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Internship report on Bank Alflah Limited

COMSATS Institute Information


Technology LAHORE

INTERNSHIP REPORT ON

BANK ALFALAH LIMITED


NEW GARDEN TOWN
LAHORE.

SUBMITTED TO:

MADAM IFFAT KHALID


LECTURER.

SUBMITTED BY:

NAUMAN AHMAD
CIIT/FA09-MBA-114/LHR

SUBMISSION DATE:
06-10-2010.

DEPARTMENT OF MANAGEMENT SCIENCE


COMSATS Institute of Information Technology, Lahore

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Internship report on Bank Alflah Limited

Preface:
Banking sector owes a pivotal importance in the economy of any country though it’s
vibrant functions. This is the deep-seated motivator that geared up me to join any
bank for internship. Moreover, the practice and familiarity learned during this tenure
would also attest very helpful and alleviating in the awaiting proficient life. Making
analysis of financial statements is an important part of our MBA program. It is a
comprehensive, practical and extremely accessible presentation bout Bank Alflah
Limited. I have tried my best to present this report with full description.
Every effort is made to expose all the relevant concepts in this report. There is a
balance of clarity. My objective in making analysis this repot is to provide a
fundamental knowledge about the company. I hope, it serves a stock of knowledge
about the Bank Alflah Limited.
It is the requirement of the MBA course that al the student s of MBA have to spend
six or eight weeks in any organization to get practical exposure and get familiarized
wit the ways to live in the organizational environment which is dramatically different
from the educational enjoinment. That period is called ‘’Internship Period”
If spends properly and sincerely, enables the students to be more confident, more
knowledgeable, more responsible and more committed to its work in the practical
field. I have also assigned to do internship of six weeks period in Bank Alflah Limited
it has enabled me to understand the practical scenario and sharpen our decision
making power and utilizing the resources in an effective manner. So that our
resources could generate maximum profit.
In preparation of this report. I have putted all my best efforts and tried my level best
to give maximum knowledge. Despite of my all coherent efforts. I do believe that
there will be a room for improvements in the efforts of learner like me.

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MY LOVING PARENTS,

RESPECTED TEACHERS,
&
DEAR FRIENDS

ACKNOWLEDGEMENTS

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All praise & thanks go to Almighty ALLAH, the creator who is the entire source of
knowledge & wisdom endowed to mankind. Offer my thanks from the depth of my
soul to the last messenger Hazrat Muhammad (PBUH) , who is forever a torch of
guidance and knowledge of entire humanity.

I have also completed a report based on familiarity with my past studies in order to
get a bit familiar with practical experiences in the organization. By the grace of
ALLAH Almighty I have accomplished this report.
I am very thank to the Mr. Raheel Yaqub (Branch Manger) and his team especially
to Mr. Ahsan officer who provided me every kind of help during internship and in
preparing this report.

I am very grateful to my entire well – wisher for this support, love & sincerity. May
ALLAH give them reward in kind of His bless and love!

Table of content
Executive Summary 6

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Introduction 8
Industry History and Background 10
History of Organization 12
Information about organization 13
Products and Services 14
Organizational structure & Department 18
Internship Experience 44
Internship Experience 44
Working Experience 45
Duties & Responsibilities 46
Accomplishment 46
Problems during Internship 47
Internal & External analysis 48
SWOT Analysis 48
Marketing Strategy 51
Competitive Strategy 53
Financial Analysis 54
Conclusion and Recommendation 57
Appendix 59
References 60

Executive Summary

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Pakistan after getting independence, did not


inherent a strong banking industry and since then a number of events in the industry,
like the nationalization of banks in the 1970. However today the banking industry of
Pakistan has been growing over the past few years, mainly because of consistent
policies implemented by the government of Pakistan. Also the state bank of Pakistan
monetary policy has been very friendly toward banking sector.
There are number of different banks established in Pakistan, including local
incorporated commercial banks, foreign incorporated commercial banks,
development financial institutions, investment banks, discount & guarantee houses,
housing finance companies, venture capital companies, micro finance banks and
Islamic banks.
Bank Alflah Ltd was incorporated in 1997 and was later privatized by the government
of Pakistan. The Abu Dhabi Group bought the majority shares of the bank and so got
the right to control the bank, s operations. Since the privatization of the bank , Bank
Alflah has implemented different policies to make it one of the best bank in Pakistan.
Bank Alflah Limited also introducing new products and services and increase its
operations by opening new branches in Pakistan.
Today Bank Alflah Limited is operating in more then 95 cities of Pakistan and
operating its foreign branches in Bangladesh, Afghanistan, and Bahrain. The total
employees of Bank Alflah in 2009 were 7,642, which increase of 15% from the past
year was. The increase in the number of employees joining Bank Alflah shows that
people feel confident in Bank Alflah as a prospect employer. Behavior of
employees with customer also helps to increase the number of customer every day.
The financial statistic of Bank Alflah are also as Impressive as their human
resources.
The profit after taxation for Bank Alflah in 2008 amounted to Rs 1,301,301 (000)
and its total assets for 2008 amounted to Rs 348,990,764 (000).
This figure shows improvement as compared to previous years but in 2009 the
earning after tax reduces to Rs 897,035(000). The reduction in earning is due to the
financial crises in all over the economy. Te stock prices and earning per share of the
bank have also increased over the years but it is before the year 2009.The earning
per share in 2008 is 1.41 that reduce in 2009 earning per share is 0.71.
Bank Alflah Limited promotes its products and services through print and electronic
media. It also promotes itself by sponsoring different events.

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For Bank Alfalah Limited, it has to compete in an industry that has grown in 2009 in
overall assets The major 5 competitors of Bank Alflah, pose close competition and
are mainly large nationally incorporated banks and a few international banks, that all
wants to become the leading bank of Pakistan, by creating some edge in the
industry. To create this edge, technology has played an important role in the industry
as banks are continuously trying to improve its products and services by introducing
innovative products.

Industry Introduction and Background

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It has not so far been decided as to how the word ‘Bank’ originated. Some authors
opine that this word is derived from the words ‘Bancus’ or Banque’, which mean a
bench. Other authorities hold the opinion that the word ‘Bank’ is derived from the
German word ‘Back’, which means ‘joint stock fund’. It is therefore, not possible to
decide as to which of the opinion is correct, for no record is available to ascertain the
validity of any of the opinions.
Banking in fact is primitive as human society, for ever since man came to realize the
importance of money as a medium of exchange; the necessity of a controlling or
regulating agency or institution was naturally felt. Perhaps it was the Babylonians
who developed banking system as early as 2000 BC. IT is evident that the temples
of Babylon were used as ‘Banks’ because of the prevalent respect and confidence in
the clergy.
At the time of independence, there were 631 offices of scheduled banks in Pakistan,
of which 487 were located in West Pakistan alone. As a new country without
resources it was very difficult for Pakistan to run its own banking system
immediately. Therefore, the expert committee recommended that the Reserve Bank
of India should continue to function in Pakistan until 30th September 1948, so that
problems of time and demand liability, coinage currencies, exchange etc. are settled
between India and Pakistan. The non-Muslims started transferring their funds and
accounts to India. By the end of June 1948 the number of officers of
Scheduled banks in Pakistan declined from 631 to 225. There were 19 foreign
banks with the status of small branch offices that were engaged solely in export of
crop from Pakistan, while there were only two Pakistani institutions, Habib Bank of
Pakistan and the Australian Bank. The customers of the bank are not satisfied with
the uncertain condition of banking. Similarly the Reserve Bank of India was not in the
favor of Govt. of Pakistan. The Govt. of Pakistan decided to establish a full-fledge
central bank. Consequently the Governor-general of Pakistan Quaid-e-Azam
inaugurated the State Bank of Pakistan on July 1, 1948. Thus a landmark was made
in the history of banking when the state bank of Pakistan assumed full control of
banking and currency in Pakistan. The banking structure in Pakistan comprises of
the following types,

 State Bank of Pakistan

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 Commercial Bank of Pakistan


 Saving banks.
 Cooperative banks
 Specialized credit institutions.

