up through ATM. But in Pakistan these services have
not been utilized yet. So if ABL upgrades its ATM technology so definitely it will get the
competitive advantage over other banks.


In allied bank the networking is only done with in the bank, means the customer
can’t transfer his funds to other bank through online. The account holder who has the
debit card can transfer his money to other bank account through ATM. But the customer
who doesn’t have account but some one gave him a habib bank cheque to transfer it
Faisal Pervaiz-03315597157 46
online through near situated Allied bank. So the allied bank can’t transfer it to habib bank
via online. So I recommend an idea that there should be a networking among different
banks so that they can transfer funds via online.


As all the ledger system and vouchers are made manually which is a much time
consuming job and it also requires much more efforts most importantly human error
chances are there that’s why if the organization implement “SAP FINANCE MODULE”
in their current saving department that will help them creating automatic vouchers and
ledger if any transaction is made by customer because SAP has the capability to keep all
the records of a an individual at just one place and it has the capacity to store much data.


I have found that there is no online facility to apply for a loan. Where as, in other
banks especially in foreign banks the customer who has an account in the same bank, can
apply for a loan through internet. So that he can save his time from going physically to
the bank.

Faisal Pervaiz-03315597157 47

Faisal Pervaiz-03315597157 48

As at December 31 2008

ASSETS 2008 2007 2006

Cash & balance with treasury bank 23653754 29739857 23042011
Balance with other banks 2096779 668449 1703011
Landing to financial institutions 15793183 18419241 19050239
Investments 82631118 83958463 46953241
Advances 212972008 168407280 144033634
Opening fixed assets 11134436 7548628 6445111
Deferred tax assets 1029223 662431 638168
Other assets 17369691 10705374 1016136__
366680192 320109723 252026776


Bill payable 2952490 3494384 2278007

Borrowings 27778151 22933656 18410425
Deposits and other account 297475321 263972382 206031324
Sub ordered loans 2498000 2499000 2500000
Liabilities against assets subject
To finance lease - - -
Deferred tax liabilities - - -
Other liabilities 13620616 7332059 5119267
344324578 300231481 234339023
Net assets 22355614 19878242 17687753

Share capital 6463644 5386370 4488642

Reserve 5804779 6050713 6133209
Inappropriate profit 8536697 6971308 5607796
20805117 18408391 16229647
Surplus on revaluation of assets 1550497 1469851 1458106
22355614 19878242 17687753

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For the year ended dec31 2008

2008 2007 2006

Markup/return/interest earned 30570540 21201422 17215507

Mark up/return/interest earned 15559805 10093010 5793101
Net markup/interest income 14010734 11108412 10422405
ProvisLoan against non-performing loans 1372155 2712935 583305
And advances net
Provision for diminution in the value of 1781110 719 (14523)
Investments net
Bad debts written directly 2735 1187 135189
3155001 2714842 704871
Net markup/interest income 10854733 8393570 9717535
Free commission and brokerage income 2291459 2052577 1353888
Dividend income 1420354 147084 193255
Income from dealing in foreign 230050 194879 282285
Gain/los sale of securities - (1453) (30180)
Other income 59154 77435 273028
Total non-markup/interest income 4152105 3920099 2449058
15005838 1231559 12155503
Non markup interest expense
Admin exp 5089913 5944340 5290578
Provision against other assets net 214284 119579 205307
Provision against off b/s 190824 39805 2545
Other charges 390877 255859 7078
Total non-markup interest exp 8885898 5350593 5505509
Extra ordinary/unusual items - - -
Profit before tax 5120940 5953075 5551094
Taxation current 1829425 1887299 2215092
Deferred 134829 (10381) 48752
1954254 1875918 2253884
Profit after tax 4155585 4075158 4397250
Inappropriate profit b/f 5971308 5507795 2731979
Transfer from surplus 17541 32701 19452
5988849 5540497 2751431
Profit available for appropriation 1145535 9715555 7148581
Basic earning per share (in rupees) 5.43 5.31 8.15
Diluted earning per share 5.43 5.31 8.15

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Published Reference:

ü Weihrich.H & kootz H(1997)

Management A Global Prospective
10th Edition (New York M.C CRAW HILL)

ü Siddiqui A.A (1998)

Practice and Law of Banking in Pakistan
6th Edition-Karachi-Royal Book Company

ü Horne V. (2002)
Financial Management
12th Edition New York M.C Craw Hill

ü Irshad M (2007)
Money, Banking and Finance
2nd Edition Lahore Majeed Publisher

Online Reference:






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