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BANK AL FALAH Internship Report


Muslim Commercial Bank is one of the leading banks of Pakistan with a deposit base
of about Rs. 280 billion and total assets of around Rs.300 billion. Incorporated in
1947, BANK AL FALAH soon earned the reputation of a solid and conservative
financial institution managed by expatriate executives. In 1974, BANK AL FALAH
was nationalized along with all other private sector banks. This led to deterioration
in the quality of the Banks loan portfolio and service quality. Eventually, BANK AL
FALAH was privatized in 1991.
During the last fifteen years, the Bank has concentrated on growth through
improving service quality, investment in technology and people, utilizing its
extensive branch network, developing a large and stable deposit base and managing
its non-performing loans via improved risk management processes.

Vision Statement

To be the leading financial services provider, partnering with our customers for a
more prosperous and secure future.

Mission Statement

We are a team of committed professionals, providing innovative and efficient

financial solutions to create and nurture long-term relationships with our customers.
In doing so, we ensure that our shareholders can invest in us with confidence.

Our Values

These are the standards and principles which determine our behavior and how we
interact with our customers and each other:
1. Integrity
We are the trustees of public funds and serve our community with integrity. We
believe in being the best at always doing the right thing. We deliver on our
responsibilities and commitments to our customers as well as our colleagues.
2. Respect
We respect our customers values, beliefs, culture and history. We value the equality
of gender and diversity of experience and education that our employees bring with
them. We create an environment where each individual is enabled to succeed.
3. Excellence
We take personal responsibility for our role as leaders in the pursuit of excellence.
We are a performance driven, result oriented organization where merit is the only
criterion for reward.
4. Customer Centricity
Our customers are at the heart of everything we do. We thrive on the challenge of
understanding their needs and aspirations, both realized and unrealized. We make
every effort to exceed customer expectations through superior services and

5. Innovation
We encourage and reward people who challenge the status quo and think beyond the
boundaries of the conventional. Our teams work together for the smooth and
efficient implementation of ideas and initiatives.

Departments of BANK AL FALAH

I did internship in Gulshan market branch which had the following departments.
There was staff shortage hence a few persons were performing all duties. Therefore,
there was overlapping of duties.
Organizational Structure of the BANK AL FALAH Branch

However there were following departments.

Current Saving Department
Accounts Department
Remittance Department
Clearing Department
Cash Department
Customer Relation Department

Account Opening

Application Form
The customer would like to open his account is required to meet with the manager
or second officer, who will give him an APPLICATION FORM.
Specimen Card
As I have already mentioned about Signature Specimen Card. This card contains
two signatures of an applicant, applicant A/c no, A/c type, branch code, title of A/c,

it will be attached with an application form. Banker uses this card at the time when
he receives the cheque; he compares customers signature with the signature on the
cheque for avoiding fraud.
Manager has every right not to accept this contract if he is not satisfied by the details
provided by the customer.
Account Opening Register
The manager records the necessary details into this register and allots an a/c
number from this a/c opening register. This register is maintained for each type of
account and the a/c numbers are allotted serially. After opening a saving and current
account every applicants data is entered into the computer to maintain a safe record
and application form is properly filled so that it can be available when necessary.
Cheque Book
Cheque book is issued to the customer when. the bank accepts the A/C opening
application form and letter of thanks is received.
Types Of Customers

Only one person can operate this a/c. We can call it a personnel or individual a/c.
Followings are required to open it.
Signature of customer on back of AOF.
N.I.C photocopy attached
Mention next of kin (nominee)


In case of joint A/c, applicant mentions that how much person will operate the A/c.
Instruction are given for joint A/c such that the account shall be operated by
Any one of us or survivor

In first case if one of the a/c holders died then the other can operate the a/c
Any two/All of us jointly

In second case if one of the a/c holders died then the other partner cant operate
this a/c individually without having permission from the court.
Sign of both customers on back of AOF
Sign on joint A/C # mandate
Name and A/C # of introducer
NIC copies of both members.
Mode of operation.