Commercial banks have been the most effective mobilizes of savings and have been
providing short-term requirements of working capitals to trade, commerce and
industry.
Up to December 31, 1973, there were 14 Pakistan commercial banks that functioned
all over the country and in some foreign countries through a network of branches. All
these commercial banks were nationalized in January 1, 1974, and were recognized
and merged into the following five banks:

 National Bank of Pakistan


 MCB Bank Limited
 Habib Bank Limited
 United Bank Limited
 Allied Bank Limited
The state bank of Pakistan is the Central bank of the country and was established on
July 1, 1948. The separation of East Pakistan and its repercussion in the form of
economic depression has caused a lot of difficulties to the banking system in
Pakistan. The network of bank branches now covers a very large segment of
national economy. The numbers of branches have increased appreciably and there
is now on branch of bank for every 3000 heads of population approximately. There
is done reasonable growth in deposits from the establishment of Pakistan.
Besides this growth, specialized credit and financial institutions have also developed
over the years. The Government of Pakistan in the late 90’s introducing the need for
the privatization of state owned banks and companies.

Historical Overview of BAL


Bank Alfalah has gone through different phases over the years. Its name and been
changed in the following sequence.

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Bank of Credit and Commerce International (BCCI)—1972


Habib Credit and Exchange Bank—1992
Bank Alfalah—1997

Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited
company under the Companies Ordinance 1984. Its banking operations
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 above 301 branches in 95
cities, with the registered office at B.A. Building, I.I. Chundrigar Road, Karachi. Since
its inception, as the new identity of Habib Credit Exchange Bank (HCEB) 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.
The Bank has invested in revolutionary technology to have an extensive range of
products and services. This facilitates commitment to a culture of innovation and
seeks out synergies with client and service providers to ensure uninterrupted
services to it customers.
This facilitates our commitment culture of innovation and seeks out synergies with
clients and service providers to ensure uninterrupted services to its customers. We
perceive the requirements of our customers and match them with quality products
and service solutions. During the past five years, we have emerged as one of the
foremost financial institution in the region endeavoring to meet the needs of
tomorrow and today. The bank is listed on the Karachi and Lahore Stock Exchange
with a ticker name of “BAFL”.

Credit Rating

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PACRA, a premier rating agency of the country, has rated the bank ‘AA’ (double A),
Entity Rating for long term and A1+ (A one plus) for the short term. These ratings
denote a very low expectation of credit risk, strong capacity for timely payment of
financial commitments in the long term and by highest capacity for timely repayment
in the short term, respectively. The ratings of first and second and third unsecured
listed and subordinated TFC issues of PKR 650 million, PKR 1,250 million and
Rs.1,325 million have been maintained at AA- (Double A minus).

Information about the organization

Vision

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The vision o Bank Alflah is to be the premier organization operating locally &
internationality that provides the complete range of financial services to all segments
under one roof.

Mission

The mission of the Bank Alflah is 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.

Values

The values of Bank Alflah Limited are philosophy of honesty, transparency in


customer dealings, product innovation, excellence in customer service and our
commitment to being a responsible corporate citizen.

Objectives

To please their customers by fulfilling the financial needs as best as possible, they
believe in placing the client at the center of business and all of the products and
service. For this the management has adopted the strategy of, caring for you …..Our
customer"
The objective of Bank Alflah is as follows:
 To get maximum share of the market
 To price the products optimally
 To expand more the network of branches in several other cities of
Pakistan as well as in the countries of the world.
 To reinforce a corporate culture that fosters learning, creativity and
flexibility.

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 To invest further in banking innovations which include Islamic banking,


SME
 Home loans and other areas of product development to provide higher
levels of services and values to the clients.
 To create maximum economic values for share holders through a
constant relationship focuses on financial services.

Products and services by BAL

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The privatization process for the expansion and diversification of economic


activities in the country also demanded the introduction of new banking
products. BAL took initiative in this direction and for the first time BAL
devised and marketed new products and services with brand names to enter
the varying requirements of its diversified customer.
Alflah Islamic Banking offers the largest products range available with any
Islamic banking institution in Pakistan including, Ijarah, Mudarbah, Istisna and
Musharika. All these products have been approved by the Bank’s
Management and cleared by the centre of Islamic Economics.
BAL currently has following products and services in the banking sector that
are making BAL more prominent in the banking sector

Current Account

This account offers unlimited deposit and withdrawal facility to facilitate business
transactions. There is absolutely no limit on number of transactions, deposits, and
withdrawal.

Alfalah car Ijarah


The customer is able to finance their vehicle the smart way with Alfalah. Bases on
the Shariah principles of Ijarah, Alfalah Islamic Banking will purchase the vehicle of
the customer choice and later rent to the client at a pre agreed rental amount.
Ownership of the vehicle is transferred to the client upon satisfactory payment of all
the rentals by the time the customer’s security deposits period expires. Insurance
and registration charges are Bourne by the Bank and the customer is not supposed
to pay any rental unless the vehicle is delivered to him.

Mudarbah Financing

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Under this product the client and the Bank enter into a sale contract. The required
goods are first purchased by the bank and then sold to the customer for a specific
period and at an agreed Mudarbah price.

Other Product and Services


With the mission to provide all-encompassing banking services to the
customers, Bank Al-Falah has a uniquely defined menu of financial products.
Currently it is one of the most comprehensive portfolios of personalized financial
solutions that are custom-tailored to serve the requirements not only of conventional
customers but also fulfill the needs of the corporate sector:
 Money Gram
 Agriculture loans
 Swift
 Car Financing
 Rupee Travelers Cheque
 Online Banking
 Credit Cards
 ATMs
 Home Financing
 Corporate and Structured Financing

Money Gram
Money Gram provides the faster transfer of money from one country to other. It is the
easy and safe way to send money to the relatives. The charges is deducted from the
person who is sends the money.

Agriculture loans

The bank also offered agriculture loan this loan is used various purposes for the
development of agriculture sector. It provide loan for cultivation of land and
equipment for the development of this sector

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SWIFT
The bank has also started replacing conventional telex messaging system for fund
transfer, L/C opening etc., by connecting on-line with the world wide interbank
Financial Telecommunication Network (SWIFT).

Car Financing

Car Financing is one of the major renowned products of Bank Al-Falah


and can be utilized in terms of Financing of Used Vehicles, Loan against Car,
Balance Transfer Facility, Refinancing Facility (only for Al-Falah Customers) and it is
characterized in terms of:
Lowest Mark up
Lower Insurance
Quick Processing
Lower Down Payment

Rupee Travelers Cheque

Rupees Travelers Cheque are as good as cash and are accepted at the major
shops, travel agents, hotels business establishments and all over the country and
abroad. This service is being offered to facilitate instant fund availability to travelers
and business people who used to carry a large sum of money with them.

Online Banking

To provide enhanced and value added products to customer bank is constantly


striving for additional facilities. Bank provide fully automated on-line telephone
banking facilities to its customers enabling them to carry out banking transactions
like balance inquiries, statement requests, product information and exchange rate.

Credit Cards

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Bank Al-Falah Visa Card is everywhere and globally accepted and welcomed at
locations displaying the VISA logo. It is accepted at nearly 30 million merchants and
870,000 ATMs in more than 150 countries around the globe and over 10,000
establishments in Pakistan. Al-Falah VISA pays for shopping, travel, entertainment,
meals and much more. There are 3 major types of Al-Falah credit cards.

Automated Teller Machine (ATMs)

The bank offers 24 hours self service banking facilities to it customers on country
wide basis through deployment of Automated Teller Machine. This system allows the
banking facilities such as cash with drawls, cash deposits, and funds transfer,
balance inquiries, account statements. All ATMs are linked through a state-of-the-art
Satellite Based Communication System which offers 24 hours real time service.

Home Financing

Major features of Bank Alfalah Home Financing are Lowest Mark-up, Quick
Processing, Multiple Repayment Options and Free Valuation. It has been bifurcated
in terms of “Home Buyer, Home Construct, Home Improver, and Home Balance
Transfer Facility”.
Financing Limit : up to Rs. 10,000,000/-
Tenure : up to 20Years
Equity Participation : 30% Borrower / 70% Bank

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Organizational Structure & Departments

Chief Executive Officer

Co-Chairman Central Management Committee

Group Heads

Regional Managers

Area Managers

Hub Managers

Branch Managers

It’s a general hierarchy of bank which is showing about the main authorities of Bank
Alfalah Limited who are controlling its management in Pakistan. Bank’s management
is divided into different groups, regions and areas. Co-chairman is providing
supervision to group heads that are responsible for controlling the affairs of different
groups. After group heads in the hierarchy, there are regional, hub and area
managers who are managing and guiding the working of different branches of bank.

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Board of Directors
The board of directors has the authority in guiding Bank affairs and in making
general policies. Some directors are the personnel of the Bank Alfalah Limited
follows.

H.E. Sheikh Hamdan Bin Mubarak Al Chairman


Nahayan
Mr. Abdullah Nasser Hawalileel Al- Director
Mansoori
Mr. Abdull Khalil Al Mutawa Director
Mr.Khalid Mana Saeed Al Otaiba Director
Mr. Ikram Ul-Majeed Sehgal Director
Mr. Nadeem Iqbal Sheikh Director
Mr. Sirajuddin Aziz Director & CEO

Board Audit committee

The board audit committee is guiding in the affairs and in checking the policies made
by board of Directors. Some auditors are the personnel of Bank Alflah Limited.
Mr. Abdullah Nasser Hawalileel Al- Director
Mansoori
Mr. Khalid Mana Saeed Al ofaiba Director
Mr.Nadeem Iqbal Sheikh Director
Mr. Yasar Rashid Sectary

Auditor A.I Ferguson & co


Chartered accountant

Chief Operating Officer Mr. Shakeel Sadiq

Company Sectary Mr. Hamid Ashraf

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Registered Office B.A.Building


I.I. Chandigar Road
Karachi.

Department of BAL:

 Account opening Department


 Accounts Department
 Trade Finance Department

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 Agriculture Department
 Clearing Department
 Cash Department
 Credit Administration Department
 Human Resource Department

Accounts opening Department

Account opening department is one of the departments that come under


the general banking facilities provided by Bank Alflah Limited. This department
maintains all formalities of the accounts and account holders like it account name,
account holder’s name, code number and full address. Different debit and credit
voucher come from different department like clearing, Remittances, Cash, Foreign
exchange and advances posted against some of the major deposit accounts opened
Accounts opening department is one of the departments that come under the
retail/general banking facilities provided by Bank Alfalah. Some of the major deposit
accounts opened by Bank Alfalah are as follows:

Major Deposit Account Products


Current Account
Current Accounts are non interest bearing accounts that have a minimum account
opening requirement of Rs. 10,000. No zakat is deducted on the accounts balance.
Furthermore all current account holders receive a Hilal debit card and there are no
restriction on the number of withdraws or deposits made to and from the account.

Profit& Loss Saving Account

Profit& Loss saving accounts can be opened with a minimum balance requirement of
Rs. 5,000 and profit is credited on a half yearly basis. There are no restrictions on
the number of deposits and withdrawal made to and from the account and all
account holders receive a Hilal debit card as well. Profit and loss saving account

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cannot be opened by a business corporation, however can be jointly opened by


individuals. Profits are paid at 2% on all account balances.

Basic Banking Account (BBA)

Basic Banking Account was introduced by banks on an order by the State Bank of
Pakistan and is current in nature. There is no minimum balance requirement for
BBA, however initial deposit must be Rs 1000. Maximum two withdrawals and
deposits are allowed by Cheque, while there is no restriction on ATM withdrawals.

Royal Profit Account

Royal profit accounts are opened with a minimum balance requirement of Rs 50,000.
The basic aim of this account is that the higher the balance the higher the return, as
profit is credited on a monthly basis. The profit paid to account holders is as follows:
Profits paid on Royal Profit Account

Amount Profit pa.


From Rs.50,000 to 999,999 2.50%
From Rs.1,000,000 to 4,999,999 3.50%
Rs.5,000,000 and above Negotiable

Kifayat Account

Kifayat account is another saving account product that can be opened with a
minimum balance requirement of Rs 10,000, with a maximum limit of Rs 1 million.
Profit is calculated on a monthly basis, while it is credited on quarterly basis. Bank
Alfalah pays 7% pa interest on Kifayat Account.

Mahana Amdan Account

Mahana Amdan account is Term Deposit Receipt (TDR) for three years that can be
opened with a minimum balance requirement of Rs 100,000, with a maximum limit of
Rs 15 million. Profits are paid at 10% pa, credited on a monthly basis. Other features

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of this account include free personal accident insurance and automatic renewal for
another 3 years, after the expiry of original period.

Alfalah Education

Alfalah education is a one year TDR that can be purchased by people having school
going children’s. A person can purchase a unit for Rs 100.000, with a maximum of 3
years. This TDR pays 7%, paid at maturity and gives an additional advantage of
giving monthly school fee of the children’s if the breadwinner of the family dies.