Partnership A/C

For partnership a/c, along with the application form signature card.Other
documents are also needed such as
Partnership deed certified copy
NIC photocopies of all partners.
Partnership mandate for account signed by all the partners
A letter duly signed by all the partners containing the operating instructions of the
account also has to be taken.
In case of addition or withdrawal of any partner a new agreement will be required.
Company Account

For company accounts following documents are required: Copy of certificate of incorporation
Memorandum of Association
List of Directors
Copy of board resolution
Certificate of Commencement of Business
Copies of NIC of Directors
Companys Balance Sheet
Letter of Thanks
Bank prepares Letter Of Thanks for the new customer. This act promotes good will
among the customer.
PayIn Slip
This slip is used for depositing the additional amount. The bank will accept the
Pakistanis notes. All cheques and other instruments should be crossed before they
are deposited for credit into the account. There shall be no restriction on number of
withdrawals in current account. An account holder wishing to close his account must
surrender the unused cheques to the bank. The current account is computerized,
thus it generate the statement of account for all account holders periodically.
Incidental charges of Rs.50 are beard by the account holder if its credit balance is
less than Rs.10000.
Closing of an Account
There are no. of reasons of closing an account. Some are listed below:
If customer desires to close his account
In case of death of one account holder
Bankruptcy of the account holder
If an account contain nil balance or not up to the requirement of rules.
Before closing any account, bank send letter to the account hold for informing him
that his account is going to be closed. There is need an approval form higher
authority to close any account.

Payment of Cheques

The first work that was assigned to me was Scrutiny of cheques. It is considered, as
the simplest work in consumer banking operations, but actually it is not that simple.
The cheques that are presented for either payment or for deposit are the main points

where most of the frauds occur. There are few points to be noted while scrutinizing a
cheque for payment or deposit,
Date of the cheque
Signatures of drawer
Signature of Presenter
Amount in figures and words
Branch stamp
Account number of the drawer
Crossing in favor of any other person
The cheques which are presented for deposit in accounts of customers for them a
pay-in-slip is to be filled in and the cheque is presented along with that slip. As the
cheques are taken for deposit in customers account, a Cheques Receipt Summary is
prepared in which cheques are entered according to their category, i.e., Transfer
Delivery, Clearance or Collection.
Call Deposit Receipts are also issued to the customers especially before the holy
month of Ramzan. The reason is that customers convert their savings from saving
account to the PLS account. The reason for this activity is that the customers want to
take out there money from the accounts in order to skip the deduction of Zakat. For
this purpose, CDRs were issued having both applicant and beneficiary the same
CDRs are issued to the contractors favoring building departments in order to get
tenders for various buildings.

Types of Accounts

Current Account
The current account is the most common account and the most preferred amongst
business concerns. The theoretical explanation for this would be that they can
function more efficiently but since in reality there are no restrictions on any with
drawl the only reason we could think of is that current account facilitates online
banking which saves time (which in this ultra competitive business world the most
precious resource) to a considerable extent. In case of a current account the client
does not earn any interest. Current account enables the client to do cash transactions
in a more efficient manner.

A sum of Rs. 10000/= in cash as initial deposit is required for opening a current
account and the same may be maintained as minimum average running credit
balance. No profit is paid on credit balances held in current accounts. The bank
reserves the right to allow opening of current a/c at its description. All deposits and
withdrawal from a current a/c takes place only at the branch where the account is
being maintained. Current a/c cannot be overdrawn, except by prior agreed
agreements with the bank. The correspondence relating to current A/Cs should be
addressed to manager of the branch where the account is being maintained.
The account holder can draw sums from his account by means of cheque supplied to

him by the bank for that particular account. Account holder should take well care of
the chequebooks issued to them.
Saving Account
Individuals who wish to earn profit/interest on their investment normally maintain
the profit and loss sharing account but in order to earn interest the client is required
to keep his/her deposits with the bank for some time. In theory there are some
restrictions on withdrawal of money from a Profit and Loss Sharing account but in
general banking practice there is no restriction on any with drawl from a Profit and
Loss Sharing account. The interest/profit is paid half yearly.
Profit and Loss Sharing Account

PLS saving account having a running minimum credit balance of RS.10000. The
bank would be within its rights to make investment of credit balances in the PLS
saving accounts in any manner at its sole discretion and to make use of the fund to
the best of its judgment in the banking business under the PLS system.