Requirement of Account opening


Standard Requirements
 Photocopy of computerized N.I.C
 Photocopy of passport, if computerized N.I.C not available
 Introduction( Existing Account Holder of Bank Alflah)
 Account opening form duly signed and completed by all concerned parties
 Vermicular form if signature are not in English
 Any photo ID if computerized N.I.C is not carrying a photo
 Two passport size photographs with thumb impression for illiterate
The requirements of these accounts are as follows
1) Individual account
2) Company account
3) Partnership account
4) Clubs / Association accounts
5) Trusts
1) Individual Accounts
There are two types of individual accounts
1) Salaried individual
2) Self Employed

Salaried Individuals

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 Employment certificate by the employer acknowledging the individual as


employee along with his salary, designation and period of employment on the
letter head and signed under rubber stamp of company
 Attested copy of service card, or any other acceptable evidence of service

Self Employed
 Copy of N.T.N certificate of the individual
 A letterhead along with a rubber stamp for proof of business or any other
acceptable evidence for verifiable source
 For sole proprietorship, letter from the proprietor confirming proprietorship
2) Company Accounts
 In this case the following documents are required
 Copies of NIC of Directors of the company
 Certificate of incorporation of business
 Certificate of commencement of business(in case of Public Limited Company)
 Article and Memorandum of Association
 Latest copy of Form-29
 List of Directors
 Copy of Board Resolution
3) Partnership
 Attested copy of partnership deed duly certified by notary public and signed
by all parties of the firm
 Attested copy of computerized N.I.C of all partners
 Rubber stamp of all partners
 Partnership mandate on the firm’s letterhead to operate the account
 Attested copy of registration Certificate
 Attested copy of N.T.N certificate

4) Clubs / Associations / Societies

 Certified copies of rules / By laws


 Certified copies of certificate of Registration

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 Resolution of the Governing body / Executive committee for opening of


account authorized the person to operate the account and attested copy of
computerized N.I.C of that authorized persons.
 An undertaking by all the authorized person on the behalf of the institution
mentioning that any change will be informed to the bank immediately

5) Trusts

 Attested copy of certificate of registration


 Attested copies of Computerized N.I.C of all trustees
 Certified copy of instrument of trust
 Board Resolution resolving to open and operate the account
 Certified copy of By- laws.

Opening the account

The procedure of opening the account is as follows.


Account Opening Form:
First of all, the customer fills the account opening form (AOF). Filling of account
opening form includes type of account, currency of account, name, address,
signature of customer and signature of introducer and attach a photocopy of national
identity card. He also signs an undertaking that he will follow the rules and
regulations of the bank.

1) Introduction:
The signature and account number of the account holder introducing the account to
the new person is obtained on the account opening form.

2) Specimen Signature Card:


The signature of the client is obtained on a specimen signature card (S.S Card). The
card is obtained with two signatures from the customer. Every time a Cheque is

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received for payment from the client, the signature on the Cheque is verified by
comparing it with S.S Card.

3) Requisition slip
A requisition slip for Cheque book is also given to the customer. The customer fills it
and gives it to the account opener.

4) Know Your Customer Form


Every account holder fills this form. The basic purpose of this form is to get some
information about the customer.

5) Account Number:
When all the formalities are completed, an account number is allotted to the
customer and all the information is entered into the computer and register. Then that
account number is written on S.S Card and account opening form.
6) Depositing of amount in account:
The client deposit cash in the account. For this purpose cash pay-in-slip is used. The
minimum initial deposit is fixed for each account according to the nature of account.
For example for PLS / saving account the minimum requirement is Rs.5,000 only.
7) Issuance of a Cheque Book:
After opening an account with the bank, the account holder makes a request in the
name of the bank for the issuance of a Cheque book. Such a request is known as
Requisition Slip. BAL issues Cheque books of at least 25 leaves. When he used this
book completely then he can apply for another. This process takes a day because
the Cheque books comes from Karachi head office.

8) Entry of Cheque Book:


Before issuance of a Cheque book the bank stamp every leaf with the account
number of the customer, enter it in the Cheque book register and computer and
issues the Cheque book to the customer after his signature on the register.

9) Filing of AOF:

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Account opening forms are basic documents of the contract therefore these are filed
in numerical order and kept for reference.

10) Letter of Thanks


A letter of thanks is prepared. One letter is for the customer and one for the
introducer. One copy is send to the customer and the other copy is kept in the record
along with other documents.
Amendments in Accounts:
BAL provides the facility of amendments in accounts, whenever required by the
customers. Account holder gives an application along with necessary documents to
the bank. Then the amendments are made in the account of the depositor. These
amendments can be made by filling certain application forms. These forms are as
follows:
 Change of Address Form
To change the address of the account holder
 Change of signature form
To change the signatures of the customer.
 Liability / Inquiry Form
This form is used if some person has acquired loan from the bank and he
wants to close his current account, then he fills this form and this form is send to
credit department. When the credit department declares him free from any debt
obligations then his account is closed.

 Vernacular Form
This form is used when some person wants to sign in any language other than
English.

 Mandate to the third party to operate the account


This form is used to enable any third party operate the account.

Closing of accounts
The procedure of closing of account is as follows.
 First of all the customer gives the request to close the account.

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 His signatures are verified.


 He withdraws all his money from his account but in case of current
account Rs. 150 is deducted as a charge of closing the account.
 A liability form is send to the credit department if he has taken a loan from
the bank. If he is cleared from all the liabilities then further proceeds are
taken.
 Permission is granted by the authorized person (the manager).
 Account is closed in the computer system.
 Hic specimen signature card is attached with the account opening form
and marked closed.

Accounts Department
Every transaction which takes place recorded in the computer so all transactions
in different departments are forwarded to account department. Since all vouchers
from different departments are forwarded to current department so this department
tallies all such transactions with current department after maintaining the ledger of
each department. Following are different functions performed by this department:
 Budgeting
 Reports
 Funds management
 Activity checking
 Reconciliation
 Foreign exchange, old Account Contracts
 Maintenance of fixed assets and calculation of their depreciation
 Test Keys

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.

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The targets determined Deposits, Advances, and revenues. Every branch prepares
its own budget for the fiscal year and then budgets of all 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 main sources of the bank are the follows:


 Deposits, Capital, Borrowing from other banks, etc
The main uses of a bank are the follows:
 Advances, Investment in securities, placement in interbank markets,
Other things which are undertaken into account while formulating the budget are:
 Income, Expenses, etc.

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.
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:

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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.

 Income and Expenditure report:


It includes all the details regarding to both the heads of income and expenditure in
detail.

 Royal Profit Report:


It includes the details of the deposit of royal profit account.

 Currency wise report (ccy):


It provides the details of all the deposits currency wise.

 New Fcy report:


This report includes the information regarding only the new foreign currency
accounts. The old foreign currency accounts are those, which were at the time of
nuclear explosions in Pakistan and were being freezed by the Nawaz Sharif
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.

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 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.

 Monthly Budget Review Report:


This report is made to review the performance of the month by calculating the
variance. And then if the variance is in negative, positive actions are taken and
reasons will also be mentioned in the report.

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:
 Total Deposit (of all branches in a single city)
 Opening Balance (closing balance of the previous day)
 Inward Clearing
 Outward clearing
 Cheque issued by State Bank
 Cheque 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.

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1. TT from Head Office:


2. Cover from Head Office
3. Funds from Other banks

TT from Head Office:


One solution of the problem is to contact and inform head office about our
respective position and demand for funds. However the most frequent reason, why
this practice is not followed is that State bank has allowed only one TT free of cost
for all the branches in Pakistan.

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.

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.

Funds from Other banks:


In case of funds shortage another bank is contacted with whom the bank has
settlement for instance Emirates bank. If this option is taken the head office is
informed and the head office then pays to the Karachi branch of the respective bank
from which funds are taken.