The profit/loss will be credited/debited on the basis of its net working results at the
end of each half-year. Calculation of products on PLS saving A/c will be made for
each calendar month on the lowest credit balance of an account between the close of
business on the 6th day and the last day of the month.
Rules for PLS

Account holder can only withdraw sums from his account by means of cheques
supplied to him by the bank for that particular account.
Post dated and stale cheques willl not be paid.
The bank reserve to itself the rights to close any account without previous notice
any account which has not satisfactory account credit balance.
If the account holder withdrawals the money under 7 days notice, the profit loss
earning products will be computed on the monthly minimum balance. Zakat is
deducted every year on non-exempted accounts.
Saving 365 Gold

This account is newly developed of BANK AL FALAH and it provides flexibility of

saving account to business people. Profit on deposits will be payable on daily product
basis on balance of RS. 500,000/- and above. However, if balance in the account
falls below RS. 500,000/- on any day, the product will be ignored. There will be no
restriction on withdrawal from the account. Zakat and withholding Tax is also
applicable on the account opened under this scheme.
Minimum balance is Rs.500,000/=
Below minimum balance, profit calculation ignored
Profit calculated on daily basis

Profit paid on annually basis

Zakat deducted on @ 2.5%
The higher the balance, higher the rate is offered.
Profit calculated on daily basis.
Profit paid into your account every month
Term Deposits

Term deposits are fixation of certain amount of money for a specific span of time.
The instrument term deposit is like a slip containing issuing bank name, a/c # to
operate on computer, deal #, customer name, reference #, date of issue, amount,
rate maturity date etc.

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 accounts department so this department
tallies all such transactions with current department after maintaining the ledger of
each department. The branch where I worked Mr Azeem-ud-din Bukhari was
performing these activities. I was not allowed to use software but I observed all the
fuctions performed by him. Following are different functions performed by this
Preparation of Financial Statements for different time span
Maintain all accounts of different departments
Calculation of profit on different schemes
Calculation of markup on different advances
Preparation Different types of reports for State Bank
Daily position of cash & every accounts
Matching daily summaries of all departments with ledger
As swift software is used therefore all these tasks have become quite simple just it
requires posting and then all tasks can be performed by giving computer commands.


The need of remittance is commonly felt in commercial life particularly and in every
day life general. A major function of any banking system is the transfer of funds from
one client or one place to another. By providing this service to the customer the bank
earns a lot of income in the form of service charges. This department deals with local
currency remittance i.e. remittance from one city to another without actually
carrying the currency. BANK AL FALAH uses following instrument for transferring
of money:
Demand Drafts (DD)
Pay Order (PO)
Telegraphic Transfer (TT)
Mail Transfer (MT)
Demand Drafts (DD)
DD is a written order given by the branch of the bank on behalf of the customer to
other branch of the same bank to pay the certain amount to the customer. DD are

issued for the particular place other than place of issuance. A drafts is a Cheque
drawn by a bank on its own branch or any other branch of another bank at a
different place requesting it to pay on demand a specified amount of money which is
already received to the person named on it. DD is of following two types:
DD payable
DD Paid Suspense a/c
In the first type as advice reaches for payment the immediately pay to the customer
while in later as DD presented by the customer, it is paid and the suspense account is

A printed application form is provided for filling in completely and signing by the
applicant. After depositing an amount of draft and commission of the bank, duly
completed and signed by two authorized officers, then it is handed over the applicant
and credit order is dispatched to drawer branch. Following are the pre-requisites for
the processing of DD:
Bank Serial No
No. of DD
Central No
Test Key
Pay Order
For this kind of remittance the payer must have the account in the issuing bank. Pay
order are more liquid as compared to cheques because cheques may be dishonored
while PO cant be. It is written order issued by the bank drawn and payable on itself.
It is used for local transfer of money from one person to another person. It is also
used by the public for depositing money with Government or Semi Government

The party who requires a pay order will get a printed application from the bank. He
will fill it and deposits the amount and commission. The bank charges are same as
on demand draft.
Bank Serial No.
No. of PO
Telegraphic Transfer (TT)
In this case the authority is given from one bank to other on the behalf of the
customer through telecommunication to debit their inter office account through
them and credit their parties account mentioned in TT. It is an inter bank
transaction. Telegraphic transfer is an instant transfer of funds. Through this
method applicant can transfer money from one place to another place. There are two
types of TT, Both types of TT are maintained in separate registers, test is applied by
the manager of every amount of TT.
Incoming TT
Outgoing TT

Applicant has to fill a form along with depositing amount to be transferred and bank
commission. BANK AL FALAH charges the commission at the same rate as in the
case of demand drafts.

Issuing Branch Name & Code

Beneficiary Branch Name & Code
No. of TT
Amount in words & Figur
Test key
Mail Transfer (Mt)
As the name shows, it is transfer of money in the shape of document through mail.
Procedure is like TT. The transfer of funds from one place to another by mail is
called Mail Transfer (MT). The MT can be foreign or domestic. The applicant who is
desiring to remit the funds by way of Mail Transfer can either deposit cash or ask the
bank to debit his/her account with the cost of MT including the bank charges. These
all measures are for safe transfer of funds.