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-

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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

Head Office Reconciliation:


All the debit and credit entries of the main office account are recorded in the
statement. Then it is checked with physical vouchers and if there is any problem,
they reconcile it. Head office extract are statements sent by 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.
State Bank of Pakistan:
SBP maintains the account of every scheduled bank including bank Alfalah. The
statement of account reconciliation shows the entries that are passed during the
month in both banks. Bank Alfalah compares the statement with the ledger card of
State bank of Pakistan in which all entries are recorded done with SBP. If any
amount debited by SBP and Bank Alfalah does not credit that amount, it is added in
the balance of the reconcile statement provided by the SBP to BAL.

Maintenance of Fixed Assets and Calculation of their Depreciation


Account department maintains the record of fixed assets. The accounts department
calculates the depreciation the assets by using straight line method. Depreciation is
the allocation of cost of the asset over the useful life. Depreciation is accrued on
monthly basis and charged at year-end. Department prepares Asset purchase report
and Asset sale report after every six months.
Depreciation is charged at the following rates:

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Building 2.5%
Furniture 10%
Carpets & curtains 25%
Equipment 20%

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

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

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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.

Trade Finance Department


Trade Finance involves the import and export activities. This department provides
protection to the rights of importer and exporter. The function of this department is to
serve as a bridge between the importer and exporter in order to settle a transaction.
When trade is taking place between the representatives of two countries (exporter
and importer), the exporter involves his bank (the Advising Bank) in the transaction,
as he wants to feel secure regarding timely payment of his goods in the required
currency.
Trade Finance Department handles two activities:-
 Import
 Export

IMPORT

Import Department of BAL deals with the import of merchandise. Import can be
defined as:
“The bringing of commodities into Pakistan from outside by sea, land or air.”
Requirement for the Importer
These requirement / document must be fulfilled from importer before doing the
import:-
 NTN (National Tax Number) certificate
 Sale Registration Certificate
 Membership from Chamber Of Commerce
 Questionnaire duly filled in
 NIC (attested copy)

Exports

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Exports are major sources of earning foreign exchange and play an important role in
the economic development of the country. It helps to utilize excess resources of the
country.
“Exports mean selling goods to another country.”

Exports of all eligible commodities through authorized banking channels are


admissible under exchange control regulation.
Requirement for the Exporter

These requirement / document must be fulfilled from exporter before doing the
export:-

 Account holder of Bank Alfalah Limited


 Must be a Pakistani
 Membership from Chamber Of Commerce
 NTN (National Tax Number) certificate
 The person must have the Sales Tax Registration Certificate.
 Form E ( export form) dully filled in
 Sale Registration Certificate

Methods of Doing International Trade


 Letter of Credit
 Contract

LETTER OF CREDIT (L / C):

LETTER Of Credit (L / C) ADVISING


Letter of Credit (LC) is a written and conditional undertaking by a bank on the behalf
of applicant to the beneficiary to pay a certain amount at a certain date; if the
stipulated terms and conditions are complied with.
The process of International Trade starts with asking of importer to its bank for L/C.
Then importer’s bank will be called as issuing bank. The issuing bank sends the L/C

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to Bank Alfalah Limited. A bank that receives the L/C is called an advising bank
because after receiving the L/C, it performs the L/C advising function. A cover letter
is prepared and is sent to the beneficiary of the L/C, advising him his L/C has
reached Bank Alfalah Limited and he should collect it immediately. A copy of the L/C
is sent along with the letter.

ISSUANCE OF E-FORMS
Government has provided facility to exporter in taking E-Form from any bank and is
a part of the exchange control mechanism of the State Bank of Pakistan. When an
exporter receives an L/C, his next job is to get an E-form from an authorized Bank.
On the E-form sent by the commercial bank following things are mentioned
 Description of the commodity
 Quantity of the commodity exported
 Amount realized
 Foreign bank charges
 Country of the importer

CERTIFICATION OF THE E-FORM

After filling in the complete information about the goods to be exported, the exporter
brings the E-form to the bank for verification. Bank issues E-form certification to
exporter and he submits it to the custom officer along with E-form certification to
certify E-form.
Documents

After getting the E-form verified the exporter starts preparing his shipment. Banks
only deal in documents. In order to receive payment from his goods the exporter has
to send certain documents to the issuing bank via his negotiating bank. These
documents are.

Bill of exchange

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A bill of exchange is an instrument in writing containing an unconditional order,


signed by the maker, directing a certain person to pay a certain sum of money only
to, or to the order of, a certain person or the bearer of the instrument. It is drawn by
the exporter (drawer) and orders the importer or the importer’s bank (Drawee) to pay
to the order of Bank Alfalah Limited (payee) a specific amount. If the draft is drawn at
sight, the importer must make the payment on receipt of the documents. If it is time
draft, the payment must be made within the specified time limit.

Commercial Invoice

The exporter prepares it. Its amount must tally with that of the L/C. It shows the
name and address of the importer as well as the invoice number. This number is
very significant as it is used in all the correspondence between the exporter and his
bank. It also contains all the specifications of the commodity being exported. The
standard definition of commercial invoice is that it is an itemized list of goods shipped
to a buyer, stating quantities, prices, and shipping charges.

Bill Of Lading

The shipping company or the airline that has been assigned the task of transporting
the goods issues these. The shipper must ensure that the goods are shipped and
handed over the right person when documents are presented to him. The standard
definition of a bill of lading is contract between the seller of the goods and the carrier.

The following are types of bill of lading:

 OCEAN Bill Of Lading


 Air Waybill
 Inland Bill Of Lading
Packing List / Weight List

The exporter prepares these lists in order to show that the consignment is according
to the order of the buyer. It gives a detailed account of the manner in which the
goods have been packed and the number of cartons they have been packed in.

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Certificate of Origin

This document certifies the origin of the exported goods. In the case of exports from
Pakistan, the certificate of origin shows that the country of origin of the goods is
Pakistan. The certificate of origin is a document in which the exporter certifies to the
place of origin of the goods to be exported.

E-Form
It is a necessity for all exports out of Pakistan. All commercial banks always issue
the E-form in quadruplicate.
 Original: is sent to the custom officer
 Duplicate: Bank receive the duplicate
 Triplicate: is sent to the State Bank Of Pakistan

Export Visa

This document is required when the destination of consignment is Canada, America,


and U.K. Different countries fix quota for different commodities and restrict imports of
those goods with in a specific limit. There fore visa is required which is in fact a
permission to export goods to the specified countries.
Payment by importer

Exporters bank sends all the documents negotiated in LC to importers bank. Once
the shipment arrives in importing country, documents are kept with the bank until the
importer makes full payment to bank.

COLLECTION / NEGOTIATION:

When the exporter comes to the bank with the documents, he has two options.
 Send them for collection
 Get Them negotiated

Collection

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The bank sends the documents on behalf of the exporter to the importer’s bank for
payment. The payment is made in Pak Rupees and the exchange rate is the Buying
rate of the day normally called the T.T. Clean Buying Rate. When the reimbursing
bank is to pay Bank Alfalah Limited it credits its nostro account maintained with it
(the reimbursing bank), and afterwards bank debits the exporter’s account with the
local equivalent of the export proceeds calculated at the TT clean buying rate.
Negotiation

The bank purchases the documents from the exporter i.e. the exporter gets them
discounted before their maturity. For example, the drafts are at 90 days from B/L
date. In simple words, the payment for the exports would be received after three
months. The exporter might not want to block his funds for such a long time. He can
get his documents negotiated the day he presents them to the bank. The exchange
rate he will get will however be lower than the TT clean buying rate because the
bank is paying him an amount that it is going to receive after three months itself.
Contracts are not negotiated however in any case. This is because they are unsafe
documents and the bank does not take the risk.

Dispatch

The documents brought by the exporter are in the form of sets containing an original
and a number of copies. The number of each document required by the importer is
mentioned on the credit. Usually they are:

 Manually signed commercial invoice


 Bills of lading
 Packing list in quadruplicate
 Bill of exchange

Filing

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A separate file is maintained in each case and if the documents have been
negotiated, it is titled FDBP that is the abbreviation of Foreign Documentary Bills
Purchased. If the documents have been sent for collection, a file in the similar
fashion is kept but it is labeled FDBC i.e. Foreign Documents Sent For Collection.

CONTRACT

The exporter might export the goods based on a CONTRACT with the importer. In
such a case, there is no surety to the exporter that the importer will make the
payment. The importer might reject the goods on receipt and deny and payment to
the exporter. Therefore, the contract is an unsafe document. There are two types of
contracts.

CAD (Cash against Documents):

The documents are sent to the issuing bank. The issuing bank informs the importer
that his documents have arrived. The importer deposits the amount of the contract
with the bank and takes possession of his documents have arrived. The issuing bank
then makes the payment to the exporter’s bank.

DA (Documents Acceptance):

Drawee takes documents and possession from the issuing bank and signs a bill of
exchange in return giving his acceptance for payment on a specific maturity date.
Now, if he does not make the payment to the issuing bank no payment is made to
the exporter and there is no liability on either bank.

Clearing Department

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Banks collect Cheque for their customers that are drawn on other banks. This
function of clearing its customers’ Cheque by a bank is performed for settling
payments through the clearing houses in the State Bank of Pakistan. In cities with no
SBP coverage, the clearing is than supervised by National Bank of Pakistan. BAL
also provides a facility of clearing.
Types of Clearing are follows
Inward Clearing
Outward Clearing

Cash Department
Cash department of Bank Alfalah works under the operations department. This
department is given the complete responsibility of cash, as result of transaction in
touch local and foreign currencies. It is also responsible for the book keeping of
these transactions and the safe custody of cash. Out of five counters of cash
department one counter is fixing for senior citizens and females. All counters are
dealing at the same time in deposits, withdraw and online transaction processes.
This department performs the main function.
Cash receipts
Cash payments

Credit Administration department (CAD)


Credit means belief or trust. “The quality of being credible or trustworthy”. Another
words we can define credit as “trust in one’s integrity in money matters and ones
ability to meet payment when due”.
Credit marketing department deals with extending loans (credit facility) to customers
before sanction advice. State Bank of Pakistan (SBP) has prescribed regulations
which are called “PRUDENTIAL REGULATIONS”. Every bank has to follow these
regulations. If any bank violates the regulations it should be liable for penalties.
The Bank Alfalah limited credit is extended on the basis of these rules and
regulations. These regulations tells the term and conditions under which you can
extend loans to the borrower and to what extent.
Credit Facilities
At BAL there are two types of credit facilities
Funded facilities
Non funded facilities

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Funded facilities
These are the facilities in which there is direct involvement of cash fund. Following
are the funded facilities.
Current finance “CF”
Term finance “TF”
Finance against foreign bills “FAFB”
Finance against packing and credit “FAPC”
Finance against imported merchandise “FIM”
Finance against trust receipt “FATR”
Non Funded facilities
The facilities where there is no direct involvement of banks fund. There are two types
of unfunded credit line facility, which are as follows:
Letter of Credit (LC)
Letter of Guarantee (LG)

Direct Induction of Fresh Candidates


Through direct induction of fresh candidates, Bank Alfalah is able to employ
fresh postgraduate candidates for its organization and the process is as follows:

Benefits provided by Bank Alfalah


Some of the monetary and non monetary benefits that Bank Alfalah provides
to its employees are as follows:
 Attractive Salary Package
 Employee Provident Fund
 Gratuity Fund
 Medical Insurance
 Bonuses
 Life Insurance
 Promotions
 Various types of Staff Loans
 Assistance in Pursuing Higher Education

Internship experience

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I did my internship at Bank Alflah, New garden town Lahore branch for a total
duration of seven weeks and the departments that I have worked during that time are
as follows:
 Customer Service
 Clearing and remittances
 Accounts and finance
 Account opening
First day, I reported to the manger of the branch who gave me brief introduction
about the management and working of the branch, he also check my knowledge
about banking by taking a short interview. Then he introduced me with employees.
Total ten employees are working with one manger. Security system is very strict,
hidden cameras are there. Branch environment is very good.

1st I worked with Madam Sadia. I learned about KYC ( knowing your customer). In
this department I learned about customers behaviour, and for why he is opening A/C.
2nd I worked in account opening Department with Ahsan Ali. I learned how to fill
current and saving deposit slips, how to fill account opening form, KYC (know your
customers) forms, How to update accounts on daily basis, what are the requirements
of account opening what type of document are required. What types of account Bank
Alflah is offering to the customers. I have learnt the procedure that an account
opening officer has to follow in order to open and maintain an account. Some of the
major deposit account opened by bank Alflah was as follows
 Alflah Education
 Profit & loss saving Account
 Basic Banking Account
 Royal Profit Account
 Kifayat Account
 Mahana Amdan Account
 Current Account
If customer wants to close the account then he has to given written application to
head of the Operation Department. After verifies the signature the account will be
close. The Charges fee is Rs.150.

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I also learned the procedure of issuance of Cheque book. When the Cheque book is
issued then the signature of customer is taken on the Cheque book issuance
register. Stock of Cheque books are balanced at the end of each day and kept under
safe custody.
3rd I worked with account officer Mr. Nosheen in Account Department. I have learned
all the transactions in different departments are forwarded to account department.
Since all vouchers from different departments are forwarded to current department
so this department tallies all such transactions with current department after
maintaining the ledger of each department. I have learned how to make the budget
which depends on the forecasting of person. Daily, weekly, Quarterly, Semi annually,
annually reports are made that describes the proper analysis of branch. BAL
prepares its reconciliation statements. All the debit and credit entries of the main
office account are recorded in the statement. Then it is checked with physical
vouchers and if there is any problem, they reconcile it.
Account department maintains the record of fixed assets. The accounts department
calculates the depreciation the assets by using straight line method
Depreciation is charged at the following rates:
Building 2.5%
Furniture 10%
Carpets & curtains 25%
Equipment 20%

Working Experience Impact on career


My internship experience has given me a realistic preview of my field of education.
Now I feel that I m better prepared to enter the world of professional work. I have
come to know and have been appreciated by a number of professionals who are
lending their services to the banking sector for more then a decade. I feel honored
that I have worked such experienced professionals.
The overall experience of my internship was very good. I learned 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 gain knowledge
about banking which I previously lacked and many more products being offered by
the bank. No doubt this internship gave me the experience, which would boos my
confidence to work in future.