Issuing Branch Name & Code

Beneficiary Branch Name & Code
Number of MT
Amount in words & Figure
Test key


All the external functions of clearing are carried by NIFT (National Institute of
Facilitation Technology) while the internal operations are performed by clearing
department. It is just like any courier service which takes the cheques of other banks
and delivers the cheques of that branch to it.
Clearing is a system by which banks exchange cheques and other negotiable
instruments drawn on each other within a specified area and thereby securing the
payment for its clients through the clearing house. A clearing house is a general
organization of the banks at a given place, Its main purpose is offsetting the cross
obligation in the form of cheques. When there are many banks in the country each
will receive a number of cheques drawn on other banks, deposited within for
collection. A clearing house is an organization where these cheques are brought and
the mutual claims of each bank on the other are offset and a settlement is made by
the payment of differences. The representatives off all the banks in Pakistan attend
office of the bank which is performing these duties of clearing house, on each
business day at a fixed time. They deliver cheques that their bank may have
negotiated and receive in exchange cheques drawn on their bank negotiated by other
bank. The responsibility of smooth cooperation of the clearing function lies with the
State Bank of Pakistan.

The operation of clearing refers to the collection of cheques drawn on other banks.
These cheques may be drawn on UBL, HBL, NBP, or any other bank of Pakistan. The
respective officer collects all cheques and enter them in clearing Register. Then he
affix a stamps on these cheques and sorts out cheques of different banks and
prepares schedule for them. These cheques are sent to clearing house. Exchange of
cheques takes place through NIFT.
Further they settle their account. State Bank of Pakistan representative will work out
the balances and will settle their account from their balances with State Bank of


It is another major department of the branch. Bank provides this facility to the
people who need advance money to meet their requirements. For getting the
advances, the first step is the preparation of credit proposal. Some principles of
lending are considered whenever financing being is made. These principles are:
Required Information
An assessment of his business abilities
Accurate & up-to-date financial statements
Market reports about the borrower
Party dealing with other banks
Nature and structure of borrower business
Names of proprietors, partners or Directors
Detail of companies associated with borrower business
Financial condition of borrower business
Preparation Of Credit Proposal
At first, a formal application for credit approval is obtained from the party along
with complete group position. The parties credibility report is also obtained from the
banks from which the party has been doing the business. The party creditability
report is also taken from the head office of Trade information Division.
For obtaining credit, party has to submit the last two years Balance Sheet and Profit
& Loss Statement duly attested but authorized auditors. If the party also involve in
export or import business then the bank also consider the data of three years about
imports and exports.
The Current and Debt equity ratio is also calculated by the bank.
Then recommendations are made the type of data required to prepare the credit
proposal is to be gathered from different departments. Some data is obtained from
the foreign exchange department. Some data is obtained from current account
department and some data is available in Advance Department. The purpose for
which the financing is required should be explained very clearly. The securities
offered by the party to the bank is also evaluated. In case of pledging of the property
in shape of land or building the complete evaluation of the property should also be

After all the requirements and necessary documents for applying for advances is
fulfilled by the party then, the case is sent to the Chief Manager for approval. If the
manager find any discrepancies, he may write on these documents. If the credit limit
is in his range, he may approve the party for credit. If the amount is exceeding the
Chief Manager send the case is forward to the Circle Office for approval and here the
same procedure is repeated and if the credit amount is in the range of GM, he can
approve and if the credit amount is very large from Circle Office, the case is then sent
to Head Office and if it is a real big then is to be decided by Board of Director. BANK
AL FALAH provides advances which are two types. These are two types of advances:
Secured Advances
Unsecured Advances
In secured advances, the bank takes any security against the loans while in case of
unsecured advance no security is taken by the bank.
BANK AL FALAH divided the advances in to two major types:
Fund Based
Non Fund Based
In the fond base advances, the funds of BANK AL FALAH is involved and in Non
Fund based only guarantee is given by the bank.
Fund Base Advance
BANK AL FALAH have following Fund base facilities of advance in its corporate
branches. The details of these types would be later. These are as follows:
Demand Finance (DF)
Cash Finance (CF)
Running Finance (RF)
Demand Finance

This is a type of secured loan and demand loan never allowed without security. It is a
type of long term financing. BANK AL FALAH also gives loan under the head of
demand finance to individuals, industrial units commercial business etc.
Cash Finance

In this, the borrower gives a specific reason for the need of cash. BANK AL FALAH
gives the facility of cash credit to business. The amount is passed through voucher
and credit to the party account. Normally 0.60 paisa per thousand is charged on
daily basis to customer.
Running Finance

These finances as evident by the name are given to the business to meet their daily
needs. The mark up is charged on daily balances. This type of advances are given to
trade, commerce and manufacturing for general purpose. Normally 0.60 paisa per
thousand is charged is charged on daily basis. It is drawn through Cheque.
Letter of Credit

A letter of credit is a written instrument issued by a bank authorizing the seller to

draw in accordance with certain terms and stipulating legal forms, that all such bills
will be honored.
How a letter of credit is opened?

Application for a letter of credit

Line of credit
Opening of the letter of credit
Handling of the documents
Payment by the importer to the bank
Liability of the issuing bank
Application for a letter of credit

An importer prepares an application on the prescribed form available from the bank.
The information which are supplied in the application are based on the contract of
sale and include only the importer feature of contract such as the value of the
merchandise, port of shipment, port of unloading, expiry date of the papers and brief
description of the goods. If the bank is satisfied with the applications, it will signed
and acceptance agreement with the importer.
Line of credit

Before issuing a letter of credit, bank takes all necessary precautions for securing its
credit. The bank first examines the customers credit standing, the type of goods to be
imported, the market demand for the goods, the collateral offered to cover the credit.
Then it establishes the amount i.e. the line of credit.
Opening of letter of credit

The letter of credit can be opened by mail or by cable. When it is opened by mail, the
issuing bank sends letter of credit and to carbon copies to the importer. The
importer then dispatches the letter of credit to the exporter in foreign country by
mail. One carbon copy is kept for the record. The second carbon copy after signing is
sent to the bank by the importer. If an importer directs the bank to open letter of
credit by cable, the importers bank sends a cable to the corresponding bank in the
foreign country with a request to notify the exporter.
Handling of the documents

When the exporter receives a letter of credit, he presents the required documents
and the draft to the bank in his own country after shipping of documents. If the bank
is satisfied with the documents in the importing country and pays the exporter at
official ratein the currency of his own country.
Payment by importer to the bank

When a bank approves the application of a customer for opening letter of credit, it
does not lend money to the importer. The bank only lends the importer to use the
credit standing of the bank to the exporter in the foreign country. The bank makes a
contract with the importer that when the draft if send by the negotiating bank for
payment the importer will make the payment to the bank not later then the day only
the bank is to honour the obligation. In case of a sight letter of credit the payment to
the corresponding bank is to be made on the day the draft and documents are
received. When the time of letter of credit is used the importer is to arrange the
payment not later than the day on which the draft is to mature.
Opening of Letter Of Credit In BANK AL FALAH

Before opening of L/C certain requirements are necessary that are

The applicant must has import registration number
He must has account in that bank
He must pledges his security against the L/C amount

Cash Department

In cash department both deposits and withdrawals go side by side. This department
works under the accounts department and deals with cash deposits and payments.
This department maintains the following sheets, books, ledger of account:
Cash received voucher sheet.
Cash paid voucher sheet.
Cheque Book
Cash balance book
Cash Paid Sheet
The only instrument that can be used to withdraw an amount from an account is the
Cheque book. No payments are made by another instrument. Cheques can be of two
types, they may be presented at the counter and encashed and the others are clearing
or transfer cheques.
Cashier manually inspect the Cheque for following:
Signature & date
Cross cutting
Drawees a/c title
Amounts in words & figures
Two signatures at the back
The cheques should not be stated as post dated. If in the Cheque there may
discrepancy regarding any of the aspects described above the cheque is returned to
the customer for rectification. On other hand if the cheque is valid in all respects, the
cashier enters the necessary inputs in the computer and post the entry so that
account balance is updated.
When cashier posts these entries, computer automatically display the balance before
posting the transaction amount, balance after posting. The cashier easily and quickly
see whether the amount being withdrawn so exceed the balance or within the
balance. If the amount does exceed the balance then it is upon the discretion of the