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Duties and Responsibilities

My duties and responsibilities are as follows:


 Maintain a good relationship with the bank senior staff.
 Create a good and effective learning environment in the bank,
 Equally deal all the type of people belonging to any type any gender, race,
religion etc.
 To help the senior staff during working hours to reduce his work load.
 Whenever a customer comes to open their account, they have to fill a
relationship with the bank. As part of my duty I had to fill these forms and then
use the appropriate bank stamps to complete these forms.
 Maintain the secret information of customer accounts.

Accomplishment

The main purpose of internship is to get a practical experience in the market and to
get some practical knowledge. Usually the period of internship is short but we can
learn a lot from this period. First time in my life when I was doing some reasonable
practical tasks.

 I learnt how to implement my MBA knowledge on this job. I learnt what the
practical implementation of the book knowledge is
 It was first time in my life to work whole day in the company with full
responsibility, to go in time and to off in time.
 I learnt from this short period of job is punctuality.
 The other thing is dressing, professional dressing matters a lot. By seeing my
senior and collogues I start to copy them in dressing.
 It was a big achievement for me, that I learn how to do the work in team and
group of people. Working in team should be learnt.

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Problems
For any job skills and abilities are acquired to perform the job but in case to perform
professional task then man should perfect and have a lot of skills to perform any type
of task. But during the internship I faced some problems
 There is no proper way to give proper training to internee.
 Lack of skill with dealing with different type of customers
 Difficult to perform work in excel because major work is done on excel.
 Operate different type of computer program especially in software.
 Acquired the skill of communication & other professional skill.
 Lack of Knowledge how to face problems encountered.

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External & Internal analysis

SWOT Analysis
SWOT is stands for strengths, weaknesses, opportunities and threats. SWOT
analysis is a careful evaluation of an organization’s internal strengths and
weaknesses as well as its environmental opportunities and threats. In SWOT
analysis the best strategies accomplish an organization’s mission by exploiting an
organization’s opportunities and strengths while neutralizing its threats and avoiding
its weakness. During my internship I also observe these factors of bank and made a
conclusion which is as follows

Strengths

 Being the private organization its main aim is not to earn profit but also to
satisfy its customers and slogan of BAL is also the representative of this
purpose as Bank Alfalah “The Caring Bank”.
 Bank has AA (Double A) and A1+ (A one plus) Credit Rating for long term and
short term loans respectively.
 Main source of profit for any financial institution is public saving which only
comes from public confidence and BAL is getting this confidence which is one
of the main strengths of bank
 Bank Alfalah is also getting fame in the market due to its name “ALFALAH”
which is leaving the Islamic and favorable impact on the minds of public.
 BAL is providing the facility of Money Gram to its entire people who are its
customer or not and through this service it has got the leadership in Money
Gram because any other bank is not offering this service.
 With in very short period it has got a superb accomplishment which shows the
competency of top management.
 Personnel of Alfalah are well trained and highly skilled.

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Weaknesses
Beside all these strengths I also noted some weaknesses in the operations of bank
Alfalah which are described below:
 Bank Alfalah is charging online charges for transfer of money but some other
banks not charge online transfer charges.
 Majority of the workforce consists of young professional, they lack in their
experience. And sometimes lack of experience becomes a hurdle while
serving to the customers. It is the point where they feel difficulty while
competing with the other banks.
 It was observed that at present the motivation level of the employees is not
very much.
 No job rotation for employees..
 BAL’s lending procedure is quite complicated that some people hesitate to
come as they are requiring a huge file of documents.
 Bank Alfalah is not offering any credit facility for students.

Opportunities

It is mandatory to try to make progress with consistency as well as to adopt changes


with needs of time, in order to cope up with both conditions.
 Bank Alfalah is spreading its network outside the boundaries of Pakistan and
it has more opportunities to extend this network as State Bank of Pakistan has
prescribed new policies in the prudential regulations.
 In addition to excellent routine banking, it has earned a good name by offering
special products like car, home and credit cards facility. So the penetration of
these products could enhance market shares.
 There is a very good growth trend in the Islamic banking in the country and in
the world as well. BAL has the advantage of having Islamic Banking network
and the growth in this particular field can be very fruitful for the bank, bank
has an opportunity to introduce new products and services in Islamic banking.

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Threats

Threats are the negative trends in external environmental factors. As on one side
environment provides opportunities to one organization, on the other hand it also has
to face some threats. Bank Alfalah also has to face this situation.
 The conventional banks those having high growth rate and high market share
are always being a threat
 There is an average not low turnover rate, mainly because of low incentives
as compared to the other banks.
 Large business parties have fewer attractions in being a client of BAL-IBD,
mainly because of excessive amount of documentation
 Other foreign financial institutions like City Bank, Standard Charted etc also
having strong banking policies and there’s a chance that people might move
toward these financial institutions to secure their investments, transactions
and related services.

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Marketing Strategy

This is an age of competition. Numerous organizations are providing financial


services to the customer. These days everyone is facing pressure of competitors. In
this world of growing competition, the only way to survive and grow, for an
organization, in the market place is the proper marketing and promotion of its
products. Same is the case with banking companies. There is large number of
foreign and local banks working in the country and it has been noticed that they are
emphasizing much on their marketing strategies. In this scenario, the key for a bank
to succeed and attract its customers is adequate promotion of its products &services.
BAFL for the promotion of its new and existing products invest heavily, it advertises
its product through:

Electronic media i.e. television


Print media i.e. newspaper
Billboards
Business magazines
Website
Sponsorship

Electronic media

The major way in which today’s organizations promote its products and services is
through television, not only because it’s economical but also because the visual and
audio aids help in promoting its product.
Television ads for Bank Alfalah mainly try to emphasis the ‘The Caring Bank’,
message in its advertisements, by showing how its services can help you with the
different financial problems that you face in your every day life. For example, an
advertisement showed how Bank Alfalah Credit Cards helped a couple when they
had no cash left during a shopping trip or how a father happily shows his family a
new car that he had financed from Bank Alfalah.
Another major way in which Bank Alfalah advertises its products electronically is
through its website, which is designed in an effective manner with detailed

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information, so that visitors can effectively know about the different services that the
bank provides.

Print media

Print advertisements are another major way in which Bank Alfalah advertises its
product to the masses. Print media advertisements are mainly printed in major
English and Urdu newspapers across Pakistan.
The messages of these advertisements are mainly of new financial services that the
bank may introduce over time.

Sponsorships

Bank Alfalah also gives a significant consideration not only to its product publicity but
also to the creation of public relations. Bank has proves its public goodwill by
contributing money and time to public service and activities. Bank Alfalah has been
sponsoring different sporting tournament, especially cricket which is the most
popular sports activity of Pakistanis and is watched by millions whenever there is a
tournament featuring the Pakistani cricket team and is thus a great way to advertise
their products. Some of the tournaments that Bank Alfalah has sponsored over the
year are as follows:

Series Sponsored By Bank Alfalah


Series Year
Pakistan Vs England 2005
Pakistan Vs West Indies 2006
Pakistan VS South Africa 2007

Now days, BAFL is sponsoring the cricket rankings updates on Ten Sports.
But due to terrorism no series is held in Pakistan from previous three years. Now the
BAL focuses on the domestic series sponsorship.