manager to allow an overdraft and not depending upon the customers reputation. If
he does not allow an over draft, the procedure is repeated again as described for the
mismatch of the signature Cheque is return.
The detail of notes (currency) is written on the back side of the Cheque. The cashier
at the same time maintain the Cash Voucher Received Record Sheet. Then once
again inspect the signature of the customer cancellation mark of checking officer and
stamp of POSTED is placed on cheque before hand over the cash to customer.
Cash Received
For depositing the cash into customers accounts, there is need to fill in the payingin-slip giving the related details of the transaction. This paying-in-slip contains the
date, a/c/no, a/c title, particulars, amount being deposited and details of the cash.
There are two portion of the paying-in-slip. The depositor signs the one part of the
paying-in-slip one is retained by the bank to show an acceptance of the entries made
in the slip.
The different colored paying-in-slip are used for all the types of deposits. Only the
slips related to a particular type of a/c is acceptable by the bank. For example
current paying-in-slip for current a/c and saving paying-in-slips for saving a/c etc.
The paying-in-slip serves as a voucher to update to computerized transaction ledger.
The transaction ledger is only updated by paying-in-slip and Cheque. The cashier
responsible to receive both the paying-in-slip and cash from the depositor. The
cashier check the necessary details provided I the paying-in-slip and accounts the
cash and tallies with the amount declared in the slip. If the amount does not tally
with the cash given, the deposit is not entertained until the customer remove the
On the other hand if the two amounts tally, the cashier fills in the Cash voucher
received Record Sheet and assigns a voucher no. to both the transaction being made
in the sheet and the slip. This voucher no. starts with one and continue by serial
increments of one for each day till the closing of the sheet, the cashier fills the
voucher no, an account, cash day till the closing of the sheet. The cashier fills in the
voucher no, an account of, cash entry in the related type of a/c and he post his
initials on both part of the voucher. Then the cashier send both to the accountant
who verifies all the entries in the two documents, if the entries in the two documents,
if the entries in the two documents tally with one another, the accountant
authenticates the two by singing on the two documents and posting stamps on the
slip. One part of the slip is then returned to the customer and other is given to the
computer operator. A very important check is that the dates mentioned into the two
documents must be the same.
The cashier posts the transaction entries in computer ledger. This ledger contains
the a/c no, a/c title, voucher no, voucher date, transaction code, transaction amount.
After posting these entries, computer display before posting balance and after
posting. On every transaction computer generates an output of transaction ledger.
He assigns the stamp POSTED on the voucher to show voucher transaction entries
are posted. Checking officer receive this voucher and the compute output transaction
ledge, he manually inspects the entries of ledger and voucher. If both are tallied, he

then signs the ledger and put a mark of cancellation on the voucher. After the
verifications from the checking officer, cashier receives the voucher.
Cash Book Balance
At the end of the working day cashier is responsible to maintain the cash balance
book. The cash book contain the date, opening balance, detail of cash payment and
received in figures, closing balance, denomination of government notes (Currency).
It s checked by manager. The consolidated figure of receipt and payment of cash is
entered in the cash book and the closing balance of cash is drawn from that i.e.
Opening Balance of Cash + Receipts - Payments = Balance
The closing balance of today will be the opening balance of tomorrow. This
department is one of the most important department of the bank. All the books
maintained in this department are checked by office

Financial Results BANK AL FALAH



Cash Dividend
Stock Dividend
Right Issue
Book Value Per
Deposits per share


Annual Annual






























Total Assets
Share Capital
Reserves & Unapp.
Surplus on
revaluation Total


Profit & Loss

Mark-up / return /
interest earned


Mark-up / return /
interest expensed
Net mark-up /
interest income
Provision against
loans & adv.
Other Provision/
Fee, commission
Dividend income
Capital Gains
expenses etc
Profit before
Profit after taxation








































Advances to
Deposits Ratio
Tax Rate

Financial Analysis of BANK AL FALAH for 2007 results

BANK AL FALAH posted an after tax profit of Rs15.26b with earnings per share of
Rs 24.30 in FY07 as compared to profit after tax of Rs12.14b with earnings per share
of Rs 19.33 in FY06, depicting a significant growth of 26.0% in FY07. Net interest
income increased by 13% to Rs23.9b from Rs21.2b in FY06. The gross interest
income grew by 23%, while the interest expense grew by 74%, depicting an increase
in the cost of raising funds. The non-mark-up income increased by 20% to Rs 6
billion. The major contribution came from a 148% increase from the capital gained
on sale of securities.
The asset base increased by 20% from 342 billion to 420 billion in 2007 as compared
to 2006.Deposits showed a steady increase of 13% to bring the figure to Rs 292
billion as compared to Rs 257.4 billion in FY06. Advances increased by 10% to
Rs218b, while the investments increased by 78% to Rs 113 billion.
Recent Results

BANK AL FALAH Bank Limited posted profit after tax of Rs4.1b with an earnings
per share of Rs 6.55 in 1Q'08 vis-a-vis of Rs 3.7 billion with an earnings per share of
Rs 5.93 in 1Q'07, depicting a growth of 10.3% during the period despite dismal
performance of banking sector during 1Q'08.
Net interest income of the bank grew by just 2.5% during the period to Rs 6.1 billion
as compared to Rs 6.0 billion in the corresponding period of last year. High cost of
deposits was the main reason behind.

Swot Analysis

The strengths of BANK AL FALAH are as:

BANK AL FALAH is the first Pakistani privatized bank and because of its quality
management, marketing, innovation in products and services is performing well in
financial market.
Has established a good reputation in the banking market
Strict adherence with the banking procedures requirements, SBPs prudential
regulation requirements and its SROs and international banking requirement as well
as to its own set policies
Strong and its attractive products
Better focus on customer services and customization
Flexibility with the changing environment
Induction of the highly qualified professionals to change overall set up
The noted weaknesses of BANK AL FALAH are as:
The majority of people are not well aware about the products of BANK AL
Therefore it should advertise extensively especially RTC and Master Cards.
A behavior has been noted that bank tries to feel at ease with good looking, rich
and educated people and the poor looking customers feel some bit strange in the
environment of the bank. The bank employees should try to accommodate
behaviorally all type of customers.
In BANK AL FALAH there is lack of specialized skill because of job rotation policy
of human resource department. The bank should concentrate upon increasing its
abilities on individual service basis.
Mismanagement of time is another big mistake in BANK AL FALAH branches, the
bank official time of closing is 5:30pm but due mismanaging of time allocation and
work the staff is normally on their seats till 7:00 or 8:00 clock.
Process of development is bit slow due to its conservative approach
Never prefer to be a leader and prefer to be a follower of others
Slow improvement and acceptance of technological changes

More emphasis on deposit accumulation and less on their mobilization

Greater potential and opportunities for Credit Division if Liberal Policies being
Can grab more market share for its RTCs, remittances and forex department
through effective promotional and liberal policies.
Inclusion of highly qualified professional can change the whole scenario and
position of the bank if they have given the due liberty in performing their duties.
Adoption of information technology will improve the customer services.
More mobilization of accumulated deposit is possible through innovative
financing to
Agro Based Sector
Personalized Financing
Change in government policies has affected the banking business. Still banks have
to wait to get permission of state bank. The freezing of foreign currency accounts is a
vital example of letting people not to trust on banks.
The Competition has become severe by the entrants of so many banks, So to exist
one will have to prove himself in its services through excellent management and will
have to satisfy its shareholders. Otherwise he will be out the market.
Employees unions have been allowed if not managed properly can affect
The decrease purchasing power of consumer in the current economic situation of
the country affecting the business activity speed too much and the result is the low
investment from the investors in new projects can create problem for the bank
because it is working a lot in trade.
Introduction of credit marketing by local and foreign banks is badly affecting the
mobilization of the BANK AL FALAHs deposits due to the non presence of such
department in it.
Introduction and adoption of information technology as well as promotion of the
computer culture by the local as well as foreign banks will definitely affect the

services and business of the BANK AL FALAH.

Pest Analysis

Employment practices are expected to change.

Unions, Associations are being allowed to work effectively which can affect the
performance of the company both positively or negatively.
Political interference regarding policies is expected to increase as current
government is in race of power gain.
Due to lack of confidence on government investor is reluctant so mobilization of
funds is going to decrease.


Inflation is very high which will decrease the demand as purchasing power is
Staff cost is increasing as basic wage rate has increased and inflation has compelled
to will compel to increase salaries.
Operating costs are increasing due to inflation.
Interest rate is increasing so loan taking has decrerased.
Value of rupee is decreasing which is pressurizing the economy.

Social And Cultural

Lack of experts is in our country regarding management hence innovative activities

are slow and conventional methods are adopted.
Cultural strain to savings is the reason due to which investment remains low .
Declining work ethics is also our problem which is mainly due to poverty, lack of
Inadequate Accountability ,lack of good governance and lack of good infrastructure
helps creditor to cheat and heavy bad debts occur. Same situation is hoped to
Inadequate Empowerment is also a usual problem in our organization as every
person want to get more power hence there is less delegation of authority and
decision making.


BANK AL FALAH has computerized its most of the branches but still some are
manual there is need to computerized otherwise customers will get bad image.
Now a days computerized system is used by banks whis is very effective. But BANK
AL FALAH will have to improve its computerized technology as some fake
transactions occur by ATM.
Shortage of electricity is a big problem,
Employees of each organization need IT training and organization has this trend.

BANK AL FALAH will have to follow it.