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Competitive Strategy
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 (DFIs)
 Specialized Banks
 Foreign Banks
Bank Alfalah is a private commercial bank so the major competitors of Bank Alfalah
are the following:
 Muslim Commercial Bank
 Union Bank Ltd
 Soneri Bank Ltd
 Prime Commercial bank
 The bank of Punjab
 Bolan Bank Ltd
 Bank Al-Habib Ltd
 ABL
 Faysal Bank Ltd
 Platinum Bank Ltd

Ratio Analysis
Ratio analysis is an important and age-old technique of financial analysis. Ratios are
important and helpful in the reference that:

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 These simplify the comprehension of financial statement and tell the whole
story of changes in the financial conditions of the business.
 These provide data for inter-firm comparison. The ratios highlight the factors
associated with successful and unsuccessful firms, also reveal strong and
weak firms.
These help in investment decision in case of investor and lending decision in
case of Bankers etc.
1. CURRENT RATIO
Rs.(000)
Rs.(000) 2009 2008
Current assets 57778651 39115635

Current Liabilities 17142253 24420285


3.37 1.6

Financial position of BAL is strong in 2009 as compare to 2008. This ratio tells us
about short term solvency of the organization
Current ratio is showing better trend in 2009. Cash balance is increasing in 2009 as
compare to 2008.

2. CASH RATIO

Rs.(000) 2009 2008


Cash Equivalent 35,056,012 32,687,335

Current Liabilities 17142253 24420285


2.04% 1.39%

Rs.(000
Cash ratio also describes the better condition for the bank. If the cash ratio increases
it is better for the bank. It shows the financial condition of the bank.
3. DEBT RATIO

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Rs.(000) 2009 2008


Total Liabilities 366936635 331946025

Total Assets 389070055 348990764


0.94% 0.95%

Debt Ratio describes the firm’s debt position as well as its liabilities. it also describe
the level of financial risk. If the ratio is high then it is negative sign for bank. The ratio
is decrease slightly but it is not good for bank overall.
4. WORKING CAPITAL
Rs. (000)
= Current assets – current liabilities

2009 = 57778651 - 24,420,065 = 33,358,586

2008 = 54268378 - 17142253 = 37,126,125

5. RETURN ON EQUITY
Rs.(000)
Rs.(000) 2009 2008
N.P.A.T X 100 897035 X 100 1301301X100

Share holder equity 19442692 1359727


4.6% 9.6%

Return on equity describes the shareholder earned on their investment in any firm. it
also describe the profitability of the company. Return on equity in 2009 reaches in
lowest position as compared to previous year.

6. NET PROFIT MARGIN

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Rs.(000) 2009 2008


N.P.A.T X 100 897035 x 100 1301301x100

Sales 35554930 31046583


0.28% 0.43%

Conclusion and Recommendations

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Conclusion
At present there is no such organization in the world that is free from problem and
challenges. Every concern has to strive and struggle a lot to be more profitable and
to get more competitive edge.
It has been eighteen years since the establishment of Bank Alfalah, and since its
establishment it has aimed to become the leading bank of Pakistan by that provides
outstanding services to its customers. The bank has seen phenomenal growth in the
past few years by opening more branches in the country, increasing the deposit
base, while also increasing the assets and profits of the bank. The services that
Bank Alfalah provides have a great market penetration not only because of their
features but also the profit and markup rates that they charge. The management of
BAFL is taking strategic steps to enable the bank to emerge as a strong and
progressive institution. It is continuing to make efforts to refine its products and
operations to make them more compatible. New deposit schemes have been
introduced and an action plan to maintain revenue growth in future. As the business
and economic conditions remain uncertain, BAL continues to develop the new
products like it has been doing in past.

Recommendations

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After doing internship of six weeks in Bank Alfalah Limited, I would like to give some
recommendations to count over some problems.
 Bank should prefer to promote worker on the basis of their talent and avoid
going for personal like and dislikes. It can be harmful for the organization in
the long run.
 In Bank Alfalah, there is misdistribution of work; some people are over
burdened with the work. So I suggest that there should be fair distribution of
work in all the departments.
 Bank Alfalah is only dealing in Money Gram; it should also starting providing
the service of other money transfer lines like Western Union.
 BAL should provide loan to students at low mark up rate and easy terms &
conditions.
 Bank Alfalah Limited needs to use more marketing channels such as radio to
make the public aware of its products and services. In the presence of intense
competition Bank Alfalah Limited has to realize the importance of marketing.
 There are no incentive schemes for employees of Bank Alfalah like
scholarship schemes for employees that want to pursue higher education.
 Bank Alfalah although gives a number of incentives to its employees, like
personal loans at nominal markup but they are only provided to employees
that are in higher ranks.
 Education fees are also returned by Bank Alfalah to its employees, after the
have finished their studies.
 Bank Alfalah Ltd should continuous to expand its business, by increasing its
deposit portfolio through aggressive market penetration strategies.

APPENDIX

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Balance Sheet of BAL


2005 2006 2007 2008 2009
Cash and balances
with treasury banks 24,788,625 27,859,360 29,436,378 32,687,335 35,056,012
Balances with other
banks 9,713,369 12,731,952 18,380,738 21,581,043 22,722,639
Lending to financial
institutions 27,050,493 12,456,653 3,452,059 3,315,500 14,947,435
Investments 57,425,700 56,502,210 88,491,564 75,973,238 99,159,957
Advances 118,864,010 149,999,325 171,198,992 191,790,988 188,042,438
Other assets 3,851,529 5,633,051 6,013,097 9,869,367 14,649,380
Operating fixed
assets 6,620,067 10,502,990 11,922,324 13,773,293 14,492,194
Deferred tax asset
TOTAL ASSETS 248,313,793 275,685,541 328,895,152 348,990,764 389,070,055
Bills payable 3,733,124 3,091,135 4,138,243 3,452,031 3,766,144
Borrowings from
financial institutions 5,844,389 8,394,130 21,230,697 13,690,222 20,653,921
Deposits and other
accounts 222,345,067 239,509,391 273,173,841 300,732,858 324,759,752
Subordinated loans 3,223,355 3,222,106 3,220,858 2,571,169 7,570,181
Liabilities against
assets subject to
finance lease - - - - -
Other liabilities 5,219,666 7,305,496 9,531,860 11,291,280 10,006,786
Deferred tax
liabilities 484,066 1,921,338 1,379,809 208,465 179,851
TOTAL
LIABILITIES 240,849,667 263,443,596 312,675,308 331,946,025 366,936,635
REPRESENTED
BY
Share capital 3,000,000 5,000,000 6,500,000 7,995,000 13,491,563
Reserves 2,351,218 2,749,533 2,414,833 3,166,056 3,587,969
Unappropriated
profit 1,386,845 2,823,072 4,851,840 3,447,467 2,690,728
Surplus on
revaluation of assets 726,063 1,669,340 2,453,171 2,436,216 2,363,160
Total EQUITY 7,464,126 12,241,945 16,219,844 17,044,739 22,133,420
Total Liabilities
and Equity 248,313,793 275,685,541 328,895,152 348,990,764 389,070,055

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References:

www.bankalfalah.com

Issues in Pakistan’s Economy by S. Akbar Zaidi

www.world313.com/pakistan_bank_alfalah.html

www.google.com

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