Recommendations and Suggestion

From the quantum of the profit and its financial data it can easily judged the after
privatization Muslim Commercial Bank is performing well. Its deposits are growing
day-by-day and so its profitability. The controlling body is responsible for the
productive performance of the bank.Following are my observations and suggestion
to improve the efficiency for the development of the bank.
Increase In Profits

People can be motivated to save money by offering the deposit through various
investment schemes. The rate of profit should increase 1% or 2 % it would be
profitable step for bank.
Increase Salaries

BANK AL FALAH is making good profits but giving less pay to their employees as
compared to their competitors. So their salaries should be increased.
Change The Nature Of Work

Most of the bank employees are sticking to one seat only with the result that they
become master of one particular job and loose their grip on other banking operation.
In my opinion all the employees should have regular job experience all out-look
towards banking. Their promotion policy should be adjusted accordingly.

Every year some of the employees should be sent for training to other countries and
employees from other branches should be brought here. Some more reading
material should be provided the purpose should be to educate the employees with
the advance studies in their field. The employee should be provided the
opportunities to attend and participate in seminars and lectures on banking.
Incentive To Employees

Bank should give some more incentive to its employees in order to remove the
conflict between lower and higher officers and should try to improve the working
condition of the bank. Such system should be designed that every employee who has
some problems with his officers can communicate to the higher management and
some steps must be taken to improve that.
Performance And Reward

Smart, educated, skilled, well spoken and well versed staff personals should be
rewarded and appreciated, while on the other hand lazy, lethargic, heard, roughdealers and ill mannered must be warned and penalized but this all should be on
merit and considering the policy of honesty is the best policy and not due to some
personal liking, disliking prejudice and patrimonial. It is therefore suggested certain
schemes and checks may be introduced in banks to increase efficiency through
reward and punishment system.
Over Employed

During my internship period I felt that at some place the Muslim Commercial Bank
Limited is over employed which is causing in expenditure. I think that the best way
out for this problem is to pen new branches.
Promotion And Advertising

Bank must let potential customers know that all attractions for banking exist. This is
done by advertising on television and obtaining press coverage, in conjunction with
direct mail, window displays, leaflet in branches and in appropriate other locations
(such as hotels, shops, etc.) and including leaflets in statement of accounts sent to
existing customers in the hope that they will tell potential customers about the
services provided by our bank.
More Focus on Salary Accounts

A logic leads to promotional campaign through employers who are customers of the
banks and their employees are paid in cash. Such business accounts should be
encouraged to open the accounts of their employees with the banks. It might be
worth offering free banking for a specific period to new accounts or simply
publicizing the services available by means of posters at the employers premises.
Internship Facilities

The period of internship should be divided in to the number of department of the

Muslim Commercial Bank Ltd. The internee should be given timetable mentioning
the number of days he has to work at different places in the bank. On the first 4 days
in each department internee should be given a lecture the officer of the department
concerned about working of the department.

What Were My Duties and What I Learned

In first weak I assisted Mr Mahboob in Scrutiny of cheques. It is considered, as the

simplest work in consumer banking operations, but actually it is not that simple. The
cheques that are presented for either payment or for deposit are the main points
where most of the frauds occur.
I learned whole process of account opening of individuals practically. I remained
involved very much in practical activities of account opening as Miss Uzma whose
duty was account opening would remain very busy as number of customers coming
for account opening and getting information was high. So I assisted her.
I havent issued any cheque book personally, but the procedure is very simple for
issuance. I observed the process.
I filled many applications form for remittances. I prepared remittance slips and
learned to apply tests on TT and MT.
I processed the Inward cheques for collection and clearance, and have also
prepared vouchers.
Every transaction which takes place recorded in the computer so all transactions in
different departments are forwarded to account department. The branch where I
worked Mr Azeem-ud-din Bukhari was performing these activities. I was not allowed

to use software but I observed all the fuctions performed by him.

Miss Maria was credit officer who explained me the procedure of advances. Mostly
work is done through computer. I was not able to perform activities by myself as
access to software is not allowed. I observed how the application is processed. I think
it sufficient to know the procedure.
In cash department I observed the process of deposits, filled deposit slips, and
learned how the cash registers are maintained. In this department I did little work
practically as it was not allowed.
During my internship I dealt with many customers and employees, this was a great
experience to learn
- how to deal with customers
- how to work under pressure i.e in rush hours.
- how to manage an office.
- My communication skills were improved.
- I observed some signs of mismanagement which I think can be removed if branch
manager take more responsibility.
- I observed the practical application of many accounting concepts.